(HKEX: 2012; TSX: SUO)
CALGARY and HONG KONG, June 4, 2014 /PRNewswire/ -- Sunshine Oilsands Ltd. ("Sunshine" or the "Corporation") (HKEX: 2012, TSX: SUO) is pleased to announce that it has received a supplemental independent reserves evaluation report (the "Supplemental Report") in respect of those four sections of oil sands lands within its West Ells SAGD project area for which it has obtained initial regulatory approval (the "West Ells Project Area"). The West Ells Project Area is the portion of the larger West Ells development area in which Sunshine anticipates pursuing its core initial development activities.
The Supplemental Report was prepared by GLJ Petroleum Consultants Ltd. ("GLJ") in accordance with the requirements of the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") with an effective date of April 30, 2014 and updates and supplements the independent reserves evaluation report prepared by GLJ with an effective date of December 31, 2013 (the "Year End Report") summarized in the Corporation's annual information form for the year ended December 31, 2013 (the "AIF").
The Supplemental Report does not replace or supersede the Year End Report, but rather updates the Year End Report on the basis of a revised steam facility design and updated operating parameters for the initial 16 well pairs in the West Ells Project Area.
Sunshine updated its operating parameters following a review of peer operating parameters in the Athabasca oil sands region of Alberta subsequent to the Year End Report. Such updated operating parameters include anticipated increased steam capacity to over 37,000 barrels per day, injection pressure for the initial 16 well pairs in the West Ells Project Area and revised peak rate of these wells to 610 barrels per day. Additionally, the Supplemental Report was prepared on the basis of GLJ's updated benchmark pricing as at April 1, 2014 and effective April 30, 2014.
Although the Supplemental Report does not attribute any changes in the volumes of Proved Undeveloped or Proved Plus Probable Undeveloped reserves in respect of the Project Area, the Supplemental Report does provide increases in the net present value of future revenues, discounted at 10%, ("NPV10") for such reserves as compared to the reserves values for the West Ells development area disclosed in the Year End Report. The NPV10 value of Proved Undeveloped reserves reported in the Supplemental Report for the Project Area was CDN $290 million compared to CDN $249 million in the Year End Report for the West Ells development Area, an increase of approximately 16%. The NPV10 value of Proved Plus Probable Undeveloped reserves reported in the Supplemental Report for the Project Area was CDN $449 million compared to CDN $360 million in the Year End Report for the West Ells Development Area, an increase of approximately 25%.
Summary of Reserves and Values
The table below summarizes the Corporation's reserves including the value of future net revenue of the Corporation from (i) the West Ells Project Area reserves as at April 30, 2014, in the case of the Supplemental Report; and (ii) the West Ells development area as at December 31, 2013, in the case of the Year End Report; in each case, as evaluated by GLJ.
Please note that the reserve evaluations in the Supplemental Report and disclosed below do not consider all of Sunshine's reserves in the West Ells development area. Rather, the Supplemental Report focuses entirely on the West Ells Project Area.
The reserves data disclosed below in respect of the Year End Report does not consider all of Sunshine's reserves across all of its properties. Rather, the Year End Report values disclosed below are derived from the Year End Report solely with respect to the West Ells development area.
As such, the reserve values disclosed below in respect of the Supplemental Report and Year End Report do not reflect the total reserve values of Sunshine for all of its properties.
