Horizon Petroleum Announces NI51-101 Reserves and Resources Report for Poland Acquisition, Proposed Development Plan and C$5 Million Financing
Horizon Petroleum Ltd. (the “Company” or “Horizon”) (TSXV:HPL) is
pleased to report the results of a recent independent reserve and
resource evaluation (“Reserves Report”) on the Lachowice conventional
natural gas field in the Bielsko-Biala concession in southern Poland,
which Horizon has agreed to acquire from San Leon Energy plc (“San
Leon”), as part of the previously announced acquisition of concessions
by Horizon on September 19, 2017 (the “Acquisition”). The Reserves
Report was prepared in compliance with the standards set out in National
Instrument 51-101 of the Canadian Securities Administrators and the
Canadian Oil and Gas Evaluation Handbook (COGEH).
The Company is also pleased to provide an update on its planned
development of the Lachowice field and announce an associated financing
of up to C$5 million to complete the Acquisition and progress
development of the field.
Highlights
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Probable Undeveloped Reserves (2P) of 36 Bcfe (6.0 MMBoe) valued at
US$98 million (NPV10 BTAX)
-
Risked Best Estimate Contingent Resources (2C) of 171 Bcfe (28.5
MMBoe) valued at US$398 million (NPV10 BTAX)
-
Unrisked Best Estimate Contingent Resources (2C) of 249 Bcfe (41.4
MMBoe)
-
Risked Best Estimate Prospective Resources of 123 Bcfe (20.6 MMBoe)
-
Unrisked Best Estimate Prospective Resources of 487 Bcfe (81.2
MMBoe)
-
Phased development plan, consisting of a new vertical well to be
drilled in the first half of 2019, targeting facility-constrained
natural gas sales of 3.0 MMcfe/d by late 2019
-
Two horizontal or highly deviated wells to be drilled in mid-2020,
increasing production to 17.5 MMcfe/d by late 2020
-
Drilling to continue, with production increases to over 30 MMcfe/d
thereafter
-
Proposed private placement of up to C$5 million to close the
Acquisition and progress development of the field
Discussion of Reserves and Resources
The Acquisition consists of a 100% interest in four conventional oil &
natural gas concessions in Poland known as Bielsko-Biala, Cieszyn,
Kotlarka, Prusice, and a fifth concession that is under application,
Buchowice. The purchase price is US$1 million in cash (US$900,000
payable at closing, US$100,000 was previously paid), C$1 million in
Horizon shares, and a 6% Net Profit Interest (“NPI”). Closing of the
Acquisition is subject to a number of conditions, including certain
approvals by the government in Poland, as well as the final approval of
the TSX Venture Exchange (the “TSXV”). The closing of the Acquisition of
the concessions from San Leon is expected to occur in mid-2018.
APEX Global Engineering Inc. (“APEX”) prepared the Reserves Report with
an effective date of January 31, 2018. APEX assigned the Probable
Reserves and Contingent and Prospective Resources to the Lachowice
field, which at 10,561 acres represents approximately 1.5% of the total
lands to be held under the concessions (see Table 1 below). The reserves
and resources assigned are subject to significant risks. Please refer to
the Risks section at the end of this press release.
Table 1: Concession Acreage
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Concessions
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Acreage
|
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|
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km2
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Acres
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|
Bielsko-Biala
|
|
|
804.6
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|
198,821
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|
- Lachowice field
|
|
|
42.7
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|
10,561
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|
Buchowice (under application)
|
|
|
927.0
|
|
229,067
|
|
Cieszyn
|
|
|
325.8
|
|
80,507
|
|
Kotlarka
|
|
|
212.4
|
|
52,473
|
|
Prucise
|
|
|
758.1
|
|
187,331
|
|
Total Acreage
|
|
|
3,028
|
|
748,198
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|
|
|
|
|
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|
Tables 2, 3 and 4 below summarize APEX’s estimates of Horizon’s
conventional natural gas reserves and resources, subject to closing the
San Leon acquisition. The volumes shown are attributable to Horizon’s
100% working interest, before deduction of any associated royalty
burdens. The economic values presented are shown after deduction of the
associated royalty burdens, the NPI, operating and capital expenses, but
before any attributable income taxes. Table 5 summarizes the commodity
pricing used in the economic evaluations.
