Burmis Energy Inc.
TSX : BME

Burmis Energy Inc.

January 23, 2008 08:00 ET

Burmis Records a 51 Percent Increase in Reserves at December 31, 2007

CALGARY, ALBERTA--(Marketwire - Jan. 23, 2008) - Burmis Energy Inc. ("Burmis") (TSX:BME) is pleased to provide the following summary information from its annual independent reserve evaluation. The engineering evaluation of Burmis' petroleum and natural gas reserves (the "Sproule Report") was completed by Sproule Associates Limited for all of the properties of Burmis effective December 31, 2007. These estimates were prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101).

HIGHLIGHTS

Highlights from the Sproule Report on Burmis' petroleum and natural gas reserves at December 31, 2007 in comparison to the prior year are:

- An increase of 51 percent in total proved and probable reserves to 9.5 million barrels of oil equivalent;

- Replacement of estimated 2007 production by 470 percent with proved plus probable reserve additions;

- An increase of 54 percent in the net present value (before tax discounted at 10 percent) of total proved and probable reserves to $168.2 million;

RESERVES

During 2007, Burmis increased total proved and probable reserves by 51 percent to 9.5 million barrels of oil equivalent at December 31, 2007 compared to 6.3 million barrels of oil equivalent at December 31, 2006. Approximately 72 percent of the Company's total proved plus probable reserves are natural gas while the remaining 28 percent of its reserves are comprised of crude oil and natural gas liquids.

During 2007, the Company's capital program resulted in total proved plus probable reserve additions of 4.1 million barrels of oil equivalent. Additions to the Company's total proved reserves were 2.5 million barrels of oil equivalent. These additions replace the Company's 2007 estimated average production of 2,400 barrels of oil equivalent per day by 470 percent and 287 percent, respectively.

The following table summarizes the Company's gross (working interest before royalties) and net (working interest after royalties) interests in proved and probable reserves at December 31, 2007 as assessed in the Sproule Report using their December 31, 2007 forecasted price and cost assumptions.



Reserves Summary as of December 31, 2007 (1, 2, 3)
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Light and Natural Natural Barrels of Oil
Medium Oil Gas (4) Gas Liquids Equivalent (5)
Gross Net Gross Net Gross Net Gross Net
Reserve Category (Mbbl) (Mbbl) (Mmcf) (Mmcf) (Mbbl) (Mbbl) (Mboe) (Mboe)
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Proved
-producing 548 471 22,303 16,562 848 536 5,114 3,767
-non-producing 153 103 2,149 1,440 136 77 647 420
-undeveloped - - 3,401 2,302 173 99 739 483
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Total Proved 701 574 27,853 20,304 1,157 713 6,500 4,671
Probable 288 242 13,261 9,818 519 329 3,017 2,208
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Proved plus
probable 989 816 41,114 30,122 1,676 1,042 9,517 6,878
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(1) Numbers in this table are subject to round off error.
(2) Gross reserves are the Company's working interest share prior to the
deduction or inclusion of royalties.
(3) Net reserves are the Company's working interest share after the
deduction or inclusion of royalties.
(4) Natural gas volumes include solution gas volumes associated with the
Company's light and medium crude oil reserves.
(5) Natural gas is converted to barrels of oil equivalent ("boe") at a
ratio of six thousand cubic feet to one boe.


NET PRESENT VALUE OF RESERVES BEFORE TAX

The following table summarizes Burmis' share of the net present value of its reserves prior to provision for income taxes, interest and general and administrative expenses. The forecast prices used in the reserve report were Sproule Associates Limited's price forecast as of December 31, 2007.



Net present value of future net revenue before income taxes as of December
31, 2007 (1,2,3)
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Discounted at (% per year)
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Unit Value
Before
Income Tax
Discounted
0% 5% 10% 15% 20% at 10%
Reserve Category (MM$) (MM$) (MM$) (MM$) (MM$) ($/boe) (4)
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Proved
-producing 157.7 126.8 108.0 95.0 85.4 28.67
-non-producing 20.1 11.4 7.3 5.1 3.9 17.26
-undeveloped 16.4 14.2 12.5 11.1 9.9 25.84
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Total Proved 194.2 152.4 127.7 111.2 99.2 27.35
Probable 100.3 59.7 40.5 29.5 22.6 18.33
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Proved plus
probable 294.4 212.1 168.2 140.7 121.8 24.45
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(1) Utilizes Sproule Associates Limited price forecast as of December 31,
2007 as detailed below.
(2) Values are net of abandonment liabilities.
(3) Numbers in this table are subject to round off error.
(4) Unit values are based on the before tax net present value, discounted at
10 percent, of each reserve category divided by the applicable net
(working interest after royalty) reserve volumes.


NET PRESENT VALUE OF RESERVES AFTER TAX

The following table summarizes Burmis' share of the net present value of its reserves after deducting income taxes, but prior to providing for interest and general and administrative expenses. The forecast prices used in the reserve report were Sproule Associates Limited's price forecast as of December 31, 2007.