| Reserves Category | Bitumen | ||||
| Supplemental Report (Project Area)(1) |
Year End Report (West Ells)(2) |
||||
| Gross (Mbbl) |
Net (Mbbl) |
Gross (Mbbl) |
Net (Mbbl) |
||
| PROVED(3) | |||||
| Producing | - | - | - | - | |
| Developed Non-producing | - | - | - | - | |
| Undeveloped | 74,205 | 64,326 | 79,080 | 69,073 | |
| TOTAL PROVED | 74,205 | 64,326 | 79,080 | 69,073 | |
| TOTAL PROBABLE | 43,439 | 34,551 | 61,005 | 49,778 | |
| TOTAL PROVED PLUS PROBABLE |
117,644 | 98,877 | 140,085 | 118,851 | |
| (1) The Supplemental Report only covers reserves evaluated for the West Ells Project Area. The reserves for the portion of West Ells evaluated did not change from the 2013 Year End report to the Supplemental Report. | |||||
| (2) Values disclosed herein for the Year End Report are solely with respect to the West Ells development area. | |||||
| (3) The Corporation has no developed proved producing reserves and no developed non-producing reserves. All of the Corporation's reserves are undeveloped reserves. | |||||
| Reserves Category | Net Present Values of Future Net Revenue(4) | |||||
| Before Income Taxes Discounted At (% per year) | ||||||
| 0% (MM$) |
5% (MM$) |
10% (MM$) |
15% (MM$) |
20% (MM$) |
||
| Supplemental Report (Project Area)(1) |
||||||
| PROVED(2) | ||||||
| Producing | - | - | - | - | - | |
| Developed Non-producing | - | - | - | - | - | |
| Undeveloped | 1,525 | 671 | 290 | 101 | - | |
| TOTAL PROVED | 1,525 | 671 | 290 | 101 | - | |
| TOTAL PROBABLE | 1,470 | 416 | 159 | 84 | 56 | |
| TOTAL PROVED PLUS PROBABLE |
2,995 | 1,087 | 449 | 185 | 56 | |
| Year End Report (West Ells)(3) |
||||||
| PROVED(2) | ||||||
| Producing | - | - | - | - | - | |
| Developed Non-producing | - | - | - | - | - | |
| Undeveloped | 1,616 | 637 | 249 | 74 | (14) | |
| TOTAL PROVED | 1,616 | 637 | 249 | 74 | (14) | |
| TOTAL PROBABLE | 2,074 | 392 | 111 | 51 | 35 | |
| TOTAL PROVED PLUS PROBABLE |
3,690 | 1,029 | 360 | 125 | 21 | |
| (1) The Supplemental Report only covers reserves evaluated for the West Ells Project Area. The reserves for the portion of West Ells evaluated did not change from the 2013 Year End report to the Supplemental Report. | ||||||
| (2) The Corporation has no developed proved producing reserves and no developed non-producing reserves. All of the Corporation's reserves are undeveloped reserves. | ||||||
| (3) Values disclosed herein for the Year End Report are solely with respect to the West Ells development area. | ||||||
| (4) Estimated values of net present value do not represent fair market value. | ||||||
| Total Future Net Revenue (Undiscounted) | ||||||
| Forecast Prices and Costs as of April 30, 2014 | ||||||
| (for West Ells Project Area) | ||||||
| Reserves Category | Revenue (MM$) |
Royalties (MM$) |
Operating Costs (MM$) |
Capital Development Costs (MM$) |
Abandonment and Reclamation Costs (MM$) |
Future Net Revenue Before Income Taxes (MM$) |
| Total Proved(1) | 5,714 | 778 | 1,904 | 1,467 | 40 | 1,525 |
| Total Proved Plus Probable(1) |
10.189 | 1,667 | 3,087 | 2,639 | 71 | 2,995 |
| (1) In respect of the West Ells Project Area. The Supplemental Report only covers reserves evaluated for the West Ells Project Area. The reserves for the portion of West Ells evaluated did not change from the 2013 Year End report to the Supplemental Report. | ||||||
GLJ Pricing Forecast
Effective April 30, 2014
The price forecast used in the GLJ reserves assessment that formed the basis for the revenue projections and net present value estimates in the Supplemental Report was based on GLJ's April 1, 2014 pricing forecast with an effective date of April 30, 2014. A summary of this price forecast is set forth below.
| Year | Oilfield Costs Inflation % | Exchange 1 USD/CAD | WTI @Cushing $US/bbl | Edm. Oil Edmonton Light $/bbl | WCS Heavy Oil Hardisty $/bbl | Heavy Oil 12 API Hardisty $/bbl | Dilbit at Hardisty Current $ Cdn/bbl | NYMEX Henry Hub Current US$/Mmbtu | Edmonton Pentanes Plus $/bbl |
| 2014 Q2-Q4 | 2 | 0.9000 | 97.50 | 102.78 | 84.79 | 75.31 | 78.79 | 4.40 | 113.06 |
| 2015 | 2 | 0.9000 | 97.50 | 102.78 | 84.79 | 75.31 | 79.29 | 4.50 | 113.06 |
| 2016 | 2 | 0.9000 | 97.50 | 105.56 | 87.08 | 78.33 | 82.08 | 4.75 | 112.94 |
| 2017 | 2 | 0.9000 | 97.50 | 105.56 | 87.08 | 78.33 | 82.58 | 5.00 | 112.94 |
| 2018 | 2 | 0.9000 | 97.50 | 105.56 | 87.08 | 78.33 | 83.08 | 5.25 | 112.94 |
| 2019 | 2 | 0.9000 | 97.50 | 105.56 | 87.08 | 78.33 | 83.00 | 5.50 | 112.94 |
| 2020 | 2 | 0.9000 | 98.54 | 106.37 | 87.75 | 78.93 | 83.59 | 5.63 | 113.81 |
| 2021 | 2 | 0.9000 | 100.51 | 108.49 | 89.50 | 80.53 | 85.26 | 5.74 | 116.08 |
| 2022 | 2 | 0.9000 | 102.52 | 110.66 | 91.29 | 82.14 | 86.96 | 5.85 | 118.40 |
| 2023 | 2 | 0.9000 | 104.57 | 112.87 | 93.12 | 83.78 | 88.70 | 5.97 | 120.77 |
| 2024+ | 2 | 0.9000 | escalate oil, gas and product prices at 2% per year thereafter | ||||||
D&M Pricing Forecast
Effective December 31, 2013
The price forecast used in the GLJ reserves assessment that formed the basis for the revenue projections and net present value estimates in the Year End Report was based on DeGolyer and McNaughton Canada Limited's January 1, 2014 pricing forecast with an effective date of December 31, 2013. A summary of this price forecast is set forth below.
