Bow Valley Energy Ltd. has announced the results of its 2004 oil and natural gas reserves evaluations, in reports dated February 25, 2005 by Ryder Scott Company with respect to the Company's Canadian reserves and APA Petroleum Engineering Inc. with respect to
the Company's U.K. reserves.
Highlights
• Canadian proved plus probable reserves increased 80% year-over-year to 3.8 mmboe
• Total Canadian proved plus probable additions of 2.1 mmboe compare to production of slightly under 0.6 mmboe, representing a 359% reserve replacement ratio
• Total Canadian proved plus probable additions of 2.1 mmboe plus positive revisions of 0.1 mmboe were achieved on capital spending of $22.2 million
• Present value of the Canadian proved plus probable reserves increased 142% to $59.7 million (NPVBT(10))
• Present value of the U.K. proved plus probable reserves increased 97% to $118.0 million (NPVBT(10))
Canadian Reserves
Total proved plus probable reserves increased 80% year-over-year, to 3.8 million boe as a result of the Company's successful exploration and development drilling program in western Canada during 2004. Total additions (discoveries, extensions and infills) of 2.1 mmboe and positive revisions of 0.1 mmboe were offset by production and dispositions of slightly under 0.6 mmboe. Total proved reserves increased by 63% due to discoveries and extensions of 1.4 mmboe and positive revisions of 0.2 mmboe offset by production and dispositions of slightly under 0.6 mmboe. The most significant drilling additions during the year occurred at the Company's Hamelin Creek and Boucher properties in the Peace River Arch as well as at the Rosevear and Gilby properties in west-central Alberta. Revisions showed a modest positive bias in 2004 in both the proved and proved plus probable categories. Many of the Company's properties showed small positive revisions, including the Earring and Cardiff properties where successful well recompletions resulted in additions to reserves.
Total additions of 2.1 mmboe compare to total production of slightly under 0.6 mmboe representing a production replacement of proved plus probable reserves of 359% (205% based on proved reserves).
Due to the increase in Bow Valley's Canadian proved plus probable reserves and the strong commodity price environment, the net present value of those reserves increased 142% to $59.7 million (NPVBT(10)).
U.K. Reserves
The Company's U.K. proved plus probable reserves declined by 11% due to production of 0.4 mmboe, downward revisions of 1.0 mmboe, and working interest adjustments of 0.4 mmboe. Bow Valley's U.K. proved reserves declined by 24% due to production of 0.4 mmboe and downward revisions of 0.1 mmboe. The proved plus probable reserve revisions were largely related to Enoch and Chestnut properties. Capital spending in the U.K. was $6.7 million.
Enoch revisions to probable reserves resulted from a lower assumed pre-unitized interest due to the progression of negotiations between the U.K. and Norwegian owners of the Enoch field, as well as a move to a primary depletion case for development, based on the most recent engineering work done by the operator. The net present value of the Company's interest in Enoch has increased due to acceleration of development, reduced capital costs and higher oil prices.
Chestnut probable reserves were reduced due to the operator's proposal for a stand-alone development, which would lead to much lower capital investment, but would also result in higher operating costs, an earlier economic cutoff and lower reserves. In prior years, the reserves at Chestnut were evaluated assuming a sub-sea tie back to fixed platform facilities. A final decision on how the Chestnut field will be developed has not yet been made.
Overall, the net present value of Bow Valley's U.K. proved plus probable reserves increased 97% to $118.0 million (NPVBT(10)) due to acceleration of field development, reduced capital costs and higher oil prices.
Robert G. Moffat, President and Chief Executive Officer said: "We are pleased with our 2004 Canadian finding and development cost performance which should place Bow Valley in the top quartile of our peer group. In the U.K., the Company is especially pleased with the acceleration of plans to develop the Blane and Enoch assets, which has increased the net present value of the Company's reserves dramatically. We expect to have field development plans finalized and submitted shortly to governments for approval by mid-year.