CALGARY, Alberta, March 02, 2023 (GLOBE NEWSWIRE) -- Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) is pleased to provide a summary of its 2022 year-end reserves evaluation and an updated operational outlook.
The highlights and reserves summary below set forth Razor’s gross reserves at December 31, 2022, as evaluated by Sproule Associates Limited (“Sproule”), qualified reserves evaluators, in an independent report dated February 24, 2023 (the “Sproule Report”). The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the “COGEH”) and the reserve definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserve information as required under NI 51-101 will be included in the Company’s Annual Information Form which is anticipated to be filed on SEDAR on or before April 14, 2023.
Razor's 2022 annual audited consolidated financial statements have not been completed. Certain financial and operating information included in this news release is based on management's estimates only and are subject to audit and may be subject to change upon completion of the Company’s annual audited consolidated financial statements. See “Reader Advisories – Unaudited Financial Information”.
HIGHLIGHTS
- Proved Developed Producing (“PDP) reserves value increased 7% year over year to $95.6 million discounted at 10% (“NPV10”).
- Razor continues to have a significant Proved Developed Non-Producing (“PDNP”) reserves value discounted at NPV10 of $67.9 million. These low-risk reactivations require minimal capital expenditures to bring production back online. Future development capital of $9.3 million is required to reactivate the PDNP, or “behind-pipe” production and reserves, in existing wells and convert them to PDP reserves. The associated production for these reactivations is estimated to be 1,500 boe/day and are scheduled throughout 2023 and 2024.
- The Company continues to maintain considerable exposure to WTI oil price. Razor’s Proved Developed reserve base, defined as PDP plus PDNP, has a NPV10 of $163.5 million from a volume of 14,148 MBoe and is comprised of 63% light 41° API oil, 2% medium 25° API oil, 25% natural gas liquids and 10% natural gas. On a cumulative basis, this equates to 90% oil and liquids.
- Razor’s corporate annual base decline remains below 13%.
- The Company’s Reserve Life Index1 is calculated by taking the Company Gross Reserves from the Sproule Report and dividing them by the projected 2023 production as estimated in the Sproule Report: PDP 7.0 years, Total Proved 9.7 years and Total Proved plus Probable 12.0 years.
- The greater Swan Hills Area accounts for 68% of Razor’s PDP reserves volumes with the greater Kaybob and South District areas at 22% and 10% respectively.
________________________
1 “Reserve Life Index” does not have standardized meaning. See “Reader Advisories - Oil and Gas Metrics” contained in this news release.
2022 INDEPENDENT RESERVES EVALUATION
Sproule carried out an independent reserves evaluation effective December 31, 2022, which was prepared in accordance with definitions, standards and procedures contained in the COGEH and in NI 51-101. The reserves evaluation was based on Sproule forecast pricing and foreign exchange rates at December 31, 2022 as outlined herein.
Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without the inclusion of any royalty interest) unless otherwise noted.
RESERVES SUMMARY
Summary of Gross Oil and Gas Reserves at December 31, 2022(1), (2), (3), (4)
| Light and Medium Crude Oil | Heavy Crude Oil | Conventional Natural Gas | Natural Gas Liquids | Barrels of Oil Equivalent | |
| Gross | Gross | Gross | Gross | Gross | |
| (Mbbl) | (Mbbl) | (MMcf) | (Mbbl) | (Mboe) | |
| Proved | |||||
| Developed Producing | 5,999 | 186 | 7,111 | 1,730 | 9,100 |
| Developed Non-Producing | 2,939 | 109 | 1,503 | 1,750 | 5,048 |
| Undeveloped | 358 | 218 | 380 | 53 | 692 |
| Total Proved | 9,296 | 513 | 8,994 | 3,532 | 14,840 |
| Probable | 2,565 | 139 | 2,249 | 972 | 4,051 |
| Total Proved plus Probable | 11,861 | 652 | 11,243 | 4,504 | 18,891 |
Net Present Value of Future Net Revenue Before Income Taxes Discounted at (% per Year) (M$)
| 0% | 5% | 10% | 15% | 20% | |
| Proved | |||||
| Developed Producing | (37,205) | 84,820 | 95,625 | 89,977 | 82,619 |
| Developed Non-Producing | 120,951 | 87,701 | 67,850 | 54,737 | 45,482 |
| Undeveloped | 27,065 | 23,240 | 20,081 | 17,481 | 15,331 |
| Total Proved | 110,812 | 195,760 | 183,557 | 162,195 | 143,432 |
| Probable | 125,765 | 75,290 | 50,875 | 37,200 | 28,730 |
| Total Proved plus Probable | 236,577 | 271,050 | 234,432 | 199,395 | 172,162 |
Notes:
(1) The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers due to rounding.
(2) Gross reserves mean the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Razor before deductions of royalties payable to others and without including any royalty interests owned by Razor.
(3) Based on Sproule's December 31, 2022 escalated price forecast. See “Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs”.
(4) The net present value of future net revenue attributable to the Company's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well ADR and IWC costs. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by Sproule represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.
