NG ENERGY ANNOUNCES 551% YOY INCREASE TO 3P RESERVES
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314% increase to 2P reserves to Company gross 161.6 BCF for before tax NPV 10 of US$259.7 million 551% increase to 3P reserves to Company gross 304.8 BCF for before tax NPV 10 of US$466.8 million Company gross unrisked best estimate contingent resources of 195.8 BCF for before-tax NPV 10 of US$148.4 million Company gross unrisked best estimate prospective resources of 184.0 BCF for before-tax NPV 10 of US$300.5 million Production at Maria Conchita has increased to 18 MMcf/d with 100% of gas volumes being sold
TORONTO , Dec. 27, 2023 /CNW/ - NG Energy International Corp. (" NGE " or the " Company ") (TSXV: GASX) (OTCQX: GASXF) is pleased to announce that, with its partners Olympo and Duemav in the Maria Conchita Block and with Clean Energy and Oleum in the SN9 Block, it has increased reserves at both Maria Conchita and Sinu-9 as part of an updated independent analysis by Sproule International Limited (" Sproule "). The updated reserves and resources incorporate the recently drilled Aruchara-3 well at Maria Conchita which includes the newly encountered section in zone H4 in addition to zones H1 and H2 and finalized plans for construction of infrastructure at Sinu-9.
Highlights
Sinu-9 Block:
Company gross Proved (1P) reserves of 26.7 BCF (37.0 BCF project gross) of natural gas for before-tax NPV 10 of US$22.0 million ; Company gross Proved + Probable (2P) reserves of 114.36 BCF (158.8 BCF project gross) of natural gas for before-tax NPV 10 of US$150.3 million ; Company gross Proved + Probable + Possible (3P) reserves of 245.3 BCF (340.8 BCF project gross) of natural gas for before-tax NPV 10 of US$331.0 million ; Company gross unrisked best estimate contingent resources (development pending) of 130.2 BCF for before-tax NPV 10 of US$78.5 million ; and Company gross unrisked best estimate prospective resources of 131.0 BCF for before-tax NPV 10 of US$264.4 million .
Maria Conchita Block:
Company gross Proved (1P) reserves of 25.0 BCF (31.3 BCF project gross) of natural gas and 50 MBBL (63 MBBL project gross) of condensate for before-tax NPV 10 of US$75.4 million ; Company gross Proved + Probable (2P) reserves of 47.2 BCF (59.0 BCF project gross) of natural gas and 75 MBBL (94 MBBL project gross) of condensate for before-tax NPV 10 of US$34.1 million ; Company gross Proved + Probable + Possible (3P) reserves of 59.5 BCF (74.3 BCF project gross) of natural gas and 94 MBBL (117 MBBL project gross) of condensate for before-tax NPV 10 of US$135.8 million ; Company gross unrisked best estimate contingent resources (development pending) of 65.6 BCF for before-tax NPV 10 of US$69.9 million ; and Company gross unrisked best estimate prospective resources (prospects) of 53.0 BCF for before-tax NPV 10 of US$36.0 million .
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Note: All dollar amounts are in US$.
Serafino Iacono , CEO of NGE, commented: "We are very pleased to have our two greatest accomplishments of the year reflected in our reserves and resources report. The report validates the incredible achievements by our team and our partners after encountering a new naturally fractured natural gas bearing section in the drilling of Aruchara-3 and finalizing contracts to build production infrastructure at Sinu-9. We look forward to continuing to grow these numbers in 2024 as we aim to achieve significant free cash flow by the end of next year."
Additional Disclosure Regarding Sinu-9 and Maria Conchita
Sinu-9
The report entitled "Evaluation of the P&NG Reserves and Resources of NG Energy International in the Sinu-9 Block, Colombia " (the " Sinu-9 Report ") was prepared by Sproule with an effective date of December 31, 2023 and a preparation date of December 21, 2023 . The Company's working interest in Sinu-9 is 72%, subject to payment of ANH sliding scale royalties. Reserves and resources attributed to the Hechizo, Brujo, Magico, Mago, Hechicero, Encanto, Milagroso, Porquero, Embrujo, Ensalmo and Sortilegio zones have been included in the Sinu-9 Report. Contingent resources for Sinu-9 are petroleum and natural gas classified as "development pending" and are attributed a chance of development of 80%. The prospective resources assigned to the Brujo-Porquero, Hechicero-Porquero and Milagroso fields are subclassified as "prospects" and are attributed a chance of discovery of 58-60% and a chance of development of 66%. The prospective resources assigned to the Embrujo, Ensalmo and Sortilegio fields are subclassified as "lead" and are attributed a chance of discovery of 25-30% and a chance of development of 66%.
