Bengal Energy Ltd. press release
Bengal Energy Announces Further Information on Fiscal 2024 Reserves and Resources
TSX - Toronto Stock Exchange · Canada
Calgary, Alberta--(Newsfile Corp. - July 2, 2024) - Bengal Energy Ltd. (TSX: BNG) ("Bengal" or the "Company") engaged GLJ Ltd. ("GLJ") to provide an evaluation of the Company's oil reserves and resources dated June 12, 2024, with an effective date of March 31, 2024 (the "GLJ Report"). The reserves and resources data set forth below is based upon the GLJ Report. GLJ is an independent reserves evaluator and the GLJ Report was prepared in accordance the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and the reserve and resources definitions contained in National Instrument 51-101 - _Standards of Disclosure for Oil and Gas Activities _("NI 51-101").
Reserves Summary
As announced by Bengal in its press release dated June 13, 2024, the Company's proved plus probable ("2P") reserves for the fiscal year ended March 31, 2024, were 1,857 thousand barrels of oil ("Mbbls") compared to 5,477 Mbbls at March 31, 2023, and Bengal's proved reserves ("1P") were 872 Mbbls compared to 2,005 Mbbls at March 31, 2023.
The net present value ("NPV") (NPV 10, before tax) of Bengal's 2P reserves, net of future development costs, at March 31, 2024 was $42 million, or $0.09 per share, utilizing the forecast prices and cost assumptions of GLJ as at March 31, 2024, and the NPV (NPV 10, before tax) of Bengal's 1P reserves, net of future development costs, at March 31, 2024 was $18.6 million, or $0.04 per share, utilizing the forecast prices and cost assumptions of GLJ as at March 31, 2024. These lower reserve volumes as at March 31, 2024, as compared to March 31, 2023, are primarily due to a significant reduction in the number of proved and probable undeveloped future drilling locations, and reserve volumes being reclassified as contingent resources as described below, and marginally offset by upward technical revisions associated with slower than expected natural declines.
All evaluations of future net production revenue set forth in the tables below are based on the forecast prices and cost assumptions of GLJ as at March 31, 2024, and are after direct lifting costs, normal allocated overhead, and future development costs. It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained, and variances could be material. The recovery and reserve estimates of the Company's oil reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual oil reserves may be greater than or less than the estimates provided herein.
Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form for the 2023 fiscal year (the "AIF"), which will be filed on SEDAR+ today.
Summary of Oil and Gas Reserves as at March 31, 2024 (Forecast Prices and Costs)
| | | | | LIGHT CRUDE OIL AND MEDIUM CRUDE OIL | | | HEAVY CRUDE OIL | | | CONVENTIONAL NATURAL GAS | | | NATURAL GAS LIQUIDS | | TOTAL | | | | | | | | | | | | | | | | | | | | | | | RESERVES CATEGORY: | | | Gross (Mbbl) | | | Net (Mbbl) | | | Gross (Mbbl) | | | Net (Mbbl) | | | Gross (MMcf) | | | Net (MMcf) | | | Gross (Mbbl) | | | Net (Mbbl) | | | | Gross (MBOE) | | | Net (MBOE) | | | | | | PROVED | | | 268 | | | 246 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 268 | | | 246 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Developed Producing | | | 247 | | | 227 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 247 | | | 227 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Developed Non-Producing | | | 21 | | | 19 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 21 | | | 19 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Undeveloped | | | 604 | | | 554 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 604 | | | 554 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL PROVED | | | 872 | | | 800 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 872 | | | 800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PROBABLE | | | 985 | | | 901 | | | ˗ | | | ˗ | | | ˗ | | | ` | | | ˗ | | | ˗ | | | | 985 | | | 901 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL PROVED PLUS PROBABLE | | | 1,857 | | | 1,701 | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | 1,857 | | | 1,701 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: (1) Estimates of reserves of natural gas include associated and non-associated gas. (2) "Gross Reserves" are the Company's working interest reserves (operating and non-operating) before the deduction of royalties and without including any royalty interest of the Company. (3) "Net Reserves" are the Company's working interest reserves (operating and non-operating) after deductions of royalty obligations plus the Company's royalty interests. (4) The numbers in this table may not add exactly due to rounding. (5) BOE amounts have been calculated using a conversion rate of six mcf to one bbl. For additional information, see "_Cautionary Statements - Barrels of Oil Equivalent_" in this press release.