| Year | Oilfield Costs Inflation % | Exchange 1 USD/CAD | WTI @Cushing $US/bbl | Edm. Oil Edmonton Light $/bbl | WCS Crude Oil Stream at Hardisty | Heavy Oil 12 API Hardisty $/bbl | Dilbit @ 35% Condensate $/bbl |
NYMEX Henry Hub Current US$/Mcf | Edmonton Pentanes Plus $/bbl |
| 2014 | 2 | 0.96 | 94.00 | 93.23 | 76.46 | 69.93 | 74.80 | 4.20 | 100.69 |
| 2015 | 2 | 0.96 | 91.80 | 90.85 | 74.49 | 68.14 | 72.89 | 4.40 | 98.12 |
| 2016 | 2 | 0.96 | 93.64 | 92.67 | 75.99 | 69.50 | 74.35 | 4.75 | 100.08 |
| 2017 | 2 | 0.96 | 95.51 | 94.52 | 77.51 | 70.89 | 75.83 | 5.10 | 102.08 |
| 2018 | 2 | 0.96 | 97.42 | 96.41 | 79.06 | 72.31 | 77.35 | 5.45 | 104.12 |
| 2019 | 2 | 0.96 | 99.37 | 98.34 | 80.63 | 73.75 | 78.90 | 5.56 | 106.21 |
| 2020 | 2 | 0.96 | 101.35 | 100.31 | 82.25 | 75.23 | 80.48 | 5.67 | 108.33 |
| 2021 | 2 | 0.96 | 103.38 | 102.31 | 83.89 | 76.73 | 82.09 | 5.78 | 110.50 |
| 2022 | 2 | 0.96 | 105.45 | 104.36 | 85.57 | 78.27 | 83.73 | 5.90 | 112.71 |
| 2023 | 2 | 0.96 | 107.56 | 106.45 | 87.28 | 79.83 | 85.40 | 6.02 | 114.96 |
| 2024 | 2 | 0.96 | 109.71 | 108.57 | 89.03 | 81.43 | 87.11 | 6.14 | 117.26 |
| 2025 | 2 | 0.96 | 111.90 | 110.75 | 90.81 | 83.06 | 88.85 | 6.26 | 119.61 |
| 2026+ | Escalate oil, gas and product prices at 2% thereafter | ||||||||
For further information regarding Sunshine's reserves data (including Sunshine's total evaluated reserves), the Year End Report and other oil and gas information in respect of Sunshine, please see "Statement of Reserves Data and Other Oil and Gas Information" in the AIF and Schedules "A" and "B" to the AIF.
Please refer to the section headed "About Sunshine Oilsands Ltd." below and the Corporation's 2013 Annual Report dated April 22, 2014 for further details about the West Ells SAGD project.
NOTICE REGARDING PRESENTATION OF RESERVES DATA AND TECHNICAL TERMS
Disclosure in this announcement of reserves data and other oil and gas information is presented in accordance with National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities (''NI 51-101'') and the COGE Handbook. Certain terms describing reserves and other oil and natural gas information used herein are defined below. Certain other terms and abbreviations used in this announcement, but not defined or described, are defined in NI 51-101 or the COGE Handbook and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101 or the COGE Handbook.
In this announcement, the abbreviations set forth below have the following meanings:
| Oil and Natural Gas Liquids | Natural Gas | ||
| bbls | barrels | Mmbtu | million British Thermal Units |
| Mbbl Mcf |
thousand bbls thousand cubic feet |
||
| Other | |||
| WTI | West Texas Intermediate, a common reference grade of crude oil in the United States | ||
The estimates of reserves and future net revenue for individual properties in this announcement may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
