Delphi Energy Corp.
TSX : DEE

Delphi Energy Corp.

February 10, 2010 19:59 ET

Delphi Energy Reports Significant Growth in Reserves

CALGARY, ALBERTA--(Marketwire - Feb. 10, 2010) - Delphi Energy Corp. ("Delphi" or the "Company") (TSX:DEE) is pleased to report its crude oil and natural gas reserves information for the year ended December 31, 2009.

Highlights

- Achieved finding, development and acquisition costs ("FD&A") of $12.06 per barrel of oil equivalent ("boe") for total proved reserves and $9.21 per boe for total proved plus probable reserves. The FD&A costs over the past three years averaged $18.20 per boe for total proved and $15.42 per boe for total proved plus probable.

- Increased total proved reserves by 19 percent to 18.0 million boe and total proved plus probable reserves by 24 percent to 27.4 million boe.

- Improved recycle ratio to 2.6 in 2009 compared to 1.6 in 2008.

- Increased proved plus probable reserve life index ("RLI") to 11.0 years in 2009 compared to 9.5 years in 2008.

- Increased before tax net present value across all reserve categories despite a significant reduction in forecasted natural gas prices.

- Increased net undeveloped land to 172,200 acres; a 37 percent increase over 2008 and a 92 percent increase over 2007.



Reserves at December 31 2009 2008 % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved Producing, mboe 12,278 10,914 12
----------------------------------------------------------------------------
Total Proved, mboe 18,018 15,138 19
----------------------------------------------------------------------------
Proved plus Probable, mboe 27,391 22,016 24
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Proved FD&A including Future
Development Costs ("FDC"), $/boe 12.06 22.48 (46)
----------------------------------------------------------------------------
Proved plus Probable FD&A including
FDC, $/boe 9.21 20.70 (56)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Net Present Value of Reserves, Before
Tax, Discounted at 10%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved Producing, M$ 211,179 202,017 5
----------------------------------------------------------------------------
Total Proved, M$ 273,237 253,192 8
----------------------------------------------------------------------------
Total Proved plus Probable, M$ 392,265 337,746 16
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserve Life Index (Proved plus
Probable), years 11.0 9.5 16
----------------------------------------------------------------------------
Reserve Replacement Ratio (Proved
plus Probable) 3.2 3.0 4
----------------------------------------------------------------------------
Proved plus Probable Reserves per
1,000 shares, boe 270.8 278.4 (3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Netback, $/boe 24.10 33.83 (29)
----------------------------------------------------------------------------
Recycle Ratio (Proved plus Probable) 2.6 1.6 61
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Undeveloped Land, net acres 172,209 125,359 37
----------------------------------------------------------------------------
Undeveloped Land, M$ 16,695 14,190 18
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bank debt plus working capital
deficiency, M$ (92,467) (109,237) (15)
----------------------------------------------------------------------------
Estimated Net Asset Value per
share (10% disc), $ per share 3.09 3.16 (2)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Certain financial and operating information included in this press release for the quarter and year ended December 31, 2009, such as finding and development costs, production information, operating netbacks, recycle ratios and net asset value calculations are based on estimated unaudited financial results for the year ended December 31, 2009 and are subject to the same limitations as discussed under forward-looking statements outlined at the end of this release. These estimate amounts may change upon completion of the audited financial statements for the year ended December 31, 2009 and those changes may be material.

Reserves Summary

GLJ Petroleum Consultants ("GLJ"), the Company's independent petroleum engineering firm, has evaluated Delphi's crude oil, natural gas and natural gas liquids reserves as at December 31, 2009 and prepared a reserves report in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" and the "Canadian Oil and Gas Evaluation Handbook".

To view a chart of the Delphi Energy Corp. Year End Reserves, please visit the following link:

http://cnrp.marketwire.com/cnrp_files/20100210-210del_1.jpg



Following is summary information detailed in the GLJ reserves report at
December 31, 2009 as compared to December 31, 2008.