Table 2: Probable Reserves in Lachowice Field
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Probable Reserves
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PIIP1
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Recoverable
Sales
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Before Income Taxes (US$MM), Discounted at
|
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|
|
|
|
|
|
0%
|
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5%
|
|
10%
|
|
15%
|
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20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Natural Gas (Bcf)
|
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49
|
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34.4
|
|
|
|
|
|
|
|
|
|
|
|
Condensate (MBbl)
|
|
344
|
|
261.7
|
|
|
|
|
|
|
|
|
|
|
|
Total Bcfe
|
|
51.2
|
|
36.0
|
|
263
|
|
153
|
|
98
|
|
67
|
|
48
|
|
Total MMBoe
|
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8.5
|
|
6.0
|
|
|
|
|
|
|
|
|
|
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Note 1: There is no certainty that it will be commercially
viable to produce any portion of the reserves.
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Table 3: Contingent Resources – Development Unclarified in
Lachowice Field
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Contingent Resources -
Development
Unclarified
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Discovered PIIP2
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Unrisked Contingent
Resources - Dev. Unclarified
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Chance
of Dev.
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Risked
Contingent
Resource (2C) -
Dev. Unclarified
|
|
|
Before Income Taxes (US$MM), Discounted at
|
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|
|
1C
|
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2C
|
|
3C
|
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1C
|
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2C
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3C
|
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(%)
|
|
|
|
0%
|
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5%
|
|
10%
|
|
15%
|
|
20%
|
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Conventional Natural Gas (Bcf)
|
|
|
309
|
|
422
|
|
583
|
|
169
|
|
238
|
|
339
|
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68.6%
|
|
163.5
|
|
|
|
|
|
|
|
|
|
|
|
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Condensate (MBbl)
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|
|
2,276
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|
3,110
|
|
4,298
|
|
1,248
|
|
1,756
|
|
2,499
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|
68.6%
|
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1,206.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Bcfe
|
|
|
323
|
|
441
|
|
609
|
|
177
|
|
249
|
|
354
|
|
68.6%
|
|
170.7
|
|
|
1,341
|
|
688
|
|
398
|
|
249
|
|
165
|
|
Total MMBoe
|
|
|
53.8
|
|
73.5
|
|
101.5
|
|
29.5
|
|
41.5
|
|
59.0
|
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68.6%
|
|
28.5
|
|
|
|
|
|
|
|
|
|
|
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Note 2: There is no certainty that it will be commercially
viable to produce any portion of the resources.
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Table 4: Prospective Resources in Lachowice Field
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Prospective Resources
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Undiscovered PIIP3
|
|
|
|
Unrisked Prospective Resources
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Chance of
Dev.
|
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Average Chance
of Disc.
|
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Risked Prospective
Resources - Best
Estimate
|
|
|
|
|
Low Estimate
|
|
Best Estimate
|
|
High Estimate
|
|
Low Estimate
|
|
Best Estimate
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High Estimate
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(%)
|
|
(%)
|
|
|
|
Conventional Natural Gas (Bcf)
|
|
|
544
|
|
778
|
|
1133
|
|
329
|
|
466
|
|
673
|
|
68.6%
|
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36.9%
|
|
118.0
|
|
Condensate (MBbl)
|
|
|
4,007
|
|
5,448
|
|
7,933
|
|
2,501
|
|
3,547
|
|
5,121
|
|
68.6%
|
|
36.9%
|
|
897.8
|
|
Total Bcfe
|
|
|
568
|
|
811
|
|
1181
|
|
344
|
|
487
|
|
704
|
|
68.6%
|
|
36.9%
|
|
123.4
|
|
Total MMBoe
|
|
|
94.6
|
|
135.2
|
|
196.8
|
|
57.3
|
|
81.2
|
|
117.3
|
|
68.6%
|
|
36.9%
|
|
20.6
|
|
Note 3: There is no certainty that any portion of these
resources will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any
portion of the resources.
