Crocotta Energy Inc.
TSX : CTA

Crocotta Energy Inc.

January 19, 2010 06:00 ET

Crocotta Energy Announces Pro-Forma Year-End Reserves and 2010 Capital Budget

CALGARY, ALBERTA--(Marketwire - Jan. 19, 2010) - Crocotta Energy Inc. ("Crocotta") (TSX:CTA) is pleased to announce its 2009 year-end reserves as independently evaluated by GLJ Petroleum Consultants Ltd., in accordance with National Instrument 51-101 excluding all asset sales previously announced. Approximately $23 million of asset sales comprising 1.5 million boe (total proved & probable) that were not closed by December 31, 2009 are excluded in the tables below but were added back in calculating 2009 Finding and Onstream Costs in order to accurately reflect the 2009 period. Crocotta will provide full year-end reserve data and other oil and gas information required pursuant to Canadian Securities Administrators' National Instrument 51-101 for the year ended December 31, 2009 in conjunction with releasing its audited consolidated financial statements and related management's discussion and analysis in March 2010.

Pro Forma Reserves Summary

Crocotta's December 31, 2009 reserves as prepared by the independent reserve engineering firm GLJ Petroleum Consultants Ltd. ("GLJ") and based on the GLJ (2010-01) future price forecast are as follows:



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Light/Medium Oil Heavy Oil Natural Gas Liquids
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Company Company Company
Gross Net Gross Net Gross Net
(Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
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Proved
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Producing 554 417 22 19 834 535
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Non-producing 27 23 0 0 97 65
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Undeveloped 67 42 60 50 194 125
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Total proved 649 482 82 68 1,125 725
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Probable 296 210 30 25 581 370
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Total proved &
probable 945 692 112 93 1,705 1,095
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Barrels of Oil
Natural Gas Equivalent
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Company Company
Gross Net Gross Net
(Mmcf) (Mmcf) (Mboe) (Mboe)
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Proved
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Producing 26,462 23,460 5,821 4,880
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Non-producing 2,781 2,336 587 477
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Undeveloped 5,783 4,471 1,285 962
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Total proved 35,025 30,266 7,693 6,319
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Probable 18,974 15,859 4,069 3,248
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Total proved & probable 53,999 46,125 11,762 9,568
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Notes:
(1) "Company Gross" reserves means Crocotta's working interest (operating
and non-operating) share before deduction of royalties and excluding any
royalty interest of Crocotta.
(2) "Net" reserves means Crocotta's working interest (operated and
non-operated) share after deduction of royalties, plus Crocotta's
royalty interest in reserves.
(3) Oil equivalent amounts have been calculated using a conversion rate of
six thousand cubic feet of natural gas to one barrel of oil.
(4) Numbers may not add due to rounding.


Pro Forma Reserves Values

The estimated future net revenues before taxes associated with Crocotta's reserves effective December 31, 2009 and based on the GLJ (2010-01) future price forecast are summarized in the following table:



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($000s) 0% DCF 5% DCF 10% DCF 15% DCF
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Proved
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Producing 190,755 137,462 107,869 89,290
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Non-producing 13,991 10,479 8,094 6,418
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Undeveloped 32,160 19,469 12,931 9,016
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Total proved 236,905 167,410 128,894 104,724
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Probable 141,007 69,008 40,637 26,639
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Total proved & probable 377,912 236,417 169,531 131,363
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Price Forecast

The GLJ (2010-01) price forecast for the next 5 years is as follows:

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WTI @ Cushing Edmonton Light Natural Gas at AECO
Year ($US / Bbl) ($Cdn / Bbl) ($Cdn / Mmbtu)
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2010 80.00 83.26 5.96
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2011 83.00 86.42 6.79
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2012 86.00 89.58 6.89
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2013 89.00 92.74 6.95
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2014 92.00 95.90 7.05
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Pro-forma Net Asset Value

Crocotta's net asset value ("NAV") as at December 31, 2009 and based on the
GLJ (2010-01) future price forecast is as follows:

($000s, except per share amounts) Discounted @ 10%
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Pre-tax present value of proved & probable reserves 169,531
Undeveloped land (Note 1) 38,000
Net Debt (Note 2) (50,000)
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Net asset value 157,531

Shares outstanding (basic) 65,084
Net asset value per share $2.42
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Notes:
(1) Crocotta internally valued its undeveloped land holdings based on 16,620
net acres of Montney land @ $1,500/acre and 4,379 net acres of Pembina
Cardium land @ $3,000/acre. Other undeveloped acreage was not allocated
any value.
(2) Net debt includes $23 million of asset sales that did not close prior to
year-end. Actual year-end net debt is estimated at $73 million.


Finding and onstream costs:

In 2009, Crocotta spent net capital of $89.5 million and increased year over year reserves by 7.1 million boe prior to production of approximately 0.93 million boe. Finding and Onstream costs are as follows:

- Proved plus probable finding and development costs of $12.58 per boe excluding future development capital

- Proved plus probable finding and development costs of $15.94 per boe including changes in future development capital


2010 Capital Budget

Crocotta's Board of Directors has approved a capital budget of $24 million for 2010 which will be spent substantially furthering its 3 resource plays:

(a) Edson Bluesky targeting light oil and natural gas

(b) Pembina Cardium targeting light oil

(c) Dawson / Glacier Montney targeting natural gas

The first quarter of 2010 will be allocated approximately $8 million of the annual budget and will be used to participate in the drilling of one horizontal cardium oil well at Pembina, one Bluesky horizontal gas well at Edson, and two Montney completions in Dawson and Glacier. Given Crocotta's material land position in all three resource plays, any first quarter success will prove up numerous follow up locations.

Crocotta has budgeted for the entire program to be funded with cash flow and unused bank credit facilities. After giving effect to the announced asset sales, Crocotta will have net debt of $50 million versus $58 million of bank credit facilities and production estimated at 2,450 boepd (70% natural gas, 30% light oil and ngls).

Crocotta has posted its new corporate presentation to its website providing updated information.

Forward-Looking Information

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intends", "forecast", "plans", "guidance" and similar expressions are intended to identify forward-looking statements or information.

More particularly and without limitation, this document contains forward looking statements and information relating to the Company's oil, NGLs and natural gas production and reserves and reserves values, value per share, capital programs, property sales, net debt,, and oil, NGLs, and natural gas commodity prices. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including expectations and assumptions relating to prevailing commodity prices and exchange rates, applicable royalty rates and tax laws, future well production rates, the performance of existing wells, the success of drilling new wells, the availability of capital to undertake planned activities and the availability and cost of labour and services.

Although the Company believes that the expectations reflected in such forward-looking statements and information are reasonable, it can give no assurance that such expectations will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as 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 estimates and projections relating to production rates, costs and expenses, commodity price and exchange rate fluctuations, marketing and transportation, environmental risks, competition, the ability to access sufficient capital from internal and external sources and changes in tax, royalty and environmental legislation. The forward-looking statements and information contained in this document are made as of the date hereof for the purpose of providing the readers with the Company's expectations for the coming year. The forward-looking statements and information may not be appropriate for other purposes. The Company undertakes no obligation 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.

BOE Conversions

BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Crocotta Energy Inc.
    Robert Zakresky
    President and Chief Executive Officer
    (403) 538-3736
    or
    Crocotta Energy Inc.
    Nolan Chicoine
    Vice President, Finance and Chief Financial Officer
    (403) 538-3738
    or
    Crocotta Energy Inc.
    700, 639 -5th Ave SW
    Calgary, Alberta T2P 0M9
    www.crocotta.ca