CALGARY, ALBERTA -- (Marketwire) -- 02/26/13 -- Chinook Energy Inc. ("Chinook" or the "Company") (TSX: CKE) today announced the results of its year-end reserve evaluations effective December 31, 2012 as prepared by its independent evaluators. The Company has also provided certain unaudited year-end financial information and an operations update.
Chinook's audit of its 2012 annual consolidated financial statements is not yet complete and accordingly all financial amounts referred to in this news release are unaudited and represent management's estimates. Readers are advised that these financial estimates are subject to audit and may be subject to change as a result.
2012 Reserves Highlights
Two evaluators, which were largely responsible for the previous evaluations of the same assets, have evaluated all of Chinook's crude oil, NGL and natural gas reserves in accordance with National Instrument 51-101. Chinook's Reserves, Safety and Environmental Committee and Board of Directors have reviewed and approved the evaluations prepared by the evaluators. Highlights of such evaluations are as follows:
-- Proved reserves totaled 28.95 million barrels of oil equivalent. The proved reserve life index ("RLI") is 7.1 years using annualized December 2012 production.-- Proved plus probable reserves totaled 51.65 million barrels of oil equivalent. The proved plus probable RLI is 12.7 years using annualized December 2012 production.-- Proved plus probable reserves are down 7.5% from 2011. Assets representing 11.7% of the 2011 reserves were sold during the year and Economic Factors and Technical Revisions represented a 0.6% increase from 2011 reserve levels.-- The proved finding and development cost, as per NI 51-101 requirements, was $39.27 per barrel of oil equivalent and the proved plus probable finding and development cost, as per NI 51-101 requirements, was $40.19 per barrel of oil equivalent. The change in future development costs ("FDC") and revisions was included in the calculation and the effect of acquisitions and divestitures was excluded.-- Commodity price forecasts used in the independent evaluation, relative to the 2011 evaluation period, were down approximately 15% for natural gas in Canada, which represents 44% of the corporate proved plus probable reserve volumes and down approximately 3% (6% in Canada and 2% in Tunisia) for the oil, which represents 51% of the corporate proved plus probable reserve volumes. As a result of the reduction in the price forecast, Chinook recorded a 1.33 million barrels of oil equivalent loss of reserves due to economic factors.-- The after tax net asset value at December 31, 2012, is $3.11 per basic share (214.2 million shares) based on the net present value of proved and probable reserves, discounted at 10% after tax and after deducting year end total net debt and adding an estimated value of $100 per acre for its 357,745 acres of undeveloped land in Canada. On a before tax basis, with a similar 10% discount rate, the net asset value is $4.21 per basic share.-- Gross Discovered Petroleum Initially in Place ("DPIIP") associated with the Bir Ben Tartar (TT) discovery on the Sud Remada permit in Tunisia, after the addition of five development wells in 2012, is estimated to be 201.7 million barrels of oil. Proved and probable reserves net to the Company of 5.1 million barrels of oil represent the Company's 48% Contractor's share of the 10.7 million barrels of oil remaining recoverable. Proved and probable reserves have been assigned to areas representing 44% of the DPIIP up to a 13% recovery, or an average of 5% recovery for the entire structure. An additional 2.5 million barrels of oil of possible reserves and a Best Case Contingent Resource of 7.2 million barrels net to the Company's interest is attributable to the DPIIP area to which proved and probable reserves have not been assigned up to the date of evaluation. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will exceed the sum of proved plus probable reserves. On this basis, 44% of the reserve and resource potential recognized on the block is reflected in the Company's NI 51-101 reserves and net asset value. The net present value after tax discounted at 10% for the proved plus probable reserves is $163 million or $34.95 per barrel.