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Table 5: Commodity Pricing
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Year
|
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APEX Commodity Price Forecasts
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Natural Gas
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Condensate
|
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|
|
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(US$/MMBTU)
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|
(US$/Mcf)
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|
(US$/Bbl)
|
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2019
|
|
|
7.56
|
|
|
8.08
|
|
|
67.00
|
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2020
|
|
|
7.56
|
|
|
8.08
|
|
|
72.00
|
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2021
|
|
|
7.56
|
|
|
8.08
|
|
|
76.50
|
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2022
|
|
|
7.71
|
|
|
8.25
|
|
|
78.03
|
|
2023
|
|
|
7.87
|
|
|
8.42
|
|
|
79.59
|
|
2024
|
|
|
8.02
|
|
|
8.59
|
|
|
81.18
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2025
|
|
|
8.18
|
|
|
8.76
|
|
|
82.81
|
|
2026
|
|
|
8.35
|
|
|
8.95
|
|
|
84.46
|
|
2027
|
|
|
8.51
|
|
|
9.12
|
|
|
86.15
|
|
2028
|
|
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2% thereafter
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NOTES:
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Natural gas transportation at 0.20 US$/Mcf included
|
Natural gas heating modifier at 109.56%
|
Condensate price is based on Sproule forecast (Jan. 31, 2018)
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History and Development Plan
The Lachowice field is at an early stage of conventional natural gas
development. Lachowice-1, Lachowice-7 and Stryszawa-2K are the primary
wells of interest on the field and, despite being essentially vertical
in their design and utilizing sub-optimal drilling and completion
methods for naturally fractured formations, tested at rates of up to 5.8
MMcf/d, 8.9 MMcf/d, and 2.5 MMcf/d, respectively. Each of these wells
was drilled and tested, with reservoir depths of 3,000-4,000 meters
targeting a naturally fractured carbonate reservoir of Middle Devonian
age. The natural gas is sweet, with up to 91% methane and 7 bbls/MMcf of
condensate.
Following receipt of the Reserves Report, Horizon is currently in the
process of finalizing its development plan. In general, it is currently
anticipated that the development plan would begin with a new vertical
well offsetting the Lachowice-7 location. Provided Horizon successfully
closes the Acquisition, it is targeting to drill and test the well in
the first half of 2019, with first production to occur by late 2019,
with natural gas sales initially facilities constrained at approximately
3.0 MMcfe/d. The wells will produce natural gas under primary drive via
the natural fractures and the matrix porosity within the reservoir. The
project is considered pre-development and is expected to cost
approximately US$7.5 million to first production. In a previous press
release dated September 19, 2017, Horizon had stated it was targeting
first production from the Lachowice field by the second half of 2018.
The regulatory process has proceeded slower than anticipated, and
therefore the conversion of the concessions to the new Polish concession
laws, and approvals related to Horizon taking operatorship of the
concessions, has taken longer than expected. It is Horizon’s
understanding that the Polish government is currently considering these
concessions, and the conversion and approvals are expected within the
next six months.
A new horizontal or highly deviated well and a horizontal or highly
deviated re-entry of the new vertical well (targeting >300m natural gas
column) would be drilled in mid-2020, increasing production to 17.5
MMcfe/d at a new processing facility expected to be operational in late
2020. Drilling would continue with production increases to over 30
MMcfe/d thereafter. Operating netbacks are expected to be approximately
US$6.80 per Mcfe, based on current pricing. Timing of the development is
subject to regulatory approvals, and Horizon has initiated efforts to
begin and fast-track the regulatory process.
Other Assets - France
In France, the government passed a law on December 30,
2017 preventing new oil and natural gas licences to be issued, and all
production on existing permits to cease by 2040. The Company has
allowed its Ger licence to expire and has applied for a three-year
extension on its Ledeuix licence. To the Company’s knowledge, other
companies operating in France have received extensions, and as such the
Company has no reason to believe that it will not receive approval on
the extension in 12-18 months. Currently, as there is no clarity on
timing to first production, the Company will initiate the seismic and
drilling applications but reduce all expenditures in France to minimum
levels.
C$5 Million Financing
Horizon proposes to raise up to C$5 million through a private placement,
issuing up to 100,000,000 common shares at a price of $0.05 per share.
