Samson Oil & Gas Limited (ASX: SSN; NYSE MKT: SSN):
June 30th Reserves
Netherland Sewell, & Associates Inc. has completed Samson’s June 30th
reserves estimate and it is as follows:
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OIL MBBL
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GAS MCF
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NPV10 MM
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PDP
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4,173
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3,608
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$62.570
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PDNP
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1,230
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2,252
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$16.196
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PUD
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5,400
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3,780
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$47.283
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TOTAL PROVED
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10,803
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9,640
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$126.049
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This compares with an internal estimate generated as at February 1st,
2016:
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OIL MBBL
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GAS MCF
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NPV10 MM
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PDP
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3,179
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2,493
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$36.045
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PDNP
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1,189
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2,241
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$11.284
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PUD
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3,344
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2,341
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$17.609
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TOTAL PROVED
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7,712
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7,074
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$64.939
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These estimates have been made using the NYMEX strip at the applicable
date, adjusted for delivery and quality differentials.
The estimate uses variables that are particular to each well, based on
historical data, but generally the variables for the Foreman Butte
project, which constitutes the bulk of the reserves, have the following
parameters:
a) A PUD well cost at $2.8 million.
b) The PUD wells use a type
curve that generates a EUR of 380,000 bbls.
c) A realized oil price
differential of $6 to WTI.
d) A fixed operating cost of $3,400 per
month per well.
e) A salt water disposal cost of $1.50 per barrel
f)
Negligible value is attributable to gas sales.
The substantial increase from February 1 to June 30 can be attributed to
three factors.
Oil Price
First, the oil price strip as at June 30th has increased,
compared to that used in the February 1st estimate.
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Period Ending
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February 1st Oil Price ($/Barrel)
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June 30th Oil Price ($/Barrel)
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February 2016
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39.63
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December 2016
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36.95
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49.42
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December 2017
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42.36
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52.17
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December 2018
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44.93
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53.69
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December 2019
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46.74
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54.60
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Thereafter
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48.07
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55.43
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PDNP Conversion
Second, following its assumption of Operatorship in the Foreman Butte
Project in early June, Samson engaged five work over rigs to restore an
additional 32 wells to PDP status. This activity, which cost around
$800,000, resulted in a $12 million NPV10 addition to the
reserve estimate as at June 30th.
Infill Development Planning
Third, during the intervening period, Samson developed a definitive
infill development plan for the Foreman Butte Field and the first three
drill spacing units have been submitted to the regulatory authorities
for approval. This plan, when fully implemented, will see 17 PUD
locations drilled in Foreman Butte along with an additional well in the
R Field, which is the high value well in the portfolio. This planned
infill development fits inside the defined limits of each field that
were established through previous drilling activity. As a result, the
value of the PUD category has increased substantially.
We are continuing to develop the reserve base in terms of behind pipe
reserves and additional drilling opportunities. We expect further
additions to emerge once that technical analysis is complete.
Cost reduction
Since acquiring the Foreman Butte project, Samson has reduced the
operating cost within the project from $22 to $12 per barrel. The lower
lifting cost is common to both the February and June reserve estimates.
It is important, however, that Samson’s cost experience after becoming
operator has confirmed the assumptions made in the February estimate.
Samson remains focused on reducing costs further, and have identified
several areas where we believe further cost reductions are achievable.
Foreman Butte Project Reserves
The acquisition of the Foreman Butte Project was financed on a February 1st
reserves report, which was as follows:
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OIL MBBL
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GAS MCF
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NPV10 MM
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PDP
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2,148
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1,049
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$22.755
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PDNP
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1,189
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2,241
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$11.284
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PUD
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3,344
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2,341
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$17.609
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TOTAL PROVED
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6,680
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5,631
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$51.648
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This compares to the June 30 estimate for Foreman Butte project:
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OIL MBBL
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GAS MCF
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NPV10 MM
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PDP
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3,243
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1,973
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$45.818
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PDNP
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1,230
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2,252
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$16.196
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PUD
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5,400
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3,780
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$47.283
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TOTAL PROVED
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9,873
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8,005
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$109.297
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This comparison demonstrates that the Foreman Butte project’s PDP
reserve has increased by more than 100%, which more than replaces the
reserves to be sold in the North Stockyard field.