Net present value of future net revenue after income taxes as of
December 31, 2007 (1,2,3)
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Discounted at (% per year)
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0% 5% 10% 15% 20%

Reserve Category (MM$) (MM$) (MM$) (MM$) (MM$)
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Proved
-producing 139.6 113.1 96.9 85.7 77.3
-non-producing 14.9 8.4 5.3 3.7 2.8
-undeveloped 11.8 10.0 8.6 7.4 6.5
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Total Proved 166.3 131.5 110.8 96.8 86.7
Probable 75.1 44.5 30.0 21.7 16.5
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Proved plus
probable 241.4 176.0 140.8 118.6 103.2
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(1) Utilizes Sproule Associates Limited price forecast as of December 31,
2007 as detailed below.
(2) Values are net of abandonment liabilities.
(3) Numbers in this table are subject to round off error.


PRICE FORECASTS

The following price forecasts were used to determine future revenues from the Company's reserves.




Sproule Report price forecast as of December 31, 2007 - Crude oil and
natural gas liquids (5)
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Edmonton
WTI Edmonton Cromer Condensate
Crude Light Heavy Medium and Natural Edmonton Edmonton
Oil Crude Oil Crude Oil Crude Oil Gasolines Propane Butanes
$US/bbl $Cdn/bbl $Cdn/bbl $Cdn/bbl $Cdn/bbl $Cdn/bbl $Cdn/bbl
Year (1) (2) (3) (4)
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Forecast
2008 89.61 88.17 54.67 75.83 90.30 52.29 65.72
2009 86.01 84.54 52.42 72.71 86.58 50.14 63.01
2010 84.65 83.16 51.56 71.52 85.17 49.32 61.98
2011 82.77 81.26 50.38 69.89 83.23 48.20 60.57
2012 82.26 80.73 50.05 69.43 82.68 47.88 60.17
2013 82.81 81.25 50.38 69.88 83.21 48.19 60.56
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(1) West Texas Intermediate at Cushing, Oklahoma, 40 degrees API, 0.5
percent sulphur.
(2) Edmonton Light Sweet, 40 degrees API, 0.5 percent sulphur.
(3) Heavy crude oil, 12 degrees API at Hardisty Alberta (after deduction of
blending costs to reach pipeline quality).
(4) Midale Cromer crude oil, 29 degrees API, 2.0 percent sulphur.
(5) Prices escalate 2.0 percent per annum after 2013.


Sproule Report price forecast as of December 31, 2007 - Natural gas (2)
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U.S. Henry Hub AECO Alberta Average Aggregator
Gas Price Spot Price Plantgate Plantgate
Year $US/Mmbtu $Cdn/Mmbtu $Cdn/Mmbtu (1) $Cdn/Mmbtu
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Forecast
2008 7.56 6.51 6.19 6.06
2009 8.27 7.22 6.94 6.87
2010 8.74 7.69 7.46 7.44
2011 8.75 7.70 7.50 7.50
2012 8.66 7.61 7.41 7.41
2013 8.83 7.78 7.58 7.58
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(1) This forecast also applies to direct sales contracts and the Alberta gas
reference price used in the crown royalty calculations.
(2) Prices escalate 2.0 percent per annum after 2013.


Inflation rates of 2.0 percent per annum were used to forecast operating costs in the Sproule Report, and an exchange rate of $1.00 US dollar to $1.00 Canadian dollar was used to forecast benchmark reference prices in the above tables.

RESERVES COMMITTEE OF BURMIS

Burmis has a Reserves Committee comprised of independent board members which reviews the qualifications and appointment of the independent reserve evaluators. The Reserves Committee also reviews the process for providing information to the evaluators and meets with the independent evaluators to discuss the procedures used in the independent report, to review major property assessments and to discuss any areas of risk. The evaluation in the Sproule Report of the 2007 year-end reserves of Burmis was reviewed by the Reserves Committee of Burmis and approved by the Company's Board of Directors on January 22, 2008.

ADVISORY - Certain information regarding Burmis set forth in this document, including the evaluation of the Company's reserves are considered to be forward-looking statements under applicable securities law. Evaluating reserves requires judgments and decisions based upon available geological, geophysical, engineering and economic data, as well as estimates and assumptions of future operations. These estimates may change over time as additional information becomes available or as economic parameters change. This may have either a positive or negative effect on the future net earnings of the Company. By their nature, forward-looking statements necessarily involve risks associated with oil and gas exploration, production, marketing, and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of forward-looking information and statements, although considered reasonable at the time may prove to be imprecise. As such, undue reliance should not be placed on forward-looking statements. Burmis' actual results and performance could differ materially from those expressed in or implied by those forward-looking statements. Accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will occur, or if they do occur, what benefit Burmis will derive therefrom.

In conformity with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, natural gas volumes have been converted to barrels of oil equivalent ("boe") using a conversion ratio of 6 mcf to 1 bbl. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Readers are cautioned that boe's may be misleading, particularly if used in isolation.

Contact Information

  • Burmis Energy Inc.
    Mr. Aidan M. Walsh, P.Eng., MBA
    President and Chief Executive Officer
    (403) 781-7284
    or
    Burmis Energy Inc.
    1000, 736 - 6 Avenue S.W.
    Calgary, Alberta T2P 3T7
    (403) 261-9028 (FAX)
    Email: ir@burmisenergy.ca
    Website: www.burmisenergy.ca