Oryx Petroleum Announces its Year End 2019 Reserves & Resources and Operations Update
19 February 2020
Calgary, Alberta, February 19, 2020
Proved Plus Probable Oil Reserves of 103 million barrels and US$ 732 million(1) in Related After-Tax Net Present Valueof Future Net Revenue as at December 31, 2019
Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announced its oil reserves and resources as at December 31, 2019 as evaluated by Netherland, Sewell & Associates, Inc. (“NSAI”), an independent oil and gas consulting firm, and as set forth in a report dated February 14, 2020 prepared in accordance with National Instrument 51-101 by NSAI (the “2019 NSAI Report”). The reserves and resources disclosure coincides with the filing on SEDAR at www.sedar.com of a material change report (the “Material Change Report”), which includes additional information derived from the 2019 NSAI Report.
Highlights of the report for Oryx Petroleum’s gross (working interest) oil reserves and resources volumes, and future net revenue related to oil reserves and contingent oil resources sub-classified as development pending in the Hawler license area as at December 31, 2019, as compared to the equivalent estimates prepared by NSAI as at December 31, 2018 (the “2018 NSAI Report”), include:
► Proved plus probable oil reserves decrease to 103 million barrels (“MMbbl”) versus 127 MMbbl:
- Decrease of volumes attributable to the Tertiary and Cretaceous reservoirs in the western fault block of the Banan field due to remapping of the field based on new well data obtained during 2019
- Decrease of volumes attributable to the Cretaceous reservoir in the Zey Gawra field due to production and well performance
- Modest decrease of volumes attributable to the Cretaceous reservoir in the Demir Dagh field due to production and a reduction in the number of assumed producing wells
► After-tax net present value of future net revenue related to proved plus probable oil reserves of US$ 732 million(1)versus US$ 814 million(2):
- Decrease is the result of lower forecast gross production volumes, lower forecast export oil prices, and a modest increase in forecast capital and operating costs, partially offset by a higher percentage entitlement under the production sharing contract
► Best estimate (2C) unrisked contingent oil resources attributable to the Hawler license area of 176 MMbbl versus 168 MMbbl:
- Addition of volumes attributable to the Banan Tertiary resulting from remapping of the Banan west fault block using data obtained during drilling in 2019
► Best estimate unrisked prospective oil resources of 2,263 MMbbl unchanged from December 31, 2018
Operations Update:
► Average gross (100%) production from the Hawler license area for the months of December 2019 and January 2020 was 14,000 bbl/d and 14,500 bbl/d, respectively
► Payments have been received for all oil sold through the pipeline through September 2019
► The horizontal sidetrack of the previously drilled Demir Dagh-3 well targeting the Cretaceous reservoir was completed as a producing well in December 2019
► The drilling of a horizontal sidetrack of the previously drilled Banan-1 well in the portion of the Banan field east of the Great Zab river was completed in early 2020
- Data obtained during drilling indicate that the Tertiary reservoir in the eastern portion of the Banan field contains oil of similar density to oil produced from the Tertiary reservoir in the portion of the Banan field west of the Great Zab river. Attempts to complete the well as a producer in the Cretaceous reservoir were unsuccessful
- Further drilling targeting both the Tertiary and Cretaceous reservoirs is planned in 2020
► Operations in recent weeks were successful in shutting off water production from the Banan-5 well which is producing oil from the Cretaceous reservoir in the portion of the Banan field west of the Great Zab river
CEO’s Comment
Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:
“We are pleased to provide an update on our operations and report our reserves and resources at year end 2019 as evaluated by NSAI, but before I comment on either of those topics, I would like to thank and congratulate all of the employees and contractors of Oryx Petroleum and OP Hawler Kurdistan Limited for working all of 2019 without incurring any Lost Time Injuries or having any significant releases or other adverse environmental incidents. Safety and environmental responsibility are pre-requisite to all of the Corporation’s operations and our employees and contractors have once again demonstrated that we can achieve our work program without compromising our safety or environmental principles, despite the inherently hazardous nature of the oil and gas business.
One of the many activities that was completed safely in December 2019 was the drilling of a horizontal sidetrack from the previously drilled Demir Dagh-3 well and completion of the sidetrack as a producer in the Cretaceous reservoir. The well is our first successful implementation, in Demir Dagh, of the horizontal well design that is integral to our development plans for the Cretaceous reservoirs in the Hawler area fields.
NSAI’s year-end evaluation of our reserves and resources resulted in downward adjustments to both proved plus probable oil reserves and the associated after-tax net present value of future net revenue. The 18% reduction in proved plus probable oil reserves is primarily the result of remapping the western fault block of the Banan field to incorporate data obtained during drilling in 2019. Smaller reductions resulted from depletion of previously booked reserves and minor adjustments to development plans for the Demir Dagh Cretaceous reservoirs. The after-tax net present value of future net revenue related to proved plus probable oil reserves decreased by 10% due to the aforementioned decrease in proved plus probable oil reserves, lower forecast export oil prices and somewhat higher estimated operating and facilities costs. These negative factors are partially offset by a higher entitlement under the production sharing contract.
We are pursuing an active drilling program in 2020 in the Hawler license area that we expect will lead to increased production and will allow us to further assess fields and reservoirs where we currently have contingent or prospective resources but no reserves. Our six well 2020 program commenced with the drilling of a horizontal sidetrack of the previously drilled Banan-1 well in the eastern fault block of the Banan field and formation evaluation data was obtained from both the Tertiary and Cretaceous reservoirs. Data obtained in the Tertiary reservoir where we currently have no reserves or contingent resources indicates the presence of a significant column of oil with similar density to that produced from the very successful Banan-3 and Banan-4 wells west of the Great Zab river. Data obtained from the Cretaceous reservoir reconfirmed the presence of an oil column in this reservoir but we were unable to complete the well as an oil producer in this reservoir as planned. Further evaluation of these two reservoirs is planned in 2020 from new wells to be drilled from a more optimal location.
In the AGC Central exploration license area in West Africa, we are preparing for exploration drilling as early as late 2020.”
[1] These estimated values are calculated using a 10% discount rate and are valid as at December 31, 2019. Estimated value of future net revenue does not represent fair market value. See the Material Change Report for additional information regarding these estimated values.
[2] These estimated values are calculated using a 10% discount rate and are valid as at December 31, 2018.