Ember Resources Inc.
TSX : EBR

Ember Resources Inc.

November 16, 2010 12:01 ET

Ember Resources Inc. Provides Mechanical Update to 2009 Year-End Reserves

CALGARY, ALBERTA--(Marketwire - Nov. 16, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Ember Resources Inc. ("Ember" or the "Company") (TSX:EBR) today released a mechanical update (the "Mechanical Update") effective November 1, 2010 of its 2009 year-end reserve information as part of is strategic alternatives process.



Reserve Highlights
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November 1, December 31,
2010 2009 Change
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Reserves (Bcfe)
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Total proved 98.4 96.0 3%
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Total probable 37.0 39.7 (7%)
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Total proved plus probable 135.4 135.7 -
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Total possible reserves 32.4 33.9 (4%)
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Total proved plus probable plus
possible 167.8 169.6 (1%)
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Reserve life index 2P- years 16.0 15.8 1%
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Proved plus probable reserves
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Net present value before tax
($ Millions)(i)
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Discount rate at 10% 216.9 295.0 (26%)
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Discount rate at 15% 164.1 230.7 (29%)
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Drilling Activity
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Gross wells 31.0 50.0 (38%)
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Net wells 18.7 33.0 (43%)
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Success rate 100% 100% -
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(i) Net present values for November 1, 2010 and December 31, 2010 were
calculated using McDaniel's price forecasts dated October 1, 2010 and
January 1, 2010 respectively.


Reserves

Reserve information is based on a mechanical update effective November 1, 2010 of the independent reserve evaluation report (the "McDaniel Report") prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") dated March 9, 2010 with an effective date of December 31, 2009. The Mechanical Update has been prepared as follows:



1. The previous evaluation as of December 31, 2009, which used a January 1,
2010 price schedule, was mechanically updated to November 1, 2010 by
applying the most recent price forecast date October 1, 2010 and
removing the forecasted reserves and cash flows for the 10 month period
ended October 31, 2010 and rediscounting the new cash flows to the
November 1, 2010 effective date.

2. There has been no review of well performance, operating costs, and
capital forecasts used in the December 31, 2009 report.

3. Reserves have been updated for acquisitions made during the 10 month
period ended October 31, 2010.

4. Reserve categorization changes have been made based on Company and
competitor activity up to September 30, 2010 and are included under
technical revisions.

5. Capital and production for wells that were scheduled to be drilled in
2010 and have not been drilled have been rescheduled to be drilled in
2011.

6. All royalty calculations are based on regulations in effect at October
31, 2010.

7. In the Mechanical Update production for the remainder of 2010 is
forecasted at 22.8 MMcf/d under the proved case and 24.0 MMcf/d under
the total proved plus probable case as compared to current production of
23.6 MMcf/d.

8. The Mechanical Update has been reviewed and approved by Ember's reserve
committee.


The following table summarizes the Company's reserve information based on the McDaniel Mechanical Update and using the current published McDaniel (2010-10) price forecast.



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Reserves
Bcfe Net Present Values
(Company Before Income Tax ($ millions)
Sales) Discounted at
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0% 5% 10% 15% 20%
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Proved
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Developed producing 53.2 182.0 136.6 109.6 91.8 79.2
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Developed
non-producing 1.7 4.2 3.3 2.7 2.2 1.8
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Undeveloped 43.6 102.7 63.4 39.1 23.1 12.0
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Total proved 98.4 288.9 203.4 151.4 117.1 93.1
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Total probable 37.0 158.5 96.8 65.5 47.0 35.0
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Total proved plus
probable 135.4 447.4 300.2 216.9 164.1 128.0
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Total possible 32.4 164.2 89.8 57.2 39.6 28.9
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Total proved, probable
& possible 167.8 611.6 389.9 274.1 203.7 156.9
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Price Forecast

The following table summarizes McDaniel's current (2010-10) price forecast.



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NATURAL GAS
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Henry Hub AECO-CSpot Exchange Rate
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YEAR ($US/ MMBtu) ($Cdn/MMBtu) ($Cdn/$US)
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Forecast
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2010 4.30 4.00 .95
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2011 4.90 4.65 .95
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2012 5.60 5.35 .95
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2013 6.30 6.05 .95
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2014 6.90 6.65 .95
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2015 7.55 7.15 .95
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2016 7.85 7.45 .95
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2017 8.20 7.80 .95
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2018 8.35 7.95 .95
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2019 8.55 8.15 .95
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2020 8.70 8.30 .95
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The weighted average realized sales price including hedges for Ember for the nine months ended September 30, 2010 was estimated at $4.38/Mcf for natural gas.

Reserves Reconciliation

The following table sets forth the changes between the reserve volume estimates made as at December 31, 2009 and the Mechanical Update to November 1, 2010, based on forecast prices, before royalties:



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Proved plus
Reserves - Bcfe Proved plus Probable
Company sales Proved Probable plus Possible
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December 31, 2009 96.0 135.7 169.6
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Extensions/Improved recovery 2.2 3.0 3.7
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Technical Revisions 5.8 1.3 (1.0)
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Acquisitions 3.6 5.7 6.5
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Economic factors (1.7) (2.6) (3.2)
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Production (Estimate) (7.5) (7.7) (7.8)
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November 1, 2010 98.4 135.4 167.8
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Reader Advisory

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements including expectations of estimated reserves and future net revenue, future production, funds from operations, earnings, operating expenses and capital expenditures. These statements are based on current expectations that involve a number of assumptions, risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., 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 reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, health, safety and environmental risks and changes to legislation related to royalties, taxation and environmental matters), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company's operations or financial results are included in the Company's reports on file with Canadian securities regulatory authorities.

The reserves and future net revenue in this press release represent estimates only. The reserves and future net revenue from the Company's properties have been independently evaluated by McDaniel with an effective date of December 31, 2009 and mechanically updated to November 1, 2010. This evaluation includes a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital, salvage values, royalties and other government levies that may be imposed during the producing life of the reserves. These assumptions were based on the McDaniel price forecast and many of these assumptions are subject to change and are beyond the control of the Company. Actual production, sales and cash flows derived there from, will vary from the evaluation and such variations could be material. The present value of estimated future net cash flows referred to herein should not be construed as the current market value of estimated crude oil and natural gas reserves attributable to the Company's properties. Estimates of future net revenue do not represent fair market value.

Possible Reserves: Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

BOE/Mcfe Disclosure: Disclosure provided herein in respect of barrels of oil equivalent (BOE) and equivalent million cubic feet of natural gas may be misleading, particularly if used in isolation. A BOE/Mcfe 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.

Ember Resources Inc. is a resource company specializing in coalbed methane (CBM) with extensive land and resource holdings in Alberta, Canada. Ember's shares are traded on the Toronto Stock Exchange under the trading symbol "EBR".

Contact Information

  • Ember Resources Inc.
    Mr. Douglas A. Dafoe
    President & CEO
    403 270-0803
    403 270-2850 (FAX)
    or
    Ember Resources Inc.
    Mr. Terry S. Meek
    Executive V.P. & COO
    403 270-0803
    403 270-2850 (FAX)
    or
    Ember Resources Inc.
    Mr. Bruce Ryan
    V.P. & CFO
    403 270-0803
    403 270-2850 (FAX)