Total gas is planned to be produced through new and existing wellbores and a pipeline to a processing facility using established recovery technology.
The development plan for the reserves area located within Sinu-9 includes the completion of the Brujo-1X, as well as drilling a total of 12 wells; 5 in the Hechicero field, 4 in the Magico field and 3 in the Brujo field. Production will be processed through a dehydration and compression facility as well as a gas pipeline from Sinu-9 to Jobo station.
The development plan for the contingent resources area located within Sinu-9 includes the drilling of 5 locations for the low estimate scenario, 12 locations for the best estimate scenario and 18 locations for the high estimate scenario. Production will be processed through new facilities to be built by the Company. Due to the number of reservoirs identified in the area, the number of wells may change by category according to the uncertainty identified in the reservoir areas, since they are not completely concentric with respect to each other.
The development plan for the prospective resources area located within Sinu-9 includes the drilling of 13 locations. Production will be processed through new facilities to be built by the Company. Due to the number of reservoirs identified in the area, the number of wells may change by category according to the uncertainty identified in the reservoir areas, since they are not completely concentric with respect to each other.
The natural gas resources were estimated based on the technically recoverable volume, budgeted operating and capital costs and the terms of the fiscal regime. Forecasts of net revenue were prepared by predicting the annual production from the resources and product prices. Gas reserves and resources have only been assigned based on the gas contracts and the gas contract precedents expected to be in place at production start-up. There is no certainty it will be commercially viable to produce any portion of the contingent resources and there is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
In sum, the development forecast presented in the Sinu-9 Report was based on a complete evaluation of the Company's lands for the zones identified by the Company to be prospective for economic development at the time of the Sinú-9 Report. The development forecast represents full development of the lands for which reserves and resources could be assigned. Additional potential could exist within zones which were not identified by the Company, within the scope of the Sinú-9 Report.
Maria Conchita
The report entitled "Evaluation of the P&NG Reserves and Resources of NG Energy International in the Maria Conchita Block, Colombia " (the " Maria Conchita Report ") was prepared by Sproule with an effective date of December 31, 2023 and a preparation date of December 20, 2023 . The Company holds an 80% working interest in Maria Conchita. Reserves and resources attributed to the H1, H1A, H1A1, H1B, H2, H2B, H3, H4 and LM2 zones have been included in the Maria Conchita Report. Contingent resources for Maria Conchita are petroleum and natural gas classified as "development pending" and are attributed a chance of development of 0.73. The prospective resources for Maria Conchita are subclassified as "prospect" and are attributed a chance of discovery of 0.41 and chance of development of 0.73.
Total gas is planned to be produced through new and existing wellbores and a pipeline to a processing facility using established recovery technology.
The development plan for the reserves area located within Maria Conchita includes the production maintenance of Aruchara-1 and Aruchara-3, as well as the drilling of a total of 5 wells; 2 in the Aruchara field and 3 in the Tinka field on 425 acres spacing. Production will be processed through an existing facility.
The development plan for the contingent resources area located within Maria Conchita includes the drilling of a total of 10 wells; 9 in the Aruchara field and 1 in the Tinka field on 425 acres spacing. Additionally, expansion of the existing facility is included to a total capacity of 60 million cubic feet per day for the best estimate scenario. Due to the number of reservoirs identified in the area, the number of wells may change by category according to the uncertainty identified in reservoir areas, since they are not completely centric with respect to each other.
The development plan for the prospective resources area located within Maria Conchita include the drilling of 10 wells on 425 acres spacing across the intervals of interest H2, H2B and H3.
