NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF U.S. SECURITIES LAWS.
Seaview Energy Inc. (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) ("Seaview" or the
"Company") is pleased to provide shareholders with an update on corporate
developments and the Company's 2008 financial and operational results.
----------------------------------------------------------------------------
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Selected Financial Information
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%
Financial Q4 2008 Q4 2007 Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Petroleum and natural gas sales $ 8,226,577 $ 566,962 1351%
Funds flow from operations 3,555,906 98,865 3497%
Basic per share 0.07 0.01 600%
Diluted per share 0.06 0.01 500%
Net income (loss) 374,858 (369,591) 201%
Basic per share 0.01 (0.02) 150%
Diluted per share 0.01 (0.02) 150%
Capital expenditures 6,669,253 3,494,333 91%
Corporate acquisitions - 13,242,776 -
Net debt (working capital surplus) 19,418,852 (8,242,885) (336%)
----------------------------------------------------------------------------
Shares Outstanding at period end
----------------------------------------------------------------------------
Class A 50,005,182 19,073,007 162%
Class B 1,053,540 1,053,540 -
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Operations
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Daily production
Natural gas (mcf/d) 8,330 858 871%
Light oil and NGLs (bbl/d) 406 8 4975%
----------------------------------------------------------------------------
Total production (boe/d) 1,794 151 1088%
----------------------------------------------------------------------------
Average realized sales price (net of
risk management gains or losses)
Natural gas (per mcf) $ 7.68 $ 6.40 20%
Light oil and NGL (per bbl) 62.82 85.96 (27%)
----------------------------------------------------------------------------
Netback per boe
Sales price (net of risk
management gains or losses) $ 49.84 $ 40.86 22%
Royalties 8.77 9.46 (7%)
Operating expenses 11.34 11.15 2%
Transportation 1.14 1.21 (6%)
----------------------------------------------------------------------------
Operating netback $ 28.59 $ 19.04 50%
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Selected Financial Information
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%
Financial 2008 2007 Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Petroleum and natural gas sales $ 22,998,137 $ 566,962 3956%
Funds flow from operations 10,853,893 93,380 11523%
Basic per share 0.30 0.02 1400%
Diluted per share 0.23 0.02 1050%
Net income (loss) 2,296,275 (375,075) 712%
Basic per share 0.06 (0.07) 186%
Diluted per share 0.05 (0.07) 171%
Capital expenditures 32,714,246 3,742,291 774%
Corporate acquisitions 60,927,572 13,242,776 360%
Net debt (working capital surplus) 19,418,852 (8,242,885) (336%)
----------------------------------------------------------------------------
Shares Outstanding at period end
----------------------------------------------------------------------------
Class A 50,005,182 19,073,007 162%
Class B 1,053,540 1,053,540 -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operations
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Daily production
Natural gas (mcf/d) 5,221 216 2317%
Light oil and NGLs (bbl/d) 207 2 10250%
----------------------------------------------------------------------------
Total production (boe/d) 1,077 38 2734%
----------------------------------------------------------------------------
Average realized sales price (net of
risk management gains or losses)
Natural gas (per mcf) $ 8.47 $ 6.40 32%
Light oil and NGL (per bbl) 89.96 85.96 5%
----------------------------------------------------------------------------
Netback per boe
Sales price (net of risk
management gains or losses) $ 58.34 $ 40.86 43%
Royalties 12.59 9.46 33%
Operating expenses 10.08 11.15 (10%)
Transportation 1.18 1.21 (2%)
----------------------------------------------------------------------------
Operating netback $ 34.49 $ 19.04 81%
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HIGHLIGHTS OF 2008 AND SUBSEQUENT EVENTS
- Average reported production for 2008 increased to 1,077 boe/d compared to
average production for 2007 of 38 boe/d.
- Average production for Q4 2008 of 1,794 boe/d was an increase of 1,088%
relative to Q4 2007 production, and a 26% increase compared to Q3 2008
production of 1,422 boe/d. Production per share increased 21% in the fourth
quarter over third quarter 2008 results.
