Sales of oil and natural gas during the four month transition year ended December 31, 2012 were 250,411 BOE comprised 39% of oil and liquids and 61% of natural gas. Oil and liquids sales for the four month transition year ended December 31, 2012 were 97,919 barrels of oil and liquids. Natural gas sales for the four month transition year ended December 31, 2012 were 914,951 Mcf of natural gas.
Reserve volumes and net present values of Crown Point's reserves were impacted by several factors. Crown Point's sales volumes for the period were 250,411 BOE with sales revenue of $8,206,914. During the period Crown Point did not drill any wells. Technical revisions were primarily due to depleted reservoir pressure in the south east area of El Valle resulting in a negative revision to primary oil recovery on proved plus probable reserves of 273,000 barrels comprised of a negative revision of 80,000 barrels of proved reserves and of 192,000 barrels of probable reserves. Increased operating costs experienced at El Valle and on the Tierra del Fuego ("TDF") concession coupled with reserve revisions impacted net present values.
Further details of the evaluation of the Company's reserves as at December 31, 2012 are contained in the Company's NI 51-101 filings for the period ended December 31, 2012 included in the Annual Information Form which has been filed with Canadian securities regulatory authorities and will be made available under the Company's profile at www.sedar.com and on the Company's website at www.crownpointenergy.com.
TIERRA DEL FUEGO, ARGENTINA
The Company's 25.78% working interest in the Tierra del Fuego area of Argentina covers approximately 489,000 acres (126,000 net acres) in the Austral Basin and includes the Las Violetas, Angostura Sur and Rio Cullen exploitation concessions. The primary term of all three concessions expires in November 2016; however, the Company and its partners have negotiated a ten year extension (to November 2026) with the provincial government authorities of TDF. The extension and its terms are currently awaiting ratification by the provincial legislature.
Crown Point's TDF concessions are high quality natural gas weighted assets possessing the capability to deliver increased levels of production and reserves in an expected increasing natural gas price market.
NEW GAS INCENTIVE IMPACT ON CROWN POINT
On January 18, 2013, the Government of Argentina issued a resolution to increase the price to US$7.50/MMbtu (approximately US$7.75/Mcf) for natural gas production in excess of a "base" production rate determined for each company (the "New Gas Incentive"). The New Gas Incentive provides that participating companies will receive, on a payment basis to be determined from the National Government, cash compensation equal to the difference between US$7.50/MMbtu (approximately US$7.75/mcf) and the price received for gas produced in excess of the base production rate. Certain details are still pending to fully clarify how the New Gas Incentive will be implemented. The implementation of this program or one similar may have a significant and positive impact on Crown Point's capital programs and its financial netbacks from production from the TDF concessions.
In the event that Crown Point and its joint venture partners participate in the "New Gas" program, it is likely that the Tierra del Fuego capital spending plans would be revised to include additional drilling and 3D seismic acquisition designed to accelerate growth in production and reserves.
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