CST: 29/07/2016 01:00:50   

Serinus Announces 2015 Year End Reserves

134 Days ago

CALGARY, ALBERTA--(Marketwired - Mar 16, 2016) - Serinus Energy Inc. ("Serinus", "SEN" or the "Company") (TSX:SEN) (WARSAW:SEN), is pleased to report the results of the year-end evaluation of its oil and gas reserves. The evaluation was prepared by RPS Energy Canada Ltd. ("RPS") in accordance with Canadian National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, and includes the reserves in Serinus' Ukraine licences, and in its Tunisian properties. RPS also assigned contingent resources to the Company's Satu Mare licence in Romania.

All of the reserves volumes as well as the net present values attributed to the Ukraine Reserves disclosed herein, refer to Serinus' 70% effective ownership interest in the assets through its 70% indirect ownership in KUB-Gas LLC ("KUB-Gas"), which owns and operates the six licence areas in northeast Ukraine. For the Total Company figures, those aggregate values are also based on 70% interest in the Ukraine assets. Note that the Company sold all of its interests in Ukraine subsequent to December 31, 2015.

Company Reserves - Using Forecast Prices
2015 2014
Oil/Liquids Gas BOE Oil/Liquids Gas BOE YoY Change
(Mbbl) (MMcf) (Mboe) (Mbbl) (MMcf) (Mboe) (%)
Tunisia
Proved
Producing 1,468 2,578 1,897 1,602 3,059 2,112 -10%
Non-Producing 301 1,337 524 402 1,740 692 -24%
Undeveloped 848 1,806 1,150 1,066 2,478 1,478 -22%
Total Proved (1P) 2,617 5,722 3,571 3,070 7,277 4,283 -17%
Probable 5,799 14,490 8,214 5,266 12,704 7,383 11%
Total Proved & Probable (2P) 8,417 20,212 11,785 8,336 19,981 11,666 1%
Possible 11,537 25,038 15,710 9,606 22,323 13,327 18%
Total Proved, Probable & Possible (3P) 19,953 45,250 27,495 17,942 42,304 24,993 10%
Ukraine (70% SEN Working Interest)
Proved
Producing 60 12,878 2,207 63 12,452 2,139 3%
Non-Producing 20 4,375 749 22 4,296 738 2%
Undeveloped 41 6,342 1,098 21 2,800 488 125%
Total Proved (1P) 121 23,595 4,054 106 19,548 3,364 20%
Probable 135 16,378 2,864 215 25,599 4,482 -36%
Total Proved & Probable (2P) 256 39,973 6,918 321 45,147 7,846 -12%
Possible 260 20,591 3,692 359 28,662 5,136 -28%
Total Proved, Probable & Possible (3P) 516 60,564 10,610 680 73,809 12,981 -18%
TOTAL COMPANY
Proved
Producing 1,528 15,456 4,104 1,665 15,512 4,250 -3%
Non-Producing 321 5,712 1,274 424 6,036 1,430 -11%
Undeveloped 889 8,148 2,247 1,086 5,278 1,966 14%
Total Proved (1P) 2,738 29,317 7,625 3,176 26,825 7,647 0%
Probable 5,934 30,868 11,078 5,481 38,303 11,865 -7%
Total Proved & Probable (2P) 8,673 60,185 18,703 8,657 65,128 19,511 -4%
Possible 11,797 45,629 19,402 9,965 50,985 18,463 5%
Total Proved, Probable & Possible (3P) 20,469 105,814 38,105 18,622 116,114 37,974 0%
Note: Serinus reports in US dollars. All dollar amounts referred to herein are in USD, unless specifically noted otherwise.

2015 was another challenging year for Serinus and the petroleum industry in general. For the industry, the continuing issue was the collapse in oil prices. The price of Brent Crude started at over $56/bbl in early January, strengthened to above $66/bbl in May, then falling below $37/bbl by year end. During January 2016, it reached $28.55/bbl before finding some strength and has been recently trading near $40/bbl. This has reduced profitability for the entire industry, and caused significant changes in the economic value, and in some cases, the economic viability of reserves and resources.

