Mapan Energy Ltd.
TSX VENTURE : MPG

January 28, 2015 21:05 ET

Mapan Energy Ltd. Announces 2014 Year-End Reserves, Operations Update and Executive Appointment

CALGARY, ALBERTA--(Marketwired - Jan. 28, 2015) - Mapan Energy Ltd. ("Mapan" or the "Company") (TSX VENTURE:MPG) is pleased to announce its 2014 year-end reserves. Mapan's independent reserve report (the "GLJ report") was prepared by GLJ Petroleum Consultants ("GLJ") in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") with an effective date of December 31, 2014.

Highlights

  • The Company's Proved Reserves increased from the March 31, 2014 report by 19% from 12.58 million (MM) Barrels of Oil Equivalent (BOE) (1) to 15 MM BOE at year end December 31, 2014.
  • Proved plus Probable Reserves increased by 27% from 15.16 MM BOE to 19.18 MM BOE.
  • Proved Producing Reserves are 12.64 MM BOE. Proved Producing reserves represent 84% of all Proved Reserves and 66% of all Proved plus Probable Reserves.
  • Technical Revisions increased Proved Reserves by 2.42 MM BOE. The majority of the upward technical revisions are due to improved performance of the producing wells.
  • The Net Present Value of future net revenue attributable to the reserves (before tax) discounted at 10% is $117.6 MM for the Proved Reserves and $144.5 MM for the Proved plus Probable Reserves.
  • The undiscounted, total future development capital for the Proved plus Probable Reserves is $34.0MM.
  • The Company's Proved and Proved plus Probable Reserves are comprised of 94% natural gas and 6% oil and natural gas liquids.
    (1) Based on the independent reserve report (the "March Report") prepared by GLJ effective March 31, 2014 in respect of the reserves acquired by the Company on the acquisition (the "Acquisition") of certain oil and natural gas properties on July 31, 2014 (the "Acquired Assets"). Unlike the GLJ Report, the reserves in the March Report do not include relatively minor reserves attributable to the properties that were held by the Company prior to the Acquisition.

Operations

On January 20, 2015, shut-in production from Mapan's properties in the Deep Basin North, processed at the Elmworth Gas Plant, came back on line as Trans Canada Pipeline lifted production restrictions on its natural gas transmission pipeline ("NGTL") system at Elmworth and put back into service a 30 inch pipeline in this area. Company production of approximately 9mmcf/d (1,500 BOE/D) had been shut in for 137 days due to this outage on NGTL. Mapan's current production is approximately 6,100 BOE/D. Approximately 600 to 700 BOE/D remains shut-in due to current, ongoing inspections, repairs and outages on the NGTL system well downstream of Mapan's producing properties. These new production restrictions on the NGTL system are expected to last several weeks.

Reserves

Summary of Oil and Gas Reserves

Effective Date: December 31, 2014 Light & Medium Oil Natural Gas Liquids Natural Gas Total Oil Equivalent
Gross Net Gross Net Gross Net Gross Net
Reserve Category (Mbbl) (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) (Mboe) (Mboe)
Proved
Developed Producing 56 43 556 365 72,141 65,612 12,635 11,343
Developed Non-Producing - - 53 38 2,549 2,345 478 429
Undeveloped - - 209 164 10,082 9,577 1,889 1,760
Total Proved 56 43 818 567 84,772 77,534 15,002 13,533
Probable
Total Probable 18 13 264 185 23,351 21,382 4,174 3,762
Total Proved plus Probable 74 57 1,082 752 108,123 98,916 19,176 17,295
Notes:
(1) Columns may not add due to rounding
(2) "Gross" reserves means the company's working interest (operated and non-operated) share before deduction of royalties payable to others and including any royalty interests of the company
(3) "Net" reserves means the company's working interest (operated and non-operated) share after deduction of royalty obligations plus the company's royalty interests in reserves

Summary of Net Present Value of Future Net Revenue

Before Income Tax Discounted at (%/yr)
0% 5% 10% 15% 20%
Reserve Category (M$) (M$) (M$) (M$) (M$)
Proved
Developed Producing 174,224 137,649 113,223 96,097 83,574
Developed Non-Producing 4,815 3,541 2,649 2,011 1,544
Undeveloped 15,540 6,781 1,696 -1,416 -3,405
Total Proved 194,578 147,971 117,568 96,692 81,712
Probable
Total Probable 73,949 42,564 26,975 18,466 13,426
Total Proved plus Probable 268,527 190,535 144,542 115,157 95,139
After Income Tax Discounted at (%/yr)
0% 5% 10% 15% 20%
Reserve Category (M$) (M$) (M$) (M$) (M$)
Proved
Developed Producing 160,047 126,754 104,588 89,075 77,738
Developed Non-Producing 3,589 2,584 1,875 1,367 995
Undeveloped 12,271 4,763 405 -2,262 -3,968
Total Proved 175,908 134,102 106,869 88,180 74,765
Probable
Total Probable 57,913 32,787 20,483 13,844 9,949
Total Proved plus Probable 233,821 166,888 127,352 102,024 84,715
Notes:
(1) Columns may not add due to rounding
(2) It should not be assumed that the undiscounted and discounted future net revenues estimated by GLJ represent the fair market value of the reserves
(3) The after-tax net present value of future net revenue of the Company's reserves reflects the tax burden on the properties on a stand-alone basis and utilizes corporate tax pools. This does not consider the business-entity level tax situation or tax planning. It does not provide an estimate of the value at the level of the business entity, which may be significantly different. Mapan's financial statements and management's discussion and analysis should be consulted for information at the business entity level.