The net proceeds are to be used to close the Acquisition, prepare the
assets for development and for general corporate purposes. Horizon has
entered into an engagement agreement with Gneiss Energy Limited, a
London, United Kingdom based energy-focused advisory practice, for the
purposes of raising new equity in Europe. In addition, Horizon will
raise additional funds from Canadian and certain UK investors on a
non-brokered basis.
Horizon is currently examining options for improving the Company’s
trading liquidity, access to new equity capital in Europe and profile
alongside its international E&P peers. As part of these deliberations,
Horizon may consider listing on another exchange, such as the London
Stock Exchange. In the event the Company decides to undertake an
additional listing, it expects to execute a plan within the next 6-12
months.
About Horizon Petroleum Ltd.
Calgary-based Horizon is focused on the appraisal and development of
conventional oil & natural gas resources onshore Europe. The Management
and Board of Horizon consist of oil & natural gas professionals with
significant international experience.
Advisories
Oil and Gas Advisories
The reserve and resource estimates contained in this press release
have been prepared in accordance with NI 51-101, is dated as of January
31, 2018 and prepared by APEX.
The reserve and resource estimates of natural gas and natural gas
liquids reserves provided in this news release are estimates only, and
there is no guarantee that the estimated reserves and/or resources will
be recovered. Actual reserves and resources may eventually prove
to be greater than, or less than, the estimates provided herein. It
should not be assumed that the estimates of future net revenues
presented herein represent the fair market value of the reserves and/or
resources. There are numerous uncertainties inherent in
estimating quantities of natural gas and natural gas liquids reserves
and/or resources and the future cash flows attributed to such reserves
and/or resources.
These risks and uncertainties include but are not limited to: (i) the
fact that there is no certainty that the zones of interest will exist to
the extent estimated or that the zones will be found to have natural gas
with characteristics that meet or exceed the minimum criteria in terms
of net pay thickness and/or porosity, or that the natural gas will be
commercially recoverable to the extent estimated; (ii) the fact that
there is no certainty that any portion of the probable reserves and
contingent and prospective resources will be commercially viable to
produce; (iii) the fact that the Company must hire an operations team
and executive team in both Calgary and Poland in order to execute on the
development plan, and there are no guarantees that suitably qualified
technical and professional staff and/or consultants will be available;
(iv) the lack of additional financing to fund the Company’s development
activities and continued operations; (v) the risks associated with
obtaining approvals to access land to drill wells or install
infrastructure and facilities in a reasonable time frame; the Polish
regulatory regime is relatively stable but is marked with long approval
processes relative to North American jurisdictions; (vi) the risks in
acquiring or constructing adequate natural gas infrastructure to produce
and sell natural gas, and whether capacity will be available in the
existing main pipeline system at reasonable costs; (vii) the risk that
there may not be a drilling rig available to drill the required wells,
and the risk that if a rig mobilization is required from outside of
Poland, that the costs may be prohibitive; (ix) risks inherent in the
international oil and natural gas industry; (x) fluctuations in foreign
exchange and interest rates; (xi)the number of competitors in the oil
and gas industry with greater technical, financial and operations
resources and staff; (xii) fluctuations in world prices and markets for
oil and natural gas due to domestic, international, political, social,
economic and environmental factors beyond the Company’s control; (xiii)
changes in government regulations affecting oil and natural gas
operations; (xiv) potential liabilities for pollution or hazards against
which the Company cannot adequately insure or which the Company may
elect not to insure; (xv) contingencies affecting the classification as
reserves versus resources which relate to the following issues as
detailed in the COGE Handbook: ownership considerations, drilling
requirements, testing requirements, regulatory considerations,
infrastructure and market considerations, timing of production and
development, and economic requirements; (xvi) the fact that there is no
certainty that any portion of the prospective resources will be
discovered and if discovered, there is no certainty that it will be
commercially viable to produce any portion of the resources; and (xvii)
other factors beyond the Company’s control.
Any reference in this press release to PIIP, contingent resources
and prospective resources are not, and should not be confused with oil
and natural gas reserves.