- Since commencing operations on October 17, 2007, record production levels in
the fourth quarter of 2008 mark the Company's fifth consecutive quarter of
growth.
- Increased Total Proven reserves by 344% per share, to 4,786 mboe, a 1,064%
relative increase since year end 2007.
- Increased Total Proven plus Probable reserves by 289% per share, to 7,256
mboe, a 921% relative increase since year end 2007.
- Reserve Life Index of 7.3 years on a Total Proven basis and 11.1 years on a
Total Proven plus Probable basis using December 31, 2008 reserves, and Q4 2008
production of 1,794 boe/d.
- Achieved Finding, Development and Acquisition ("FD&A") costs of $24.01/boe
Proven and $17.94/boe Proven plus Probable (including changes to Future
Development Costs ("FDC")).
- Achieved Finding and Development ("F&D") costs of $13.63/boe Proven and
$12.08/boe Proven plus Probable (including changes to FDC).
- Funds flow from operations for 2008 were $10.9 million or $0.30 per share.
- The Company drilled and cased 18 wells (9.1 net) in 2008 with a 89% success
rate. In the fourth quarter 2 wells (0.2 net) were drilled with a 100% success
rate.
- On April 1, 2008, Seaview closed the corporate acquisition of 1332915 Alberta
Ltd ("133Co") for total consideration of $24.0 million, comprised of the
assumption of 133Co's net debt position and the issuance of 8,049,250 Class A
shares at $0.87 per share. The acquisition of 133Co was highly accretive on all
measures to Seaview, and significantly expanded the Company's reserves,
production, cash flow, land and drilling inventory.
- On May 29, 2008, Seaview closed a bought-deal financing for gross proceeds of
$6.0 million through the issuance of 2,792,000 Class A shares issued on a
"flow-through basis" at a price of $2.15 per share.
- On June 26, 2008, Seaview acquired light oil properties from Progress Energy
Trust located in southeast Saskatchewan and issued 8.3 million Class A shares,
with an ascribed value of $2.12 per share, to Progress, as well as approximately
$5.0 million in cash, for total consideration of $22.5 million.
- On July 10, 2008, Seaview closed a bought-deal financing for gross proceeds of
$10.0 million through the issuance of 2,899,000 Class A shares at a price of
$3.45 per share.
- On July 24, 2008, the Company closed the corporate acquisition of C3 Resources
Ltd. ("C3") for total consideration of $36.9 million, comprised of the
assumption of C3's net debt position, the issuance of 5,891,925 Class A shares
at $3.24 per share and approximately $6.3 million in cash.
- On December 18, 2008, Seaview closed a bought-deal financing for gross
proceeds of $4.8 million through the issuance of 3,000,000 Class A shares issued
on a "flow-through basis" at a price of $1.60 per share.
- Expanded the credit facility to $44 million representing a 30% increase
relative to June 30, 2008. Based on year end 2008 net debt of $19.4 million,
Seaview has $24.6 million of available credit capacity to pursue additional
strategic opportunities.
Business Strategy
During the first full year of operations, Seaview's management has aggressively
positioned the company for solid future growth through the successful execution
of a balanced business strategy of acquiring, exploiting and exploring for
high-quality natural gas and light oil assets in Western Canada.
Seaview successfully closed three strategic and highly accretive acquisitions
during 2008 to build the Company's current core areas in the Peace River Arch
and southeast Saskatchewan. Each of these transactions featured long-life, high
quality reserves featuring low operating costs resulting in high netback
properties. Combined with an effective exploration and exploitation 2008
drilling program, Seaview has achieved significant reserves and production
growth per share.
Despite volatile commodity prices and the impact of the global financial crisis
on capital markets, Seaview is well positioned to continue executing its
aggressive growth strategy. Through a disciplined approach to capital
management, Seaview has several key characteristics that support continued
growth and value creation for shareholders despite the current economic climate:
- High-quality, long reserve life assets, focused on natural gas in the Peace
River Arch and light oil in southeast Saskatchewan, both desirable areas within
the Western Canadian Sedimentary Basin.
