Eaglewood Energy Inc.
TSX VENTURE : EWD

Eaglewood Energy Inc.

June 26, 2012 11:40 ET

Eaglewood Announces Ubuntu Resource Upgrade

CALGARY, ALBERTA--(Marketwire - June 26, 2012) - Eaglewood Energy Inc. (the "Corporation") (TSX VENTURE:EWD) is pleased to announce an update to the estimated resources on its Ubuntu Discovery in Papua New Guinea. The Corporation entered into a data swap agreement with the PRL 21 Joint Venture which provided information on nearby and recently drilled Elevala-2 and Ketu-2 appraisal wells. Following the review of data from these wells, Gaffney, Cline & Associates ("GCA"), an independent qualified reserves evaluator, prepared the update for the Corporation dated effective June 26, 2012. The resource estimates from GCA are prepared using the Petroleum Resources Management System published by the Society of Petroleum Engineers / World Petroleum Council / American Association of Petroleum Geologists / Society of Petroleum Evaluation Engineers (SPE/WPC/AAPG/SPEE) in March, 2007 ("SPE PRMS") GCA considers that these resource estimates are equivalent to those that would be assessed under the Canadian Oil and Gas Evaluation Handbook (COGEH) and National Instrument (NI) 51-101 Standards of Disclosure for Oil and Gas Activities.

The GCA update reports a P50 Estimate of natural gas initially in place of 153.0 Bscf, and a P50 estimate of natural gas liquids initially in place of 8.22 MMBbl. Eaglewood have used a 6:1 conversion ratio to convert natural gas liquids to natural gas equivalent, with the estimated mean natural gas equivalent initially in place of 202.32 BCFE. This is a significant increase from the previous GCA estimate performed in March 2012 due to the availability of adjacent field data that provides new anchor points for the calculations.

The updated resource estimate indicates the following:

  • The Contingent Resource of the 1C category level on a 100% basis of 29.4 Bscf of natural gas and 1.10 MMBbl of natural gas liquids;
  • The Contingent Resource of the 2C category level on a 100% basis has increased to 101.1 Bscf of natural gas and 3.89 MMBbl of natural gas liquids; and,
  • The Contingent Resource of the 3C category level on a 100% basis has increased to 163.1 Bscf of natural gas and 7.25 MMBbl of natural gas liquids.

The reported increases are attributable to the higher probability that Ubuntu is "filled to spill" given that the adjacent Elevala and Kutu fields, based on data provided, are also likely filled to spill. Also, the mid case Ubuntu gas water contact (based on combining Ubuntu, Elevala and Kutu pressure data) is likely deeper than originally estimated.

A breakdown in the increase in Gas Initially In Place, Condensate Initially In Place and Contingent Resources for the field compared to March 2012 is outlined in the tables below:

GIIP (Bscf) Contingent Gas
Resource (Bscf)
P90 P50 P10 Pmean 1C 2C 3C
Mar-12 43.3 65.5 167.4 96.2 28.6 43.7 111.1
Jun-12 44.2 153.0 243.8 148.6 29.4 101.1 163.1
Increase N/A 134 % 46 % 54 % N/A 131 % 47 %

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CIIP (MMBbl) Contingent Condensate
Resource (MMBbl)
P90 P50 P10 Pmean 1C 2C 3C
Mar-12 2.27 3.62 9.28 5.28 1.00 1.82 4.73
Jun-12 2.38 8.22 13.69 8.17 1.10 3.89 7.25
Increase N/A 127 % 48 % 55 % N/A 114 % 53 %

There are a number of significant factors relevant to the estimates provided above, including, but not limited to:

1. Definition of a Field Development Plan (FDP) - current Recovery Factors are notional and based on a gas blowdown development scenario.

2. Review of natural gas and natural gas liquids recovery factors once an FDP is decided.

There are also a number of contingencies, which preclude the estimated resources from being classified as reserves. Such contingencies include, but are not limited to, additional appraisal drilling being performed and the development plan envisaged by the Corporation being enacted . There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources stated herein.

CEO Brad Hurtubise commented "We are pleased to have the benefit of the PRL 21 data to allow the independent engineers to update and help clarify the size of the resources in our Ubuntu Discovery. In our opinion, the volumes support our plans to commercialise Ubuntu and clearly de-risks our other prospects in the immediate area. With this increased resource volume, our FEED studies, our pipeline and facilities applications recently lodged with the DPE and the MOU we have with Petromin to provide a domestic gas market solution, I expect Eaglewood will be playing a key role in the development of the PNG Forelands gas resources."

Reader Advisory

"Contingent resources" means those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

"Natural gas initially in place" and "natural gas liquids initially in place" mean those quantities of natural gas or natural gas liquids that are estimated to exist originally in naturally occurring accumulations. It includes that quantity of natural gas or natural gas liquids that are estimated, as of a given date, to be contained in known accumulations, prior to production.

"1C (Low Estimate or P90)" means a conservative estimate of the quantity that will actually be recovered from the accumulation. It is likely that the actual remaining quantities discovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability that the quantities actually recovered will equal or exceed the low estimate.

"2C (Best Estimate or P50)" means the best estimate of the quantity that will actually be recovered from the accumulation. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability that the quantities actually recovered will equal or exceed the best estimate.

"3C (High Estimate or P10)" means an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability that the quantities actually recovered will equal or exceed the high estimate.

"Mean Estimate" represents the statistical mean of the Low Estimate, the Best Estimate and the High Estimate using probabilistic methods.

No proved, probable or possible reserves have been assigned to the Ubuntu well at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. Readers are also advised that there is no certainty that it will be commercially viable to produce any portion of the resources.

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

Forward-Looking Statements

Certain statements contained in this press release, such as statements relating to resource estimates, may constitute forward-looking statements. These statements relate to future events or the Corporation's future performance. All statements, other than statements of historical fact, may be forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by investors as actual results may vary. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.

Neither The Tsx Venture Exchange nor its regulation services provider (as that term is defined in the policies of the Tsx Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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