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CALGARY, Feb. 27, 2017 /CNW/ - Vermilion Energy Inc. ("Vermilion", the "Company", "We" or "Our") (TSX, NYSE: VET) is pleased to announce summary 2016 year-end reserves and resource information. The estimates of reserves and resources and other oil and gas information contained in this news release have been estimated by GLJ Petroleum Consultants Ltd. ("GLJ") effective as at December 31, 2016 and prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH"). For additional information about Vermilion, including Vermilion's statement of reserves data and other information in Form 51-101F1, report on reserves data by independent qualified reserves evaluator or auditor in Form 51-101F2 and report of management and directors on oil and gas disclosure in Form 51-101F3, please review the Company's Annual Information Form for the year ended December 31, 2016, to be filed on February 27, 2017 and available on SEDAR at www.sedar.com and on the SEC's EDGAR system at www.sec.gov.
HIGHLIGHTS
(1) |
As evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") in a report dated February 1, 2017 with an effective date of December 31, 2016. |
(2) |
F&D (finding and development) and FD&A (finding, development and acquisition) costs are used as a measure of capital efficiency and are calculated by dividing the applicable capital expenditures for the period, including the change in undiscounted future development capital ("FDC"), by the change in the reserves, incorporating revisions and production, for the same period. |
(3) |
"Operating Recycle Ratio" is a measure of capital efficiency calculated by dividing the Operating Netback by the cost of adding reserves (F&D cost). "Operating Netback" is calculated as sales less royalties, operating expense, transportation costs, PRRT and realized hedging gains and losses presented on a per unit basis. |
(4) |
Vermilion retained GLJ to conduct an independent resource evaluation dated February 1, 2017 to assess contingent and prospective resources across all of the Company's key operating regions with an effective date of December 31, 2016 (the "GLJ 2016 Resource Assessment"). The aggregate associated chance of development for each of the low, best and high estimate for contingent resources in the Development Pending category are 84%, 83% and 82%, respectively. The aggregate associated chance of development for each of the low, best and high estimate for contingent resources in the Development Unclarified category are 55%, 54% and 55%, respectively. The aggregate associated chance of commerciality for each of the low, best and high estimate for prospective resources in the Prospect category are 25%, 26% and 26%, respectively. There is uncertainty that it will be commercially viable to produce any portion of the resources. |
(5) |
Vermilion retained GLJ to conduct an independent resource evaluation dated February 8, 2016 to assess contingent resources across all of the Company's key operating regions with an effective date of December 31, 2015 (the "GLJ 2015 Resource Assessment"). The aggregate associated chance of development for each of the low, best and high estimate for contingent resources in the Development Pending category are 83%, 82% and 81%, respectively. There is uncertainty that it will be commercially viable to produce any portion of the resources. For further information, see the "Contingent Resources" section of this news release. |
DISCLAIMER
Certain statements included or incorporated by reference in this news release may constitute forward looking statements or financial outlooks under applicable securities legislation. Such forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release may include, but are not limited to:
Such forward-looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things:
Although the Company believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct. Financial outlooks are provided for the purpose of understanding the Company's financial strength and business objectives and the information may not be appropriate for other purposes. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking statements or information. These risks and uncertainties include but are not limited to:
The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.
RESERVES, FUTURE NET REVENUE AND OTHER OIL AND GAS INFORMATION
The following is a summary of the oil and natural gas reserves and the value of future net revenue of Vermilion as evaluated by GLJ, independent petroleum engineering consultants in Calgary in a report dated February 1, 2017 with an effective date of December 31, 2016 (the "GLJ 2016 Reserves Evaluation"). The GLJ 2016 Reserves Evaluation was prepared in accordance with National Instrument 51-101 and COGEH.
Reserves and other oil and gas information in this news release is effective December 31, 2016 unless otherwise stated.
All evaluations of future net production revenue set forth in the tables below are stated after overriding and lessor royalties, Crown royalties, freehold royalties, mineral taxes, direct lifting costs, normal allocated overhead and future capital investments, including abandonment and reclamation obligations. Future net production revenues estimated by the GLJ 2016 Reserves Evaluation do not represent the fair market value of the reserves. Other assumptions relating to the costs, prices for future production and other matters are included in the GLJ 2016 Reserve Evaluation. There is no assurance that the future price and cost assumptions used in the GLJ 2016 Reserves Evaluation will prove accurate and variances could be material.