- Strong financial position including a low cost structure, strong balance sheet
and $24.6 million of available credit capacity providing Seaview with the
ability to capitalize on strategic opportunities.
- Attractive commodity risk management program to provide an enhanced cash flow
stream in order to maintain balance sheet strength, secure acquisition economics
and finance the Company's capital expenditures.
- Strong management team, directors and technical professionals with significant
ownership positions, ensuring strong alignment to shareholders' interests.
OPERATIONS OVERVIEW
Seaview's core areas feature high quality, long-live reserves with significant
identified upside potential through exploration and development drilling. The
Company's acquisition strategy has been on consolidating key core areas where
management has previous knowledge and experience. For the year ended December
31, 2008, Seaview has successfully executed its business plan through the
closing of three strategic acquisitions and a very successful drilling program.
Peace River Arch Core Area
Seaview has initially focused its conventional exploration and acquisition
efforts in the Peace River Arch region. This area is characterized as having
multi-zone potential of natural gas and light oil drilling opportunities at
shallow to moderate drilling depth (approximately 350 to 2,300 metres).
Seaview acquired its initial assets through the corporate purchase of 1276921
Alberta Ltd. ("127Co") concurrent with its Initial Public Offering ("IPO") in
October, 2007. Subsequently Seaview acquired additional producing assets and
undeveloped land through the corporate acquisitions of 133Co and C3. The
acquired assets added approximately 1,000 boe/d in this region consolidating in
key producing properties of Gordondale, Balsam, Boundary Lake, Valhalla, Doe,
Pouce Coupe, Sinclair and Clayhurst.
During 2008, Seaview drilled 18 wells (9.10 net) in this region on the various
properties. The targets ranged from the Upper Cretaceous Doe Creek reservoir to
the Mississippian Kiskatinaw reservoirs which provide high impact production and
reserve potential. Seaview drilled and operated 16 of the wells drilled in the
area. The total capital program was $17.7 million, which included drilling 12
wells (6.6 net) exploration wells. The highlights of the program are summarized
as follows:
- Based on a proprietary 3D seismic program, Seaview drilled 2 wells (0.45 net)
which successfully delineated an extension of a significant Kiskatinaw gas pool
at Gordondale. Combined these wells have produced a total 2 bcf (0.4 bcf net) of
reserves to date and are currently flowing at production rates of 3 mmcf/d and
10 mmcf/d (400 boe/d net).
- At Boundary Lake, Seaview drilled a dual zone Kiskatinaw gas well (0.5 net)
that was initially brought on production in April, 2008 at restricted rates of
500 mcf/d due to pipeline restrictions. This issue was rectified in early
December 2008 and the well is currently producing from both reservoir zones at a
gross rate of approximately 4 mmcf/d (333 boe/d net).
- Seaview drilled 6 wells (2.30 net) and recompleted a suspended gas well (0.5
net) at Valhalla. Three wells were brought on production in 2008, a fourth began
producing in the first quarter of 2009 and production from one additional well
was deferred until April 1 to take advantage of the royalty incentive. Net
production from these wells is approximately 110 boe/d.
- Seaview drilled a Montney discovery well at 100% working interest in Clayhurst
which was brought on production early 2008. Subsequently, Seaview acquired
additional interest in the Clayhurst area including 100% ownership of the
pipeline and compression infrastructure in the area.
- At Sinclair, Seaview drilled 2 wells (0.55 net) subsequent to the C3
acquisition. Both wells have been completed and are expected to be tied-in for
production this summer. The Company estimates net production additions of 75
boe/d to be on-stream during the third quarter of 2009.
- Seaview brought 2 wells on production starting April 1, 2009, a dual zone well
at Gordondale (0.6 net) from a new Kiskatinaw pool and a well at Valhalla (0.5
net) at initial gross rates of approximately 2.5 mmcf/d (240 boe/d).
- Seaview has an additional 4 wells (1.2 net) to be brought on production during
the year which are expected to add combined deliverability of approximately 200
boe/d. The production from these wells plus the recent tie-ins in Gordondale and
Valhalla will qualify for the maximum 5% royalty rate subject to limitations
disclosed under the Alberta government's royalty relief program.
