Decklar Resources Inc. (TSX-V: DKL) (OTCQX: DLKRF) (FSE:
A1U1) (the “
Company” or
“
Decklar”) is pleased to announce the filing of
its 2021 year-end reports, an application to extend to the expiry
date for certain purchase warrants, and highlights of the Company’s
Form 51-101F1 - Statement of Reserves Data and Other Oil and Gas
Information as of December 31, 2021 (the
“
51-101F1”).
Completion and Filing of 2021 Year-End
Reports
Decklar has completed and filed its 2021
year-end reports, including audited consolidated financial
statements for the years ended December 31, 2021 and 2020 (the
“Annual Financial Statements”), management’s
discussion and analysis as at December 31, 2021 (the
“MD&A”, and collectively with the Annual
Financial Statements and the 51-101F1, the “Year-End
Reports”), and the 51-101F1. The Year-End Reports are all
available on the Company’s website at www.decklarresources.com and
have also been filed on www.sedar.com.
Highlights of 2021 Reserves Summary
Report
The Company engaged McDaniel & Associates
(“McDaniel”) to perform an independent review of
the Company’s oil and gas reserves as at December 31, 2021 (the
“McDaniel Report”). McDaniel is a qualified
reserves engineer and reports in compliance with the Canadian
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities (“NI 51- 101”) and the Canadian Oil
and Gas Evaluation Handbook. All references to reserves and
valuation of those reserves in this release are derived directly
from the McDaniel Report.
The Company has significantly increased its
reserves during 2021 through its acquisition of Purion Energy
Limited (“Purion”), through which the Company
acquired an economic interest in the Asaramatoru oil field in
Nigeria (the “Asaramatoru Field”), and through the
re-entry of the Company’s Oza-1 well in the Oza oil field in
Nigeria, which converted several hydrocarbon zones from contingent
resources to reserves.
The Company’s share of gross proved reserves
(“1P”) of light/medium crude oil has increased by
3.60 million bbls to 4.79 million bbls, a 303% increase as compared
to year end 2020.
The Company’s share of gross proved + probable
reserves (“2P”) of light/medium crude oil has
increased by 7.16 million bbls to 9.07 million bbls, a 375%
increase as compared to year end 2020.
The Company’s share of gross proved + probable +
possible reserves (“3P”) of light/medium crude oil
has increased by 11.75 million bbls to 14.48 million bbls, a 430%
increase as compared to year end 2020.
The following table summarizes Decklar’s share
of gross and net (after deducting royalties) reserves as at
December 31, 2021, in thousands of barrels
(“Mbbl”).
|
Light/Medium Crude Oil |
Reserves Category |
Gross |
Net |
|
(Mbbl) |
(Mbbl) |
Proved |
|
|
Proved Developed
Producing |
- |
- |
Proved Developed
Non-Producing |
2,479 |
2,356 |
Proved
Undeveloped |
2,315 |
2,182 |
Total
Proved |
4,794 |
4,538 |
Total
Probable |
4,275 |
4,016 |
Total Proved + Probable |
9,069 |
8,555 |
Total
Possible |
5,408 |
5,052 |
Total Proved + Probable + Possible |
14,477 |
13,606 |
|
|
|
The independent valuation of the Company’s
reserves has increased corresponding to the increase in reserve
volumes and is also impacted by economic factors such as commodity
pricing. The McDaniel Report and valuations are based on McDaniel’s
brent crude oil pricing forecasts from January 1, 2022, summarized
below, denoted in US dollars per barrel
(“US$/bbl”).
|
|
Year |
Brent Crude Oil Price |
|
(US$/bbl) |
|
|
2022 |
75.00 |
2023 |
69.87 |
2024 |
67.63 |
2025 |
68.98 |
2026 |
70.36 |
2027 |
71.77 |
2028 |
73.20 |
2029 |
74.66 |
2030 |
|
Inflation after
2031 |
2% |
|
|
The estimated value of Decklar’s 1P reserves,
discounted at 10% per annum, has increased by US$64.41 million to
US$74.06 million, a 667% increase as compared to year end 2020.
The estimated value of Decklar’s 2P reserves,
discounted at 10% per annum, has increased by US$106.58 million to
US$128.00 million, a 498% increase as compared to year end
2020.
The estimated value of Decklar’s 3P reserves,
discounted at 10% per annum, has increased by US$144.27 million to
US$176.69 million, a 445% increase as compared to year end
2020.
