Shoreline Energy Corp.

Shoreline Energy Corp.

March 30, 2012 22:04 ET

Shoreline Energy Corp. Releases 2011 Year-End Reserves and Provides an Operational Update

CALGARY, ALBERTA--(Marketwire - March 30, 2012) - Shoreline Energy Corp. ("Shoreline" or the "Company") (TSX:SEQ) is pleased to announce its 2011 Year End Reserves, as well as an Operational Update. Shoreline's Annual Information Form ("AIF") includes additional reserves disclosure and may be obtained at or via the Company's website at, the AIF should be read in conjunction with the contents of this press release.

2011 Reserves Highlights

Shoreline's reserves as of December 31, 2011 prepared by GLJ Petroleum Consultants Ltd. ("GLJ") and based on GLJ January 2012 forecast prices and cost assumptions are as follows. These estimates were prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the full reserves information is included in the Corporation's AIF. The Company more than doubled its total proved plus probable reserves on a year over year basis. Of significance, is the relative proportion of the Company's working interest oil reserves, which grew by 177% on a total proved basis.

During the year, Shoreline invested $52,141,308 in cash and shares on acquisitions, and $6,537,334 on oil and gas capital projects, for a total of $58,678,642. These investments added proved reserves of 4.0 million BOE and proved plus probable reserves of 5.4 million BOE of proved plus to the company's working interest (including 2011 produced volumes). Total finding, development, and acquisition costs for 2011 were $16.93/BOE on a proven reserve basis, and $13.59/BOE on a proved plus probable reserve basis, including future development capital.

  • December 31, 2011 Proved (1P)and Proved plus Probable Reserves (2P) working interest reserves increased to 3.75 MMBOE, and 5.18 MMBOE respectively, representing an increase of 72% and 102% over previous levels (1)

  • Proved and proved plus probable oil reserves increased by 237% and 169% respectively(1)

  • 76% of proved reserves and 55% of proved plus probable reserves are considered developed producing

  • Finding, development and acquisition costs of $16.93/BOE and $13.59/BOE on a proved and proved plus probable basis, including future development capital

  • Proved reserve life index (RLI) of 6.6 years, and proved plus probable RLI of 9.1 years

  • Future development capital of only $14.5 million in investment (undiscounted) required over next 10 years to realize booked 2P reserves, with only 5.1 net probable drilling locations included in existing reserve report

Reserves Summary
Reserves Data (Forecast Prices and Costs)
Breakdown of Reserves (Forecast Case)
Light and Medium Crude Oil
Heavy Crude Oil
Natural Gas (Excluding Natural Gas Liquids) Natural Gas Liquids Total Oil Equivalent
Gross(MMcf) Net
Developed Producing 469 423 3 28 13,473 12,030 91 64 2,808 2,521
Developed Non-producing 40 37 0 0 1,293 1,185 6 4 261 238
Undeveloped 104 90 0 0 3,267 2,717 31 24 679 567
Total Proved 613 550 3 28 18,032 15,932 128 91 3,749 3,325
Total Probable 384 334 1 10 5,996 5,076 47 33 1,432 1,223
Total Proved + Probable 997 884 4 38 24,028 21,007 175 125 5,181 4,548
Net Present Value of Future Net Revenue (Forecast Case)
Net Present Value of Future Net Revenue Before Income Taxes Discounted at (%/year) Unit Value Before Income Tax Discounted at 10% per year
0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) $/BOE $/MCFE
Developed Producing 60,111 47,119 38,997 33,447 29,414 15.47 2.58
Developed Non-producing 4,581 3,516 2,905 2,499 2,205 12.21 2.04
Undeveloped 10,194 6,924 4,856 3,478 2,517 8.56 1.43
Total Proved 74,887 57,559 46,758 39,424 34,136 14.01 2.34
Total Probable 36,425 22,662 15,862 11,888 9,306 12.97 2.16
Total Proved + Probable 111,312 80,221 62,620 51,311 43,442 13.77 2.29
(1) Comparative figures utilize GLJ year end 2011 report, and NI 51-101 compliant data in Shoreline's Long Form Prospectus, dated April 2011.
Note : Numbers may not add due to rounding.

