LNG Energy Group Announces 2023 Year End Reserves Evaluation With Before Tax NPV10 Value of 2P Reserves Increasing 26% to U.S.$306 Million or C$2.67/Share
Highlights:
- Increased before-tax NPV10 for Proved (1P) reserves to U.S.$171 million representing NPV10 of C$1.49 per share.
- Increased before-tax NPV10 for Proved plus Probable (2P) reserves to U.S.$306 million representing NPV10 of C$2.67 per share.
- Increased before-tax NPV10 for Proved plus Probable plus Possible (3P) reserves to U.S.$577 million representing NPV10 of C$5.04 per share.
- At December 31, 2023, 1P net reserves life index of 7.9 years and a 2P reserves life index of 14.3 years.
- Three-year average net reserves replacement ratio is 193% on a 1P basis, 336% on a 2P basis.
TORONTO, March 12, 2024 (GLOBE NEWSWIRE) -- LNG Energy Group Corp. (TSXV: LNGE) (TSXV: LNGE.WT) (OTCQB: LNGNF) (FRA: E26) (the “Company” or “LNG Energy Group”) announced today announced the results of its annual independent reserves assessment conducted by DeGolyer and MacNaughton (“D&M”). All of the Company’s booked reserves for the year ended December 31, 2023 are located close to markets and infrastructure in northern Colombia within the Lower Magdalena and Sinú-San Jacinto basins.
“2023 saw a robust natural gas market in Colombia and our Company has benefited from the supply and demand dynamics playing out now in the country,” commented Pablo Navarro, Chairman and Chief Executive Officer of the Company. “The current market price of the Company’s common shares represents a significant discount to the NPV10 for 1P reserves which is C$1.49 per share. The Company has a reserves life index of 7.9 years on a 1P basis and a net reserves replacement ratio of 193% on a 1P basis. These reserves are located on acreage that represent less than 2% of our total acreage and we look forward to launching our 2024 activity set.”
2023 Reserves Report
For the year ended December 31, 2023, LNG Energy Group reported the following:
- The before-tax net present value at a 10% discount rate (“NPV10”) for the net 1P reserves is U.S.$171 million at December 31, 2023. See the Net Present Value of Future Revenue Before-Tax summary table below for more information.
- The before-tax NPV10 for the net 2P reserves is U.S.$306 million at December 31, 2023.
- The before-tax NPV10 for the net 3P reserves is U.S.$577 million at December 31, 2023.
- Before-tax NPV10 of contingent resources of U.S.$9.8 million.
- Total 1P gross reserves of 97.8 billion cubic feet equivalent (“Bcfe”)(1) consisting of 95% conventional natural gas and 5% natural gas liquids.
- Total 2P gross reserves of 168.9 Bcfe consisting of 96% conventional natural gas and 4% natural gas liquids.
- As at December 31, 2023, 1P net reserves life index of 7.9 years and a 2P reserves life index of 14.3 years.
- The Company’s three-year average net reserves replacement ratio is 193% and 336% for 1P and 2P reserves, respectively.
| (1) | See section entitled “Boe conversion”. |
2023 Year-End D&M Certified Net Reserves Volumes(1)
| December 31, 2023 | December 31, 2022 | |||||
| Reserves Category | Condensate | Sales Gas | Total | Condensate | Sales Gas | Total |
| Mbbl | MMcf | Bcfe | Mbbl | Bcf | Bcfe | |
| Proved Developed Producing (PDP) | 309 | 28 | 30 | 470 | 35 | 37 |
| Proved Developed Non-Producing (PNDP) | 26 | 7 | 7 | 93 | 8 | 8 |
| Proved Undeveloped (PUD) | 103 | 16 | 17 | 5 | 11 | 11 |
| Total Proved (1P) | 439 | 51 | 54 | 569 | 54 | 57 |
| Probable | 215 | 43 | 44 | 302 | 40 | 42 |
| Total Proved Plus Probable (2P) | 654 | 94 | 98 | 871 | 94 | 99 |
| Possible(2) | 606 | 132 | 135 | 482 | 127 | 129 |
| Total Proved Plus Probable Plus Possible (3P) | 1,260 | 226 | 233 | 1,353 | 221 | 228 |
| (1) | Net reserves represent LNG Energy Group’s working interest before royalties. See section entitled About LNG Energy Group’s 2023 Year-End Estimated Reserves. Probable and possible reserves have not been risked adjusted to make them comparable to proved reserves. See section entitled About LNG Energy Group’s 2023 Year-End Estimated Reserves. Numbers in table may not add due to rounding differences. |
| (2) | 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 equal or exceed the sum of the proved plus probable plus possible reserves. |
Reserves Life Index (“RLI”)(1)
| Reserves Category | December 31, 2023(2) | |
| Total Proved (1P) | 7.9 | |
| Total Proved Plus Probable (2P) | 14.3 | |
| Total Proved Plus Probable Plus Possible (3P) | 34.2 |
| (1) | RLI does not have a standardized meaning and may not be comparable to similar measures presented by other companies and therefore should not be used to make such comparisons. |