The natural gas and condensate reserves and resources were estimated based on the technically recoverable volume, operating and capital costs and the terms of the fiscal regime. Forecasts of net revenue were prepared by predicting the annual production from the reserves, resources and product prices. Gas reserves and resources have only been assigned based on the gas contracts and the gas contract precedents in effect as of date of the Maria Conchita Report. There is no certainty it will be commercially viable to produce any portion of the contingent resources and there is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
In sum, the development forecast presented in the Maria Conchita Report was based on a complete evaluation of the Company's lands for the zones identified by the Company to be prospective for economic development at the time of the Maria Conchita Report. The development forecast represents full development of the lands for which reserves and resources could be assigned. Additional potential could exist within zones which were not identified by the Company, within the scope of the Maria Conchita Report.
With regard to the costs associated with achieving additional commercial production at Maria Conchita and Sinú-9, and the general timeline of the projects, please see the Company's Annual Information Form dated June 30, 2023 and its most recent Management's Discussion & Analysis, both of which can be found at www.sedarplus.ca .
Sproule International Limited, an independent qualified reserves and resources evaluator, has conducted the reserves and resource evaluation for Maria Conchita and Sinú-9 in accordance with the Canadian Oil and Gas Evaluation Handbook (the " COGE Handbook "). It adheres in all material aspects to the principles and definitions established by the Calgary Chapter of the Society of Petroleum Evaluation Engineers regarding annual reserve and resource reports that are being released in the public domain. The COGE Handbook is incorporated by reference in National Instrument 51-101 - _Standards of Disclosure for Oil and Gas Activities _(" NI 51-101 ").
About NG Energy International Corp.
NG Energy International Corp. is a natural gas exploration and production company with operations in Colombia . The Company is on a mission to discover, delineate and develop meaningful natural gas fields in developing counties to support energy transition and economic growth. In Colombia , the Company is executing on this mission with a rapidly growing production base that is being delivered to the premium priced Colombian market. NGE's team has extensive technical expertise and a proven track record of building companies and creating value in South America . For more information, please visit SEDAR+ ( www.sedarplus.ca ) and the Company's website ( www.ngenergyintl.com ).
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release, including, without limitation, the information contained in this news release regarding any development forecast and any information concerning the intentions, plans and future actions of the Company. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's most recent Management Discussion and Analysis and its Annual Information Form dated June 30, 2023 , which are available for view on SEDAR+ at www.sedarplus.ca . These risks include but are not limited to, the risks associated with the oil and natural gas industry, such as exploration, production and general operational risks, volatility of pricing for oil and natural gas, changing investor sentiment about the oil and natural gas industry, competition in the markets where the Company operates, any delays in production, marketing and transportation of natural gas, drilling costs and availability of equipment, regulatory approval risks and environmental risks. Forward-looking statements contained herein, including but not limited to the Company's statements related to anticipated business plans or strategies, including the Company's plans to complete infrastructure construction required for commercial production from Sinu-9; completion of the transactions contemplated by the pipeline agreement ; and the completion of any updated resource assessment and reclassification of contingent resources to reserves. The Company disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Abbreviations
The abbreviations set forth below have the following meanings:
| Oil and Natural Gas Liquids | | Natural Gas | | | | M bbl s | thousand barrels | | MMcf/d | million cubic feet per day | | NGLs | na tural gas liquids | | Bcf | billion cubic feet | | | | | | | | Other | | | | | | NPV 10 | Net present value using a 10% forward discount rate | | | | | | | | | |
Caution Respecting Reserves Information
The determination of oil and gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of proved, probable and possible reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgement combined with geological and engineering knowledge to assess whether or not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions.
The recovery and reserve estimates of NGLs and gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein. The estimated future net revenue from the production of the disclosed gas reserves does not represent the fair market value of these reserves.
Information Regarding Reserves
Reserves are estimated remaining quantities of commercially recoverable oil, gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status.
" Proved reserves " are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved reserves.
" Probable reserves " are those additional reserves that are less certain to be recovered than Proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves.
" Possible reserves " are those additional reserves that are less certain to be recovered than Probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves.
The qualitative certainty levels referred to in the definitions above are applicable to "individual reserves entities" (which refers to the lowest level at which reserves calculations are performed) and to "reported reserves" (which refers to the highest-level sum of individual entity estimates for which reserves estimates are presented). Reported reserves should target the following levels of certainty under a specific set of economic conditions:
at least a 90% probability that the quantities actually recovered will equal or exceed the estimated Proved reserves; and at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable reserves.
A qualitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods.