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Altura Energy Reports 2019 Results, Reserve Update

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   |    Monday,March 09,2020

Altura Energy Inc. reported its 2019 results as well as a reserve update.

2019 Production / Operations Update

2019 production averaged 1,742 Boe per day (70% oil and liquids), consistent with guidance of 1,700 to 1,800 Boe per day and representing a 49 percent increase from average 2018 production on an absolute and per share basis.  Fourth quarter 2019 production averaged 1,561 Boe per day (64% oil and liquids).  Fourth quarter 2019 production was affected by natural declines as no new wells were brought on production in the quarter and by the disposition of a seven percent working interest of production, as announced on December 4, 2019.

In 2019, Altura invested approximately $12.8 million in capital projects.  The Company drilled three gross (3.0 net) and completed two gross (2.0 net) wells in the Leduc-Woodbend area, invested in an electrification project and a solution gas compressor at Leduc-Woodbend, as well as changed its artificial lift system on 11 wells to improve run-time efficiencies and reduce operating and capital workover events.

Altura evaluated a new potential oil play targeting medium to light oil in the Entice area of Alberta, south of Strathmore.   The Corporation has acquired 89 gross (83 net) sections of land in the area which has year-round access.  Vertical well data, combined with extensive 3D seismic coverage in the area, provided a means to identify and map the hydrocarbon accumulation.  In June 2019, Altura drilled a vertical exploratory stratigraphic well to obtain additional geological data.

In December 2019, Altura announced it had entered into a definitive agreement for the asset sale of a 12.5% working interest (the “Asset Disposition”) in the Company’s production, wells, lands and facilities for $7.0 million in two transactions. The first transaction closed on December 4, 2019, whereby Altura divested a seven percent working interest for $3.1 million.  Proceeds from the first transaction were directed to the Company’s exploratory prospect at Entice in 2020.

Based on the geological data obtained from the vertical exploration well, Altura drilled and completed a horizontal well (93% working interest) targeting the Pekisko Formation in January 2020.  The well was successfully drilled and cased to a vertical depth of 1,775 meters with a horizontal length of 2,004 meters and subsequently completed with 45 frac stages placing approximately 13 tonnes of sand per stage.  Production testing operations are ongoing and expected to continue through March as Altura evaluates the well.

At Leduc-Woodbend, Altura completed a horizontal oil well (93% working interest) in January 2020 that was drilled in the third quarter of 2019.   The well was equipped for production and brought on stream on February 8, 2020.  Additionally, Altura drilled a horizontal oil well (93% working interest) and expects to complete it in the second quarter of 2020.

2019 Year-End Reserves

• Net of the seven percent Asset Disposition, Altura’s proved developed producing (“PDP”) reserves increased two percent from 1,725 MBoe at December 31, 2018 to 1,755 MBoe. Total proved (“1P”) reserves increased one percent from 6,270 MBoe at December 31, 2018 to 6,347 MBoe. Total proved plus probable (“2P”) reserves increased 10 percent from 10,126 MBoe at December 31, 2018 to 11,150 MBoe.
• Finding, development and acquisition (“FD&A”) costs¹ were $14.61 per Boe for PDP reserves.
• Recycle ratio¹ of 1.7 times for PDP reserves based on the 2019 FD&A costs and Altura’s estimated 2019 operating netback¹ of $24.95 per Boe.
• Replaced1 105 percent of annual production with new PDP reserves, 112 percent of annual production with new 1P reserves and 261 percent of annual production with new 2P reserves, based on 2019 production of 1,742 Boe per day.
• 2P reserves at Leduc-Woodbend are booked on 18 net sections of land which is only 27 percent of Altura’s lands in the area.
• The forecast cost of all of Altura’s future abandonment, decommissioning and reclamation obligations (“ADR”) is $1.8 million (discounted at 10%), which represents only 6.6% of the total $27.2 million of future net revenue of PDP reserves (before tax, discounted at 10%), excluding ADR.