Striker Exploration Corp.
TSX VENTURE : SKX

Striker Exploration Corp.

March 14, 2016 17:16 ET

Striker Exploration Corp. Announces 2015 Year-End Reserves and Review of Strategic Alternatives

CALGARY, ALBERTA--(Marketwired - March 14, 2016) - Striker Exploration Corp. ("Striker" or the "Company") (TSX VENTURE:SKX) is pleased to provide a summary of its 2015 year-end reserves evaluation.

The highlights and reserves summary below sets forth Striker's gross reserves as at December 31, 2015, as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") in an independent report (the "GLJ Report"). The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and the reserve definitions contained in NI 51-101. Additional reserve information as required under NI 51-101 will be included in the Company's annual information form which will be filed on SEDAR on or before April 29, 2016.

HIGHLIGHTS(1)

  • Net asset value, including estimated year-end 2015 net debt ($8.1 million or $0.25 per basic share outstanding) and excluding undeveloped land, tax pools, seismic, reclamation liabilities, and other corporate attributes ("NAV"), was $1.60/share on a proved developed producing basis ("PDP") discounted at 10% ("NPV10") and $3.45/share on a total proved plus probable basis ("2P") NPV10;
  • The Company's year-end 2015 PDP reserves were 4,220 Mboe (65% oil and liquids). Total proved ("1P") reserves were 6,443 Mboe and 2P reserves were 11,072 Mboe;
  • PDP reserves represent approximately 65% of 1P reserves and approximately 38% of 2P reserves;
  • Finding, development and acquisition ("FD&A") costs, including revisions and future development capital ("FDC"), were $23.63 per boe on a PDP basis, $14.85 for 1P reserves and $14.04 per boe for 2P reserves. The corresponding recycle ratios were 0.7, 1.1 and 1.2. Recycle ratios were calculated using the Company's average 2015 netback; and
  • The Company's reserve life index is 4.5 years for PDP, 6.6 years for 1P and 11.3 years for 2P reserves based on December, 2015 average production.

Note:

(1) Financial information is based on the Company's preliminary estimate of 2015 year-end results and is therefore subject to change.

2015 INDEPENDENT RESERVES EVALUATION

GLJ conducted an independent reserves evaluation effective December 31, 2015, which was prepared in accordance with definitions, standards and procedures contained in the COGE Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). GLJ evaluated 100% of the Company's reserves and has done so since the Company's inception (including all predecessor companies). The reserves evaluation was based on GLJ forecast pricing and foreign exchange rates at January 1, 2016 as outlined herein.

Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without the inclusion of any royalty interest) unless otherwise noted.

RESERVES SUMMARY

Summary of Gross Oil and Gas Reserves as of December 31, 2015(1), (2), (3), (4)

Oil Total
Natural Gas
Natural Gas
Liquids
Barrels of Oil
Equivalent
Gross Gross Gross Gross
(Mbbl) (MMcf) (Mbbl) (Mboe)
Proved
Developed Producing 2,291 8,967 434 4,220
Developed Non-Producing 46 358 13 118
Undeveloped 1,436 2,446 260 2,104
Total Proved 3,773 11,771 707 6,443
Probable 2,905 7,567 463 4,629
Total Proved plus Probable 6,679 19,338 1,170 11,072

Net Present Value Before Income Taxes Discounted at (% per Year) (M$)

0% 5% 10% 15% 20%
Proved
Developed Producing 95,585 73,257 59,728 50,699 44,250
Developed Non-Producing 1,485 1,269 1,069 904 772
Undeveloped 37,515 26,582 18,818 13,494 9,800
Total Proved 134,585 101,108 79,615 65,098 54,823
Probable 116,524 64,664 39,790 26,315 18,299
Total Proved plus Probable 251,108 165,772 119,406 91,414 73,122

Notes:

(1) The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding.
(2) Gross reserves means the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Striker before deductions of royalties payable to others and without including any royalty interests owned by Striker.
(3) Based on GLJ's January 1, 2016 escalated price forecast. See "Summary of Pricing and Inflation Rate Assumptions".
(4) The net present value of future net revenue attributable to the Company's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment and reclamation costs for only those wells assigned reserves by GLJ. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by GLJ represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.

NET ASSET VALUE(1)

NPV5
(M$)
$/share(2) NPV10
(M$)
$/share(2)
Proved
Developed Producing 73,257 2.27 59,728 1.85
Developed Non-Producing 1,269 0.04 1,069 0.03
Undeveloped 26,582 0.82 18,818 0.59
Total Proved 101,108 3.13 79,615 2.47
Probable 64,664 2.01 39,790 1.23
Total Proved plus Probable 165,772 5.14 119,406 3.70
Net Debt(3) (8,100 ) (0.25 ) (8,100 ) (0.25 )
Net Asset Value 157,672 4.89 111,306 3.45

Notes:

(1) All Net Asset Values cited above or in the highlights above are the resulting NPV per reserves category per basic share less net debt of $8.1 million or $0.25/share.
(2) Basic shares outstanding of 32.24 million. All dilutive instruments currently out of the money.
(3) Financial information is based on the Company's preliminary estimate of 2015 year-end results and is therefore subject to change.