The following table summarizes the estimated
after tax value of Decklar’s reserves as at December 31, 2021,
denoted in thousands of US dollars (“US$M”).
|
|
|
|
Cash Flow After Income Taxes, Discounted at
(%/year) |
Unit Value after Income Tax |
Reserves Category |
0% |
5% |
10% |
15% |
20% |
Discounted at 10%/year |
|
(US$M) |
(US$M) |
(US$M) |
(US$M) |
(US$M) |
(US$/bbl) |
Proved |
|
|
|
|
|
|
Proved Developed
Producing |
- |
- |
- |
- |
- |
- |
Proved Developed
Non-Producing |
59,032 |
53,016 |
48,098 |
44,020 |
40,592 |
20.41 |
Proved
Undeveloped |
41,757 |
32,829 |
25,962 |
20,589 |
16,320 |
11.90 |
Total
Proved |
100,789 |
85,844 |
74,060 |
64,609 |
56,913 |
16.32 |
Total Probable |
100,561 |
72,990 |
53,937 |
40,422 |
30,620 |
13.43 |
Total Proved + Probable |
201,350 |
158,834 |
127,997 |
105,030 |
87,532 |
14.96 |
Total Possible |
91,460 |
65,035 |
48,697 |
37,968 |
30,553 |
9.64 |
Total Proved + Probable + Possible |
292,810 |
223,870 |
176,694 |
142,999 |
118,085 |
12.99 |
|
|
|
|
|
|
|
As part of the process to prepare and review the
Company’s reserve report and related summaries for the 2021-year
end, a correction to information released on December 13, 2021, has
been made for the reserves reported for the Asaramatoru Oil Field.
The volumes previously reported by the Company represented a 100%
coverage of the risk finance and technical services agreement
(“RFTSA”) in the Asaramatoru Oil Field, rather
than the 51% coverage of the RFTSA that the Company holds through
Purion’s agreement with the field operator, Prime Exploration and
Production Limited. This has been corrected in the Company’s
51-101F1. The Company continues to negotiate with the owner of the
remaining 49% of the Asaramatoru Field in order to apply the RFTSA
across the remaining 49% of the license.
Duncan Blount, CEO of Decklar Resources,
remarked, “We are greatly excited by the upside opportunities
presented by the reserves potential of the Oza and Asaramatoru
Fields. The activities that we successfully completed in 2021,
including the acquisition of the economic interest in the
Asaramatoru Field and the appraisal and development success of the
Oza-1 well re-entry, position the Company for strong production
growth in 2022 and in the years to come.”
Extension to Expiry Date for $1.50
Purchase Warrants
The Company intends to
apply to the TSX Venture Exchange (the “TSXV”) to
seek approval for the extension of the expiry date of: (i) the
5,037,499 common share purchase warrants (the “May
Warrants”) that were issued to subscribers as part of the
Company’s private placement financing which closed on May 25, 2021;
and (ii) the 2,500,000 common share purchase warrants (the
“August Warrants”, and together with the May
Warrants, the “Warrants”) that were issued to
subscribers as part of the Company’s private placement financing
which closed on August 27, 2021. The Company proposes to extend the
expiry date of the Warrants for a period of one year (the
“Warrant Extension”), for the May Warrants
extending the expiration date from May 25, 2022 until May 25, 2023
and for the August Warrants extending the expiration date from
August 27, 2022 until August 27, 2023. All other terms of the
Warrants will remain the same. The proposed Warrant Extension is
subject to TSXV acceptance.
Reserves
Definitions
With respect to the
reserves data contained herein, the following terms have the
meanings indicated:
“developed” reserves
are those reserves that are expected to be recovered from existing
wells and installed facilities or, if facilities have not been
installed, that would involve a low expenditure (e.g. when compared
to the cost of drilling a well) to put the reserves on
production.
“developed producing”
reserves are those reserves that are expected to be recovered from
completion intervals open at the time of the estimate. These
reserves may be currently producing or, if shut-in, they must have
previously been on production, and the date of resumption of
production must be known with reasonable certainty.
“developed
non-producing” reserves are those reserves that either have not
been on production, or have previously been on production, but are
shut-in, and the date of resumption of production is unknown.
“possible” reserves
are those additional reserves that are less certain to be recovered
than probable reserves. It is unlikely that the actual remaining
quantities recovered will exceed the sum of the estimated proved
plus probable plus possible reserves. There is a 10% probability
that the quantities actually recovered will equal or exceed the sum
of the estimated proved plus probable plus possible reserves.
