CALGARY, ALBERTA–(Marketwired – Feb. 24, 2016) – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company“) is pleased to announce the results of its independent oil and gas reserves evaluation as of December 31, 2015, prepared by GLJ Petroleum Consultants Ltd. (“GLJ”), summarized below.
Tamarack’s stringent capital allocation complemented by a constant focus on cost reductions and improving capital efficiencies has resulted in another significant year of reserve growth in 2015, despite challenges associated with lower commodity prices. During 2015, Tamarack adopted a three pronged strategy in the Wilson Creek and Alder Flats areas of Alberta: 1) re-design the drilling and completion programs to permanently reduce capital costs per well and improve capital efficiencies; 2) reduce operating expenses to improve netbacks which translates into enhanced economics on future drilling; and 3) add drilling inventory through tuck-in acquisitions to take advantage of existing infrastructure and maintain a low cost, high netback structure.
Tamarack executed all three elements of this strategy in 2015 and successfully delivered per share reserves growth while reducing net debt. The Company’s significant reserves growth includes a 32% increase in proved developed producing reserves, a 46% increase in proved (“1P”) reserves and a 35% increase in proved plus probable (“2P”) reserves.
2015 RESERVES REPORT HIGHLIGHTS
- Increased 1P reserves per fully diluted share by 13.3% and 2P reserves per fully diluted share by 5.1%.
- Increased 1P reserves by 46% to 25.0 million boe, and 2P reserves by 35% to 45.0 million boe, weighted 52% and 54% to oil and natural gas liquids (“NGLs”), respectively.
- Including acquisitions, the Company replaced 356% of production on a 1P basis and 481% on a 2P basis.
- Maintained a conservative approach to reserves booking, with 1P reserves including only 65 (53.3 net) proved undeveloped horizontal Cardium drilling locations and 2P reserves including only 111 (90.0 net) proved plus probable undeveloped horizontal Cardium drilling locations.
- Achieved 1P finding and development (“F&D”) costs of approximately $11.01/boe including the change in future development capital (“FDC”), a 71% reduction from the prior year. The Company also achieved 1P finding, development and acquisition (“FD&A”) costs of approximately $13.26/boe, including the change in FDC, representing a 66% reduction over 2014.
- Realized three year average 2P F&D costs of approximately $17.44/boe and 2P FD&A costs of $19.26/boe including the change in FDC.
- Generated a 1P F&D recycle ratio of 1.58 times and a 1P FD&A recycle ratio of 1.31 times using the estimated 2015 funds from operations netback of $17.35/boe (unaudited), which represents an increase of 52% and 31% over 2014, respectively, despite commodity prices averaging more than 40% lower in 2015.
- Maintained a 2P reserve life index of 12.5 years based on estimated fourth quarter 2015 average production of 9,870 boe/d.
2015 YEAR-END RESERVES & OPERATIONS UPDATE
Tamarack realized tremendous reserves and production growth through 2015, and was able to maintain a conservatively booked reserves report, while reducing net debt. In 2015 the Company drilled 15 (13.9 net) horizontal Cardium oil wells in the core Wilson Creek and Alder Flats areas and on June 15, 2015 closed a strategic acquisition of assets within these areas, further contributing to Tamarack’s growth. The operational success realized in 2015 coupled with ongoing cost reduction initiatives ensure Tamarack is well positioned for continued measured growth and long-term sustainability.
The following tables highlight Tamarack’s 2015 year-end independent reserves assessment and evaluation prepared by GLJ with an effective date of December 31, 2015 (the “GLJ Report”). The GLJ Report has been prepared in accordance with definitions, standards and procedures contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook. All evaluations and summaries of future net revenue are stated prior to provision for interest, debt service charges or general administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves.
