Twoco Petroleums Ltd.
TSX VENTURE : TWO

Twoco Petroleums Ltd.

March 10, 2011 18:12 ET

Twoco Petroleums Ltd. Announces Reserves and Updates Drilling Program

CALGARY, ALBERTA--(Marketwire - March 10, 2011) - Twoco Petroleums Ltd. ("Twoco" or the "Company") (TSX VENTURE:TWO) is pleased to announce that, despite a significant drop in forecast natural gas prices and limited drilling activity (three (3) gross (2.03 net) wells) in 2010, it has maintained its oil and natural gas reserves base from December 31, 2009 to December 31, 2010, as evaluated by AJM Petroleum Consultants ("AJM") in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Although natural gas reserves in 2010 declined due to both production and reductions associated with a reduced gas price forecast, Twoco was able to maintain its overall oil and natural gas reserve base as a result of heavy oil reserves assigned following the successful drilling of two (2) gross (1.97 net) oil wells on its previously announced heavy oil play in the Warspite area of Alberta.

Production from the two (2) horizontal oil wells has averaged a combined rate of 108 bopd since commencing production on December 19, 2010. 

Based on the drilling results from the initial two (2) wells, and in accordance with NI 51-101, Proved + Probable reserves of 418,800 barrels of oil have been assigned to these initial wells and five (5) immediately offsetting locations. Based on 100 metre inter-well spacing and 700 metre lateral lengths, the Company has identified 105 additional horizontal locations on its lands. In this regard, the Company has submitted a Holding Application to the Energy Resources Conservation Board ("ERCB") to allow for this increased well density. Subject to the approval of the ERCB, the Company expects to drill two (2) additional wells in each of the second and third quarters of 2011.

A summary of the Company's reserves volumes according to reserve category as at December 31, 2010 is as provided in the following table. Unless otherwise stated, the reserves information included in this news release is stated on a "company interest" basis, which represents Twoco's working interest (operated and non-operated) share of remaining reserves before deduction of royalties and including any royalty interests. Numbers presented in table may not add exactly due to rounding.

    Light and
Medium Oil
    Heavy
Oil
    Natural
Gas
    Natural Gas
Liquids
    Total Oil Equivalent  
Reserves Category   (Mbbl )   (Mbbl )   (MMcf )   (Mbbl )   (Mboe )
                               
Proved                              
  Producing   0     86.6     2,899.1     0     569.8  
  Non-Producing   0     0     2,228.5     4.8     376.2  
  Undeveloped   0     88.2     1,732.3     0     377.0  
Total Proved   0     174.8     6,860.0     4.8     1,322.9  
Probable   0     246.0     4,636.6     1.1     1,019.9  
                               
Total Proved plus Probable   0     420.8     11,496.6     5.9     2,342.8  

A summary of the Company's estimated future net revenues associated with Twoco's reserves as at December 31, 2010 based on the AJM December 31, 2010 price forecast is provided in the following table. It should not be assumed that the net present values estimated by AJM represent the fair market value of the reserves. Numbers presented in table may not add exactly due to rounding.

    Before Income Taxes Discounted at (%/year)  
    0 %   5 %   10 %   15 %   20 %
Reserves Category   (M$ )   (M$ )   (M$ )   (M$ )   (M$ )
                               
Proved                              
  Producing   10,177.2     9,132.6     8,306.2     7,639.5     7,091.9  
  Non-Producing   7,034.9     5,447.9     4,392.4     3,647.9     3,098.8  
  Undeveloped   8,106.3     6,472.2     5,326.7     4,483.2     3,837.8  
Total Proved   25,318.5     21,052.6     18,025.3     15,770.6     14,028.5  
Probable   25,926.2     18,641.5     14,217.4     11,323.2     9,314.8  
                               
Total Proved plus Probable   51,244.7     39,694.1     32,242.7     27,093.8     23,343.2  

Relevant portions of the AJM December 31, 2010 price forecast used in the Company's evaluation are as follows:

  WTI at Cushing Oklahoma    
Edmonton City Gate
    Bow River 25 Deg API Hardisty     Heavy Oil 12 Deg API Hardisty     Alberta AECO Average Price    
US/Cdn Exchange Rate
 
Year ($US/bbl )   ($Cdn/bbl )   ($Cdn/bbl )   ($Cdn/bbl )   ($Cdn/mcf )   ($US/$Cdn )
2011 85.00     82.80     71.10     64.80     4.10     1.00  
2012 89.25     88.80     75.50     68.80     4.60     0.98  
2013 91.55     94.05     79.05     71.95     5.20     0.95  
2014 95.50     98.15     81.35     73.85     5.50     0.95  
2015 102.85     105.80     87.10     79.20     5.75     0.95  
2016 110.40     113.70     93.90     85.70     6.20     0.95  
2017 112.60     116.05     95.15     88.05     6.55     0.95  
2018 114.85     118.35     96.35     90.35     7.00     0.95  
2019 117.15     120.75     98.75     92.75     7.30     0.95  
2020 119.50     123.15     101.15     95.15     7.45     0.95  
2021 121.90     125.60     103.60     97.60     7.60     0.95  
2022 124.35     128.15     106.15     100.15     7.75     0.95  
2023 126.80     130.70     108.70     102.70     7.95     0.95  
2024 129.35     133.30     111.30     105.30     8.10     0.95  
2025 131.95     135.95     113.95     107.95     8.25     0.95  
2026 134.60     138.70     116.70     110.70     8.40     0.95  
2027 137.30     141.45     119.45     113.45     8.60     0.95  
2028 140.00     144.30     122.30     116.30     8.75     0.95  
2029 142.80     147.20     125.20     119.20     8.95     0.95  
2030 145.70     150.10     128.10     122.10     9.10     0.95  
Thereafter +2%/year     +2%/year     +2%/year     +2%/year     +2%/year     0.95  

Twoco is an oil and gas company engaged in the exploration for, and the acquisition, development and production of, oil and natural gas reserves primarily in the Province of Alberta.

In this news release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1Bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead.

Forward-Looking Statements:

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including statements regarding potential drilling locations and the drilling of additional wells. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Twoco's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, operational risks in exploration and development, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the ability to access sufficient capital from internal and external sources. Although Twoco believes that the expectations in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Twoco does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy securities in any jurisdiction.

Neither 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.

Contact Information

  • Twoco Petroleums Ltd.
    Wayne A. Malinowski
    President and Chief Executive Officer
    (403) 231-8653
    (403) 237-6048 (FAX)