Bengal Energy Ltd. press release
Bengal Energy Announces Independent Oil and Natural Gas Resource Report
TSX - Toronto Stock Exchange · Canada
Calgary, Alberta--(Newsfile Corp. - March 30, 2022) - Bengal Energy Ltd.(TSX: BNG)("Bengal" or the "Company") announces the issuance of its independent oil and natural gas Resource assessment report dated March 30, 2022, with an effective date of March 20, 2022 (the "Resource Report").
Highlights of Resource Report:
At March 20, 2022, the Company's unrisked Best Estimate Contingent Resources were 1.1 million stock tank barrels ("MMstb") of light crude and medium crude oil and 19.0 billion standard cubic feet ("Bscf") of conventional natural gas for a total of 4.3 million barrels of oil equivalent ("Mmboe").
At March 20, 2022 the Company's unrisked Best Estimate Prospective Resources were 10.6 MMstb of light crude and medium crude oil and 29.3 Bscf of conventional natural gas for a total of 15.5 Mmboe.
These are estimated Resources associated with all of the Company's tenements in the Cooper Basin, which includes Authority to Prospect ("ATP") 732, ATP 934 and Petroleum Lease ("PL") 1109, PL 1110, PL 188 and PL 411.
The Resource Report excludes any of the reserves carried by the Company in its producing ATP 752 Cuisinier Oilfield.
Bengal's President & CEO Chayan Chakrabarty said:
"We believe that the significant volumes of both natural gas and crude oil Resources set out in the Resource Report (19.8 Mmboe of Contingent and Prospective Resources), combined with current oil and natural gas pricing, bodes well for Bengal's future development programs designed to convert Resources to reserves.
The size of the Resources indicated by the Resource Report will, we believe, allow Bengal to pursue a number of development options utilising spare capacity in existing production infrastructure. As an example, the Wareena project is already pipeline connected and requires a moderate work program to be brought onstream. Also, we believe that ATP 934 prospects, (which are all proximal), can be connected to the existing pipeline infrastructure, saving time and capital as we work towards commercialising the Resources associated with this tenement. We believe that Bengal has the ability to work towards successfully commercialising the Resources indicated by the Resource Report and, with success, to materially increase our production, reserves and ability to generate cash flow for the benefit of all stakeholders.
The Resource Report was prepared by ERC Equipoise, Perth ("ERCE"), an independent consultancy specialising in geoscience evaluation, engineering and economic assessment, whom the Company engaged to evaluate the Company's Contingent and prospective oil and natural gas Resources across its tenements in the Cooper Basin license acreage in Queensland, Australia, specifically in ATP 732, ATP 934, PL 188, PL 1110, PL 1109, and PL 411 (collectively, the "Resource Properties"). The title to the Resource Properties is in good standing, with PL 188 expiring June 3, 2028, PL 411 expiring September 22, 2029, PL1109 expiring March 25, 2031, PL1110 expiring March 25, 2031, ATP 934 expiring February 28, 2027, and ATP 732 expiring March 31, 2023. ATP 732 and ATP 934 are anticipated to be extended under PL or Potential Commercial Area ("PCA") applications for up to 15 years. There is no guarantee any PL or ATP licence extension or PCA application will be granted. The volumes presented in the Resource Report and the following tables assume that all such extensions/applications are granted.
The Resource Report has been prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and National Instrument 51-101 - _Standards of Disclosure for Oil and Gas Activities_("NI 51-101"). Additional information in respect of the Company's reserves data and other oil and gas information under NI 51-101, is filed on its profile on SEDAR at www.sedar.com.
Further details of the findings in the Resource Report and the basis of its preparation are set out below.
Resource Report
The Resource Report is based on the Company's working interest in the Resource Properties, which is 100% with the exception of 62,256 acres in the south western portion of ATP 934 where the Company's working interest is 40%.
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 "_Forward-looking Information_" for a statement of principal assumptions and risks that may apply. Unless otherwise indicated in this press release, all references to Contingent and Prospective Resource volumes are Best Estimate Resource volumes and all Resources in the tables below are Contingent and Prospective Resource volumes.