Within the first year of operations, Seaview has succeeded in establishing a
significant asset base including a land position of 121,730 gross acres (51,126
net) with over 60 drilling locations identified on Company interest lands in the
Peace River Arch focus area. Despite the low commodity price environment,
Seaview's diverse prospect inventory combined with the recent royalty incentives
announced by the Government of Alberta provides a solid platform for continued
value creation through its drilling operations.
Southeast Saskatchewan
In June 2008, Seaview closed the acquisition of three properties from Progress
Energy Trust located in the Rocanville, Steelman and Alameda areas in southeast
Saskatchewan. The acquisition provides Seaview with a component of operated,
high quality, long-life oil reserves including several development and
exploration targets.
Seaview has successfully completed several improvements on the acquired
properties including well re-activations, pump changes and optimization of water
flood injection practices. As at year-end 2008, the property was assigned Total
Proven plus Probable reserves of 1,340 mboe with a reserve life index of over 18
years based on oil production rates of 200 bbl/d.
Management has identified several additional infill drilling opportunities which
include horizontal development wells and exploration targets. Combined with the
stable, predictable cash flow derived from these assets, the lower-risk nature
of the identified drilling inventory in Saskatchewan complements Seaview's
exploration targets in the Peace River Arch core area.
Resource Play Exploration Program
Seaview's capital budget is weighted towards exploration drilling, therefore the
success in the drilling program can materially impact the Company's success.
Management balances the risk of exploration drilling by allocating capital
towards a combination of higher risk conventional targets with a component of
lower technical risk resource plays. Due to the high capital cost and technical
complexity of these plays, Seaview looks to partner with industry leaders in
order to gain experience and knowledge in these plays to be leveraged on future
properties.
Pouce Coupe - Montney
Through a series of farm-ins and acquisitions, Seaview has established an
average 17.5% working interest in 12,800 gross acres of prospective Montney
lands in this evolving play fairway located in northwest Alberta. The Montney
tight gas play is an exciting resource play offering an attractive combination
of low-risk exploration with significant reserve potential.
Following up on 3 vertical wells (1.7 net) drilled in 2007, Seaview participated
in the Company's first horizontal well (0.24 net) completed with multi-frac
technology in late 2008. The horizontal location was successfully completed with
a six-stage frac and will be brought on production in Q3 2009. Net production
from this well will again qualify for the 5% royalty relief program.
Seaview's land position in the Pouce Coupe Montney play, which is now 3.9 net
sections, is well positioned offsetting numerous successful horizontal
development wells drilled during 2008 by other industry participants. Other
operators have reported significant early success in the Lower Montney formation
with reported initial production rates ranging from 2 - 5 mmcf/d.
With the success of Seaview's first horizontal well, an additional four
horizontal locations (1.4 net) were assigned Proven Undeveloped and Proven plus
Probable undeveloped reserves totalling 450 mboe validating the long term
potential of this area. Seaview's position within this play provides a long term
development opportunity to be capitalized over the next several years with less
than 10% of the potential development locations currently booked.
Harlech - Nordegg and Rock Creek
Late in 2008, Seaview participated in drilling a 3,300 meter multi-zone
exploration well targeting a developing resource play located in Harlech in west
central Alberta. As a result of drilling and completing this well, Seaview has
earned a 25% working interest in 5,760 gross acres of contiguous land with
additional crown land available offsetting Seaview's position. The discovery
well was successfully completed in multiple reservoir zones, however, the well
cannot be brought on production until next winter due to surface access issues.
Seaview expects to drill additional wells on this land position to further
evaluate its resource potential.
RESERVES
Seaview has a Reserve Committee comprised of independent board members, which
reviews the qualifications and appointment of the independent reserve
evaluators. The Committee also reviews the processes and technical data used to
determine the reserves booked.
The independent reserves evaluation has been completed by Sproule and Associates
Limited ("Sproule") with an effective date of December 31, 2008, in a National
Instrument 51-101 ("NI 51-101") compliant report . Highlights of the report are
summarized below:
- Proven Developed Producing reserves have increased by 358% per share, to 3,941
mboe, a relative increase of 1,096% since December 31, 2007.