Definitions
Total Petroleum Initially in Place (“PIIP”) refers to the
total quantity of petroleum that is estimated to exist originally in
naturally occurring accumulations. It includes the petroleum that exists
in known accumulations prior to production and the estimated quantities
yet to be discovered in the various leads and prospects identified by
seismic and inferred by geology. A portion of the PIIP will be
recoverable as determined by ultimate recovery factors and the estimated
recoverable portion is further classified as Reserves, Contingent
Resources or Prospective Resources.
Discovered Petroleum Initially in Place (“Discovered PIIP” or “DPIIP”)
is the total quantity of Petroleum that is estimated as of the effective
date of the Report to be contained in known accumulations prior to
production.
Multiple development projects may be applied to each known
accumulation which may be separated vertically into different formations
or by area in different pools; each project will recover a portion of
the PIIP according to its unique reservoir characteristics. The projects
will be subdivided into Commercial and Sub-Commercial at the effective
date with the estimated recoverable petroleum quantities being
classified as Reserves and Contingent Resources.
Reserves are estimated remaining quantities of oil and natural
gas and related substances anticipated to be commercially recoverable
from known accumulations, from a given date forward, based on:
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(a)
|
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analysis of drilling, geological, geophysical and engineering
data;
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(b)
|
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the use of established technology; and
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(c)
|
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specified economic conditions (see the discussion of "Economic
Assumptions" below).
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Reserves are classified according to the degree of certainty
associated with the estimates.
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(d)
|
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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.
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(e)
|
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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.
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(f)
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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 + probable + possible
reserves.
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Company Gross Reserves are the Company’s working interest
(operating or non-operating) share before deducting royalties and
without including any royalty interests of the Company.
Resources are defined in the Canadian Oil and Gas Evaluation
Handbook (COGEH) Volume 1, section 5 as follows:
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from known
accumulations, but the applied projects are not yet considered mature
enough for commercial development due to one or more contingencies.
Contingent Resources may include, for example, projects for which there
are currently no viable markets, or where commercial recovery is
dependent on technology under development, or where evaluation of the
accumulation is insufficient to clearly assess commerciality.
Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters, or a lack of markets.
It is also appropriate to classify as contingent resources, the
estimated discovered recoverable quantities associated with a project in
the early evaluation stage. Contingent Resources are further classified
in accordance with the level of certainty associated with the estimates
and may be sub classified based on project maturity and/or characterized
by their economic status.
Not all technically feasible development plans will be commercial.
The commercial viability of a development project is dependent on the
forecast of fiscal conditions over the life of the project. For
Contingent Resources, the risk component relating to the likelihood that
an accumulation will be commercially developed is referred to as the
“chance of development.” For contingent resources, the chance of
commerciality is equal to the chance of development.
Development Pending are contingencies that are being actively
pursued; expect resolution in a reasonable time period; are directly
influenced by the developer with both, internal approvals and commitment
and development timing and; have a high chance of development (>80%).
Development on Hold are contingencies with major non-technical
contingencies identified; have a reasonable chance of development
(>50%); have contingencies that are beyond the control of the developer
including but not limited to: external approvals, economic factors,
market access, political factors and social license.
Development Unclarified are contingencies that have not been
clearly defined; the project is currently under active evaluation;
significant further appraisal may be required; progress is expected in a
reasonable time period; chance of development is difficult to assess and
could be a big range (20%-80%).
Development Not Viable are contingencies that have been
identified; the project was evaluated and considered not viable or
significant further appraisal may be required; progress is not expected
in a reasonable time period and; has a low chance of development (<<50%).
Contingent Resources –Development Pending and –Development On Hold
are considered economic, Contingent Resources –Development Unclarified
have economics that are undetermined, and Contingent Resources
–Development Not Viable are considered sub-economic.
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. Prospective Resources are further
subdivided in accordance with the level of certainty associated with
recoverable estimates assuming their discovery and development and may
be sub classified based on project maturity.
Not all exploration projects will result in discoveries. The chance
that an exploration project will result in the discovery of petroleum is
referred to as the “chance of discovery.” Thus, for an undiscovered
accumulation, the chance of commerciality is the product of two risk
components — the chance of discovery and the chance of development.
