BlackPearl Resources Inc.

BlackPearl Resources Inc.

February 04, 2010 16:30 ET

BlackPearl Announces Year-End Oil & Gas Reserves and Updates Current Production

CALGARY, ALBERTA--(Marketwire - Feb. 4, 2010) - BlackPearl Resources Inc. ("BlackPearl" or the "Company") (TSX:PXX)(FIRST NORTH:PXXS) is pleased to announce the results of its 2009 year-end oil and gas reserves evaluation and to provide an update of the Company's current oil and gas production.

Highlights include:

  • Total proved reserves were 11.6 MMboe, an increase of 10%; proved plus probable (2P) reserves of 23.6 MMboe;
  • Net present value of 2P reserves (discounted at 10% before tax) increased 19%, to $437 million;
  • Proved plus probable reserve life index of 12.2 years based on Q4 2009 production;
  • Recent drilling at Onion Lake resulted in current company production of 6,400 boe per day, a 26% increase from Q3 production.

Oil and Gas Reserves

The following tables summarize certain information contained in the independent reserves report prepared by Sproule Associates Limited ("Sproule") as of December 31, 2009. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR later this month.

John Festival, President of BlackPearl, commenting on the new reserves evaluation indicated that, "The 2009 reserves are in-line with our expectations. Overall proved plus probable reserves are down slightly due to reserves that were produced in 2009; however, we were able to convert a significant amount of probable reserves to proved reserves as a result of our 2009 activities. While current reserves are important, we are working on some larger, longer term projects that will require additional development before reserves are recognized. This includes our SAGD projects at Blackrod and Onion Lake, where no reserves from thermal recovery have been booked."

Summary of Oil and Gas Reserves – Forecasted Prices and Costs

(Company interest, before royalties) Oil&NGL Reserves Natural Gas Reserves 2009 BOE (1) 2008 BOE (1)
  (Mbbls) (MMcf) (Mboe) (Mboe)
Proved developed producing 2,733 4,484 3,482 5,405
Proved developed non-producing 1,048 190 1,080 1,594
Proved undeveloped 6,973 240 7,013 3,475
Total proved 10,754 4,914 11,573 10,474
Probable 11,795 1,659 12,071 15,856
Total proved plus probable 22,549 6,573 23,645 26,330
(1) BOE's may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of 6 Mcf: 1barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Net Present Value of Reserves – Forecasted Prices and Costs

  Net Present Values of Before Tax Future Net Revenue Discounted at
  0% 5% 10% 15% 20%
  Developed producing 117,404 107,986 100,361 94,023 88,655
  Developed non-producing 38,930 32,594 28,022 24,613 21,997
  Undeveloped 194,445 148,960 119,799 99,424 84,324
Total proved 350,779 289,540 248,181 218,060 194,975
Probable 403,044 261,218 188,571 144,494 114,923
Total proved plus probable 753,823 550,759 436,752 362,554 309,899
  Net Present Values of After Tax Future Net Revenue Discounted at
  0% 5% 10% 15% 20%
  Developed producing 117,404 107,986 100,361 94,023 88,655
  Developed non-producing 38,930 32,594 28,022 24,613 21,997
  Undeveloped 194,445 148,960 119,799 99,424 84,324
Total proved 350,779 289,540 248,181 218,060 194,975
Probable 302,282 197,515 143,295 110,119 87,725
Total proved plus probable 653,061 487,055 391,476 328,179 282,701
Columns may not add due to rounding

The pricing assumptions used in the Sproule evaluation are summarized below.

Pricing Assumptions – Forecast Prices and Costs

Year WTI Cushing 40°API Edmonton Par Price 40° API Hardisty Lloydblend 20.5° API Alberta AECO-C Spot Inflation rate Exchange rate
  (US$/bbl) (CDN$/bbl) (CDN$/bbl) (CDN$/MMBtu) (%/yr) (US$/Cdn$)
2010 79.17 84.25 74.14 5.36 2.0 0.92
2011 84.46 89.99 78.29 6.21 2.0 0.92
2012 86.89 92.61 76.86 6.44 2.0 0.92
2013 90.20 96.19 78.87 7.23 2.0 0.92
2014 92.01 98.13 79.49 7.98 2.0 0.92
2015 93.85 100.11 81.09 8.16 2.0 0.92
2016 95.72 102.13 82.73 8.34 2.0 0.92
2017 97.64 104.19 84.40 8.52 2.0 0.92
2018 99.59 106.30 86.10 8.71 2.0 0.92
2019 101.58 108.44 87.84 8.90 2.0 0.92
2020 103.61 110.63 89.61 9.10 2.0 0.92
Escalation rate of 2.0% thereafter
  1. The pricing assumptions were provided by Sproule Associates Limited
  2. None of the Company's future production is subject to a fixed or contractually committed price.

This was the first year Sproule was engaged to prepare a reserves evaluation for the Company. In the prior year the Company requested another independent engineer to evaluate possible ("3P") reserves on the Company's properties. The 2008 reserves report included possible reserves for the Company's SAGD project at Blackrod. In 2009, the Company elected not to undertake an evaluation of its possible reserves. Given the significant capital expenditures required and the uncertainty of the timing of those expenditures, the Company felt it was appropriate to defer further review of possible reserves until we have results from our proposed pilot project and a commitment from the Company's Board of Directors to proceed with commercial development of the Blackrod lease.

On a net present value basis (10% discount, before tax), approximately 58% of the value of reserves were attributable to the Onion Lake area and 24% was attributable to the Mooney area. No reserves were assigned to the Blackrod project.


  1. "Proved" reserves 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.
  2. "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.
  3. "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.
  4. "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.
  5. "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.
  6. "Undeveloped" reserves are those reserves expected to be recovered from know accumulations where a significant expenditure (for example, 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.
  7. The Net Present Value (NPV) based on Sproule Forecast Pricing and costs, before taxes, discounted at 10%. The estimated NPV does not necessarily represent the fair market value of our reserves. There is no assurance that forecast prices and costs assumed in the Sproule evaluations will be attained, and variances could be material.


In the fall of 2009 the Company initiated a 28 well drilling program at Onion Lake. Twenty-five of these wells are now on production resulting in current oil and gas production of approximately 6,400 boe per day. BlackPearl plans to drill an additional eight wells at Onion Lake in the first quarter, with additional drilling planned after spring break-up. The Company is also pursuing the sale of some of its non-core assets, primarily southern Alberta gas properties. These properties are currently producing about 600 boe per day.


The Company is planning to release its 2009 year-end financial and operating results, as well as guidance for 2010, on February 25, 2010.

Forward-Looking Statements

Certain of the statements made and information contained herein is forward-looking statements and forward looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. Forward-looking statements are typically identified by such words as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "potential", "targeting", "intend", "could", "might", "should", "believe" or similar words suggesting future events or future performance. In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, and which rely on assumptions as to, without limitation, the volumes and estimated value of BlackPearl's reserves, production levels, future oil and gas prices, future taxes payable, capital expenditure programs and operating costs.

Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to the Corporation and its shareholders.

Forward-looking statements are based on the Company's current beliefs as well as assumptions made by, and information currently available to, the Company concerning anticipated financial performance, business prospects, strategies, regulatory developments, future commodity prices, future production levels, the ability to obtain equipment in a timely manner to carry out development activities, the ability to market oil and natural gas successfully to current and new customers, the impact of increasing competition, the ability to obtain financing on acceptable terms, and the ability to add production and reserves through development and exploration activities. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

The Corporation does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.

BlackPearl's Certified Advisor on First North is E. Ohman J:or Fondkommission AB.

Company Registration Number: 409596-1

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