Twoco Petroleums Ltd. Announces Reserves and Updates Drilling Program
March 10 2011 - 4:12PM
Marketwired Canada
Twoco Petroleums Ltd. ("Twoco" or the "Company") (TSX VENTURE:TWO) is pleased to
announce that, despite a significant drop in forecast natural gas prices and
limited drilling activity (three (3) gross (2.03 net) wells) in 2010, it has
maintained its oil and natural gas reserves base from December 31, 2009 to
December 31, 2010, as evaluated by AJM Petroleum Consultants ("AJM") in
accordance with National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"). Although natural gas reserves in 2010 declined due
to both production and reductions associated with a reduced gas price forecast,
Twoco was able to maintain its overall oil and natural gas reserve base as a
result of heavy oil reserves assigned following the successful drilling of two
(2) gross (1.97 net) oil wells on its previously announced heavy oil play in the
Warspite area of Alberta.
Production from the two (2) horizontal oil wells has averaged a combined rate of
108 bopd since commencing production on December 19, 2010.
Based on the drilling results from the initial two (2) wells, and in accordance
with NI 51-101, Proved + Probable reserves of 418,800 barrels of oil have been
assigned to these initial wells and five (5) immediately offsetting locations.
Based on 100 metre inter-well spacing and 700 metre lateral lengths, the Company
has identified 105 additional horizontal locations on its lands. In this regard,
the Company has submitted a Holding Application to the Energy Resources
Conservation Board ("ERCB") to allow for this increased well density. Subject to
the approval of the ERCB, the Company expects to drill two (2) additional wells
in each of the second and third quarters of 2011.
A summary of the Company's reserves volumes according to reserve category as at
December 31, 2010 is as provided in the following table. Unless otherwise
stated, the reserves information included in this news release is stated on a
"company interest" basis, which represents Twoco's working interest (operated
and non-operated) share of remaining reserves before deduction of royalties and
including any royalty interests. Numbers presented in table may not add exactly
due to rounding.
Light and
Medium Heavy Natural Natural Gas Total Oil
Oil Oil Gas Liquids Equivalent
Reserves Category (Mbbl) (Mbbl) (MMcf) (Mbbl) (Mboe)
----------------------------------------------------------------------------
Proved
Producing 0 86.6 2,899.1 0 569.8
Non-Producing 0 0 2,228.5 4.8 376.2
Undeveloped 0 88.2 1,732.3 0 377.0
----------------------------------------------------------------------------
Total Proved 0 174.8 6,860.0 4.8 1,322.9
Probable 0 246.0 4,636.6 1.1 1,019.9
----------------------------------------------------------------------------
Total Proved plus
Probable 0 420.8 11,496.6 5.9 2,342.8
A summary of the Company's estimated future net revenues associated with Twoco's
reserves as at December 31, 2010 based on the AJM December 31, 2010 price
forecast is provided in the following table. It should not be assumed that the
net present values estimated by AJM represent the fair market value of the
reserves. Numbers presented in table may not add exactly due to rounding.