Estimates of resources always involve uncertainty, and the degree of
uncertainty can vary widely between accumulations/projects and over the
life of a project. Consequently, estimates of resources should generally
be quoted as a range according to the level of confidence associated
with the estimates. An understanding of statistical concepts and
terminology is essential to understanding the confidence associated with
resources definitions and categories. These concepts, which apply to all
categories of resources, are outlined below. The range of uncertainty of
estimated recoverable volumes may be represented by either deterministic
scenarios or by a probability distribution. Resources should be provided
as low, best, and high estimates as follows:
-
Low Estimate and/or 1C in the case of Contingent Resources:
This is considered to be a conservative estimate of the quantity that
will actually be recovered. It is likely that the actual remaining
quantities recovered will exceed the low estimate. If probabilistic
methods are used, there should be at least a 90 percent probability
(P90) that the quantities actually recovered will equal or exceed the
low estimate.
-
Best Estimate and/or 2C in the case of Contingent Resources:
This is considered to be the best estimate of the quantity that will
actually be recovered. It is equally likely that the actual remaining
quantities recovered will be greater or less than the best estimate.
If probabilistic methods are used, there should be at least a 50
percent probability (P50) that the quantities actually recovered will
equal or exceed the best estimate.
-
High Estimate and/or 3C in the case of Contingent Resources:
This is considered to be an optimistic estimate of the quantity that
will actually be recovered. It is unlikely that the actual remaining
quantities recovered will exceed the high estimate. If probabilistic
methods are used, there should be at least a 10 percent probability
(P10) that the quantities actually recovered will equal or exceed the
high estimate.
This approach to describing uncertainty may be applied to reserves,
contingent resources, and prospective resources. There may be
significant risk that sub commercial and undiscovered accumulations will
not achieve commercial production, however, it is useful to consider and
identify the range of potentially recoverable quantities independently
of such risk.
The main contingencies identified in the Lachowice Reserves Report
are the successful recompletion of existing abandoned wells, the
expected decline rates and the approval and completion of new
development and new re-entries. Table 6 below outlines the
positive and negative factors which may be relevant to the Resource
Report assumptions and estimates.
Table 6:
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Positive Factors
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Negative Factors
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The Federal Government is familiar with the oil and gas industry
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No gas plant near the play - a new gas plant is included in CAPEX
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Federal government is supporting international investments into
their oil and gas industry
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No sales pipeline near the play - a new natural gas sales lines is
included in CAPEX
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Significant resources
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No current sales contract
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High and stable natural gas prices
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Approval timelines may delay the project
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Low royalties
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Local resitance to drilling and/or production facilities may delay
the project
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Well understood approval process
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Changing political landscape
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The local community is familiar with natural gas production and
processing and is generally well accepted
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Access to capital to spend CAPEX
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The development project is located in a farming area, away from
major urban centers
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Drilling and completion risks
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Limited production rate and reserves in place
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Boe means a barrel of oil equivalent on the basis of 6 Mcf of
natural gas to 1 barrel of oil equivalent. Mcfe means one
thousand cubic feet of natural gas equivalent on the basis of 6 Mcfe : 1
barrel of oil. A boe conversion ratio of 6 Mcf : 1 Boe and
6 Mcfe : 1 bbl are based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given the value ratio based on the
price of crude compared to the price of natural gas at various times can
be significantly different from the energy equivalence of 6 Mcf : 1 boe
or 6 Mcfe : 1 bbl, using Boe’s and Mcfe’s may be misleading as an
indication of value.
Abbreviations:
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Bcf
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billion cubic feet
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Bcfe
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billion cubic feet of natural gas equivalent
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Bbl
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barrels
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Boe
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barrels of oil equivalent
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M
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thousand
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MM
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million
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Mcfe
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thousand cubic feet of natural gas equivalent
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MMcfe/d
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million cubic feet equivalent per day
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Tcf
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trillion cubic feet
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BTAX
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before income tax
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PV10
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present value discounted at 10%
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km2
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square kilometers
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Note Regarding Forward Looking Statements.