Summary of Pricing and Inflation Rate Assumptions - Forecast Prices and Costs

The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs. Crude oil and natural gas benchmark reference pricing, inflation and exchange rates utilized by GLJ as at January 1, 2016 were as follows:

Year Exchange
Rate
(CAD/USD)
WTI Cushing
Oklahoma
40 API
(USD/bbl)
Canadian Light
Sweet 40 API
(CAD/bbl)
Canadian
Medium
29 API
(CAD/bbl)
Natural
Gas AECO
(CAD/mmbtu)
2016 0.725 44.00 55.86 50.80 2.76
2017 0.750 52.00 64.00 59.52 3.27
2018 0.775 58.00 68.39 63.60 3.45
2019 0.800 64.00 73.75 68.59 3.63
2020 0.825 70.00 78.79 73.27 3.81
2021 0.850 75.00 82.35 76.59 3.90
2022 0.850 80.00 88.24 82.06 4.10
2023 0.850 85.00 94.12 87.53 4.30
2024 0.850 87.88 96.48 89.73 4.50
2025 0.850 89.63 98.41 91.52 4.60
2026+ 0.850 +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr

Reconciliation of Company Gross Reserves By Principle Product Type(1), (2)

The following table sets forth the reconciliation of the Company's reserves at Forecast Prices and Costs:

Light and Medium Oil Heavy Oil Natural Gas Liquids
Factors Gross Proved (Mbbl) Gross Probable (Mbbl) Gross Proved + Probable (Mbbl) Gross Proved
(Mbbl)
Gross Probable
(Mbbl)
Gross Proved + Probable
(Mbbl)
Gross Proved
(Mbbl)
Gross Probable
(Mbbl)
Gross Proved + Probable
(Mbbl)
December 31, 2014 3,524 2,082 5,607 54 36 90 324 209 532
Discoveries - - - - - - - - -
Extensions/Infill Drilling 803 756 1,560 - - - 228 220 449
Improved Recovery 38 14 52 - - - 7 3 10
Technical Revisions (6 ) (239 ) (246 ) (23 ) (6 ) (28 ) 21 (17 ) 4
Acquisitions 476 147 623 - - - 231 67 299
Dispositions (66 ) (16 ) (82 ) - - - (10 ) (15 ) (25 )
Economic Factors (447 ) 131 (316 ) (28 ) - (28 ) (27 ) (5 ) (32 )
Production (549 ) - (549 ) (3 ) - (3 ) (68 ) - (68 )
December 31, 2015 3,772 2,875 6,648 1 30 31 707 463 1,170
Total Natural Gas Barrels of Oil Equivalent
Factors Gross Proved
(Mmcf)
Gross Probable
(Mmcf)
Gross Proved + Probable
(Mmcf)
Gross Proved
(Mmcf)
Gross Probable
(Mmcf)
Gross Proved + Probable
(Mmcf)
December 31, 2014 14,979 7,322 22,301 6,398 3,547 9,946
Discoveries - - - - - -
Extensions/Infill Drilling 1,598 1,543 3,141 1,298 1,234 2,532
Improved Recovery 51 22 73 54 21 75
Technical Revisions (1,044 ) (669 ) (1,713 ) (182 ) (373 ) (555 )
Acquisitions 1,684 489 2,173 988 296 1,284
Dispositions (1,769 ) (854 ) (2,623 ) (371 ) (174 ) (544 )
Economic Factors (1,477 ) (286 ) (1,763 ) (748 ) 78 (670 )
Production (2,251 ) - (2,251 ) (995 ) - (995 )
December 31, 2015 11,771 7,567 19,338 6,443 4,629 11,072

Notes:

(1) The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding.
(2) Total Natural Gas includes associated, non-associated and coal bed methane gas.

Future Development Costs

The following table sets forth development costs deducted in the estimation of Striker's future net revenue attributable to the reserve categories noted below:

Forecast Prices and Costs (M$)
Year Proved Reserves Proved plus Probable
2016 2,043 4,083
2017 9,273 16,557
2018 10,519 16,588
2019 9,880 19,750
2020 4,330 16,658
Thereafter - 169
Total Undiscounted 36,045 73,805
Total Discounted at 10% 28,172 56,368

The future development costs are estimates of capital expenditures required in the future for Striker to convert proved undeveloped reserves and probable reserves to proved developed producing reserves. The undiscounted future development costs are $36.0 million for proved reserves and $73.8 million for proved plus probable reserves (in each case based on forecast prices and costs).

