Serinus Announces 2017 Year End Reserves

CALGARY, Alberta, March 20, 2018 (GLOBE NEWSWIRE) — Serinus Energy Inc. (“Serinus”, “SEN” or the “Company”) (TSX:SEN) (WARSAW:SEN), announces the results of the 2017 year-end evaluation of its oil and gas reserves.  The evaluation was prepared by the independent qualified reserves evaluator RPS Energy Canada Ltd. (“RPS”) in accordance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities, and includes the reserves and contingent resources in Serinus’ Tunisian and Romanian properties.

Company Gross Reserves – Using Forecast Prices

                   
    2017   2016
    Oil/Liquids Gas BOE   Oil/Liquids Gas BOE YoY Change
    (Mbbl) (MMcf) (Mboe)   (Mbbl) (MMcf) (Mboe) (%)
                   
TUNISIA (Company Working Interest)
Proved                
  Producing   438   1,028   609     1,068   1,985   1,399 -56 %
  Non-Producing   692   1,544   949     481   1,961   808 18 %
  Undeveloped   802   1,888   1,117     699   1,641   973 15 %
Total Proved (1P)   1,932   4,459   2,675     2,247   5,587   3,178 -16 %
Probable   5,044   11,670   6,989     5,169   14,455   7,578 -8 %
Total Proved & Probable (2P)   6,976   16,129   9,664     7,416   20,042   10,756 -10 %
                   
ROMANIA (Company Working Interest)
Proved                
  Producing   –    –    –      –    –    –  N/A
  Non-Producing   –    –    –      –    –    –  N/A
  Undeveloped   12   6,111   1,031     –    –    –  N/A
Total Proved (1P)   12   6,111   1,031               N/A
Probable   27   8,686   1,475     –    –    –  N/A
Total Proved & Probable (2P)   39   14,797   2,505               N/A
                 
TOTAL COMPANY
Proved                
  Producing   438   1,028   609     1,068   1,985   1,399 -56 %
  Non-Producing   692   1,544   949     481   1,961   808 18 %
  Undeveloped   814   7,999   2,147     699   1,641   973 121 %
Total Proved (1P)   1,944   10,570   3,706     2,247   5,587   3,178 17 %
Probable   5,071   20,356   8,464     5,169   14,455   7,578 12 %
Total Proved & Probable (2P)   7,015   30,926   12,169     7,416   20,042   10,756 13 %
 

Serinus encountered significant external and operational challenges in 2017, although the petroleum industry in general saw a recovery in relative oil prices towards the latter half of the year. The price of Brent Crude started at just over $56/bbl in early January, trading within a narrow band between $53/bbl and $57/bbl until early March before becoming more volatile with steep declines and recovery until the yearly low of $44.82/bbl on June 21, 2017. Brent Crude prices then began to gradually strengthen from June to the end of the year, reaching the yearly high of $67.02 on December 21, 2017. Brent crude  prices have sustained levels above $62/bbl in 2018 to date, exceeding $70/bbl for brief periods of trading.

Total corporate 1P and 2P reserves increased in 2017 from 2016 by 17% and 13%, respectively.  Recovering commodity prices were the dominant factor in 2017, especially in the latter half.  These increased reserves volumes are due to the reclassification of a portion of the gas resources of the Moftinu structure in Romania from Contingent Resources to Reserves, offset by reserve reductions attributed to the Company’s Tunisia properties. There were positive and negative revisions which are discussed below. 

Tunisia

In Tunisia, 1P reserves decreased by 16%, while 2P reserves decreased by 10%.  The technical revisions to reserves are:

  • Positive revisions included:
    • Removing SAB N1 workover and replacing with SAB N2, which has a higher EUR at lower cost; and
    • Improvement in SAB 11, WIN 13 and SAB NW1 production performance; and
  • Negative revisions included:
    • Reclassifications of Ech Chouech and Sanghar from Reserves to Contingent Resources;
    • Decreased reserves due to reduced production performance at WIN 12bis; and
    • Decreased reserves due to the removal of future development plans for CS-5, CS Sil-10, CS Sil-1 & CS-8bis

Romania

In Romania, the Moftinu Structure was classified as Reserves from its previous classification as contingent resources. Some of the key assumptions of Romanian reserves are:

  • Total resources nearly doubled from 2016;
  • Reclassification of A1, A2 and A3 sands to reserves from contingent resources;
  • The 2017 YE reserves evaluation assumes three additional/replacement development wells; (1003, 1004, 1007) to be drilled and placed on production in 2018, with Moftinu-1006 to be drilled and placed on production in 2019;
  • Almost no change to reserves as a result of the Moftinu-1001 uncontrolled well incident;
  • ~27 Mboe of gas escaped during the event, or 0.52% of the field’s total resources; and
  • Replacing Moftinu-1001 with Moftinu-1007 had no material effect on the reserves for the field.