This press release contains forward-looking statements and
forward-looking information (collectively "forward-looking information")
within the meaning of applicable securities laws relating to the
Company’s plans and other aspects of our anticipated future operations,
management focus, strategies, financial, operating and production
results, industry conditions, commodity prices and business
opportunities. In addition, and without limiting the generality of the
foregoing, this press release contains forward-looking information
regarding anticipated netbacks, anticipated potential of the
Acquisition, the closing and timing of the Acquisition, the timing of
the remaining regulatory approvals to close the Acquisition, the closing
and timing of closing of the Financing, the use of proceeds from the
Financing, decisions regarding additional listings, production guidance,
capital program and allocation thereof, future production, development
and drilling plans, well economics, future cost reductions, potential
growth, the extension of the Ledeuix licence and the current operating
plans with respect to the Company's assets in Franceas well as the
source of funding the Company’s capital spending. Forward-looking
information typically uses words such as "anticipate", "believe",
"project", "expect", "goal", "plan", "intend" or similar words
suggesting future outcomes, statements that actions, events or
conditions "may", "would", "could" or "will" be taken or occur in the
future.
The forward-looking information is based on certain key expectations
and assumptions made by Horizon’s management, including expectations and
assumptions noted previously in this press release under oil and gas
advisories, and in addition with respect to prevailing commodity prices
and differentials, exchange rates, interest rates, applicable royalty
rates and tax laws; future production rates and estimates of operating
costs; performance of future wells; reserve and resource volumes;
anticipated timing and results of capital expenditures; the success
obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing, location
and extent of future drilling operations; the state of the economy and
the exploration and production business; results of operations;
performance; business prospects and opportunities; the availability and
cost of financing, labour and services; the impact of increasing
competition; the ability to efficiently integrate assets and employees
acquired through acquisitions, including the Acquisition, the ability to
market natural gas successfully and Horizon’s ability to access capital.
Although the Company believes that the expectations and assumptions on
which such forward-looking information is based are reasonable, undue
reliance should not be placed on the forward-looking information because
Horizon can give no assurance that they will prove to be correct. Since
forward-looking information addresses future events and conditions, by
its very nature they involve inherent risks and uncertainties. Horizon’s
actual results, performance or achievement could differ materially from
those expressed in, or implied by, the forward-looking information and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking information will transpire or occur,
or if any of them do so, what benefits that we will derive therefrom.
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release in
order to provide securityholders with a more complete perspective on
future operations and such information may not be appropriate for other
purposes.
Readers are cautioned that the foregoing lists of factors are not
exhaustive. These forward-looking statements are made as of the date of
this press release and we disclaim any intent or obligation to update
publicly any forward-looking information, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws.
This press release contains future-oriented financial information and
financial outlook information (collectively, "FOFI") about Horizon’s
prospective results of operations, operating netbacks and components
thereof, all of which are subject to the same assumptions, risk factors,
limitations and qualifications as set forth in the above paragraphs.
FOFI contained in this press release was made as of the date of this
press release and was provided for the purpose of providing further
information about Horizon’s anticipated future business operations.
Readers are cautioned that the FOFI contained in this press release
should not be used for purposes other than for which it is disclosed
herein.
Non-GAAP Measures
This press release includes non-GAAP measures as further described
herein. These non-GAAP measures do not have a standardized meaning
prescribed by International Financial Reporting Standards (“IFRS” or,
alternatively, “GAAP”) and therefore may not be comparable with the
calculation of similar measures by other companies.
Operating netbacks are determined by deducting royalties, net
profit interest, production expenses and selling expenses from oil and
gas revenue. Operating netbacks are per mcfe measures used in
operational and capital allocation decisions.
The assumptions used to generate the netback (US$/Mcfe) in this
press release are as follows:
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Daily Production(1)
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17.65 MMcfe/d
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Commodity Revenue (2)
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US$4.57 MM
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Royalties and 6% NPI
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US$ 0.57 MM
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Operating Cost(1)
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US$ 0.28 MM
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Operating Netbacks
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US$6.82/Mcfe
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(1) Daily production and operating costs are management's best
estimate of the production and operating costs from the
anticipated wells and is based on all of the assumptions outlined
in the above paragraphs;
(2)Based on Lachowice Natural Gas Price = US$8.63/mcf,
Condensate Price = US$72.00/Bbl, CAD/USD= 0.778
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Neither TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
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