Shiningbank Energy Income Fund
TSX : SHN.UN

Shiningbank Energy Income Fund

March 01, 2007 09:00 ET

Shiningbank Energy Announces 2006 Reserve Information

CALGARY, ALBERTA--(CCNMatthews - March 1, 2007) - Shiningbank Energy Income Fund (TSX:SHN.UN) (the "Fund" or "Shiningbank"), today announced the results of its December 31, 2006 independent reserves evaluation. The evaluation was conducted by Paddock Lindstrom & Associates Ltd. ("PLA") effective December 31, 2006 and prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

2006 HIGHLIGHTS

- Increased proved plus probable reserves by 13% and proved reserves by 10% through acquisition and development in 2006;

- Proved producing reserves constitute 89% of total proved reserves and total proved reserves equate to 62% of total proved plus probable reserves;

- Shiningbank replaced 228% of 2006 production with new reserves acquired or developed in the year, bringing cumulative replacement to 265% of production over the life of the Fund; and

- On the basis of proved plus probable reserves:

- Finding and development costs for the year aggregated $22.87 per barrel of oil equivalent ("boe") bringing the three year average finding and development costs to $14.29 per boe;

- The finding and development cost recycle ratio for 2006, based on an operating netback of $29.53 per boe was 1.3 to 1; and

- The Fund's reserve life index ("RLI") stands at 9.8 years based on estimated 2007 production. Shiningbank's RLI has fluctuated between 9.7 and 10.1 years over the past five years.

Finding and Development Program

Shiningbank's 2006 development program, which totaled $131.4 million, focused on two main areas:

Sousa

The Fund spent approximately $43.7 million on the Sousa Bluesky gas property to drill 78 gross (74.3 net) wells (97% success rate) and successfully filled the gas plant. Approximately 4.5 mmcf/d of initial gas deliverability was added in April 2006 and existing proved non-producing and probable reserves were re-categorized as proved producing at year-end. Only minor incremental proved non-producing and probable reserves were booked as a result of the drilling program. Although the economics of this program remain very positive, because no material reserves were added, the finding and development costs per barrel of reserves distort the overall corporate results.

West-Central Alberta / Peace River Arch

The Fund spent approximately $87.7 million, adding 5.7 million barrels of oil equivalent proved plus probable reserves and generating proved plus probable finding and development costs of $15.27/boe, excluding future development costs, and $19.16/boe including future development costs. Approximately 197 gross (32 net) wells were drilled with an 86% success ratio.

Corporate finding and development costs for 2006 therefore averaged $22.87/boe excluding future development costs and $21.19/boe including future development costs on a proved plus probable basis.

Shiningbank's 2007 capital program is estimated at $110 to $120 million and will be focused in the following areas:



West-Central Alberta 60%
Peace River Arch 25%
Other 15%

Reserves Details

The following tables summarize the independent reserve estimates and values
at December 31, 2006:

Summary of Oil and Gas Reserves - Forecast Prices and Costs

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Reserves (Company Interest)(2)
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2006 2005
Oil Natural Gas NGL Oil Equivalent Oil Equivalent
(mbbl) (bcf) (mbbl) (mboe)(1) (mboe)(1)
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Proved
Developed
Producing 4,479 234.6 7,439 51,023 45,352
Developed Non-
Producing 285 20.2 600 4,258 3,167
Undeveloped 130 9.9 418 2,202 3,971
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Total Proved 4,893 264.8 8,457 57,483 52,490
Probable 2,977 160.6 5,087 34,828 29,068
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Total Proved plus
Probable 7,870 425.4 13,544 92,311 81,558
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Value of Reserves using Forecast Prices and Costs(3)

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Discount factor
($Millions) 0% 5% 10% 12% 15%
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Present value of reserves
Proved Developed
Producing $ 1,736 $ 1,326 $ 1,090 $ 1,021 $ 935
Proved Developed Non-
Producing 133 94 74 68 62
Proved Undeveloped 61 40 28 24 20
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Total Proved 1,929 1,459 1,192 1,113 1,016
Probable 1,197 657 433 377 313
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Total Proved plus
Probable $ 3,126 $ 2,117 $ 1,625 $ 1,491 $ 1,329
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The following table outlines the reconciliation of changes in company
interest reserves estimates for the period December 31, 2005 to December
31, 2006.

Reserves Reconciliation

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Reserves (Company Interest)(2)
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Oil Natural Gas NGL Oil Equivalent
(mbbl) (bcf) (mbbl) (mboe)(1)

Total Proved
December 31, 2005 4,864 240.7 7,512 52,490
Acquisitions 514 43.0 1,583 9,265
Dispositions - - - -
Extensions - 2.8 79 538
Discoveries 554 9.9 275 2,485
Technical revisions and
economic factors (186) 7.4 124 1,169
Production (852) (39.0) (1,117) (8,465)
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December 31, 2006 4,893 264.8 8,457 57,483
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Total Proved plus Probable
December 31, 2005 7,451 373.5 11,857 81,558
Acquisitions 743 62.8 2,368 13,571
Dispositions - - - -
Extensions 165 14.6 402 3,004
Discoveries 805 10.4 200 2,741
Technical revisions and
economic factors (441) 3.1 (166) (97)
Production (852) (39.0) (1,117) (8,465)
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December 31, 2006 7,870 425.4 13,544 92,311
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Notes to tables:

1. Barrel of oil equivalent (boe) volumes are reported at 6:1 with
6 mcf = 1 bbl. The 6:1 conversion 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. While it is
useful for comparative measures, it may not accurately reflect
individual product values and may be misleading if used in isolation.

