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:
OIL
MBBL GAS MCF NPV10 MM PDP 4,173 3,608
$62.570 PDNP 1,230 2,252 $16.196 PUD
5,400 3,780 $47.283 TOTAL PROVED 10,803
9,640 $126.049
This compares with an internal estimate generated as at February
1st, 2016:
OIL
MBBL GAS MCF NPV10 MM PDP 3,179 2,493
$36.045 PDNP 1,189 2,241 $11.284 PUD
3,344 2,341 $17.609 TOTAL PROVED 7,712
7,074 $64.939
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
$1.50 per barrelf) Negligible value is attributable to gas
sales.
The substantial increase from February 1 to June 30 can be
attributed to three factors.
Oil Price
First, the oil price strip as at June 30th has increased,
compared to that used in the February 1st estimate.
Period Ending
February 1st Oil Price($/Barrel)
June 30th Oil Price($/Barrel)
February 2016 39.63 December 2016 36.95
49.42 December 2017 42.36 52.17 December 2018
44.93 53.69 December 2019 46.74 54.60
Thereafter 48.07 55.43
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:
OIL
MBBL GAS MCF NPV10 MM PDP 2,148 1,049
$22.755 PDNP 1,189 2,241 $11.284 PUD
3,344 2,341 $17.609 TOTAL PROVED 6,680
5,631 $51.648
This compares to the June 30 estimate for Foreman Butte
project:
OIL
MBBL GAS MCF NPV10 MM PDP 3,243 1,973
$45.818 PDNP 1,230 2,252 $16.196 PUD
5,400 3,780 $47.283 TOTAL PROVED 9,873
8,005 $109.297
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:
OIL
MBBL GAS MCF NPV10 MM PDP 3,342 2,286
$47.242 PDNP 1,230 2,252 $16.196 PUD
5,400 3,780 $47.283 TOTAL PROVED 9,971
8,318 $110.720
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 BARRManaging 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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version on businesswire.com: http://www.businesswire.com/news/home/20160911005052/en/
Samson Oil & Gas LimitedTerry Barr, 303-296-3994 (US
office)CEO