North Stockyard Sale
As previously announced, Samson has executed a purchase and sale
agreement with respect to its interest in the North Stockyard field and
accepted a $1 million nonrefundable deposit as part of the $15 million
consideration. We are expecting the buyer of this asset to close the
transaction mid to late September. As a result, after the closing
Samson’s pro forma June 30th reserves will be reduced as
follows:
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OIL MBBL
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GAS MCF
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NPV10 MM
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PDP
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3,342
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2,286
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$47.242
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PDNP
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1,230
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2,252
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$16.196
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PUD
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5,400
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3,780
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$47.283
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TOTAL PROVED
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9,971
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8,318
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$110.720
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Samson’s proved reserves will have nevertheless almost doubled compared
to its February 1st estimate.
Debt Facility
As previously announced, the proceeds of the North Stockyard sale will
be used to reduce our debt to $19 million, and to fund the immediate
working capital requirements of the company.
After the North Stockyard sale Samson will have a theoretical borrowing
base well in excess of its current draw. While there is no assurance of
the availability of additional capital, Samson is optimistic that its
improved reserves will provide it with the capital opportunities for
further expanding the Foreman Butte asset base through production
enhancements and infill development drilling.
Samson’s Ordinary Shares are traded on the Australian Securities
Exchange under the symbol "SSN". Samson's American Depository Shares
(ADSs) are traded on the New York Stock Exchange MKT under the symbol
"SSN". Each ADS represents 200 fully paid Ordinary Shares of Samson.
Samson has a total of 3,215 million ordinary shares issued and
outstanding (including 230 million options exercisable at AUD 3.8
cents), which would be the equivalent of 16.08 million ADSs.
Accordingly, based on the NYSE MKT closing price of US$0.765 per ADS on
September 9th, 2016, the Company has a current market
capitalization of approximately US$12.3 million (the options have been
valued at an exchange rate of 0.7652). Correspondingly, based on the ASX
closing price of A$0.005 for ordinary shares and a closing price of
A$0.001 for the 2017 options, on September 9th, 2016, the
Company has a current market capitalization of approximately A$16.1
million.
Competent Person Statement
The reserves quoted in this announcement were estimated by Netherland
Sewell & Associates, an independent petroleum reserve engineering
consulting firm based on the definitions and disclosures guidelines
contained in the Society of Petroleum Engineers, World Petroleum
Council, Association of Petroleum Geologists and Society of Petroleum
Evaluation Engineers Petroleum Resources Management Systems.
Information in this announcement relating to hydrocarbon reserves is the
responsibility of the CEO of Samson Oil and Gas Ltd., Mr. T.M. Barr a
petroleum geologist who holds an Associateship in Applied Geology and
who has 40 years of relevant experience in the oil and gas industry.
SAMSON OIL & GAS LIMITED
TERRY BARR
Managing Director
Statements made in this press release that are not historical facts may
be forward looking statements, including but not limited to statements
using words like “may”, “believe”, “expect”, “anticipate”, “should” or
“will.” Actual results may differ materially from those projected in any
forward-looking statement. There are a number of important factors that
could cause actual results to differ materially from those anticipated
or estimated by any forward looking information, including uncertainties
inherent in estimating the methods, timing and results of exploration
activities. A description of the risks and uncertainties that are
generally attendant to Samson and its industry, as well as other factors
that could affect Samson’s financial results, are included in the
prospectus and prospectus supplement for its recent Rights Offering as
well as the Company's report to the U.S. Securities and Exchange
Commission on Form 10-K, which are available at www.sec.gov/edgar/searchedgar/webusers.htm.
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