High North Resources Ltd.

High North Resources Ltd.

April 17, 2014 18:43 ET

High North Resources Announces Updated Reserves Numbers From GLJ Petroleum Consultants

CALGARY, ALBERTA--(Marketwired - April 17, 2014) -


High North Resources Ltd. (TSX VENTURE:HN) (the "Company" or "High North") is pleased to announce that GLJ Petroleum Consultants Ltd. ("GLJ") has completed a report dated April 7, 2014, on the reserves attributed to the Company's Girouxville property, located in north-west Alberta, Canada, effective March 31, 2014 (the "GLJ Report"). The GLJ Report was prepared in accordance with the requirements of National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, estimating reserves and future net revenues for the Girouxville property, effective March 31, 2014 and using GLJ's January 1, 2014 price forecast.

The Girouxville property is located in Townships 075 to 076, Range 21 W5M, approximately 360 kilometres north-west of Edmonton, Alberta. The Company holds a 100 percent working interest ("WI") in three horizontal wells producing 28° API oil from the Montney formation. The wells are located at 00/09-26-075-21W5, 00/09-02-076-21W5 and 00/16-02-076-21W5. Solution gas is currently being flared and was, therefore, assigned no value in the GLJ Report.

The 09-02 and 16-02 wells came on production in January 2014 and over approximately three months, are currently flowing at combined restricted rates of approximately 320 barrels of oil per day ("bopd"). Restrictions are due to surface equipment limitations. Very limited flow data for the 09-26 well was available by the effective date of the GLJ Report. Total combined, restricted flowing production sales for the three wells during the month of March 2014 are estimated to be 11,000 barrels of oil and gross revenue estimated at $880,000. The GLJ Report assumes increased surface capacity to remove the restrictions scheduled for May 2014. The Company currently anticipates meeting this targeted timeline, subject to regulatory approvals. Longer production periods from the three wells plus additional drilling will provide information to enhance the reserve estimates for future updates to the GLJ Report.

Including the three sections assessed by the GLJ Report, the Company currently holds a 100% WI in 5,952 hectares (23.25 sections), earned through the drilling of the three wells and purchases from Alberta Crown land sales. The Company anticipates that drilling an additional two wells plus closing the purchase of 1,792 hectares (seven sections) for approximately $2.2 million through a purchase option agreement with Redhill Resources Corp. previously announced on December 20, 2013, will increase the Company's 100% WI land base considered prospective for Montney formation oil to 9,792 hectares (38.25 sections). The Company has obtained permission from the Alberta Energy Regulator that will allow it to drill a minimum of four horizontal wells in the Montney formation per section, which is the same as that granted in offsetting lands.

The GLJ Report indicates the Company's total proved reserves at 0.632 million remaining recoverable barrels of oil ("MMbbls") for five wells (including the three currently producing wells) based on total petroleum initially-in-place ("PIIP"), all of which is discovered, of 32.4 MMbbls. The total proved valuation estimates 2.0% recovery factor of PIIP. GLJ estimates that the remaining oil total proved reserves as at the effective date of the GLJ Report have a net present value of $19.962 million before income tax, discounted at 0% annually and a net present value of $14.387 million before income tax, discounted at 10% annually, using forecast prices.

For a seven well development program (including the three currently producing wells), the GLJ Report indicates remaining total proved plus probable reserves ("P2") at 1.111 MMbbls based on PIIP of 43.3 MMbbls, for a recovery factor of 2.6%. GLJ estimates that the remaining P2 oil reserves as at the effective date of the GLJ Report have a net present value before tax (0% discount) of $32.256 million before income tax, discounted at 0% annually and a net present value of $19.780 million before income tax, discounted at 10% annually, using forecast prices.

Reader Advisory Regarding Forward-Looking Statements

Estimates of reserves and resources in this news release are deemed to be forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and that the reserves described can be profitably produced in the future.

Certain statements in this news release may contain "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation. Such forward-looking statements or information include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Corporation. Often, but not always, forward-looking statements or information may be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "projects" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Statements regarding future production, reserve additions and capital expenditures are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes.

Although the Company believes that the expectations conveyed by the forward-looking information are reasonable based on information available to it on the date such forward-looking information was made, no assurances can be given as to future results, levels of activity and achievements. Readers should not place undue importance or reliance on the forward-looking information and should not rely on the forward-looking information as of any date other than the date hereof. Further, statements including forward-looking information are made as at the date they are given and, except as required by applicable law, High North does not intend, and does not assume any obligation, to update any forward-looking information, whether as a result of new information or otherwise. If the Company does update one or more statements containing forward-looking information, it is not obligated to, and no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking information. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

Reserves Advisory

High North's reserves estimates have been prepared and evaluated in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook.

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.

It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves or resources. Future net revenue values, whether calculated without discount or using a discount rate, are estimated values only and do not represent fair market value. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The reserve estimates provided herein are estimates only and there is no assurance that the estimated reserves will be recovered. Actual oil reserves may be greater than or less than the estimates provided herein.

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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