December 31, 2009 December 31, 2008
Gas Oil & NGLs Total % of Total
Reserves(1) (mcf) (mbbls) (mboe)(2) P+P (mboe)(2) % Change
----------------------------------------------------------------------------
Proved
----------------------------------------------------------------------------
Producing 63,910 1,626 12,278 45 10,915 12
----------------------------------------------------------------------------
Non-producing 11,196 307 2,173 8 1,535 42
----------------------------------------------------------------------------
Undeveloped 18,595 467 3,567 13 2,690 33
----------------------------------------------------------------------------
Total proved 93,701 2,400 18,018 66 15,138 19
----------------------------------------------------------------------------
Probable 46,490 1625 9,373 34 6,879 36
----------------------------------------------------------------------------
Total proved
plus probable 140,191 4,025 27,391 100 22,016 24
----------------------------------------------------------------------------

Notes:
(1) Delphi's reserves represent the operated and non-operated working
interest share of reserves before deduction of royalties and include
any royalty interests of the Company.
(2) Oil equivalent amounts have been calculated using a conversion rate of
six thousand cubic feet of natural gas to one barrel of oil (6:1).
(3) Table numbers have been rounded.


Net Present Value of Reserves

The estimated future net revenues associated with Delphi's reserves at December 31, 2009 based on the GLJ January 1, 2010 price forecast are summarized in the following table.



Future net revenues before income
taxes discounted at a rate of:
($ thousands)(1) 0% 10% 15%
----------------------------------------------------------------------------
Proved
----------------------------------------------------------------------------
Producing 318,778 211,179 182,164
----------------------------------------------------------------------------
Non-producing 54,183 28,865 23,461
----------------------------------------------------------------------------
Undeveloped 77,147 33,193 23,856
----------------------------------------------------------------------------
Total proved 450,109 273,237 229,481
----------------------------------------------------------------------------
Probable 267,161 119,027 89,292
----------------------------------------------------------------------------
Total proved plus probable 717,269 392,265 318,773
----------------------------------------------------------------------------

Note:
(1) The estimated future net revenues are before the deduction of estimated
future site restoration costs but are reduced for estimated future
abandonment costs for reserve wells and estimated capital for future
development associated with the reserves.


Reserves Reconciliation

The following reconciliation of Delphi's reserves compares changes in the Company's reserves at December 31, 2008 to the reserves at December 31, 2009, each evaluated in accordance with National Instrument 51-101 definitions.



Proved plus
Proved Probable probable
(mboe) (mboe) (mboe)
----------------------------------------------------------------------------
Reserves at December 31, 2008 15,137 6,879 22,016
----------------------------------------------------------------------------
Exploration and development additions 1,751 1,666 3,417
----------------------------------------------------------------------------
Revisions 591 (763) (172)
----------------------------------------------------------------------------
Acquisitions 3,862 1,793 5,655
----------------------------------------------------------------------------
Dispositions (838) (202) (1,040)
----------------------------------------------------------------------------
Production (2,485) - (2,485)
----------------------------------------------------------------------------
Reserves at December 31, 2009 18,018 9,373 27,391
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Finding and Development Costs

Finding and development costs in 2009 and over the past three years were as
follows:



2009 2007 - 2009
Proved Proved
Total plus Total plus
Capital ($ thousands) Proved Probable Proved Probable
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Exploration and development
("E&D") expenditures 33,946 33,946 162,649 162,649
----------------------------------------------------------------------------
Change in FDC related to
E&D additions (3,132) 5,043 31,832 58,195
----------------------------------------------------------------------------
Change in FDC related to
acquisitions and
dispositions ("A&D") 7,754 7,241 (2,232) (12,537)
----------------------------------------------------------------------------
Total on-stream costs 38,568 46,230 192,249 208,307
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acquisitions 39,031 39,031 88,022 88,022
----------------------------------------------------------------------------
Dispositions (12,862) (12,862) (36,814) (36,814)
----------------------------------------------------------------------------
Total capital invested 64,737 72,399 243,457 259,515
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Finding and Development
Costs ($/boe)
----------------------------------------------------------------------------
E&D, excluding FDC 14.49 10.46 16.82 13.02
----------------------------------------------------------------------------
E&D, including change in FDC
related to E&D additions 13.16 12.02 20.11 17.67
----------------------------------------------------------------------------
A&D, excluding FDC 8.65 5.67 19.88 16.67
----------------------------------------------------------------------------
A&D, including change in FDC
related to A&D 11.22 7.24 13.21 8.93
----------------------------------------------------------------------------
Exploration, development,
acquisitions and dispositions,
including total change in FDC 12.06 9.21 18.20 15.42
----------------------------------------------------------------------------


Total exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect the total cost of reserve additions in that year.