Total corporate 1P and 3P reserves were substantially unchanged from 2014, while 2P reserves fell by 4%. Lower commodity prices and price forecasts were the dominant factor in 2015. The forecast price for Brent crude for 2016 is $44/bbl, vs. $74.64/bbl in the 2014 evaluation, and in the longer term, the new forecast only recovers to 92% of that used last year. This reduced reserves volumes due to earlier economic cut-offs, and delays some development plans. Individual fields (or countries) had other positive and negative revisions as well which are discussed below.

As in previous years, there were markedly different results between Ukraine and Tunisia, the two countries in which the Company's reserves were located.

Tunisia

In Tunisia, 1P reserves decreased by 17%, while 2P and 3P reserves increased by 1% and 10% respectively. In addition to the effects of lower commodity prices, the revisions to reserves include:

  • Future development in Sabria now contemplates the use of dual lateral horizontal wells. These are expected to have higher IP rates and recoveries at the 1P, 2P and 3P levels, while reducing overall capital costs.

  • Better than expected performance from the CS-3 and CS-7 wells.

  • Smaller technical revisions included:

    • Negative revisions to Proved Developed Producing ("PDP") reserves for several wells that are currently awaiting workover, stimulation or other remedial measures.

    • a lower gas oil ratio in the Sabria Field leading to lower gas reserves

Ukraine

1P reserves in Ukraine increased by 20% and 2P and 3P reserves decreased by 12% and 18% respectively compared to year end 2014. The key influences on the Ukraine reserves were:

  • Positive technical revisions due to

    • the success of the R30c zone in O-11 and the subsequent addition of a new R30c location

    • the installation of field compression in the Olgovskoye Field, and resultant better production performance

    • a new horizontal location in the Makeevskoye Field.

  • Negative technical revisions due to:

    • reduced pool volumetrics around the O-24 well

    • the M-19 well watering out earlier than previously anticipated

    • decline in the M20 R8 pool production performance

  • Net positive economic revisions, as reductions in the nominal royalty rates from 55% to 29% for gas more than offset the effects of lower commodity prices, extending the economic life of the properties.

Net Present Value - After Tax, Using Forecast Prices
2015 2014
YoY Change
0% 10% 15% 0% 10% 15% for PV10
(US$ millions) (US$ millions)
Tunisia
Proved
Producing 3.7 7.4 7.9 27.2 27.2 26.5 -73%
Non-Producing 9.9 8.1 7.0 19.0 15.4 13.7 -47%
Undeveloped 16.9 5.7 2.9 36.3 18.4 13.4 -69%
Total Proved (1P) 30.5 21.2 17.8 82.5 60.9 53.6 -65%
Probable 216.1 88.2 62.4 216.3 97.0 73.4 -9%
Total Proved & Probable (2P) 246.6 109.4 80.2 298.8 157.9 127.0 -31%
Possible 514.9 140.0 92.0 432.7 140.2 98.6 0%
Total Proved, Probable & Possible (3P) 761.5 249.4 172.2 731.5 298.1 225.6 -16%
Ukraine (70% SEN Working Interest)
Proved
Producing 34.2 29.2 27.0 35.6 30.8 28.6 -5%
Non-Producing 15.8 11.0 9.4 7.4 4.8 3.9 128%
Undeveloped 9.0 2.0 - 1.1 (0.5) (0.8) nm
Total Proved (1P) 58.8 42.5 36.9 44.1 35.1 31.7 21%
Probable 76.5 35.4 25.8 78.7 42.3 33.4 -16%
Total Proved & Probable (2P) 135.3 77.9 62.7 122.8 77.4 65.1 1%
Possible 115.6 47.8 34.5 111.0 46.0 33.3 4%
Total Proved, Probable & Possible (3P) 250.9 125.7 97.2 233.8 123.4 98.3 2%
TOTAL COMPANY
Proved
Producing 37.9 36.6 34.9 62.7 58.0 55.1 -37%
Non-Producing 25.7 19.1 16.4 26.4 20.2 17.6 -5%
Undeveloped 60.5 7.7 2.9 37.4 17.9 12.6 -57%
Total Proved (1P) 89.3 63.7 54.7 126.6 96.0 85.3 -34%
Probable 292.6 123.6 88.2 295.0 139.3 106.8 -11%
Total Proved & Probable (2P) 381.9 187.3 142.9 421.6 235.3 192.1 -20%
Possible 630.5 187.8 126.5 543.7 186.2 131.8 1%
Total Proved, Probable & Possible (3P) 1,012.4 375.1 269.4 965.3 421.5 323.9 -11%

