Excelsior Energy Limited announces the completion of an updated independent evaluation of bitumen resources on Excelsior’s Hangingstone property (“Hangingstone” or “Hangingstone Asset”), near Fort McMurray, Alberta. The report was prepared to provide an independent assessment of the results of a 26 well core drilling program at Hangingstone completed in March, 2008. Excelsior has a 75% working interest in 39 contiguous sections of oil sands rights in the Hangingstone Asset.
The resource estimates were prepared by McDaniel & Associates Consultants Limited (“McDaniel”). The McDaniel report (“the Report”) was prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101. The effective date of the evaluation is July 1, 2008. The Report incorporates the McDaniel price deck as at July 1, 2008 in the forecast price scenario.
The Report represents the first evaluation of the Hangingstone Asset prepared by McDaniel. Readers are cautioned that the Report cannot be compared to the Hangingstone evaluation prepared as at December 31, 2007 because of differences in methodology.
“The discipline of the McDaniel methodology supports the resource base” commented Robert Bailey, COO and Vice President, Engineering of Excelsior, “The report confirms the commercial potential of the Hangingstone Asset and provides a strong base for continued delineation. Excelsior is working towards a 10,000 bopd SAGD demonstration project application at Hangingstone in Q2, 2009.”
Discovered and Undiscovered Petroleum Initially-in-Place
McDaniel has recognized best estimate Discovered Petroleum Initially-in-Place of 1.587 billion barrels on the Hangingstone Asset in proximity to well control (Excelsior working interest share) with a low estimate of 1.107 billion barrels and a high estimate of 2.072 billion barrels. The area included in Discovered Petroleum Initially-in-Place assignments, based on well control, amounts to approximately 50% of Hangingstone gross lands. Generally, McDaniel’s methodology for the assignment of Discovered Petroleum Initially-In-Place requires a minimum delineation density of one well per square mile.
McDaniel has determined additional prospectivity in an Undiscovered Petroleum Initially-in-Place assignment. The Report assigns 3.041 billion barrels of best estimate Discovered and Undiscovered Petroleum Initially-in-Place to the Hangingstone Asset (Excelsior working interest share) with a low estimate of 2.281 billion barrels and a high estimate of 3.801 billion barrels.
Contingent Resources
The Report assigned Contingent Resources to Hangingstone based on the well delineation density achieved as of March, 2008. Best estimate Contingent Resources were estimated at 119.0 MMbbls (Excelsior working interest share before royalty); low estimate Contingent Resources were estimated at 83.7 MMbbls and high estimate Contingent Resources were estimated at 165.9 MMbbls. The assigned Contingent Resources are further categorized as economic.
The Report estimated that Excelsior’s best estimate Contingent Resources would generate $1.360 billion of future net revenue with a net present value before income tax discounted at 8% (“NPV8”) of $283 million after deduction of $1.988 billion in future capital requirements and abandonment costs of $37.8 million.
McDaniel calculates Contingent Resources based on that portion of Discovered Petroleum-Initially-in-Place that meets the requisite minimum qualitative and quantitative criteria to be exploited using conventional SAGD technology.
The Contingent Resource volumes have not been classified as Reserves at this time pending further delineation drilling, development planning and regulatory applications.
Share Value based on Contingent Resource and Common Shares Outstanding
On a per share basis the estimated NPV8 for best estimate Contingent Resources equates to $2.60 per Excelsior common share outstanding, the estimated NPV8 for the high estimate Contingent Resources equates to $5.62 per Excelsior common share outstanding. The estimated NPV8 for the low estimate Contingent Resources equates to $0.87 per Excelsior common share outstanding. There are approximately 108.8 million Excelsior common shares outstanding.
Prospective Resources
McDaniel also assigned Prospective Resources to Hangingstone. Best estimate Prospective Resources were estimated at 86.0 MMbbls (Excelsior working interest share before royalty); low estimate Prospective Resources were estimated at 55.1 MMbbls and high estimate Prospective Resources were estimated at 110.7 MMbbls.
The Report estimated that Excelsior’s best estimate Prospective Resources would generate $0.841 billion of future net revenue with an NPV8 of $126 million after deduction of $1.766 billion in future capital requirements and abandonment costs of $40.2 million.
McDaniel calculates Prospective Resources based on that portion of Undiscovered Petroleum-Initially-in-Place that is expected to meet the requisite minimum qualitative and quantitative criteria to be exploited using conventional SAGD technology.
The Prospective Resource volumes have not been classified as Contingent Resources at this time pending additional delineation drilling.
Incremental Share Value based on Prospective Resource and Common Shares Outstanding
On a per share basis, the estimated NPV8 for best estimate Prospective Resources equates to $1.16 per Excelsior common share outstanding, the estimated NPV8 for the high estimate Prospective Resources equates to $2.28 per Excelsior common share outstanding. The estimated NPV8 for the low estimate Prospective Resources equates to $(0.13) per Excelsior common share outstanding. There are approximately 108.8 million Excelsior common shares outstanding.
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