Finding, Development & Acquisition Costs(1), (2), (3), (4), (5), (6)

FD&A Costs (M$)
Proved Producing Reserves 2015 2014 Two Year Average
Exploration and Development Capital 12,035 7,278 19,313
Acquisitions, net of dispositions 14,577 115,182 129,759
Total change in FDC - - -
Total FD&A capital including change in FDC 26,612 122,460 149,072
Total Reserve additions, including revisions (Mboe) 1,126 4,426 5,552
FD&A costs, including FDC ($/boe) 23.63 27.67 26.85
Recycle Ratio 0.7 0.8
FD&A Costs (M$)
Total Proved Reserves 2015 2014 Two Year Average
Exploration and Development Capital 12,035 7,278 19,313
Acquisitions, net of dispositions 14,577 115,182 129,759
Total change in FDC 1,795 31,711 33,506
Total FD&A capital including change in FDC 28,407 154,171 182,578
Total Reserve additions, including revisions (Mboe) 1,915 6,038 7,953
FD&A costs, including FDC ($/boe) 14.83 25.53 22.96
Recycle Ratio 1.1 0.8
FD&A Costs (M$)
Proved plus Probable Reserves 2015 2014 Two Year Average
Exploration and Development Capital 12,035 7,278 19,313
Acquisitions, net of dispositions 14,577 115,182 129,759
Total change in FDC 19,179 49,486 68,665
Total FD&A capital including change in FDC 45,791 171,946 217,737
Total Reserve additions, including revisions (Mboe) 3,261 9,338 12,599
FD&A costs, including FDC ($/boe) 14.04 18.41 17.28
Recycle Ratio 1.2 1.1

Notes:

(1) Financial information is based on estimates and is unaudited.
(2) While NI 51-101 requires that the effects of acquisitions and dispositions be excluded from the calculation of finding and development costs, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company's cost structure. Finding and development costs excluding acquisitions and dispositions have been presented below.
(3) The aggregate of the exploration 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.
(4) As Striker commenced operations with the recapitalization of Elkwater Resources Ltd. in July 2014, only two year average costs are available.
(5) The acquisitions include the announced purchase price of acquisitions rather than the amounts allocated to property, plant and equipment and exploration and evaluation assets for accounting purposes. Capital expenditures include costs of land and seismic, but exclude capitalized general and administration costs.
(6) Recycle Ratio is calculated by dividing the operating netback per boe by the FD&A for that period.

REVIEW OF STRATEGIC ALTERNATIVES

The Company's Board of Directors has determined that it is timely, prudent and in the best interests of shareholders to initiate a formal process to explore strategic alternatives with a view to enhancing shareholder value. Such strategic alternatives may include, but are not limited to, a corporate sale, merger or other business combination, the sale of all or a material portion of Striker's assets, a reorganization, recapitalization or restructuring of Striker or any combination of the foregoing.

FirstEnergy Capital Corp. has been retained by Striker to act as its exclusive financial advisor in connection with this comprehensive review and analysis of strategic alternatives.

It is the Company's intention not to disclose developments with respect to the strategic review process until the board of directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. Striker cautions that there are no assurances or guarantees that the process will result in a transaction and that, if a transaction is undertaken, no assurances or guarantees may be given with respect to the type, terms or timing of such a transaction.

Striker will continue to focus on its near and long term business plan, centered around the development and de-risking of its existing Belly River acreage at Wilson Creek and Thorsby. Striker has maintained a strong balance sheet and enviable financial position during the current period of low commodity prices, and intends to continue to do so. Striker has approximately $8.0 million in net debt and more than $30.0 million of undrawn credit capacity. Year to date production has averaged 2,459 boepd based upon field estimates.

READER ADVISORY

Forward-Looking Statements. Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to future development costs associated with oil and gas reserves. Statements relating to "reserves" are also deemed to be forward-looking statements, 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 can be profitably produced in the future.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Striker, including expectations and assumptions concerning the success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Striker's properties, the successful application of drilling, completion and seismic technology, prevailing weather and break-up conditions, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and our ability to acquire additional assets.

Although Striker believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Striker can give no assurance 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. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraint in the availability of services, commodity price and exchange rate fluctuations, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Striker's Annual Information Form for the year ended December 31, 2014.

The forward-looking information contained in this press release is made as of the date hereof and Striker undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

Oil and Gas Metrics: This press release contains a number of oil and gas metrics, including FD&A, recycle ratio and reserves life index, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.

Boe Disclosure. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Finding, Development and Acquisition Costs: Finding and development costs including acquisitions and dispositions have been presented herein. While NI 51-101 requires that the effects of acquisitions and dispositions be excluded, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company's cost structure. The Company's finding and development costs, excluding the effects of acquisitions and dispositions, for 2015 were $10.65/boe on a proved basis and $12.33/boe on a proved plus probable basis. The aggregate of the exploration 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.

Non-IFRS Measures. This press release contains the term "net debt", which does not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable with the calculation of similar measures by other companies. Management believes "net debt" is a useful supplemental measure of the total amount of current and long-term debt of the Company. Additional information relating to non-IFRS measures can be found in the Company's most recent management's discussion and analysis MD&A, which may be accessed through the SEDAR website (www.sedar.com).

Contact Information

  • Striker Exploration Corp.
    Doug Bailey
    President and Chief Executive Officer
    (403) 262-0242

    Striker Exploration Corp.
    Neil Burrows
    Vice President, Finance and Chief Financial Officer
    (403) 262-0242