Net present values for Serinus' reserves declined by 34%, 20% and 11% for 1P, 2P and 3P reserves respectively. The major contributing factors to those declines were:

  • The drop in commodity prices

  • The decrease in royalty rates effective January 1, 2016 on oil and gas production by the Ukraine government partially offset the effect of commodity prices there.

  • The changes in reserve volumes as discussed above.

Tunisia

The decline in oil prices significantly outweighed all other factors, even in the 2P and 3P categories which experienced net volume increases.

The drop in oil prices has an effect on Tunisian gas prices as well. In general, gas in Tunisia is priced as an equivalent to low sulphur heating oil, which in turn, will fluctuate with oil prices.

Ukraine

Serinus' production in Ukraine was 98% natural gas, and while the drop was not as severe as that for Brent crude, the price forecast is still materially lower than that used for year end 2014. The average expected prices for 2016 and 2017 are $5.99 and $6.43/Mcf respectively, vs. $8.34 and $8.58/Mcf last year.

The more significant impact on the value of the Ukraine reserves came from the decrease in nominal natural gas royalties from 55% to 29% effective January 1, 2016. This more than offset the loss in value due to the lower commodity price forecasts in all three categories.

Contingent Resources - Romania

In addition to the 1P, 2P and 3P reserves assigned to the Company's properties in Tunisia and Ukraine, contingent resources were also assigned to the Moftinu discovery in Romania made in early 2015. The Moftinu-1001 well tested at a maximum rate of 7.4 MMcf/d and 19 bbl/d of condensate. The currently development plan contemplates three development well and a gas plant tying into an existing sales line running through the Satu Mare concession. The resources and their net present values are shown in the table below.

Resource Volumes (unrisked) AT NPV (unrisked)
Oil/Liquids Gas BOE 0% 10% 15% Probability of
(Mbbl) (MMcf) (Mboe) ($ millions) Development
1C Contingent Resources 17.7 6,976 1,180.3 10.8 6.9 5.4 85%
2C Contingent Resources 41.8 12,632 2,147.1 36.7 24.5 20.2 85%
3C Contingent Resources 96.3 24,203 4,130.2 94.9 57.2 45.7 85%

Pending regulatory approvals by the Romanian government and the ability to finance, first production is anticipated in early 2017 and will require $14 million of capital expenditures.

Finding and Development Costs
Total Corporate Finding and Development Costs, excluding Acquisitions
Total Proved Reserves Total Proved & Probable Reserves
3 Year 3 Year
2015 2014 2013 Total 2015 2014 2013 Total
Exploration and Development Costs (M$) 18,875 67,453 75,560 161,888 18,875 67,453 75,560 161,888
Net Change in Future Development Costs (M$) 22,750 (22,647) 3,537 3,640 19,960 (22,597) 3,537 900
Total Finding & Development Costs (M$) 41,625 44,806 79,097 165,528 38,835 44,856 79,097 162,788
Reserve Additions (excluding acquisition) (Mboe) 2,189 1,075 914 4,178 709 978 1,399 3,087
Finding & Development Costs ($/Boe) $19.02 $41.68 $86.52 $39.62 $54.77 $45.85 $56.52 $52.74
Total Corporate Finding, Development and Acquisition Costs
Total Proved Reserves Total Proved & Probable Reserves
3 Year 3 Year
2015 2014 2013 Total 2015 2014 2013 Total
Exploration and Development Costs (M$) 18,875 67,453 75,560 161,888 18,875 67,453 75,560 161,888
Acquisition/Disposition Costs (M$) - - 99,518 99,518 - - 99,518 99,518
Net Change in Future Development Costs (M$) 22,750 (22,647) 33,437 33,540 19,960 (22,597) 61,177 58,540
Total Finding & Development Costs (M$) 41,625 44,806 208,515 294,946 38,835 44,856 236,255 319,946
Reserve Additions (Mboe) 2,189 1,075 4,656 7,920 709 978 12,783 14,471
Finding & Development Costs ($/Boe) $19.02 $41.68 $44.78 $37.24 $54.77 $45.85 $18.48 $22.11