2. Company interest includes working interest plus royalty interests
attributable to the Fund.

3. The present value of reserves is net of estimated future capital
expenditures, royalty burdens, operating costs and abandonment costs,
but prior to any provision for general and administrative expenses. It
should not be assumed that present value is representative of the fair
market value of the assets. Present value is based on PLA's escalated
price forecast as of December 31, 2006, which assumes a base 2007 oil
price of US$61.00/bbl and an Alberta natural gas reference price of
C$7.12/mmbtu.


Finding, Development and Acquisition ("FD&A") Costs

Under NI 51-101, the methodology to be used to calculate FD&A costs includes changes in future development costs. For completeness, Shiningbank has presented FD&A costs both including and excluding such costs. The following table sets out the finding and development costs, acquisition costs and aggregate FD&A costs for the year for both proved and proved plus probable reserves together with comparative figures for prior years and the three year average costs.



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Three year
Proved plus probable 2006 2005 2004 costs
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Finding and development costs
Development expenditures
(000s) $131,373 $ 81,772 $ 56,339 $ 269,484
Change in future development
costs (000s) $ (9,654) $ 67,332 $(13,230) $ 101,598
Reserve additions from
development (mboe) 5,745 7,369 5,746 18,860
Finding and development costs
per boe
Excluding future development
costs $ 22.87 $ 11.10 $ 9.80 $ 14.29
Including future development
costs $ 21.19 $ 20.23 $ 7.50 $ 19.68

Acquisition costs
Acquisition costs (000s) $447,972 $329,996 $184,828 $ 962,796
Future development costs from
acquisitions (000s) $ 11,530 $ 45,620 $ 28,877 $ 86,027
Reserves added by acquisition
(mboe) 13,571 13,900 16,564 44,035
Acquisition costs per boe
Excluding future development
costs $ 33.01 $ 23.74 $ 11.16 $ 21.86
Including future development
costs $ 33.86 $ 27.02 $ 12.90 $ 23.82

FD&A costs
Acquisition and development
costs (000s) $579,345 $411,768 $241,167 $1,232,280
Change in total future
development costs (000s) $ 1,876 $112,952 $ 15,647 $ 187,625
Total reserves added (mboe) 19,316 21,269 22,310 62,895
FD&A costs per boe
Excluding future development
costs $ 29.99 $ 19.36 $ 10.81 $ 19.59
Including future development
costs $ 30.09 $ 24.67 $ 11.51 $ 22.58
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Three year
Total Proved 2006 2005 2004 costs
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Finding and development costs
Development expenditures
(000s) $131,373 $ 81,772 $ 56,339 $ 269,484
Change in future development
costs (000s) $(19,451) $ (2,568) $ (569) $ 14,184
Reserve additions from
development (mboe) 3,023 3,022 3,876 9,921
Finding and development costs
per boe
Excluding future development
costs $ 43.46 $ 27.06 $ 14.54 $ 27.16
Including future development
costs $ 37.02 $ 26.21 $ 14.39 $ 28.59

Acquisition costs
Acquisition costs (000s) $447,972 $329,996 $184,828 $ 962,796
Future development costs from
acquisitions (000s) $ 9,424 $ 27,348 $ 13,488 $ 50,260
Reserves added by acquisition
(mboe) 9,265 8,827 10,162 28,254
Acquisition costs per boe
Excluding future development
costs $ 48.35 $ 37.38 $ 18.19 $ 34.08
Including future development
costs $ 49.37 $ 40.48 $ 19.52 $ 35.86

FD&A costs
Acquisition and development
costs (000s) $579,345 $411,768 $241,167 $1,232,280
Change in total future
development costs (000s) $(10,027) $ 24,780 $ 12,919 $ 64,444
Total reserves added (mboe) 12,288 11,849 14,038 38,175
FD&A costs per boe
Excluding future development
costs $ 47.15 $ 34.75 $ 17.18 $ 32.28
Including future development
costs $ 46.33 $ 36.84 $ 18.10 $ 33.97
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Note:
The aggregate of the finding and development costs incurred in the most
recent financial year and the change during that year in estimated future
development costs generally will not reflect total finding and development
costs related to reserves additions for that year.


Shiningbank Energy Income Fund is a natural gas focused energy trust founded in 1996. The Fund purchases, develops and operates producing properties for the direct benefit of its unitholders. Shiningbank has one of the highest weightings of natural gas production in the energy trust sector at 76%.

Shiningbank is listed on the Toronto Stock Exchange under the symbol SHN.UN.

Contact Information

  • Shiningbank Energy Income Fund
    David M. Fitzpatrick
    President and C.E.O.
    (403) 268-7477 or Toll Free 1-866-268-7477
    or
    Shiningbank Energy Income Fund
    Bruce K. Gibson
    C.F.O.
    (403) 268-7477 or Toll Free 1-866-268-7477
    or
    Shiningbank Energy Income Fund
    Debbie Carver
    Investor Relations Coordinator
    (403) 268-7477 or Toll Free 1-866-268-7477
    (403) 268-7499 (FAX)
    Email: irinfo@shiningbank.com
    Website: www.shiningbank.com