Summary:
Company Net Contingent Resources at March 20, 2022[(1),(2),(3),(4),(5),(6), (7),(8),(9)]
| Company Net Contingent Resources | | | | | | | | | | Field / Discovery | Resource sub-class | Chance of Development | Light Crude Oil and Medium Crude Oil (MMbbl) | Conventional Natural Gas (Bcf) | | | | | | 1C (Low) | 2C (Best) | 3C (High) | 1C (Low) | 2C (Best) | 3C (High) | | | | | Wareena Field1 | Development on Hold2 | 90% | - | - | - | 1.40 | 7.10 | 18.00 | | Ramses Discovery | Development on Hold2 | 60% | 0.10 | 0.30 | 0.90 | 2.10 | 8.00 | 24.60 | | Ghina Discovery | Development Unclarified2 | 50% | - | - | - | 1.30 | 3.90 | 11.60 | | Caracal Discovery | Development on Hold2 | 70% | 0.10 | 0.80 | 4.30 | - | - | - | | Deterministic Total | - | - | 0.20 | 1.10 | 5.20 | 4.8 | 19 | 54.2 |
Resource estimates reported here are ERCE estimates, effective March 20, 2022
1. See definitions for "Contingent Resources", "Low Estimate", "High Estimate", "Best Estimate", "1C", "2C", "3C", "Development on Hold" and "Development Unclarified" below. 2. The Wareena Field Contingent Resources are post-production as at March 20, 2022, being the effective date of the Resource Report. 3. All fields and discoveries are Contingent on proving a commercial hydrocarbon flow rate. 4. Company net Contingent Resources are based on Bengal's working interest in the permits. 5. Contingent Resources volumes shown have had shrinkage applied to account for CO2 removal and include hydrocarbon gas only. 6. No allowance for fuel and flare volumes has been made. 7. The chance of development is defined as the probability of a project being commercially viable. 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. 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 "Risks and Significant Positive and Negative Factors" discussed below. 8. There is no certainty that it will be commercially viable to produce any portion of the Resources. There is no certainty that any portion of the Contingent Resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the Resources. 9. Totals are added arithmetically which means statistically there is a greater than 90% chance of exceeding the Total 1C and less than a 10% chance of exceeding the Total 3C.
Company Net Prospective Resources at March 20, 2022[(1),(2),(3),(4),(5),(6),(7)
| Company Net Prospective Resources | | | | | | | | | Prospect | COS | Light Crude Oil and Medium Crude Oil (MMbbl) | Conventional Natural Gas (Bcf) | | | | | | 1U (Low) | 2U (Low) | 3U (Low) | 1U (Low) | 2U (Low) | 3U (Low) | | | | Karnak | 63% | - | - | - | 3.8 | 10.0 | 25.9 | | ATP 934 Prospects | 11 - 26% | - | - | - | 8.2 | 29.3 | 44.9 | | ATP 732 Prospects | 8 - 32% | 3.2 | 10.6 | 37.1 | - | - | - | | Total | - | 3.2 | 10.6 | 37.1 | 12.0 | 29.3 | 70.8 |
Resource estimates reported here are ERCE estimates, effective March 20, 2022
1. See definitions for "Prospective Resources", "Low Estimate", "High Estimate", "Best Estimate", "1U", "2U" and "3U". 2. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the Resources. 3. Company net Prospective Resources are based on Bengal's working interest in the permits 4. The Prospective Resources have also not been adjusted for chance of development. 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. 5. Prospective Resources volumes shown have had shrinkage applied to account for CO2 removal and include hydrocarbon gas only. 6. No allowance for fuel and flare volumes has been made. 7. Totals are added arithmetically which means statistically there is a greater than 90% chance of exceeding the Total Low Case and less than a 10% chance of exceeding the Total Best Case.