Net Present Values of Future Net Revenue as at March 31, 2024 (Forecast Prices and Costs)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unit Value Before Income Taxes | | | | | | | | | | BEFORE INCOME TAXES DISCOUNTED AT (%/year) | | | AFTER INCOME TAXES DISCOUNTED AT (%/year) | | | Discounted at 10%/year | | | Discounted at 10%/year | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($M) | | | 0% | | | 5% | | | 10% | | | 15% | | | 20% | | | 0% | | | 5% | | | 10% | | | 15% | | | 20% | | | ($/BOE) | | | ($Mcfe) | | | | PROVED | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Developed Producing | | | 7,090 | | | 6,948 | | | 6,625 | | | 6,256 | | | 5,895 | | | 7,090 | | | 6,948 | | | 6,625 | | | 6,256 | | | 5,895 | | | 29.23 | | | 4.87 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Developed Non-Producing | | | 934 | | | 762 | | | 630 | | | 528 | | | 447 | | | 934 | | | 762 | | | 630 | | | 528 | | | 447 | | | 32.95 | | | 5.49 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Undeveloped | | | 20,410 | | | 15,130 | | | 11,353 | | | 8,662 | | | 6,721 | | | 20,410 | | | 15,130 | | | 11,353 | | | 8,662 | | | 6,721 | | | 20.50 | | | 3.42 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL PROVED
| | | 28,434 | | | 22,840 | | | 18,609 | | | 15,447 | | | 13,064 | | | 28,434 | | | 22,840 | | | 18,609 | | | 15,447 | | | 13,064 | | | 23.27 | | | 3.88 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PROBABLE | | | 48,390 | | | 32,973 | | | 23,449 | | | 17,397 | | | 13,394 | | | 37,961 | | | 26,911 | | | 19,769 | | | 15,082 | | | 11,893 | | | 26.03 | | | 4.34 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL PROVED PLUS PROBABLE | | | 76,824 | | | 55,813 | | | 42,058 | | | 32,844 | | | 26,458 | | | 66,395 | | | 49,750 | | | 38,378 | | | 30,529 | | | 24,957 | | | 24.73 | | | 4.12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: (1) Net present value of future net revenue includes all resource income: sale of oil, gas by-product reserves; processing of third-party reserves; and other income. (2) Income taxes includes all resource income, appropriate income tax calculations and prior tax pools. (3) The unit values are based on working interest reserve volumes before income tax. (4) The numbers in this table may not add exactly due to rounding. (5) See BOE amounts have been calculated using a conversion rate of six mcf to one bbl. For additional information, see "_Cautionary Statements - Barrels of Oil Equivalent_" in this press release.
Forecast Costs and Price Assumptions
GLJ employed the following pricing, exchange rate, and inflation rate assumptions in estimating the Company's reserves using forecast prices and costs as at March 31, 2024. GLJ has only assigned light crude oil reserves in the GLJ Report with pricing based on Brent plus a 1% premium.
SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS FORECAST PRICES AND COSTS (AUSTRALIAN PROPERTIES AS OF MARCH 31, 2024)
| | | YEAR FORECAST | | | Inflation(2) Rate (%) | | | Brent ($Cdn/Bbl) | | | Exchange Rate(3) ($Cdn /$ US) | | | Brent(4) ($US/Bbl) | | | | | 2024 Q2-Q4(1) | | | 0 | | | 111.18 | | | 0.745 | | | 82.83 | | | | | 2025 | | | 2.0 | | | 107.95 | | | 0.755 | | | 81.50 | | | | | 2026 | | | 2.0 | | | 106.54 | | | 0.765 | | | 81.50 | | | | | 2027 | | | 2.0 | | | 107.95 | | | 0.765 | | | 82.58 | | | | | 2028 | | | 2.0 | | | 110.05 | | | 0.765 | | | 84.19 | | | | | 2029 | | | 2.0 | | | 112.29 | | | 0.765 | | | 85.90 | | | | | 2030 | | | 2.0 | | | 114.56 | | | 0.765 | | | 87.64 | | | | | 2031 | | | 2.0 | | | 116.82 | | | 0.765 | | | 89.37 | | | | | 2032 | | | 2.0 | | | 119.16 | | | 0.765 | | | 91.16 | | | | | 2033 | | | 2.0 | | | 121.54 | | | 0.765 | | | 92.98 | | | | | 2034+ | | | 2.0 | | | +2%/yr | | | 0.765 | | | +2%/yr | |
Notes: (1) 2024 forecast pricing is for the last nine months (April 1 - December 31) of 2024. (2) Inflation rates for forecasting prices and costs. (3) Exchange rates used to generate the benchmark reference prices in this table. (4) Crude oil pricing has been estimated by GLJ as Brent blend in US dollars. Historical futures contract price is an average of the daily settlement price of the near-month contract over the calendar month.