Operational Update

Shoreline continues to successfully develop oil reserves on its lands, and is pleased to report the following activities which occurred in the first quarter of 2012.

  • New Charlie Lake horizontal oil well (Shoreline 44.8% WI) tested 300 barrels of light oil during a 36 hour production test. The well is expected to be brought on stream in April 2012

  • Following spring breakup Shoreline plans to accelerate the drilling additional horizontal locations offsetting the Progress horizontal

  • Hines Creek area horizontal well commenced production on March 28th, 2012 at rates of over 2 MMcf/d

  • Bonanza area horizontal oil well commenced production in March, at a rate of approximately 40 barrels per day of light oil to Shoreline

  • Pouce Coupe exploration discovery on production at net 30 barrels per day, offset vertical well is now drilled, cased, and awaiting completion and tie-in

  • Shoreline acquired additional lands on a high impact oil prospect, where analog wells have tested over 400 barrels of oil per day. This land acquisition expands the Company's existing land position on the play trend. Shoreline plans to drill a horizontal well in the area following spring breakup

  • Shoreline has hedged 200 barrels per day through the remainder of 2012, using both physical and financial contracts with a weighted average price of $104.64 per barrel, effectively locking in 53% of 2012 forecast revenue

  • Shoreline has increased its light oil drilling inventory to over 30 drilling locations, the majority of which are operated by the Company.

2012 Outlook

The Company is pleased with oil development activities performed to date in its' core Peace River Arch operating area, and intends to continue to deploy capital into similar lower risk oil projects. In response to the drop in natural gas prices, Shoreline is shifting more of its capital expenditures towards internally generated oil opportunities. While the Company is susceptible to continued weakness in natural gas prices, the increases in oil reserves and production coupled with Shoreline's relatively low operating costs on a large portion its natural gas production serve to partially mitigate this effect. With continued strength in oil pricing, as well as success in the field, and despite weak natural gas prices Shoreline anticipates that its 2012 net operating income will exceed 2011 levels. The Company continues to evaluate acquisition opportunities in its core area, as well as accretive transactions which could see an expansion outside of our existing core area.

Annual Meeting of Shareholders

Shoreline's Annual General Meeting of Shareholders is scheduled for Thursday June 14, 2012 at 2:30 p.m., Calgary Time, at the Calgary Petroleum Club, 319-5 Avenue S.W. Calgary Alberta.

Investor Information

Currently, Shoreline has 5,640,882 common shares outstanding. Shoreline is a Calgary, Alberta based company engaged in the exploration, development and production of petroleum and natural gas. Shoreline offers investors a combination of value growth via lower risk development of additional oil and gas reserves and production on its current lands, as well as through a quarterly dividend. The Company's common shares are currently listed on the TSX under the trading symbol "SEQ." Additional information regarding Shoreline is available under the company's profile at or at the company's website,

Forward Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management's assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as "will," "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "should," "plan," and similar expressions suggesting future outcomes, and include statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. The forward-looking statements are based on various assumptions including expectations regarding the success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; the Company's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Company to access capital and credit. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions; delays resulting from or inability to obtain required regulatory approvals and to satisfy various closing conditions; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Shoreline believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Shoreline does not undertake any obligation to publicly update or revise any forward-looking statements.

Note Regarding BOEs

The term barrel of oil equivalent ("BOE") or MCFe may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 MCF : 1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Note Regarding Non-GAAP Financial Measures

Funds from operations and operating netback are not recognized measures under IFRS as issued by the International Accounting Standards Board. Management believes that in addition to net earnings, funds from operations and operating netback are useful supplemental measures as they demonstrate the Company's ability to generate the cash necessary to fund future growth through capital investment or repay debt if incurred in future periods. Investors are cautioned, however, that these measures should not be construed as an alternative to cash flow from operating activities or net earnings determined in accordance with IFRS as an indication of the Company's performance. The Company's method of calculating these measures may differ from other entities and, accordingly, they may not be comparable to measures used by other entities. For these purposes, the Company defines funds from operations as cash flow from operations before changes in non-cash operating working capital, financing expenditures related to the costs of acquisitions and decommissioning expenditures and defines operating netback as revenue less royalties, operating and transportation expenses. Net debt is defined as current assets less current liabilities.

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