Before Income Taxes Discounted at (%/year)
0% 5% 10% 15% 20%
Reserves Category (M$) (M$) (M$) (M$) (M$)
----------------------------------------------------------------------------
Proved
Producing 10,177.2 9,132.6 8,306.2 7,639.5 7,091.9
Non-Producing 7,034.9 5,447.9 4,392.4 3,647.9 3,098.8
Undeveloped 8,106.3 6,472.2 5,326.7 4,483.2 3,837.8
----------------------------------------------------------------------------
Total Proved 25,318.5 21,052.6 18,025.3 15,770.6 14,028.5
Probable 25,926.2 18,641.5 14,217.4 11,323.2 9,314.8
----------------------------------------------------------------------------
Total Proved plus
Probable 51,244.7 39,694.1 32,242.7 27,093.8 23,343.2
Relevant portions of the AJM December 31, 2010 price forecast used in the
Company's evaluation are as follows:
Bow River Heavy Oil Alberta
WTI at 25 Deg 12 Deg AECO US/Cdn
Cushing Edmonton API API Average Exchange
Oklahoma City Gate Hardisty Hardisty Price Rate
Year ($US/bbl) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/mcf) ($US/$Cdn)
----------------------------------------------------------------------------
2011 85.00 82.80 71.10 64.80 4.10 1.00
2012 89.25 88.80 75.50 68.80 4.60 0.98
2013 91.55 94.05 79.05 71.95 5.20 0.95
2014 95.50 98.15 81.35 73.85 5.50 0.95
2015 102.85 105.80 87.10 79.20 5.75 0.95
2016 110.40 113.70 93.90 85.70 6.20 0.95
2017 112.60 116.05 95.15 88.05 6.55 0.95
2018 114.85 118.35 96.35 90.35 7.00 0.95
2019 117.15 120.75 98.75 92.75 7.30 0.95
2020 119.50 123.15 101.15 95.15 7.45 0.95
2021 121.90 125.60 103.60 97.60 7.60 0.95
2022 124.35 128.15 106.15 100.15 7.75 0.95
2023 126.80 130.70 108.70 102.70 7.95 0.95
2024 129.35 133.30 111.30 105.30 8.10 0.95
2025 131.95 135.95 113.95 107.95 8.25 0.95
2026 134.60 138.70 116.70 110.70 8.40 0.95
2027 137.30 141.45 119.45 113.45 8.60 0.95
2028 140.00 144.30 122.30 116.30 8.75 0.95
2029 142.80 147.20 125.20 119.20 8.95 0.95
2030 145.70 150.10 128.10 122.10 9.10 0.95
Thereafter +2%/year +2%/year +2%/year +2%/year +2%/year 0.95
Twoco is an oil and gas company engaged in the exploration for, and the
acquisition, development and production of, oil and natural gas reserves
primarily in the Province of Alberta.
In this news release the calculation of barrels of oil equivalent (boe) is
calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas
for one barrel (Bbl) of oil based on an energy equivalency conversion method.
Boes may be misleading particularly if used in isolation. A boe conversion ratio
of 6 Mcf: 1Bbl is based on an energy equivalency conversion method primarily
applicable to the burner tip and does not represent a value equivalency at the
wellhead.
Forward-Looking Statements:
Certain information set forth in this news release contains forward-looking
statements or information ("forward-looking statements"), including statements
regarding potential drilling locations and the drilling of additional wells. By
their nature, forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond Twoco's control, including the impact of
general economic conditions, industry conditions, volatility of commodity
prices, currency fluctuations, imprecision of reserve estimates, environmental
risks, operational risks in exploration and development, competition from other
industry participants, the lack of availability of qualified personnel or
management, stock market volatility and the ability to access sufficient capital
from internal and external sources. Although Twoco believes that the
expectations in our forward-looking statements are reasonable, our
forward-looking statements have been based on factors and assumptions concerning
future events which may prove to be inaccurate. Those factors and assumptions
are based upon currently available information. Such statements are subject to
known and unknown risks, uncertainties and other factors that could influence
actual results or events and cause actual results or events to differ materially
from those stated, anticipated or implied in the forward looking information. As
such, readers are cautioned not to place undue reliance on the forward looking
information, as no assurance can be provided as to future results, levels of
activity or achievements. The risks, uncertainties, material assumptions and
other factors that could affect actual results are discussed in our Annual
Information Form and other documents available at www.sedar.com. Furthermore,
the forward-looking statements contained in this document are made as of the
date of this document and, except as required by applicable law, Twoco does not
undertake any obligation to publicly update or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise. The forward-looking statements contained in this document
are expressly qualified by this cautionary statement.
This news release shall not constitute an offer to sell or the solicitation of
any offer to buy securities in any jurisdiction.
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