“probable” reserves
are those additional reserves that are less certain to be recovered
than proved reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum
of the estimated proved plus probable reserves. At least a 50%
probability that the quantities actually recovered will equal or
exceed the sum of the estimated proved plus probable reserves is
the targeted level of certainty.
“proved” are those
reserves that can be estimated with a high degree of certainty to
be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves. At least a 90%
probability that the quantities actually recovered will equal or
exceed the estimated proved reserves is the targeted level of
certainty.
“reserves” are
estimated remaining quantities of oil and natural gas and related
substances anticipated to be recoverable from known accumulations,
from a given date forward, based on: (a) analysis of drilling,
geological, geophysical, and engineering data; (b) the use of
established technology; and (c) specified economic conditions,
which are generally accepted as being reasonable and shall be
disclosed. Reserves are classified according to the degree of
certainty associated with the estimates.
“undeveloped” reserves
are those reserves expected to be recovered from known
accumulations where a significant capital expenditure (e.g., when
compared to the cost of drilling a well) is required to render them
capable of production. They must fully meet the requirements of the
reserves classification (proved, probable, possible) to which they
are assigned.
For further information:
Duncan T. BlountChief Executive Officer Telephone: +1 305 890
6516Email: dblount@decklarresources.com
David HalpinChief Financial Officer Telephone: +1 403 816
3029Email: david.halpin@decklarresources.com
Investor Relations: info@decklarresources.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Cautionary Language
Information Regarding Reserves and Net Present
Value of Future Net Revenues
All information contained in this press release
regarding reserves and the net present value of future net revenue
has been derived from the independent reserves report prepared by
McDaniel and Associates, which has an effective date of December
31, 2021.
Certain statements made and information
contained herein constitute “forward-looking information” (within
the meaning of applicable Canadian securities legislation. All
statements in this news release, other than statements of
historical facts, are forward-looking statements. Such statements
and information (together, "forward looking statements") relate to
future events or the Company's future performance, business
prospects or opportunities. Forward looking statements in this
announcement include, but are not limited to: the Company’s ability
to conclude negotiations with the owner of the remaining 49% of the
Asaramatoru Field in order to apply the RFTSA across the remaining
49% of the license; the Company’s expectation for strong production
growth in 2022; McDaniel’s brent crude oil pricing forecasts; and
the Company’s intention to apply to the TSXV for the Warrant
Extension. All statements other than statements of historical fact
may be forward-looking statements. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. The Company believes that the expectations reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements should not be unduly relied upon.
The Company does not intend, and does not assume any obligation, to
update these forward-looking statements, except as required by
applicable laws. These forward-looking statements involve risks and
uncertainties relating to, among other things, changes in oil
prices, the impact of inflation, results of exploration and
development activities, uninsured risks, regulatory changes,
defects in title, availability of materials and equipment, TSXV
approval, of the Warrant Extension, timeliness of government or
other regulatory approvals, actual performance of facilities,
availability of financing on reasonable terms, availability of
third party service providers, equipment and processes relative to
specifications and expectations and unanticipated environmental
impacts on operations. Actual results may differ materially from
those expressed or implied by such forward-looking statements.
Statements relating to "reserves" are deemed to
be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves described exist in the quantities predicted or estimated
and that the reserves can be profitably produced in the future.
Actual reserve values may be greater than or less than the
estimates provided herein.
There are numerous uncertainties inherent in
estimating quantities of crude oil reserves. The reserve
information set forth herein are estimates only. In general,
estimates of economically recoverable crude oil reserves are based
upon a number of variable factors and assumptions, such as
historical production from the properties, production rates,
ultimate reserve recovery, timing and amount of capital
expenditures, marketability of oil and natural gas, royalty rates,
the assumed effects of regulation by governmental agencies and
future operating costs, all of which may vary materially. For these
reasons, estimates of the economically recoverable crude oil
reserves attributable to any particular group of properties,
classification of such reserves based on risk of recovery and
estimates of future net revenues associated with reserves prepared
by different engineers, or by the same engineers at different
times, may vary. Decklar's actual production, revenues, taxes and
development and operating expenditures with respect to its reserves
will vary from estimates thereof and such variations could be
material. Therefore, Decklar's actual results, performance or
achievements could differ materially from those expressed in, or
implied by, these forward-looking estimates and if such actual
results, performance or achievements transpire or occur, or if any
of them do so, there can be no certainty as to what benefits
Decklar will derive therefrom.
The Company provides no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. The Company
does not assume the obligation to revise or update these
forward-looking statements after the date of this document or to
revise them to reflect the occurrence of future unanticipated
events, except as may be required under applicable securities
laws.
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