Reserves for Australia, Canada, France, Germany, Ireland, the Netherlands and the United States are established using deterministic methodology. Total proved reserves are established at the 90 percent probability (P90) level. There is a 90 percent probability that the actual reserves recovered will be equal to or greater than the P90 reserves. Total proved plus probable reserves are established at the 50 percent probability (P50) level. There is a 50 percent probability that the actual reserves recovered will be equal to or greater than the P50 reserves.
Estimates of reserves have been made assuming that development of each property, in respect of which estimates have been made, will occur without regard to the availability of funding required for that development.
With respect to finding and development costs, 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 reserve additions for that year.
Pricing used in the forecast price estimates is set forth in the table below and referenced in the notes to subsequent tables.
Table 1: Forecast Prices used in Estimates (1)
Light Crude Oil and & Medium Crude Oil |
Crude Oil |
Conventional Natural Gas Canada |
Conventional Natural Gas Europe |
Natural Gas Liquids |
Inflation Rate |
Exchange |
Exchange |
|||
WTI |
Edmonton |
Cromer |
Brent Blend |
National Balancing |
||||||
Cushing |
Par Price |
Medium |
FOB |
AECO |
Point |
FOB |
||||
Oklahoma |
40˚ API |
29.3˚ API |
North Sea |
Gas Price |
(UK) |
Field Gate |
Percent |
|||
Year |
($US/bbl) |
($Cdn/bbl) |
($Cdn/bbl) |
($US/bbl) |
($Cdn/MMBtu) |
($US/MMBtu) |
($Cdn/bbl) |
Per Year |
($US/$Cdn) |
($CdnEUR) |
2016 |
43.30 |
52.95 |
48.71 |
45.01 |
2.19 |
4.65 |
34.50 |
1.50 |
0.76 |
1.47 |
Forecast |
||||||||||
2017 |
55.00 |
69.33 |
64.48 |
57.00 |
3.46 |
5.75 |
40.40 |
2.00 |
0.75 |
1.40 |
2018 |
59.00 |
72.26 |
67.20 |
61.00 |
3.10 |
6.00 |
41.41 |
2.00 |
0.78 |
1.35 |
2019 |
64.00 |
75.00 |
69.75 |
66.00 |
3.27 |
6.25 |
42.94 |
2.00 |
0.80 |
1.31 |
2020 |
67.00 |
76.36 |
71.02 |
70.00 |
3.49 |
6.50 |
43.77 |
2.00 |
0.83 |
1.27 |
2021 |
71.00 |
78.82 |
73.31 |
74.00 |
3.67 |
6.75 |
45.24 |
2.00 |
0.85 |
1.24 |
2022 |
74.00 |
82.35 |
76.59 |
77.00 |
3.86 |
6.89 |
47.30 |
2.00 |
0.85 |
1.24 |
2023 |
77.00 |
85.88 |
79.87 |
80.00 |
4.05 |
7.02 |
49.25 |
2.00 |
0.85 |
1.24 |
2024 |
80.00 |
89.41 |
83.15 |
83.00 |
4.16 |
7.16 |
51.23 |
2.00 |
0.85 |
1.24 |
2025 |
83.00 |
92.94 |
86.44 |
86.00 |
4.24 |
7.31 |
53.42 |
2.00 |
0.85 |
1.24 |
2026 |
86.05 |
95.61 |
88.92 |
89.64 |
4.32 |
7.45 |
54.80 |
2.00 |
0.85 |
1.24 |
Thereafter |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
2.0% |
0.850 |
1.235 |
Note: |
|
(1) |
The pricing assumptions used in the GLJ Report with respect to net present value of future net revenue (forecast) as well as the inflation rates used for operating and capital costs are set forth above. The NGL price is an aggregate of the individual natural gas liquids prices used in the Total Proved plus Probable evaluation. GLJ is an independent qualified reserves evaluator appointed pursuant to NI 51-101. |
All forecast prices in the tables above are provided by GLJ. For 2016, the price of crude oil in the United States is based on WTI. The benchmark price for Canadian crude oil is Edmonton Par and Canadian natural gas is priced against AECO. The benchmark price for Australia and France crude oil is Dated Brent. The price of our natural gas in Ireland is based on the NBP index. The price of Vermilion's natural gas in the Netherlands is based on the TTF day-ahead index, as determined on the Title Transfer Facility Virtual Trading Point. The price of Vermilion's natural gas in Germany is based on the TTF, as determined on the Title Transfer Facility Virtual Trading Point. For the year ended December 31, 2016, the average realized sales prices before hedging were $46.89 per bbl (United States) for WTI, $43.58 per bbl for Canadian-based crude oil, condensate and NGLs and $2.14 per Mcf for Canadian natural gas, $60.33 per bbl (Australia), $55.42 per bbl (France) for Brent-based crude oil, $5.86 per Mcf (Ireland), $5.67 per Mcf (Netherlands), and $5.33 per Mcf (Germany).