- Total Proven reserves have increased by 344% per share, to 4,786 mboe, a
relative increase of 1,064% since December 31, 2007.
- Total Proven plus Probable reserves increased by 289% per share, to 7,256
mboe, a relative increase of 921% since December 31, 2007.
- Achieved Q4-2008 average production of 1,794 boe/d, representing an increase
of 367% per share as compared to Q4-2007 average production of 151 boe/d.
- Reserve Life Index of 7.3 years on a Total Proven basis and 11.1 years on a
Total Proven plus Probable basis using December 31, 2008 reserves, and Q4-08
production of 1,794 boe/d.
- Total capital expenditures were $114.7 million, including changes in FDC total
capital costs for the purpose of calculating FD&A costs were $126.2 million.
-- Achieved FD&A costs of $24.01/boe Proven and $17.94/boe Proven plus Probable
(Including FDC).
-- Seaview completed three strategic acquisitions in 2008 adding 4,753 mboe of
Total Proven plus Probable reserves, or 64% of the Total Proven plus Probable
reserve additions in 2008.
-- Seaview's acquisitions and drilling success replaced production by 11.3 times
on a Proven basis and 16.3 times on a Proven plus Probable basis.
- Seaview completed an active drilling program in 2008 which included drilling
18 wells (9.1 net) with an 89% success rate. Capital expenditures were $20.5
million directed towards drilling activity. Including changes to FDC, the total
capital costs for the purpose of calculating F&D costs are $31.2 million.
Compared to the unaudited financials reported on April 2, development capital
has been restated from $24.1 million to $20.5 million to account for a revision
in capital allocated to drilling activities that was related to acquisitions. As
a result, the Company's F&D costs have been recalculated relative to previous
disclosure.
-- Achieved F&D costs of $13.63/boe Proven and $12.08/boe Proven plus Probable
(including FDC).
-- Seaview enjoyed a very successful drilling program accounting for 2,475 mboe
or 36% of the Total Proven and Probable reserve additions in 2008.
-- Seaview's drilling success replaced production by 3.6 times on a Proven basis
and 6.1 times on a Proven plus Probable basis.
Net asset value is calculated to be $2.19 per Class A share, using Total Proven
plus Probable reserves value discounted at 10%, an increase of 75% relative to
December 31, 2007.
The December 31, 2008, evaluation was prepared by Sproule utilizing the
methodology and definitions as set out under NI 51-101. The reserves presented
herein include the total Company's working interest reserves before deduction of
royalties and exclude royalty interest reserves as at December 31, 2008.
Table 1 NI 51-101
Summary of Oil and Gas Reserves
as of December 31, 2008
Forecast Prices and Costs
Gross Reserves Net Reserves
------------------------------------------------------------------
Light
and Light and
Medium Natural Medium Natural
Crude Heavy Gas Natural Crude Heavy Gas Natural
Oil Crude Liquids Gas Oil Crude Liquids Gas
------------------------------------------------------------------
Mbbls Mbbls Mbbls Mmcf Mbbls Mbbls Mbbls Mmcf
------------------------------------------------------------------
Proved
Developed
Producing 1107.0 0 50.5 16,702 968.4 0 31.3 12,134
Developed
Non-
Producing 51.9 0 1.9 3,409 48.8 0 1.2 2,428
Undeveloped 24.4 0 3.7 1,167 17.9 0 2.2 975
Total
Proved 1183.3 0 56.1 21,278 1035.1 0 34.7 15,537
Probable 503.5 0 39.2 11,567 431.4 0 25.2 8,259
Total Proved
plus
Probable 1686.9 0 95.3 32,845 1466.5 0 59.9 23,796
Table 2 NI 51-101
Summary of Net Present Values of Future Net Revenue
as of December 31, 2008
Forecast Prices and Costs
Unit Value Before
Before Future Income Tax Income Tax
Expenses and Discounted at Discounted at
--------------------------------------------------------------
0% 5% 10% 15% 20% 10%/yr
--------------------------------------------------------------
(M$) (M$) (M$) (M$) (M$) ($/boe)
--------------------------------------------------------------
Proved