Contingent Resources
The following are the specific contingencies that Bengal anticipates will be required to allow the classification of the Resources to Reserves:
ATP 732- The Wyandra formation surrounding the Caracal discovery in ATP 732 has been assigned Contingent Resources, with the classification as Development on Hold. During the initial well completion the Wyandra formation was perforated and live oil was swabbed to surface at sub economic rates. The ongoing acid stimulation and well workover of the Wyandra Formation is designed to remediate near well bore damage and allow for commercial production rates. Estimated total cost to achieve commercial production is $1,700,000 with estimated first production in June of 2022. The predevelopment study assumes use of a mobile pumping unit and portable oil storage tanks.
PL 188- The Poolowanna Formation in PL 188 has been assigned Contingent Resources, with the classification as Development Unclarified. This classification is primarily a result of a drill stem test performed on the Ramses 2 well, which recovered an estimated 588 barrels of oil per day. Further evaluation work is required to determine the extent of this oil discovery and levels of sustainable oil production. Estimated total cost to achieve commercial production is $2,000,000 with estimated first production in Q4 2025. The predevelopment study assumes use of a mobile pumping unit and portable oil storage tanks.
PL 188- The Toolachee and Patchawara Formations in PL 188 have been assigned Contingent Resources with the classification of Development on Hold. The existing Ramses 1 well was drilled on a seismically defined anticline targeting the Toolachee and Patchawarra Formations, north of the Coonaberry field. Wireline logs in Well Ramses-1 well encountered 2.8m of net gas pay within the PC35 sandstone interval of the Toolachee Formation and 4m of gas pay in the VC35/40 reservoir of the Patchawarra Formation. A drill stem test of the Ramses 1 Patchawarra formation recovered natural gas at a rate of .332 MMscf/d. The Ramses-2 well was drilled over the period December 2006 to January 2007, to test and appraise the Permian gas discovery made by Well Ramses-1. Wireline log analysis indicated the Toolachee Formation contained 4.4m of conventional gas pay and the Patchawarra Formation contains 4.5m of gas pay. Estimated total cost to achieve commercial production at Ramses is $2,500,000 with estimated first production in Q4 2024. The predevelopment study assumes the wells will be fracture stimulated and pipeline connected into the Coonaberry system.
PL 1109- Ghina - The Toolachee formation in PL1109 has been assigned a Contingent Resources, with the classification as Development Unclarified. This classification is primarily due to the results of the Ghina well from which well logs indicate a thin pay zone in the Toolachee formation. An extended production test is planned for the Ghina well at a cost of approximately $600,000. Further drilling to expand the size of the discovery is required prior to commercialization and pipeline connection. Such work is planned within the next three years.
PL 1110- Wareena - The Wareena 1 and 5 wells show historic Toolachee formation cumulative production of 6.3 billion cubic feet of natural gas recovered and shipped to market via the Wareena to Coonaberry pipeline which is 100% owned by Bengal. Wareena is classified as Development on Hold. Well production ceased with water breakthrough. Well workovers to reduce or remove water production in these wells and rejuvenation of the now shut- in pipeline connection to the Coonaberry pipeline terminal is ongoing. The work program is expected to cost approximately $2,600,000. The predevelopment study assumes dewatering followed by pipeline connection into the Coonaberry terminal.
Prospective Resources
Prospective Resources (undiscovered) have been assigned to the Wyandra, Hutton and Murta formations in ATP 732, the Toolachee and Patchawarra formations in PL188, the Toolachee and Patchawara formations in ATP 934, the Toolachee and Patchawarra formation in PL 1110, the Toolachee formation in PL 1109 and the Toolachee and Patchawarra formations in PL411.
Background to the 2022 Resource Evaluation
During the calendar year 2022, the Company initiated an internal comprehensive review of its assets with a view to better understanding field subsurface mapping, reservoir simulation modelling and well performance to estimate the remaining potential of the assets. The 2022 studies included a detailed review of the seismic data base and subsequent remapping of the discovered and prospect hydrocarbon areas.