Weighted average historical prices realized by the Company for the year ended March 31, 2024, were USD$82.93 (CDN $112.29) Bbl for light crude oil and medium crude oil. All of the Company's oil sales in Australia are based upon Brent oil pricing in US dollars plus a 1% oil quality premium.
The following table sets forth the actual pricing and exchange rate used in the GLJ Report:
| | YEAR FORECAST | | | Brent x 1.01 ($Cdn/Bbl) | | | Exchange Rate(3) ($Cdn/$ US ) | | | Brent(4) ($US/Bbl) | | | | 2024 Q2-Q4(1) | | | 112.34 | | | 0.745 | | | 82.83 | | | | 2025 | | | 109.03 | | | 0.755 | | | 81.50 | | | | 2026 | | | 107.60 | | | 0.765 | | | 81.50 | | | | 2027 | | | 109.03 | | | 0.765 | | | 82.58 | | | | 2028 | | | 111.15 | | | 0.765 | | | 84.19 | | | | 2029 | | | 113.41 | | | 0.765 | | | 85.90 | | | | 2030 | | | 115.71 | | | 0.765 | | | 87.64 | | | | 2031 | | | 117.99 | | | 0.765 | | | 89.37 | | | | 2032 | | | 120.35 | | | 0.765 | | | 91.16 | | | | 2033 | | | 122.76 | | | 0.765 | | | 92.98 | | | | 2034+ | | | 125.21 | | | 0.765 | | | +2%/yr | |
_Reconciliation of Company Gross Reserves by Product Type (Forecast Prices and Costs_(3)
| | | | | Light Crude Oil and Medium Crude Oil | | | Total BOE | | | | | | | | | | | | | | | | FACTORS | | | Gross Proved (Mbbl) | | | Gross Probable (Mbbl) | | | Gross Proved plus Probable (Mbbl) | | | Gross Proved (MBOE) | | | Gross Probable (MBOE) | | | Gross Proved Plus Probable (MBOE) | | | | March 31, 2023 | | | 2,005 | | | 3,472 | | | 5,477 | | | 2,005 | | | 3,472 | | | 5,477 | | | | Extensions(1) | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Improved Recovery(1) | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Infill Drilling(1) | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Technical Revisions(2)(4)(5) | | | (1,071) | | | (2,487) | | | (3,558) | | | (1,071) | | | (2,487) | | | (3,558) | | | | Discoveries | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Acquisitions | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Dispositions | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Economic Factors | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | ˗ | | | | Production | | | (62) | | | ˗ | | | (62) | | | (62) | | | | | | (62) | | | | March 31, 2024 | | | 872 | | | 985 | | | 1,857 | | | 872 | | | 985 | | | 1,857 | |
Notes: (1) The above change categories correspond to standard set out in the COGE Handbook. For reporting under NI 51-101, reserves additions under Infill Drilling, Improved Recovery and Extensions would be combined and reported as Extensions and Improved recovery. (2) Includes technical revisions due to reservoir performance, geological and engineering changes and reclassification of proved and probable undeveloped reserves as contingent resources. (3) No heavy crude oil, natural gas liquids or conventional natural gas reserves were assigned as at March 31, 2022 or March 31, 2023 so there are no reconciliations to provide in respect of any such reserves. (4) Includes economic revisions due to changes in economic limits; and working interest changes resulting from the timing of interest reversions and related to price and royalty factor changes. (5) The negative technical revisions result from reclassification of volumes of proved and probable undeveloped reserves to contingent resources, in compliance with regulatory requirements defining the timing of development required to continue to carry these volumes as reserves.
Resources Summary The contingent resources evaluated by GLJ and contained in the GLJ Report are in respect of the Cuisinier property, which is located within the Barta Block (Authority to Prospect 752) of the Cooper Basin, Australia within Production Licenses 303 and 1028. Bengal holds a 30.4% working interest ("WI") in the Cuisinier property and it is operated by a third-party operator. Resources included herein are stated on a Company gross basis, unless noted otherwise. Company gross resources refers to Bengal's 30.4% WI in the resources.
The following discussion is subject to a number of cautionary statements, assumptions, contingencies and risks as set forth in this press release. In addition to the discussion below, see "_Cautionary Statements - Contingent Resources_". Unless otherwise indicated in this press release, all references to contingent resource volumes are contingent light crude oil and medium crude oil resources.
| | | | | | | | | | | Resources - Unrisked(1) | | | | | | | | | Resources - Risked(1) | | | | | | | | | | | | | | | | | | | | | | WI(6) | | | Low Estimate | | | Best Estimate | | | High Estimate | | | Chance of Discovery | | | Chance of Development | | | Low Estimate | | | Best Estimate | | | High Estimate | | | | Structure | | | Classification | | | (%) | | | Mbbl | | | Mbbl | | | Mbbl | | | %(4) | | | %(4) | | | Mbbl | | | Mbbl | | | Mbbl | | | | Cuisinier | | | Contingent (Development Unclarified)(5) | | | 30.4 | | | 1,085 | | | 3,495 | | | 7,525 | | | 100.0 | | | 61.2 | | | 664 | | | 2,139 | | | 4,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Contingent Resources(2)(3) | | | | | | 1,085 | | | 3,495 | | | 7,525 | | | 100.0 | | | 61.2 | | | 664 | | | 2,139 | | | 4,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: (1) See "Cautionary Statements - Contingent Resources" definitions for "contingent resources", "Low Estimate", "High Estimate", "Best Estimate", "risked" and "unrisked". (2) There is no certainty that it will be commercially viable to produce any portion of the resources. (3) The risked resources have been risked for chance of discovery and for the chance of development. The chance of development is defined as the probability of a project being commercially viable. Quantifying the chance of development requires consideration of both economic contingencies and other contingencies, such as legal, regulatory, market access, political, social license, internal and external approvals and commitment to project finance and development timing. As many of these factors are extremely difficult to quantify, the chance of development is uncertain and must be used with caution. See "_Cautionary Statements -Contingent Resources_". (4) As all contingent resources are considered to be discovered, the chance of commerciality for contingent resources is equal to the chance of development. "Chance of development" is the estimated probability that, once discovered, a known accumulation will be commercially developed. (5) The contingent resources have been sub-classified as development unclarified. The following items have been considered in the sub-classification process: (i) the Cuisinier field is part of the Barta Block (Authority to Prospect 752) and is currently on production with transportation infrastructure and marketing agreements in place; (ii) the future development includes drilling development wells with fracture stimulation. Additional capital is considered for the expansion of the trucking facility and for construction of a twin pipeline between Cook and Merrimelia to provide adequate capacity and develop completely; (iii) the development timeframe is limited by the timing of future drilling and facility capacity; however, the development timing remains within a range that is acceptable for reserves; (iv) the corporate commitment for development of contingent resources has been assessed as high; (v) as non-operator, Bengal may not have access to the operator's internal approval process, but there is a high degree of certainty that development will occur; and (vi) the recovery technology is established as it will be primary depletion. (6) Company gross resources refers to Bengal's 30.4% WI in the resources.
The specific contingencies that need to be addressed before the resources can be re-classified as reserves are the following:
Firm development plan and development timeframe - Actions and business decisions to further refine the project's scope and timing to progress these development projects through final approvals to implementation and initiation of production.
All new wells exhibiting hydrocarbons are required to be capable of commerciality.
The definition of commerciality for an accumulation will vary according to local conditions and circumstances and is left to the discretion of the country or company concerned.
There is an expectation that the accumulation will be developed and placed on production within a reasonable timeframe.
Contingencies may include factors such as economic, legal, environmental, political and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economics.
Background to the GLJ Report
During the calendar year 2023, the Company initiated an internal comprehensive review of its Cuisinier asset with a view to better understanding the field's resource potential to complement its knowledge of its field reserve volumes defined annually by the reserves evaluation prepared for the Company by GLJ. The field's subsurface mapping, reservoir simulation modelling and well performance were considerations for estimating the remaining resource potential of the asset. The studies for the GLJ Report included a detailed review of the seismic data base and subsequent remapping of the discovered and prospective hydrocarbon areas.
Future Plans
The Company has a development program planned for the Cuisinier field for a portion of the proved undeveloped reserves in 2025 through the drilling of four proved undeveloped wells in 2025, followed by similar programs in 2027 and 2029. Probable undeveloped reserves' location drilling plans entail the drilling of one well in each of 2025, 2027 and 2029, with five wells planned to be drilled in 2031, focusing on the development drilling opportunities in the Cuisinier field in Australia, and subject to financing for such drilling being available to the Company.