(i) Net is net revenue interest
The Company's remaining Edmonton Sands shallow gas drilling inventory is now estimated to be 542 gross (307 net) locations.
The recently completed reserves report effective December 31, 2012, and summarized herein, includes proved plus probable reserves for 48 net Cardium horizontal oil, 0.75 net other horizontal oil and no Edmonton Sands locations. There are a further 100 net Cardium horizontal and 61 net other horizontal light oil locations that are not included in the reserves report.
PRODUCTION
The property dispositions announced in the fourth quarter of 2012 have all been completed. Net of all of the properties sold, the Company estimates first quarter 2013 production to be approximately 3,900 to 4,200 BOED of which 55% is from high netback Cardium properties. Oil & NGL production is estimated to be 43% of the total BOED production in the quarter. Given the low price environment, the Company shut-in 700 Mcfd of natural gas production in the first quarter of 2012, and shut-in an additional 900 Mcfd in the first quarter of 2013.
2013 CAPITAL PROGRAM
For the first half of 2013, Anderson estimates its capital program to approximate cash flows, dedicated exclusively to its Cardium horizontal drilling program. After spring break up, the Company will revisit its 2013 capital program.
COMMODITY HEDGING CONTRACTS
Crude Oil. As part of its price management strategy, the Company has added to its fixed price swap contracts based on the NYMEX crude oil price in Canadian dollars. As of March 15, 2013, the average volumes and prices for these derivative contracts are summarized below:
Weighted Weighted average WTI average volume CanadianPeriod (bpd) ($/bbl)January 1, 2013 to March 31, 2013 1,200 89.73April 1, 2013 to June 30, 2013 1,100 89.81July 1, 2013 to September 30, 2013 900 90.54October 1, 2013 to December 31, 2013 800 90.56----------------------------------------------------------------------------
The Company entered into hedging contracts to protect its capital program and continues to evaluate the merits of additional commodity hedging as part of a price management strategy. The Company has not hedged any natural gas volumes at this time.
RESERVES
GLJ Petroleum Consultants ("GLJ"), an independent evaluator, has completed a reserves report (the "GLJ Report") of all the Company's oil and natural gas properties effective December 31, 2012, prepared in accordance with procedures and standards contained in National Instrument 51-101 of the Canadian Securities Administrators ("NI 51-101") and the Canadian Oil and Gas Evaluation ("COGE") Handbook. The reserves definitions used in preparing the report are those contained in the COGE Handbook and NI 51-101. As of December 31, 2012, the Company had 6.9 MMBOE PDP reserves (39% oil & NGL), 10.3 MMBOE TP reserves (43% oil & NGL) and 17.8 MMBOE P&P reserves (48% oil & NGL). The GLJ price forecast used in the evaluation is shown in Management's Discussion and Analysis for the year ended December 31, 2012.
The reserves report reflects the disposition of $74 million in properties in 2012, the previously announced termination of the Company's shallow gas drilling commitment and the negative impact of significant reductions in natural gas price forecasts over the past year. The percentage of PDP, TP and P&P total BOE reserves volumes from the Cardium formation represent approximately 59%, 66% and 75% of total Company reserves volumes respectively. By product, approximately 96% of P&P oil and NGL reserves and 55% of P&P natural gas reserves (primarily solution gas) are in the Cardium formation. The Cardium P&P NPV 10 value is approximately 90% of the total Company P&P NPV 10 value. The Edmonton Sands shallow gas project represents approximately 5% of the total Company P&P NPV 10 value.
