Greenfields Petroleum Corporation (“Greenfields” or the “Company”; TSX-VENTURE: GNF) is pleased to announce the Company’s oil, natural gas and natural gas liquids (“NGL”) reserves as at December 31, 2019, as evaluated by an independent qualified reserves evaluator, Wisholm Geosciences Inc. (“WGI”), in an independent report (the “WGI Report”) as well as a progress update on the extension of its senior debt payment. In addition to the summary information disclosed in this announcement, more detailed information is included in Greenfields’ statement of reserves data as at December 31, 2019 which has been filed on the Company’s SEDAR profile at sedar.com. All amounts herein are in United States dollars.
WGI REPORT
As at December 31, 2019, the proved reserves net to the Company through its interest in Bahar Energy Limited were evaluated at 34,900 Mboe and the total proved plus probable reserves were evaluated at 52,688 Mboe net to the Company. The net present value of proved reserves discounted at 10% (“PV10”) was $196 million net to the Company while the PV10 of the proved plus probable reserves was $506 million.
Reserves Summary
The WGI Report has evaluated Greenfields’s reserves in accordance with National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” and the Canadian Oil and Gas Evaluation Handbook (“COGEH”). The Company’s net reserves at December 31, 2019 as set forth in the WGI Report are summarized below:
| Greenfields Net Reserves |
2018Total
Proved (1P) Mboe |
2019 Total
Proved (1P) Mboe |
2018Total
Proved +
Probable
(2P)
Mboe |
2019Total
Proved +
Probable
(2P)
Mboe |
2018Total Proved +
Probable +
Possible (3P) Mboe |
2019 Total Proved +
Probable +
Possible(3P) Mboe |
Light & Medium
Crude Oil and
NGL |
9,716 |
11,673 |
16,653 |
17,788 |
24,007 |
24,287 |
| Conventional Natural Gas |
24,644 |
23,000 |
34,179 |
34,900 |
37,281 |
37,183 |
| TOTAL |
34,360 |
34,673 |
50,832 |
52,688 |
61,288 |
61,470 |
PV10
(in thousands of US$) |
$241,308 |
$195,944 |
$531,980 |
$506,114 |
$831.946 |
$746,339 |
- Total numbers have been adjusted to reflect changes made to COGEH related to the reporting of Company Net Reserves associated with Production Sharing Contracts. Please see the below reconciliation table.
A reconciliation of the Company’s net lease reserves at December 31, 2019 to the previous year-end is as follows:
| Thousand Barrels of Oil Equivalent (Mboe) |
Proved |
|
Probable |
Proved plus Probable |
|
| Opening Balance December 31, 2018 (1&2) Technical Revisions |
34,360
1,626 |
|
16,473
1,543 |
50,833
3,168 |
|
| Production |
(1,313 |
) |
0 |
(1,313 |
) |
| Closing Balance December 31, 2019 |
34,673 |
|
18,015 |
52,688 |
|
- Opening Balance has been adjusted to reflect changes made to COGEH related to the reporting of Company’s net lease reserves associated with Production Sharing Contracts.
- Opening Balances were separately prepared by GLJ Petroleum Consultants Ltd., an independent qualified reserves evaluator.
Pricing Assumptions - Forecast Prices and Costs
The WGI Report uses the following pricing and inflation rate assumptions as of December 31, 2019 in estimating the Company’s reserves data using forecast prices and costs.
| |
Brent Oil Price (1) |
Net Realized Oil Price (2) |
Natural Gas Contract Price |
Net Realized NGL
Price (2) |
% Cost Escalation Operating Expenses (3) |
Inflation rate |
| |
($/bbl) |
($/bbl) |
($/MMBTU) |
($/bbl) |
(%) |
(%) |
| Forecast |
|
|
|
|
|
|
| 2020 |
67.00 |
60.00 |
2.69 |
60.00 |
0.0 |
0.0 |
| 2021 |
68.00 |
60.00 |
2.69 |
60.00 |
2.0 |
2.0 |
| 2022 |
71.00 |
60.90 |
2.69 |
60.90 |
2.0 |
2.0 |
| 2023 |
73.00 |
63.70 |
2.69 |
63.70 |
2.0 |
2.0 |
| 2024 |
75.00 |
65.60 |
2.69 |
65.60 |
2.0 |
2.0 |
| 2025 |
76.00 |
67.50 |
2.69 |
67.50 |
2.0 |
2.0 |
| 2026 |
78.00 |
68.40 |
2.69 |
68.40 |
2.0 |
2.0 |
| 2027 |
79.81 |
70.30 |
2.69 |
70.30 |
2.0 |
2.0 |
| 2028 |
81.33 |
72.00 |
2.69 |
72.00 |
2.0 |
2.0 |
| 2029 |
82.88 |
73.50 |
2.69 |
73.50 |
2.0 |
2.0 |
| 2030+ |
+2%/yr.(3) |
+2%/yr.(3) |
2.69 |
+2%/yr.(3) |
2.0 |
2.0 |
Notes:
- Per GLJ’s Crude Oil Price Forecast effective January 1, 2020.
- Net Realized Oil Prices are calculated at approximately 94% of GLJ forecast Brent Crude Price less $3.00/bbl for transportation and marketing costs.
- Escalation rates are based on the Society of Petroleum Evaluation Engineers annual survey of projected expenses and costs.
LOAN FACILITY
The Company has made positive progress on a payment deferral letter with its senior lender, Vitol Energy (Bermuda) Ltd.(“Vitol”), regarding deferring the loan payment due under the Company’s credit facility from April 30th, 2020. The Company anticipates that the deferral will give the Company sufficient time to comply with its obligations to the Company’s loan agreement with Vitol, as amended.
FINANCIAL STATEMENTS
As previously announced, the Alberta Securities Commission (the “ASC”) has issued a temporary management cease trade order (“MCTO”) against Greenfields on the basis that the Company was unable to file its annual financial statements, management's discussion and analysis and related certifications for the financial year ended December 31, 2019 (the “Annual Filings”) by the filing deadline, as extended under ASC Blanket Order 51-517. The financial audit process is taking longer than usual due to the continued impact of COVID-19. In particular, delay has resulted from travel restrictions imposed by the Cabinet of Ministers of the Azerbaijan Republic, including the suspension of all flights and other passenger traffic to and from Azerbaijan until August 1, 2020.
The MCTO will remain in effect until the Annual Filings and the Company’s interim financial statements, management’s discussion and analysis and related officer certifications for the three-month period ended March 31, 2020 (the “Interim Filings”) have been filed, provided that such filings are completed on or before July 31, 2020. The Company anticipates that the Annual Filings and Interim Filings will be filed on July 24, 2020.
The MCTO does not affect the ability of shareholders who are not insiders of the Company to trade their securities. The Company is providing this status update in accordance with the provisions of the alternative information guidelines set out in National Policy 12-203 Management Cease Trade Orders. Except as disclosed in this announcement, the Company confirms as of the date of this press release that there has been no material change in the information contained in the announcements issued on June 18, 2020 and July 2, 2020 and there is no other material information concerning the affairs of the Company that has not been generally disclosed.