Reconciliation of Gross Reserves (before Royalties) by Principal Product Type

Light & Medium Oil Natural Gas
Proved + Proved +
Proved Probable Probable Proved Probable Probable
Factors (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) (MMcf)
March 31, 2014 76 30 106 71,875 14,692 86,567
Technical Revisions -9 -12 -21 13,043 3,208 16,251
Infill Drilling - -11 -11 10,082 5,452 15,534
Production -11 11 - -10,228 - -10,228
December 31, 2014 56 18 74 84,772 23,351 108,123
Natural Gas Liquids Total Oil Equivalent
Proved + Proved +
Proved Probable Probable Proved Probable Probable
Factors (Mbbl) (Mbbl) (Mbbl) (Mboe) (Mboe) (Mboe)
March 31, 2014 524 101 625 12,579 2,579 15,158
Technical Revisions 160 50 211 2,325 573 2,898
Infill Drilling 209 113 322 1,889 1,022 2,911
Production (2) -76 0 -76 -1,791 0 -1,791
December 31, 2014 818 264 1,082 15,002 4,174 19,176
Notes:
(1) Columns may not add due to rounding
(2) Production is for the period April 1, to December 31, 2014
(3) There were no reserves attributed to other catagories
(4) The foregoing reconciliation of gross reserves provides a reconciliation of the Company's reserves as at December 31, 2014 to the reserves attributable to the Acquired Assets as evaluated in the March Report, which does not include relatively minor reserves that were already held by the Company prior to the acquisition of the Acquired Assets. A complete reconciliation of reserves of the Company will be included in the annual information form of the Company for the year ended December 31, 2014.

Pricing

GLJ employed the following pricing, exchange rate and inflation rate assumptions as of December 31, 2014 in the GLJ Report in estimating the net present value of the future net revenue attributable to the reserves. Actual wellhead prices received by the Company may vary due to transportation charges and product quality adjustments:

Natural Gas Light Crude Oil Pro-
pane
Butane Pen-
tanes Plus
Henry Hub AECO WTI Edmon-
ton
Edmon-
ton
Edmon-
ton
Edmon-
ton
Infla-
tion
Ex-
change
Year Rates Rate
Forecast ($US/
MMBtu)
($CAD/
MMBtu)
($US/
bbl)
($CAD/
bbl)
($CAD/
bbl)
($CAD/
bbl)
($CAD/
bbl)
(%/
year)
($US/
$CAD)
2015 3.31 3.31 62.50 64.71 19.63 52.91 69.24 2.0 0.850
2016 3.75 3.77 75.00 80.00 32.00 60.80 85.60 2.0 0.875
2017 4.00 4.02 80.00 85.71 38.57 65.14 91.71 2.0 0.875
2018 4.25 4.27 85.00 91.43 41.14 69.49 97.83 2.0 0.875
2019 4.50 4.53 90.00 97.14 43.71 73.83 103.94 2.0 0.875
2020 4.75 4.78 95.00 102.86 46.29 78.17 110.06 2.0 0.875
2021 5.00 5.03 98.54 106.18 47.78 80.70 113.62 2.0 0.875
2022 5.25 5.28 100.51 108.31 48.74 82.31 115.89 2.0 0.875
2023 5.50 5.53 102.52 110.47 49.71 83.96 118.20 2.0 0.875
2024 5.68 5.71 104.57 112.67 50.70 85.63 120.56 2.0 0.875
There-
after
+2%/yr +2%/yr +2%/yr +2%/yr +2%/yr +2%/yr +2%/yr 2.0 0.875
Note:
(1) Actual wellhead prices received by the Company may vary due to transportation charges and product quality adjustments

Corporate Presentation

Mapan has updated its corporate presentation to reflect the 2014 year-end reserves which can be found on its website at www.mapanenergy.com.

Executive Appointment

Mapan is pleased to announce the appointment of Colin Taylor to the position of Vice President Land. Mr. Taylor has over ten years of industry experience and will be a key addition to the Mapan team.

ADVISORY: This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning the timing that production may be shut-in, the reserves attributable to the Company's assets and the estimate of the net present value of the future net revenues attributable thereto. Although Mapan believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Mapan cannot give assurances that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Risks include risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets and other economic and industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling services, incorrect assessment of value of acquisitions and failure to realize the benefits therefrom, delays resulting from or inability to obtain required regulatory approvals, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources and economic or industry condition changes. Actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Mapan will derive therefrom. Additional information on these and other factors that could affect Mapan are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements contained in this press release are made as of the date hereof and Mapan undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Barrels of Oil Equivalent: Disclosure provided herein in respect of barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1; utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Neither the TSX Venture Exchange nor its Regulation Service 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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