TORONTO, Jan. 24 /CNW/ - Sprott Resource Corp. ("SRC") announced today that Orion Oil & Gas Corporation ("Orion") (TSX:OIP), which is 78.9% owned by SRC on an undiluted basis, has announced today the results of its 2010 year-end oil and gas reserves evaluation conducted by GLJ Petroleum Consultants ("GLJ") and Sproule Associates Limited ("Sproule") as at December 31, 2010.
Highlights for year-end 2010 compared to year-end 2009 include:
Orion Oil and Gas Reserves
The tables below summarize certain information contained in the independent reserves reports prepared by GLJ and Sproule as of December 31, 2010 (collectively, the "Reports"). The information relating to reserves and the associated Net Present Value of Orion's Beaverhill Lake (Kaybob), Bigstone and Redwater properties was prepared by GLJ. The information relating to reserves and associated Net Present Value of Orion's Redwater North property was prepared by Sproule. Orion retained Sproule to continue its evaluation of the Redwater North acquisition which Orion announced in December 2010.
The Reports were prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). The Net Present Values included in the table below were based on price forecasts, effective January 1, 2011, provided by GLJ and Sproule, as applicable.
Additional reserve information in respect of Orion's reserves, as required under NI 51-101, will be included in SRC's Annual Information Form (the "AIF"), which will be filed prior to March 31, 2011 following approval by SRC's board of directors. The AIF will also incorporate SRC's oil and gas interests held through SRC's other subsidiaries, Waseca Energy Inc. and One Earth Oil & Gas Inc.
Summary of Orion Oil and Gas Reserves - Forecast Prices and Costs
|Light and Medium
|Natural Gas||Natural Gas
|Proved Developed Producing||-||-|
|Beaverhill Lake (Kaybob)||26,705||23,375||3,359||2,272||7,810||6,168|
|Total Proved Developed Producing||1,485||1,256||31,358||27,220||3,360||2,272||10,072||8,065|
|Proved Developed Non-Producing||-||-|
|Beaverhill Lake (Kaybob)||1,204||1,068||151||97||352||275|
|Total Proved Developed Non-Producing||57||48||1,247||1,104||151||97||416||329|
|Beaverhill Lake (Kaybob)||17,619||16,256||2,216||1,631||5,153||4,340|
|Total Proved Undeveloped||514||428||18,479||16,946||2,216||1,631||5,810||4,883|
|Beaverhill Lake (Kaybob)||45,529||40,699||5,727||3,999||13,315||10,782|
|Beaverhill Lake (Kaybob)||22,608||19,444||2,844||1,906||6,612||5,146|
|Total Proved plus Probable||-||-|
|Beaverhill Lake (Kaybob)||68,137||60,144||8,571||5,905||19,927||15,929|
|Total Proved plus Probable||3,426||2,885||76,941||67,441||8,572||5,906||24,822||20,031|
|Beaverhill Lake (Kaybob)||23,431||19,891||2,948||1,943||6,853||5,258|
|Total Proved plus Probable plus Possible|
|Beaverhill Lake (Kaybob)||91,568||80,034||11,519||7,848||26,780||21,187|
|Total Proved plus Probable plus Possible||3,426||2,885||100,372||87,331||11,520||7,849||31,675||25,289|
|(1)||Gross equals Orion working interest reserves.|
|(2)||Net equals volumes after Royalty equivalent volumes are deducted.|
|(3)||Columns for all tables may not add due to rounding.|
|(4)||Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is at least a 10% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible reserves.|
|(5)||The reserves replacement ratio was calculated by subtracting the reserves balance at December 31, 2009 from the reserves balance at December 31, 2010; adding the estimated production for 2010; and dividing the result by the estimated 2010 production.|
|(6)||All dollar amounts are in Canadian dollars unless otherwise noted.|
The following table sets forth the Net Present Value of estimated cash flows attributed to Orion's reserves as set forth in the Reports, both before and after deducting income taxes, and prior to general and administrative expenses.
Net Present Value of Orion Reserves - Forecast Prices and Costs
|Before Deducting Income Taxes Discounted at each percent|
|Total Proved plus Probable||788.2||569.7||439.3||354.7||296.2|
|Total Proved plus Probable plus Possible||1041.9||705.3||526.6||417.6||344.9|
|After Income Taxes Discounted at each percent|
|Total Proved plus Probable||652.6||476.1||370.2||301.1||253.2|
|Total Proved plus Probable plus Possible||843.6||577.6||435.2||347.8||289.2|
The GLJ and Sproule price forecasts used in the Reports are summarized below:
|Year||WTI Crude Oil
|Light Crude Oil
|Light Crude Oil
GLJ - $US/$CDN exchange rate assumed to be $0.98. Inflation rate assumed to be 2.0% per year.
Sproule - $US/CDN exchange rate assumed to be $0.932. Inflation rate assumed to be 1.5% per year.
|Alberta Natural Gas Liquids (GLJ)|
On a Net Present Value basis (10% discount rate, before tax), approximately 79% of the value of reserves is attributable to the Kaybob area (including Bigstone) and 21% is attributable to the Redwater area (including Redwater North).
About Sprott Resource Corp.
SRC is a Canadian based company, the primary purpose of which is to invest, directly and indirectly, in natural resources. Through acquisitions, joint ventures and other investments, SRC seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. SRC is well positioned to draw upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting Limited Partnership ("SCLP'"), of which Sprott Inc. is the sole limited partner. Pursuant to a management services agreement between SCLP and SRC, SCLP provides day-to-day business management for SRC as well as other management and administrative services. For more information, please visit www.sprottresource.com.
Certain information contained in this press release constitutes forward-looking information or statements. Forward-looking information and statements are often, but not always, identified by the use of words such as "anticipate", "seek", "believe", "expect", "hope", "plan", "intend", "forecast", "target", "project", "guidance", "may", "might", "will", "should", "could", "estimate", "predict" or similar words or expressions suggesting future outcomes or language suggesting an outlook. Statements relating to "reserves" and "resources" are forward-looking information as they involve the implied assessment, based on certain estimates and assumptions that, among others, the reserves and resources described exist in the quantities predicted or estimated. By their very nature, forward-looking information and statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts and projections.
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