Developed
Producing 142,071 99,062 77,390 64,350 55,581 25.61
Developed
Non-Producing 20,811 15,546 12,344 10,316 8,886 27.15
Undeveloped 4,998 2,568 1,312 583 126 7.18
Total Proved 167,881 117,086 91,045 75,249 64,594 24.88
Probable 92,267 50,390 33,680 24,809 19,298 18.37
Total Proved
plus Probable 260,147 167,476 124,725 100,058 83,892 22.71
After Future Income Tax Expenses and Discounted at
----------------------------------------------------
0% 5% 10% 15% 20%
----------------------------------------------------
(M$) (M$) (M$) (M$) (M$)
----------------------------------------------------
Proved
Developed Producing 117,165 83,416 66,096 55,539 48,371
Developed Non-Producing 15,278 11,274 8,946 7,429 6,359
Undeveloped 3,740 1,811 804 216 -151
Total Proved 136,184 96,501 75,845 63,184 54,580
Probable 67,907 36,922 24,427 17,760 13,609
Total Proved plus Probable 204,091 133,424 100,272 80,944 68,189
Table 3 NI 51-101
Total Future Net Revenue Undiscounted
as of December 31, 2008
Forecast Prices and Costs
Operating Development
Revenue Royalties Costs Costs
---------------------------------------------
(M$) (M$) (M$) (M$)
---------------------------------------------
Total Proved
Reserves 329,371 62,522 87,036 5,219
Total Proved plus
Probable 519,760 101,481 136,245 12,982
Future Net
Revenue
Abandonment and Before Future Net
Reclamation Income Income Revenue After
Costs Taxes Taxes Income Taxes
-----------------------------------------------------
(M$) (M$) (M$) (M$)
-----------------------------------------------------
Total Proved
Reserves 6,707 167,881 31,697 136,184
Total Proved plus
Probable 8,896 260,147 56,057 204,091
Table 4 NI 51-101
Net Present Value of Future Net Revenue
By Production Group
as of December 31, 2008
Forecast Prices and Costs
Future Net Revenue Unit Value Before
Before Income Taxes and Income Taxes
(Discounted at 10%/Year) (Discounted at 10%/Year)
----------------------------------------------------
(M$) ($/boe)
----------------------------------------------------
Proved
Light and Medium Crude Oil
(including solution gas
and associated by-products) 25,852 23.82
Heavy Crude Oil
(including solution gas
and associated by-products) 0 0
Natural Gas
(including associated by
products) 65,194 25.33
Proved plus Probable
Light and Medium Crude Oil
(including solution gas and
associated by-products) 34,405 22.29
Heavy Crude Oil
(including solution gas and
associated by-products) 0 0
Natural Gas
(including associated by products) 90,320 22.87
Table 5 NI 51-101
Summary of Pricing and Inflation Rate Assumptions
As of December 31, 2008 Forecast Prices and Costs
NATURAL
CRUDE OIL GAS
-------------------------------------------------------------
Edmonton Cromer
WTI Par Price Medium Alberta
Crude 40 degrees 29.3 degrees AECO Gas
Year Oil API Crude Oil API Crude Oil Price
-------------------------------------------------------------
($US/Bbl) ($Cdn/Bbl) ($Cdn/Bbl) ($Cdn/mmbtu)
-------------------------------------------------------------
(1) (2) (3)
------------------------------------------------
Forecast
2009 53.72 65.35 58.16 6.82
2010 63.41 72.78 66.23 7.56
2011 69.53 79.95 72.76 7.84
2012 79.59 86.57 79.65 8.38
2013 92.01 94.97 87.38 9.20
Thereafter Various Escalation Rates
NATURAL GAS LIQUIDS
-------------------------------------------------------------
Pentanes Butanes
Plus FOB US/CAN
FOB Field Field Exchange
Year Gate Gate Inflation Rate
-------------------------------------------------------------
($Cdn/Bbl) ($Cdn/Bbl) (%) ($US/Cdn)
-------------------------------------------------------------
Forecast
2009 66.93 51.15 2.0 0.800
2010 74.54 54.25 2.0 0.850
2011 81.88 59.59 2.0 0.850
2012 88.66 64.53 2.0 0.900
2013 97.27 70.79 2.0 0.950
Thereafter Various Escalation Rates
Notes:
(1) West Texas Intermediate at Cushing Oklahoma 40 degrees API, 0.5%
sulphur
(2) Edmonton Light Sweet 40 degrees API, 0.3% sulphur
(3) Comer Medium (29.3� degrees API Heavy stream)
Net Asset Value per Share Information
Based on Sproule Reserves Evaluation as at December 31, 2008