The following table summarizes the capital expenditures made by Vermilion on oil and natural gas properties for the year ended December 31, 2016:
Table 2: Capital Costs Incurred
Acquisition Costs |
|||||
Proved |
Unproved |
Exploration |
Development |
Total |
|
(M$) |
Properties |
Properties |
Costs |
Costs |
Costs |
Australia |
- |
- |
- |
59,910 |
59,910 |
Canada |
13,309 |
- |
- |
62,706 |
76,015 |
Croatia |
- |
- |
2,968 |
- |
2,968 |
France |
- |
- |
- |
68,472 |
68,472 |
Germany |
48,377 |
- |
- |
3,803 |
52,180 |
Hungary |
- |
- |
338 |
- |
338 |
Ireland |
- |
- |
- |
9,375 |
9,375 |
Netherlands |
28,259 |
- |
- |
23,740 |
51,999 |
United States |
5,935 |
- |
- |
13,539 |
19,474 |
Total |
95,880 |
- |
3,306 |
241,545 |
340,731 |
The following table sets forth the reserve life index based on total proved and proved plus probable reserve and fourth quarter 2016 production of 60,863 boe/d.
Table 3: Reserve Life Index
Commodity |
Production |
Reserve Life Index (years) |
|||
Fourth Quarter 2016 |
Total Proved |
Proved Plus Probable |
|||
Crude oil, condensate and natural gas liquids (bbl/d) |
28,439 |
9.9 |
15.9 |
||
Natural gas (mmcf/d) |
194.54 |
6.2 |
10.6 |
||
Oil Equivalent (boe/d) |
60,863 |
7.9 |
13.1 |
The following tables provide reserves data and a breakdown of future net revenue by component and production group using forecast prices and costs. For Canada, the tables following include Alberta gas cost allowance.
The following tables may not total due to rounding.
Table 4: Oil and Gas Reserves - Based on Forecast Prices and Costs (1)
Light Crude Oil & Medium |
Heavy Oil |
Tight Oil |
Conventional Natural Gas |
|||||
Gross (2) |
Net (2) |
Gross (2) |
Net (2) |
Gross (2) |
Net (2) |
Gross (2) |
Net (2) |
|
(Mbbl) |
(Mbbl) |
(Mbbl) |
(Mbbl) |
(Mbbl) |
(Mbbl) |
(MMcf) |
(MMcf) |
|
Proved Developed Producing (3) (5) (6) |
||||||||
Australia |
10,718 |
10,718 |
- |
- |
- |
- |
- |
- |
Canada |
12,277 |
10,990 |
- |
- |
12 |
8 |
112,918 |
101,728 |
France |
36,481 |
33,478 |
- |
- |
- |
- |
5,412 |
5,024 |
Germany |
4,805 |
Vermilion Energy Inc.
3500, 520 3rd Avenue SW Calgary, Alberta T2P 0R3 Phone: 1-403-269-4884 Fax: 1-403-476-8100 Investor Relations
investor_relations / vermilionenergy, com
1-866-895-8101 Whistleblower
robert.engbloom / nortonrosefulbright, com
1-403–267–9405 Community Investment
Emergency Contacts
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