Net Present Value of Future Net Revenues– After Tax, Using Forecast Prices

           
    2017   2016  
    0 % 10 % 15 %   0 % 10 % 15 % YoY Change for PV10
    (US$ millions)   (US$ millions)  
           
TUNISIA
Proved                 
  Producing   (7.7 )   (2.4 )   (1.0 )     (18.4 )   (2.8 )   0.8   14 %
  Non-Producing   (6.6 )   3.6     5.4       0.7     4.7     4.9   -23 %
  Undeveloped   9.3     4.3     2.5       9.9     2.3     0.4   87 %
Total Proved (1P)   (4.9 )   5.5     6.9       (7.8 )   4.2     6.1   31 %
Probable    86.3     62.0     43.7       115.7     70.3     49.9   -12 %
Total Proved & Probable (2P)   81.4     67.5     50.6       107.9     74.5     56.0   -9 %
                               
ROMANIA
Proved                 
  Producing   –      –      –        –      –      –    N/A
  Non-Producing   –      –      –        –      –      –    N/A
  Undeveloped   11.8     9.9     9.1       –      –      –    N/A
Total Proved (1P)   11.8     9.9     9.1                       N/A
Probable    40.3     32.2     29.1       –      –      –    N/A
Total Proved & Probable (2P)   52.1     42.1     38.2                       N/A
                             
TOTAL COMPANY
Proved                 
  Producing   (7.7 )   (2.4 )   (1.0 )     (18.4 )   (2.8 )   0.8   -14 %
  Non-Producing   (6.6 )   3.6     5.4       0.7     4.7     4.9   -23 %
  Undeveloped   21.1     14.2     11.6       9.9     2.3     0.4   517 %
Total Proved (1P)   6.8     15.4     16.0       (7.8 )   4.2     6.1   267 %
Probable    126.6     94.2     72.8       115.7     70.3     49.9   34 %
Total Proved & Probable (2P)   133.4     109.6     88.8       107.9     74.5     56.0   47 %
                               

Net present values for Serinus’ Reserves Increased by 267% and 47% for 1P and 2P Reserves, respectively.  The contributing factors to the $11.2 million increase in the 1P PV10 valuation was the classification of Romania Contingent Resources in 2016 to reserves in 2017 and a slight increase in the valuation of Tunisian 1P Reserves.

Contingent Resources

In addition to the 1P and 2P Reserves assigned to the Company’s properties in Tunisia and Romania, Contingent Resources are also assigned to the Company’s properties,

The Tunisian contingent resources are in the Development Pending sub-class and consist of the commercially recoverable resources in the Ech Chouech and Sanghar fields, which have been on production in the past using conventional primary recovery technology, but are currently shut in due to political uncertainties.  The specific contingency which prevents these resources from being classified as reserves is the Company decision to not return the fields to production status at this time given the political risks of social unrest in the area.  Return to production, and reclassification to reserves, is forecast to occur in the 2019 or 2020 timeframe.  The development costs to bring these contingent resources on to production are US$0.8 million. The Company has a 100% working interest in all properties attributed with contingent resources.

The Romanian contingent resources are also in the Development Pending sub-class and consist of the resources behind pipe in three specific reservoir sand layers and which are recoverable using conventional primary gas recovery technology. The specific contingency which prevents these resources from being classified as reserves is the Company decision to recomplete a producing well to access recovery of gas resources from these sands, which is forecast to occur during 2019 and 2020. The development costs to bring these contingent resources on to production are estimated at US$ 0.4 million, US$1.2 million and US$1.55 million for the 1C, 2C, and 3C cases respectively.

Company Gross Risked Contingent – Using Forecast Prices

 
TUNISIA – Contingent Resources (Company Working Interest)
  Resource Volumes (risked)   AT NPV (risked)    
  Oil/Liquids Gas BOE   0 % 10 % 15 %   Chance of Development
  (Mbbl) (MMcf) (Mboe)   (US$ millions)  
1C Contingent Resources   81.6   69   89.5     (6.5 )   (4.1 )   (3.3 )   90 %
2C Contingent Resources   217.4   192   250.0     (4.3 )   (0.5 )   0.1     90 %
3C Contingent Resources   351.5   328   405.7     (1.4 )   2.2     2.1     90 %
                           