----------------------------------------------------------------------------
Before Tax 10% Discount
----------------------------------------------------------------------------
($M except share amounts) Proven Total
Developed Proven Total Proven
Producing Reserves plus Probable
----------------------------------------------------------------------------
Value of Reserves 77,390 91,045 124,725
Undeveloped Land (22,000
acres at $200 per acre) 4,400 4,400 4,400
Estimated Net Debt as at
December 31, 2008 (19,418) (19,418) (19,418)
----------------------------------------------------------------------------
Total Net Assets 62,372 76,027 109,707
Class A shares Outstanding
(MM) as at December 31, 2008 50.00 50.00 50.00
Estimated Net Asset Value per
Class A share $1.25 $1.52 $2.19
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Before Tax 15% Discount
----------------------------------------------------------------------------
($M except share amounts) Proven Total
Developed Proven Total Proven
Producing Reserves plus Probable
----------------------------------------------------------------------------
Value of Reserves 64,350 75,249 100,058
Undeveloped Land (22,000
acres at $200 per acre) 4,400 4,400 4,400
Estimated Net Debt as at
December 31, 2008 (19,418) (19,418) (19,418)
----------------------------------------------------------------------------
Total Net Assets 49,332 60,231 85,040
Class A shares Outstanding
(MM) as at December 31, 2008 50.00 50.00 50.00
Estimated Net Asset Value per
Class A share $0.99 $1.20 $1.70
----------------------------------------------------------------------------
COMMODITY PRICE RISK MANAGMENT
A key component to Seaview's balance sheet management is the Company's commodity
price risk strategy. Seaview's risk management program is intended to reduce
price volatility in order to maintain balance sheet strength, protect
acquisition economics and finance ongoing capital expenditures.
- Seaview currently has approximately 810 boe/d (41% of estimated 2009
production) hedged for the remainder of 2009.
-- 4500 GJ/d of natural gas hedged in put and fixed contracts providing for a
"net of cost" floor of $8.05 CDN per GJ which is an 89% premium to the current
calendar AECO 2009 futures strip of $4.26 CDN per GJ.
-- 100 bbl/d of crude oil hedged in a fixed contract at $55.90 CDN per barrel.
- Current hedging program provides minimum gross revenue of $14.5 million for
2009 for the hedged volumes.
- As at March 31, 2009, the estimated market-to-market value of Seaview's
derivatives contracts was $3.5 million.
- Seaview currently has the following natural gas and crude oil financial
contracts outstanding:
Pricing Strike
Volume Point Price Premium Term
----------------------------------------------------------------------------
Natural AECO
Gas Put 1,000 GJ/d Monthly $ 7.57/GJ $ 0.82/GJ April '08 - March '09
Natural AECO August '08 -
Gas Put 1,000 GJ/d Monthly $10.50/GJ $ 1.80/GJ December '09
Natural AECO November '08 -
Gas Put 1,500 GJ/d Monthly $ 8.50/GJ $ - December '09
Natural AECO April '09 -
Gas Put 1,000 GJ/d Monthly $ 9.00/GJ $ - December '09
Natural AECO March '09 -
gas swap 1,000 GJ/d Monthly $ 6.02/GJ $ - December '09
Natural AECO January '10 -
gas call 1,500 GJ/d Monthly $ - $ 7.00/GJ December '10
Crude oil WTI- March '09 -
swap 100 bbl/d Nymex CAD $55.90/bbl $ - December '09
Crude oil WTI- January '10 -
call 100 bbl/d Nymex CAD $ - $80.00/bbl December '10
----------------------------------------------------------------------------
OUTLOOK; 2009 GUIDANCE
As a result of a very successful year in 2008, Seaview is currently well
positioned to continue its growth strategy in 2009 despite the current
challenging economic climate. Seaview now has the following characteristics:
- Total Proven reserves are 4,786 mboe, and Total Proven plus Probable reserves
are 7,256 mboe, effective December 31, 2008, as evaluated by Sproule and
Associates using National Instrument 51-101 reserve definitions.