Key findings of the Company 2022 subsurface review included an increase in the number of geophysically defined prospects on ATP 732 and ATP 934, as well as a better understanding of the stratigraphy and expansion possibilities on PL's in the Wareena, Ghina, Ramses and Karnak areas.
About Bengal
Bengal Energy Ltd. is an international junior oil and gas exploration and production company with assets in Australia. The Company is committed to growing shareholder value through international exploration, production and acquisitions. Bengal's common shares trade on the TSX under the symbol "BNG". Additional information is available at www.bengalenergy.ca
CAUTIONARY STATEMENTS:
The above estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to discovered and undiscovered accumulations. These estimates are unrisked and have associated risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.
The estimate of raw gas and oil and has been determined on a probabilistic basis in accordance with the COGE Handbook and NI 51-101 standards as at March 20, 2022. Bengal has commenced a production development program with the objective of validating the Contingent and Prospective Resources outlined above.[1]
Contingent Resources
The Contingent Resources shown have been estimated by ERCE as at March 20, 2022. Resource estimates carry a risk of development. The estimates have been determined using probabilistic and statistic volumetric methods based on the interpretation of porosity, hydrocarbon saturation and net reservoir thickness from the loggingprogram, the analysis of potential hydrocarbon columns from the pressure data and the fluid properties derived from the gas and oil samples and applied to the structure map with recovery factors calculated using analogues and industry standards.
The existence of potentially moveable hydrocarbons and the determination of the presence of movable hydrocarbons was via petrophysical analysis and in the case of Wareena and Caracal of gas and oil produced to surface.
These Contingent Resources were aggregated probabilistically at the reservoir level within individual fields and these fields were summed together arithmetically and hence the aggregate Low estimate may be a very conservative estimate and the High estimate may be a very optimistic estimate due to the portfolio effects of arithmetic summation.
These are classified as Contingent Resources according to the COGE Handbook and NI 51-101 standards as the development concept has not yet been finalized or sanctioned.
Risks and Significant Positive and Negative Factors
The development of the Contingent and Prospective Resources identified in the Resource Report is dependent upon the following factors.
Factors regarding Development of Resources
Key positive factors relevant to the development of the Resource Properties include:
consistent growth in the local economy resulting in a steady increase in demand for crude oil natural gas in the region; and
positive commodity price outlook for sales of natural gas and crude oil.
Key negative factors relevant to the development of the Resource Properties include:
potential for loss of access to processing and transportation systems which are owned by third parties;
the emergence of new or alternative gas or energy supplies and the consequential impact on demand from the Resource Properties; and
adverse weather conditions and surface access difficulties.
Factors regarding Resource Estimates
Significant positive factors relevant to the estimates of the Company's crude oil and natural gas Resources include:
the Company's knowledge of the Resource Properties based on significant production history; the Company's knowledge of drilling and completion techniques used to develop Resource Properties; and the Company's strong track record of developing similar projects according to its plans.
Significant negative factors relevant to the estimate of the Company's crude oil natural gas Resources include:
uncertainty in assumptions about forecasted demand; and uncertainty in assumptions about natural gas and oil pricing.
Resource Definitions
"Contingent Resources" are those quantities of petroleum estimated, as of the given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies.
Contingent Resources may be divided into the following project maturity sub-classes:
"development pending" is assigned to Contingent Resources for a particular project where resolution of final conditions for development is being actively pursued (high chance of development).
"development on hold" is assigned to Contingent Resources for a particular project where there is a reasonable chance of development, but there are major non-technical contingencies to be resolved that are usually beyond the control of the operator.
"development unclarified" is assigned to Contingent Resources for a particular project where evaluation is incomplete and there is ongoing activity to resolve any risks or uncertainties.
"development not viable" is assigned to Contingent Resources for a particular project where no further data acquisition or evaluation is currently planned and there is a low chance of development.
Contingent Resources are defined probabilistically as:
1C: Low Estimate of Contingent Resources
2C: Best Estimate of Contingent Resources
3C: High Estimate of Contingent Resources
"economic" means those Contingent Resources that are currently economically recoverable.
"Prospective Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development.