| (2) | Calculated by dividing the total relevant net reserves category by the 2023 equivalent net production of 6.817 Bcfe. See section entitled “Boe conversion”. |
Net Present Value of Future Net Revenue Before Tax Summary(1)
| Reserves Category | December 31, 2023 NPV10 (U.S.$MM)(2) | December 31, 2023 NPV10 (C$/share)(3) | |||
| Proved Developed Producing (PDP) | $124 | $1.08 | |||
| Total Proved (1P) | $171 | $1.49 | |||
| Total Proved Plus Probable (2P) | $306 | $2.67 | |||
| Total Proved Plus Probable Plus Possible (3P)(4) | $577 | $5.04 | |||
| (1) | See section entitled “Reserves Report”. The full natural gas sales price assumptions will be set out in the Reserves Report. Please note a comparison to 2022 has not been provided as the Company closed its go-public transaction on September 12, 2023. Net reserves represent LNG Energy Group’s working interest before royalties. See section entitled About LNG Energy Group’s 2023 Year-End Estimated Reserves. |
| (2) | Includes Future Development Costs (“FDC”) as at December 31, 2023 of U.S.$26.1 million for 1P reserves and U.S.$41.7 million for 2P reserves. |
| (3) | Calculated by dividing the NPV10 value as at December 31, 2023 by 155,534,426 common shares issued and outstanding as at December 31, 2023 and using a U.S.$:C$ exchange rate of 1.3574. The per share valuation excludes the value of the Company’s non-oil and gas assets and net indebtedness. |
| (4) | 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 equal or exceed the sum of provided plus probable plus possible reserves. |
Net Present Value of Future Net Revenue After Tax Summary(1)
| Reserves Category | December 31, 2023 NPV10 (U.S.$MM)(2) | December 31, 2023 NPV10 (C$/share)(3) | |||
| Proved Developed Producing (PDP) | $101 | $0.88 | |||
| Total Proved (1P) | $127 | $1.11 | |||
| Total Proved Plus Probable (2P) | $212 | $1.85 | |||
| Total Proved Plus Probable Plus Possible (3P) (4) | $379 | $3.31 | |||
| (1) | See section entitled “Reserves Report”. The full natural gas sales price assumptions will be set out in the Reserves Report. Please note a comparison to 2022 has not been provided as the Company closed its go-public transaction on September 12, 2023. Net reserves represent LNG Energy Group’s working interest before royalties. See section entitled About LNG Energy Group’s 2023 Year-End Estimated Reserves. |
| (2) | Includes FDC as at December 31, 2023 of U.S.$26.1 million for 1P reserves and U.S.$41.7 million for 2P reserves. |
| (3) | Calculated by dividing the NPV10 value as at December 31, 2023 by 155,534,426 common shares issued and outstanding as at December 31, 2023 and using a U.S.$:C$ exchange rate of 1.3574. The per share valuation excludes the value of the Company’s non-oil and gas assets and net indebtedness. |
| (4) | 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 equal or exceed the sum of provided plus probable plus possible reserves. |
Neither the TSXV nor its Regulation Services Provider accept responsibility for the adequacy or accuracy of this release.
Unless otherwise indicated all reserves referenced in this news release are the Company’s working interest share before royalties. All dollar amounts in this news release and the Company’s financial disclosures are in United States dollars, unless otherwise noted.
About LNG Energy Group
The Company is focused on the acquisition and development of natural gas production and exploration assets in Latin America. For more information, please visit www.lngenergygroup.com.
For more information please contact:
James Morris, Vice-President, Business Development and Investor Relations
LNG Energy Group Corp.
Website: www.lngenergygroup.com
Email: investor.relations@lngenergygroup.com
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LinkedIn: https://www.linkedin.com/company/lng-energy-group-inc/
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About LNG Energy Group’s 2023 Year-End Estimated Reserves
The Company’s 2023 year-end estimated reserves were evaluated by D&M in their report entitled “Report as of December 31, 2023, on Reserves and Revenue and Contingent Resources and Potential Revenue of the SSJN-1 and VIM-41 Blocks in Colombia with interests attributable to Lewis Energy Colombia, Inc.” dated March 6, 2024, with an effective date of December 31, 2023 (the “Reserves Report”), in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”), National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and CSA Staff Notice 51-324. D&M is an independent qualified reserves evaluator as defined in NI 51-101.
