Storm’s year-end reserve evaluation effective December 31, 2015 was prepared by InSite Petroleum Consultants Ltd. (“InSite”) under date of February 16, 2016. InSite has evaluated all of Storm’s crude oil, NGL and natural gas reserves. The InSite price forecast at December 31, 2015 was used to determine all estimates of future net revenue (also referred to as net present value or NPV). Storm’s Reserves Committee which is made up of independent and appropriately qualified directors, has reviewed and approved the evaluation prepared by InSite, and the report of the Reserves Committee has been accepted by the Company’s Board of Directors.
Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise. All reserves information has been prepared in accordance with National Instrument ("NI") 51-101. In addition to the information disclosed in this report, more detailed information will be included in Storm's Annual Information Form.
- Proved developed producing (“PDP”) reserves increased 54% to total 20,810 Mboe with additions replacing 300% of 2015 production.
- Total proved (“1P”) reserves increased 23% to total 73,434 Mboe with additions replacing 480% of 2015 production. Total proved plus probable (“2P”) reserves increased 14% to total 100,722 Mboe with additions replacing 450% of 2015 production.
- Total proved reserves were 73% of total proved plus probable reserves, an improvement from 68% in 2014.
- The all-in finding, development, and acquisition (“FD&A”) cost(1) to add reserves was $6.53 per Boe for PDP, $3.38 per Boe for 1P and was $0.50 per Boe for 2P.
- Recycle ratio using the all-in FD&A cost was 1.3 for PDP additions, 2.6 for 1P additions, and 17.3 for 2P additions using the 2015 field operating netback of $8.68 per Boe excluding hedging gains or losses.
- Technical revisions were primarily due to horizontal well performance exceeding expectations which increased PDP reserves by 1,221 Mboe, 1P reserves by 6,700 Mboe and 2P reserves by 5,482 Mboe.
- Economic factors were the elimination of undeveloped drilling locations at the Horn River Basin (“HRB”) in northeast British Columbia, reducing 1P reserves by 2,364 Mboe and 2P reserves by 4,462 Mboe.
- Breaking down 2P reserves by area, 96.2% is at Umbach, 3.4% at the HRB and 0.4% is at Grande Prairie.
- Future development costs (“FDC”) were $435.4 million on a 1P basis and $543.3 million on a 2P basis which represents approximately five years of activity in the evaluation based on forecast capital investment in 2016.
- At Umbach the 100% working interest lands were assigned 70 net 2P horizontal drilling locations at an average of 4.7 Bcf gross raw gas, an increase of 7% from 4.4 Bcf gross raw gas assigned in 2014. On the 60% working interest lands, 20.4 net 2P horizontal drilling locations were assigned an average of 3.7 Bcf gross raw gas, an increase of 16% from 3.2 Bcf gross raw gas assigned in 2014.
- Ultimate 2P recovery for the producing horizontal wells at Umbach is forecast to average 5.5 Bcf gross raw gas for the wells drilled in 2015, 6.2 Bcf gross raw gas for the wells drilled in 2014 (revised up from 5.4 Bcf last year), and 4.4 Bcf gross raw gas for the wells drilled in 2013 (revised up from 4.2 Bcf last year).
- At Umbach, 2P reserves were recognized in the upper Montney only on 20% or 31.2 net sections of Storm’s 153 net sections in the area with DPIIP averaging 48 Bcf gross raw gas per section in the upper Montney (total net DPIIP 1.5 Tcf on 31.2 net sections). Forecast recovery of DPIIP totals 38% for 2P reserves.
- Umbach 2P FDC totaled $514.0 million for 90.4 net 2P future horizontal drilling locations which equals an average of $5.7 million per location and includes $0.6 million per location for future infrastructure expansion (last year was $484.0 million for 79.4 net locations which was $6.1 million per future horizontal drilling location and included $0.8 million per location for future infrastructure expansion).
- The all-in calculation reflects the result of Storm’s entire capital investment program as it takes into account the effect of acquisitions, dispositions and revisions, as well as the change in FDC.
INFORMATION REGARDING DISCLOSURE ON OIL AND GAS RESERVES AND RESOURCES
All amounts are stated in Canadian dollars unless otherwise specified. Where applicable, natural gas has been converted to barrels of oil equivalent ("Boe") based on 6 Mcf:1 Boe. The Boe rate is based on an energy equivalent conversion method primarily applicable at the burner tip and does not recognize a value equivalent at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value. Production volumes and revenues are reported on a company gross basis, before deduction of Crown and other royalties, unless otherwise stated. Unless otherwise specified, all reserves volumes are based on "company gross reserves" using forecast prices and costs. The oil and gas reserves statement for the year ended December 31, 2015, which will include complete disclosure of oil and gas reserves and other information in accordance with NI 51-101, will be contained within the Annual Information Form which will be available on SEDAR.
References to estimates of oil and gas classified as DPIIP are not, and should not be confused with, oil and gas reserves.
To view detailed Reserves tables, please visit our 2015 Year-End Report on this website under "Investor Relations","Financial Reports", "Reserves".