ROMANIA – Contingent Resources (Company Working Interest)
  Resource Volumes (risked)   AT NPV (risked)    
  Oil/Liquids Gas BOE   0 % 10 % 15 %   Chance of Development
  (Mbbl) (MMcf) (Mboe)   (US$ millions)  
1C Contingent Resources   3.3   1,626   274.4     5.7     4.8     4.4     90 %
2C Contingent Resources   15.0   5,673   960.5     26.7     18.1     15.1     90 %
3C Contingent Resources   30.0   9,171   1,558.5     45.6     25.3     19.3     90 %
                           
TOTAL COMPANY
  Resource Volumes (risked)   AT NPV (risked)    
  Oil/Liquids Gas BOE   0 % 10 % 15 %   Chance of Development
  (Mbbl) (MMcf) (Mboe)   (US$ millions)  
1C Contingent Resources   84.9   1,695   367.5     (0.8 )   0.7     1.1     90 %
2C Contingent Resources   232.3   5,865   1,209.8     22.3     17.6     15.2     90 %
3C Contingent Resources   381.4   9,499   1,964.6     44.3     27.5     21.4     90 %
 

Notes to Contingent Resources Table:

  1. Contingent Resources are those quantities of petroleum estimated, as of December 31, 2017 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.
  2. There is uncertainty that is will be commercially viable to produce any portion of the contingent resources.

Serinus will concentrate on the development of the Moftinu Gas Development Project in Romania which is currently under construction with anticipated first gas in late Q2 2018.  The Company is also developing the drilling program for the Moftinu-1007, the replacement well for Moftinu-1001 after the recent well control incident and subsequent abandonment, as well as the Moftinu-1003 and Moftinu-1004 wells. The drilling of these wells should meet the work commitments for the extension of the Satu Mare Concession obtained on October 28, 2016.

Reserve Evaluator Price Forecasts

RPS used the following commodity price forecasts in preparing its evaluation of Serinus’ oil and gas properties:

       
    Tunisia Domestic Gas Romanian Gas Price
  Brent Sabria Chouech  
  (US$/Bbl) (US$/Mcf) (US$/Mcf) (US$/MMBtu)
2018 62.00 7.24 6.94 5.54
2019 62.00 7.24 6.94 5.54
2020 65.00 7.59 7.27 5.80
2021 69.00 8.06 7.72 6.16
2022 72.50 8.46 8.11 6.47
2023 75.50 8.81 8.45 6.74
2024 78.83 9.20 8.82 7.04
2025 80.41 9.39 9.00 7.18
2026 82.02 9.58 9.18 7.32
2027 83.66 9.77 9.36 7.47
2028 85.33 9.96 9.55 7.62
2029 87.04 10.16 9.74 7.77
2030 88.78 10.37 9.93 7.92
2031 90.55 10.57 10.13 8.08
2032 92.36 10.78 10.33 8.24
2033 94.21 11.00 10.54 8.41
2034 96.09 11.22 10.75 8.58
2035 98.02 11.44 10.97 8.75
2036 99.98 11.67 11.19 8.92
         

Abbreviations

bbl Barrel(s) bbl/d Barrels per day
boe Barrels of Oil Equivalent boe/d Barrels of Oil Equivalent per day
Mcf Thousand Cubic Feet Mcf/d Thousand Cubic Feet per day
MMcf Million Cubic Feet MMcf/d Million Cubic Feet per day
Mcfe Thousand Cubic Feet Equivalent Mcfe/d Thousand Cubic Feet Equivalent per day
MMcfe Million Cubic Feet Equivalent MMcfe/d Million Cubic Feet Equivalent per day
Mboe Thousand boe Bcf Billion Cubic Feet
MMboe Million boe Mcm Thousand Cubic Metres
UAH Ukrainian Hryvnia MMBtu Million British Thermal Units
CAD Canadian Dollar USD U.S. Dollar

Cautionary Statement:
BOEs may be misleading, particularly if used in isolation.  A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

All values of net present value of reserves and contingent resources shown in this press release do not necessarily represent fair market value.

Test results are not necessarily indicative of long-term performance or of ultimate recovery.  The test data contained herein is considered preliminary until full pressure transient analysis is complete.

About Serinus
Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Tunisia and Romania.

For further information, please refer to the Serinus website (www.serinusenergy.com) or contact the following:

Serinus Energy Inc.
Calvin Brackman
Vice President, External Relations & Strategy
Tel.: +1-403-264-8877
cbrackman@serinusenergy.com
Serinus Energy Inc.
Jeffrey Auld
Chief Executive Officer
Tel.: +1-403-264-8877
jauld@serinusenergy.com
     

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.  Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company’s projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial , political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company’s published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

 

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