Note: Finding, Development (and Acquisition Costs) in the tables above are shown and calculated on the basis of 100% working interest in Ukraine, consistent with the consolidated financial reporting and statements.

Reserve Evaluator Price Forecasts

RPS used the following commodity price forecasts in preparing its evaluation of Serinus' oil and gas properties.

Ukraine Tunisia Gas
Brent Condensate Gas Sabria Chouech
($/Bbl) ($/Bbl) ($/Mcf) ($/Mcf) ($/Mcf)
2016 44.00 33.96 5.99 7.15 7.78
2017 50.00 38.60 6.43 8.13 8.84
2018 58.00 44.77 7.02 9.43 10.25
2019 65.00 50.17 7.53 10.57 11.49
2020 73.00 56.35 8.12 11.87 12.91
2021 78.00 60.21 8.49 12.68 13.79
2022 83.00 64.07 8.86 13.49 14.67
2023 88.00 67.93 9.23 14.30 15.56
2024 93.00 71.79 9.60 15.12 16.44
2025 95.61 73.80 9.79 15.54 16.90
2026 97.52 75.28 9.93 15.85 17.24
2027 99.47 76.78 10.07 16.17 17.59
2028 101.46 78.32 10.22 16.49 17.94
2029 103.49 79.88 10.37 16.82 18.30
2030 105.56 81.48 10.52 17.16 18.66
2031 107.67 83.11 10.68 17.50 19.04
2032 109.82 84.77 10.84 17.85 19.42
2033 112.02 86.47 11.00 18.21 19.80
2034 114.26 88.20 11.16 18.57 20.20
Abbreviations
bbl Barrel(s) bbl/d Barrels per day
boe Barrels of Oil Equivalent boe/d Barrels of Oil Equivalent per day
Mcf Thousand Cubic Feet Mcf/d Thousand Cubic Feet per day
MMcf Million Cubic Feet MMcf/d Million Cubic Feet per day
Mcfe Thousand Cubic Feet Equivalent Mcfe/d Thousand Cubic Feet Equivalent per day
MMcfe Million Cubic Feet Equivalent MMcfe/d Million Cubic Feet Equivalent per day
Mboe Thousand boe Bcf Billion Cubic Feet
MMboe Million boe Mcm Thousand Cubic Metres
UAH Ukrainian Hryvnia USD U.S. Dollar
CAD Canadian Dollar

Cautionary Statement:

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Test results are not necessarily indicative of long-term performance or of ultimate recovery. The test data contained herein is considered preliminary until full pressure transient analysis is complete.

About Serinus

Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Tunisia and Romania.

For further information, please refer to the Serinus website (www.serinusenergy.com).

Translation : This news release has been translated into Polish from the English original.

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

Serinus Energy Inc. - Canada
Norman W. Holton
Vice Chairman
+1-403-264-8877
nholton@serinusenergy.com
Serinus Energy Inc. - Canada
Gregory M. Chornoboy
Director - Capital Markets & Corporate Development
+1-403-264-8877
gchornoboy@serinusenergy.com
Serinus Energy Inc. - Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00
jkorczak@serinusenergy.com