Additional reserves information as required under NI 51-101 will be included in the Company's statement of reserves data and other oil and gas information on Form 51-101F1, which is expected to be filed on SEDAR on or about April 29, 2024. See “Advisory Note Regarding Oil and Gas Information” section in the “Advisories”, at the end of this news release.
Reserves Report
D&M, an independent qualified reserves and resources evaluator, has conducted the reserves and resource evaluation for the SSJN-1 and VIM-41 blocks in accordance with the COGE Handbook. It adheres in all material aspects to the principles and definitions established by the Calgary Chapter of the Society of Petroleum Evaluation Engineers regarding annual reserve and resource reports that are being released in the public domain. The COGE Handbook is incorporated by reference in NI 51-101.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements, and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often using phrases such as “expects”, “anticipates”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends”, or variations of such words and phrases, or stating that certain actions, events or results “may” or “could”, “would”, “should”, “might” or “will” be taken to occur or be achieved, are not statements of historical fact and may be forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include: general business, economic, competitive, political and social uncertainties; delay or failure to receive any necessary board, shareholder or regulatory approvals, factors may occur which impede or prevent LNG Energy Group’s future business plans; and other factors beyond the control of LNG Energy Group. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, LNG Energy Group assumes no obligation to update the forward-looking statements, whether they change as a result of new information, future events or otherwise, except as required by law.
Non-Standardized Measures
This news release includes non-standardized measures, including reserves life index and reserves replacement ratio. Reserves life index is calculated as the net reserves in the referenced category divided by the equivalent production of the last year. It is a measure of how long the booked reserves will last if the production rate is maintained and no additional reserves are added. Reserves replacement ratio is calculated as the net reserves added in the referenced category divided by the equivalent production of the last year. It is a measure of the capacity to replace the production. These measures should not be construed as alternative measures of financial performance. Such measures have been included to provide readers with additional means to evaluate the Company’s performance, but these non-standardized measures are not reliable indicators of the Company’s future performance and therefore must not be relied upon unduly. The Company's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies. Readers are cautioned that the information provided or derived by these measures should not be relied upon for investment purposes.
Advisory Note Regarding Oil and Gas Information
The reserves information contained in this news release has been prepared in accordance with NI 51-101, but only presents a portion of the disclosure required thereunder. Complete reserves disclosure required in accordance with NI 51-101 will be available on SEDAR at www.sedar.com on or about April 29, 2024. Actual oil and natural gas reserves and future production may be greater than or less than the estimates provided in this news release. There is no assurance that forecast prices and costs assumed in the Reserves Report, and presented in this news release, will be attained and variances from such forecast prices and costs could be material. The estimated future net revenue from the production of the disclosed oil and natural gas reserves in this news release does not represent the fair market value of these reserves. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.
There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary.
The Company’s actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material. All evaluations and reviews of future net revenue are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. The tax calculations used in the preparation of the Reserves Report are done at the field level in accordance with standard practice, and do not reflect the actual tax position at the corporate level which may be significantly different.
Boe Conversion
The term “boe” is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet to barrels is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, boe has been expressed using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy. In addition, as the value ratio between oil and natural gas based on current market values is significantly different from the energy equivalency of 5.7:1, utilizing a conversion of 5.7:1 may be misleading as an indication of value.
| Definitions: | |
| 1P | Proved reserves |
| 2P | Proved plus probable reserves |
| 3P | Proved plus probable plus possible reserves |
| bbl(s) | Barrel(s) of oil |
| Bcfe | Billion cubic feet of natural gas equivalent |
| boe | Refer to “Boe Conversion” disclosure above |
| boe/d | Barrel of oil equivalent per day |
| Gross Production | Refers to working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of the Company |
| Mboe | Thousand barrels of oil equivalent |
| $MM | Millions of dollars |
| Mbbl | Thousand barrels of oil |
| MMboe | Million barrels of oil equivalent |
| Mcf | Thousand cubic feet |
| MMcf | Million cubic feet |
| Net Production | Refers to working interest (operating or non-operating) share after deduction of royalty obligations, plus the Company’s royalty interests in production or reserves |
| W.I. | Working interest |
“Proved Developed Producing Reserves” are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been in production, and the date of resumption of production must be known with reasonable certainty.
“Proved Developed Non-Producing Reserves” are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is unknown.
“Proved Undeveloped Reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.
“Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. There is a 90 percent probability that the quantities actually recovered will equal or exceed the sum of proved reserves.
“Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. There is a 50 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable reserves.
“Possible” reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Information Regarding Contingent Resources
“Contingent resources” are those quantities of oil or gas estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies are conditions that must be satisfied for a portion of contingent resources to be classified as reserves that are: (a) specific to the project being evaluated; and (b) expected to be resolved within a reasonable timeframe.
Information Regarding Prospective Resources
“Prospective resources”are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by applying future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further categorized according to the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.