Acreage Summary

The Company significantly increased its land holdings over the past year through multiple property acquisitions and land sales. Undeveloped land holdings increased to 172,200 acres in 2009; a 37 percent increase over 2008 and a 92 percent increase over 2007. Total net land increased to 276,166 acres. Delphi has regulatory approval to drill up to four natural gas wells per pool per section on the Company's developed and undeveloped lands at its three core properties of Bigstone, Hythe and Wapiti.


To view a chart of the Delphi Energy Corp. Year End Net Land Holdings, please visit the following link:

http://cnrp.marketwire.com/cnrp_files/20100210-210del_2.jpg

Facility and Infrastructure Acquisitions

As part of the 2009 asset acquisitions, the Company acquired ownership in strategic processing facilities and infrastructure at Hythe and Wapiti.

At Hythe, the Company acquired incremental ownership in area infrastructure consisting of an additional 13 percent in the Goodfare natural gas processing plant with a through-put capacity of 52 million cubic feet per day, 20 percent in the field gathering system and 24 percent in a compressor station.

The Company also acquired additional strategic infrastructure including; ownership in two natural gas processing facilities with a combined through-put capacity of 280 million cubic feet per day, gathering and transportation pipelines and various associated compression and separation facilities.

At Wapiti, Delphi acquired an ownership in three natural gas processing plants with a combined through-put capacity of 720 million cubic feet per day, ten compressor stations and 393 kilometres of gathering and transportation pipelines.

Net Asset Value

The estimated net asset value of the Company at December 31, 2009 has been calculated using before tax, net present value of reserves discounted at ten percent as follows:



($ thousands except per share data) 2009 2008 % Change
----------------------------------------------------------------------------
Discounted value of proved plus
probable reserves(1) 392,265 337,746 16
----------------------------------------------------------------------------
Undeveloped land(2) 16,695 14,190 18
----------------------------------------------------------------------------
Mark-to-market value of hedging contracts 3,943 7,109 (45)
----------------------------------------------------------------------------
In-the-money option proceeds(3) 4,149 - -
----------------------------------------------------------------------------
Total asset value 417,052 359,045 16
----------------------------------------------------------------------------
Bank debt plus working capital deficiency (92,467) (109,237) (15)
----------------------------------------------------------------------------
Net asset value 324,585 249,808 30
----------------------------------------------------------------------------
Basic shares outstanding and
in-the-money options 105,174,132 79,067,158 33
----------------------------------------------------------------------------
Net asset value per share 3.09 3.16 (2)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Notes:
(1) Before tax and reclamation costs. The Company estimates in has
approximately $210 million of tax deductions available to offset
future taxable income.
(2) Undeveloped land is based on the estimated land value in Seaton-Jordan
& Associates Ltd. land valuation report.
(3) In-the-money option proceeds are based on the closing December 31,
2009 share price of $1.71.


Delphi anticipates releasing its audited financial statements for the year ended December 31, 2009 on or about March 18, 2010.

Delphi Energy Corp. is a Calgary-based company that explores, develops and produces oil and natural gas in Western Canada. The Company is led by an experienced management team with proven technical expertise in the Company's core areas of the Deep Basin. Delphi trades on the Toronto Stock Exchange under the symbol DEE.

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 press release contains forward-looking statements and information relating to the Company's risk management program, petroleum and natural gas production, future funds flow from operations, capital programs, natural gas prices and debt levels. The forward-looking statements and information are based on certain key expectations and assumptions made by Delphi, 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 capital availability 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. Additional information on these and other factors that could affect the Company's operations or financial results are included in reports on file with the applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release 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. Delphi 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.

Reserve replacement ratio is calculated as the ratio of reserve additions from exploration, development, acquisition and disposition plus reserve revisions to total yearly production on a barrel of oil equivalent basis.

Operating netback is calculated as revenue less royalties and operating and transportation costs on a barrel of oil equivalent basis.

A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion 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

  • Delphi Energy Corp.
    David J. Reid
    President & CEO
    (403) 265-6171
    (403) 265-6207 (FAX)
    or
    Delphi Energy Corp.
    Brian P. Kohlhammer
    V.P. Finance & CFO
    (403) 265-6171
    (403) 265-6207 (FAX)
    or
    Delphi Energy Corp.
    300, 500 - 4 Avenue S.W.
    Calgary, Alberta T2P 2V6
    info@delphienergy.ca
    www.delphienergy.ca