- Reserve life index is 11.1 years based on Total Proven plus Probable reserves
and Q4 2008 production of 1,794 boe/d.
- Net asset value is $2.19 and $1.70 per Class A share, using Total Proven plus
Probable reserves and a before-tax 10-per-cent and 15-per-cent discount rate,
respectively, including $4.4 million in value for undeveloped land.
- Expanded credit facility of $44 million representing a 30% increase relative
to June 30, 2008. Based on year end 2008 net debt of $19.4 million, Seaview has
$24.6 million of available credit capacity to pursue additional strategic
opportunities.
- Forecast 2009 average daily production estimate of more than 2,000 boe/d
compared to 2008 annual average production of 1,077 boe/d resulting in an
estimated forecast production growth of 86% per share (based on 50 million Class
A shares outstanding).
- Forecasted 2009 capital budget designed to be net debt neutral at the end of
2009 compared to year end 2008 based on reinvesting cash-flow plus the positive
impact of drilling credits to be earned under the Government of Alberta's
royalty incentive program announced on March 3, 2009.
- Incremental 440 boe/d net production coming on steam after April 1, 2009,
qualifying for the maximum 5% royalty rate subject to certain limitations.
- Commodity hedging program providing for downside protection on 41% of 2009
forecasted average production generating minimum $14 million gross revenue for
2009.
- Drilling inventory of more than 80 locations, including over 60 prospects
targeting multizone conventional prospects in Peace River Arch, and 20 potential
locations targeting light oil in southeast Saskatchewan. Seaview's prospect
inventory is not fully reflected in the company's independent reserve evaluation
and therefore provides for significant long-term growth potential;
- 50.0 million Class A shares and 1.0 million Class B shares outstanding.
RELEASE OF 2008 FINANCIALS AND ANNUAL INFORMATION FORM
Seaview has filed its financial results for the year ended December 31, 2008
including the audited consolidated financial statements and related management's
discussion and analysis ("MD&A"). The Annual Information Form which includes
Seaview's reserves data and other oil and gas information for the year ended
December 31, 2008 as mandated by National Instrument 51-101 Standards for
Disclosure for Oil and Gas Activities of the Canadian Securities Administrators
will be filed on or before April 30, 2009. These filings will be available in
their entirety at www.seaviewenergy.com and www.sedar.com or by contacting the
Company directly.
Barrels of oil equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural
gas to one barrel (bbl) of oil is based on an energy conversion method primarily
applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. All boe conversions in this press release are
derived by converting natural gas to oil in the ratio of six thousand cubic feet
of natural gas to one barrel of oil. Certain financial amounts are presented on
a per boe basis, such measurements may not be consistent with those used by
other companies.
Estimated values contained in this press release do not represent fair market value.
This press release may contain forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements may include estimates,
plans, anticipations, expectations, opinions, forecasts, projections, guidance
or other similar statements that are not statements of fact. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results to
differ materially from those anticipated or implied in the forward-looking
statements. These risks include, but are not limited to: the risks associated
with the oil and gas industry (e.g. operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses and health, safety and environmental risks),
commodity price and exchange rate fluctuation and uncertainties resulting from
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures. The Company's forward-looking statements are
expressly qualified in their entirety by this cautionary statement. The
forward-looking statements contained in this press release are made as of the
date hereof and the Company undertakes no obligations to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
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