Reserves Reconciliation (1)
The following table sets forth the reconciliation of the Company’s reserves at Forecast Prices and Costs:
| Barrels of Oil Equivalent | |||
| Factors | Gross Proved Developed Producing (Mboe) | Gross Proved (Mboe) | Gross Proved + Probable (Mboe) |
| December 31, 2021 | 9,768 | 16,193 | 21,085 |
| Acquisitions | - | - | - |
| Disposition | (856) | (1,350) | (1,678) |
| Extensions/Infill Drilling | - | - | - |
| Economic Factors | 990 | 1,501 | 1,940 |
| Technical Revision | 747 | 47 | (907) |
| Production | (1,549) | (1,549) | (1,549) |
| December 31, 2022 | 9,100 | 14,840 | 18,891 |
Notes:
(1) The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers due to rounding.
Future Development Costs
The following table sets forth development costs deducted in the estimation of Razor’s future net revenue attributable to the reserve categories noted below:
| Forecast Prices and Costs (M$) | ||
| Year | Total Proved Reserves | Proved plus Probable |
| 2023 | 7,933 | 8,361 |
| 2024 | 9,287 | 9,473 |
| 2025 | 0 | 0 |
| Thereafter | 3,829 | 3,829 |
| Total Undiscounted | 21,049 | 21,663 |
| Total Discounted at 10% | 17,696 | 18,251 |
The future development costs are estimates of capital expenditures required in the future for Razor to convert proved developed and undeveloped non-producing plus probable reserves to PDP reserves. The undiscounted future development costs are $21.1 million for proved reserves and $21.7 million for proved plus probable reserves, in each case based on forecast prices and costs.
Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs
The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs. Crude oil and natural gas benchmark reference pricing, inflation and exchange rates utilized by Sproule at December 31, 2022 were as follows:
| Year | Exchange Rate (CAD/USD) | WTI Cushing Oklahoma 40 API (USD/bbl) | Canadian Light Sweet 40 API (CAD/bbl) | Hardisty Bow River 25 API (CAD/bbl) | Natural Gas AECO (CAD/mmbtu) |
| 2023 | 0.75 | 86.00 | 110.67 | 89.32 | 4.33 |
| 2024 | 0.80 | 84.00 | 101.25 | 90.72 | 4.34 |
| 2025 | 0.80 | 80.00 | 96.18 | 85.32 | 4.00 |
| 2026 | 0.80 | 81.60 | 98.10 | 87.03 | 4.08 |
| 2027 | 0.80 | 83.23 | 100.06 | 88.77 | 4.16 |
| 2028 | 0.80 | 84.90 | 102.06 | 90.55 | 4.24 |
| 2029 | 0.80 | 86.59 | 104.10 | 92.36 | 4.33 |
| 2030 | 0.80 | 88.33 | 106.18 | 94.20 | 4.42 |
| 2031+ | 0.80 | +2.0%/yr. | +2.0%/yr. | +2.0%/yr. | +2.0%/yr. |
OPERATIONAL OUTLOOK
Razor continues to progress its reactivation program. The Company anticipates bringing onstream primarily light oil and natural gas liquids from this program at similar declines to its existing reserve base. Once reactivated, the PDNP reserves from these wells will shift back to the PDP reserves category.
ABOUT RAZOR
Razor is a publicly traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth, focused on efficiency and cost control in all areas of the business. Razor currently trades on TSX Venture Exchange under the ticker “RZE”.
www.razor-energy.com
For additional information please contact:
| Doug Bailey President and Chief Executive Officer | OR | Kevin Braun Chief Financial Officer |
| Razor Energy Corp. 800, 500-5th Ave SW Calgary, Alberta T2P 3L5 Telephone: (403) 262-0242 www.razor-energy.com | ||
READER ADVISORIES
Forward-Looking Statements. Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project” or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include but is not limited to: Razor’s business strategy, objectives, strength and focus; the ability of the Company to achieve drilling success consistent with management’s expectations; the timing for filing the Company’s Annual Information Form; estimated capital expenditures; the Company’s expectations and timing for the reactivation program; and future development costs associated with oil and gas reserves. Statements relating to “reserves” are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Razor, including expectations and assumptions concerning the success of future drilling, development, completion and reactivation activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Razor's properties, the successful application of drilling, completion and seismic technology, prevailing weather and break-up conditions, commodity prices, price volatility, price differentials and the actual prices received for the Company’s products, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and Razor’s ability to acquire additional assets.
Although Razor believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Razor can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry and geothermal electricity projects in general (e.g., operational risks in development, exploration and production; variability in geothermal resources; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), constraint in the availability of services, electricity and commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas and geothermal industries, regulatory and political risks, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Razor’s annual information form for the year ended December 31, 2021 which is available on SEDAR at www.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Razor undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about Razor’s prospective results of operations, production, 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 document was approved by management as of the date of this document and was provided for the purpose of providing further information about Razor’s future business operations. Razor disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.
Oil and Gas Metrics. This press release contains a number of oil and gas metrics, including “future development costs” and “reserve life index” which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods. Future development costs are calculated as the sum of development capital plus the change in future development costs for the period. Reserve life index is calculated by taking the Company Gross Reserves from the Sproule Report and dividing them by the projected 2023 production as estimated in the Sproule report.
Boe Disclosure. The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Unaudited Financial Information. Certain financial and operating information included in this press release for the year ended December 31, 2022, are based on estimated unaudited financial results for the year then ended, and are subject to the same limitations as discussed under Forward-Looking Statements set out above. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2022 and changes could be material.
Neither the 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 news release.
