• 2007 Reserve Replacement Ratio of 302 per cent and Reserve Life Index of 9.7 years
• Year end 2007 Proved plus Probable oil reserves increase 26 per cent to 446.7 MMbbl
• Year end 2007 unrisked prospective oil resources of 2,246 MMbbl (risked 738 MMbbl)
• Year end 2007 contingent gas resources of 2,415 Bcf and 77.2 MMbbl of liquids
Addax Petroleum Corporation announces that its Board of Directors has accepted a reserve report prepared by Netherland, Sewell & Associates Inc., independent oil and natural gas reservoir engineers (“NSAI” and the “NSAI Report”), that evaluates all of the Corporation’s petroleum reserves and certain resources. As at December 31, 2007, NSAI estimates gross working interest proved plus probable reserves for the Corporation to be 446.7 MMbbl, representing an increase of approximately 26 per cent over the quantities estimated by NSAI at the prior year-end. In addition, the Corporation produced an average of 125,940 bbl/d of oil during 2007, representing an increase of approximately 40 per cent over 2006 and close to the 2007 target of 127,000 bbl/day. Average oil production for 2007 included 104,510 bbl/d from Nigeria and 21,430 bbl/d from Gabon.
CEO’s Comment
Commenting today, Addax Petroleum’s President and Chief Executive Officer, Jean Claude Gandur, said: “I am pleased to report very strong operational results for 2007. Our production performance was outstanding, delivering 40 per cent growth over 2006. Strong production growth, combined with a favourable oil price environment, has allowed us to continue to invest in the growth of our reserves and resources base. I believe we have invested well and have delivered strong reserves growth in each of our operations areas, as laid out in our reserves disclosure. Growth in production and reserves has been complimented and balanced with increases in our prospective oil resources and contingent gas resources, providing a platform for continued future growth. I believe our 2007 success in growing our production and adding to our reserves and resources base represents a major accomplishment that Addax Petroleum has achieved for its shareholders and stakeholders.”
The NSAI Report
The NSAI Report was prepared for the Corporation at the direction of Addax Petroleum’s Technical and Reserves Committee, using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101. In addition to oil reserves on the Corporation’s license areas, the NSAI Report includes prospective oil resources for the Corporation’s license areas in West Africa and contingent gas resources for the Corporation’s Nigeria license areas.
Selected Oil Reserves Highlights
Highlights of oil reserves reported in the NSAI Report and the Corporation’s 2007 production, with comparatives to 2006 results, are as follows:
• Total gross working interest proved plus probable reserves increased by approximately 26 per cent to 446.7 MMbbl as at December 31, 2007 from 353.7 MMbbl as at December 31, 2006. The Corporation did not make reserves acquisitions or disposals in 2007 and the 2007 reserves additions arise primarily from the Corporation’s operational activity, including extensions and discoveries, and favourable economic factors.
• In Nigeria, gross working interest proved plus probable reserves increased by approximately 22 per cent to 262.7 MMbbl as at December 31, 2007 from 215.4 MMbbl as at December 31, 2006 and oil production for 2007 averaged 104,510 bbl/d.
• In Gabon, gross working interest proved plus probable reserves increased by approximately 11 per cent to 109.4 MMbbl as at December 31, 2007 from 98.2 MMbbl as at December 31, 2006 and oil production for 2007 averaged 21,430 bbl/d.
• In the Kurdistan Region of Iraq, gross working interest proved plus probable reserves increased by approximately 86 per cent to 74.6 MMbbl as at December 31, 2007 from 40.1 MMbbl as at December 31, 2006, all of which are contained in the Taq Taq field. There was no oil production from the Taq Taq field during 2007.
• The Corporation’s overall 2007 reserves replacement ratio was 302 per cent. The reserves replacement ratio is calculated by dividing the gross working interest proved plus probable reserve additions of 139.0 MMbbl (before deduction of 2007 production of 46.0 MMbbl) by the 2007 production.
• The Corporation’s 2007 reserve life index, based on proved plus probable reserves as at December 31, 2007 and average 2007 oil production, has decreased slightly to 9.7 years from 10.8 in 2006. The 2007 reserve life index is calculated by dividing the gross working interest proved plus probable reserves of 446.7 MMbbl as at December 31, 2007 by the 2007 production of 46.0 MMbbl. The Corporation’s oil production for December, 2007 averaged 143,600 bbl/day and included 117,200 bbl/day in Nigeria and 26,400 bbl/day in Gabon.
• Total gross working interest proved plus probable plus possible reserves have increased by 21 per cent to 580.3 MMbbl as at December 31, 2006 from 480.4 MMbbl as at December 31, 2006.
Selected Prospective Oil Resources Highlights
Highlights of prospective oil resources reported in the NSAI Report, with comparatives to 2006 results, are as follows:
• Prospective oil resources were reported for the majority of the Corporation’s license areas in West Africa, including the recently acquired JDZ Block 1. Prospective oil resources were not reported for the Taq Taq license area in the Kurdistan Region of Iraq and the majority of the Corporation’s license areas onshore Gabon. In each instance, data collection and evaluation at year-end 2007 were insufficiently advanced to identify prospective resources.
• Total gross working interest best estimate unrisked prospective oil resources were 2,246 MMbbl as at December 31, 2007. Risked prospective oil resources increased by approximately 10 per cent to 738 MMbbl as at December 31, 2007 from 670 MMbbl as at December 31, 2006.
• Of the year-end 2007 risked prospective oil resources, 476 MMbbl or 64 per cent relate to the Corporation’s Deep Water Gulf of Guinea portfolio, 210 MMbbl or 28 per cent to onshore Nigeria and shallow water offshore Nigeria and Cameroon, and 51 MMbbl or 8 per cent to Gabon, predominantly offshore.
Selected Contingent Gas Resources Highlights
Highlights of contingent gas resources reported in the NSAI Report, with comparatives to 2006 results, are as follows:
• Contingent gas resources reported are limited to the Corporation’s producing license areas in the shallow water and onshore license areas in Nigeria only. They are categorized as contingent because the commerciality of the gas resources and the Corporation’s rights to produce the gas resources have yet to be established. The Corporation is presently formulating commercial development proposals these contingent gas resources.
• Total gross working interest best estimate contingent gas resources increased by approximately 71 per cent to 2,415 Bcf as at December 31, 2007 from 1,412 Bcf as at December 31, 2006. Best estimate liquids associated with contingent gas resources increased by approximately 106 per cent to 77.2 MMbbl as at December 31, 2007 from 37.4 MMbbl as at December 31, 2006.
• The largest additions are in OML137 where 926 Bcf and 25.3 MMbbl were added arising from the Corporation’s successful exploration efforts during 2007.
