Journey Energy Inc. Reports Increased Reserves for 2015 and Updates Guidance for 2016

February 23, 2016

CALGARY, Feb. 23, 2016 /CNW/ - Journey Energy Inc. (JOY – TSX) ("Journey" or the "Company") is pleased to report its year end 2015 oil and gas reserves evaluation.  During 2015, the company invested approximately $48 million in its capital program including $41 million in exploration and development, and $7 million to consolidate working interests in core properties.  In response to decreasing commodity prices, Journey's capital program was adjusted lower to preserve our balance sheet.  Total capital and development capital expenditures for 2015 were 20% and 45% of 2014 levels respectively. 

Highlights:

  • Increased proved plus probable reserves to a Company record level of 49.8 MMboe, while increasing liquids weighting to 58% from 54% in 2014.
  • Proved plus probable net asset value discounted at 10% of $9.12 per basic share outstanding.
  • Proved plus probable, developed, producing net asset value discounted at 10% of $4.56 per basic share outstanding.
  • Proved, developed producing reserves accounted for 40% of total proved plus probable reserves while proved reserves accounting for 58%.
  • Finding, development, and acquisition ("FD&A") costs, including change in future development capital:
    • $11.73 per boe for proved reserves.
    • $5.13 per boe for proved plus probable reserves.
  • Finding and development costs ("F&D") costs, including change in future development capital:
    • $9.39 per boe for proved reserves.
    • $3.69 per boe for proved plus probable reserves.
  • Journey has consistently achieved strong Proved plus Probable FD&A recycle ratios. For the year ended December 31, 2015 we achieved a ratio of:
    • 2.6 times for FD&A costs with proved plus probable reserves.
    • 3.6 times for F&D costs with proved plus probable reserves.
  • Proved plus probable reserve life index of 13.1 years, with only $3.55/boe of future development capital booked in the report
  • Proved developed producing and proved plus probable developed producing reserve life index of 6.2 and 8.0 years respectively

COMPANY GROSS WORKING INTEREST OIL AND GAS RESERVES AND NET PRESENT VALUES

The following table provides summary information presented in the GLJ Petroleum Consultants Limited ("GLJ") independent reserves assessment and evaluation effective December 31, 2015 (the "GLJ Report").  GLJ evaluated 100% of Journey's crude oil, natural gas liquids ("NGL") and natural gas reserves.  The evaluation of all of its oil  and gas properties was done in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101").  Detailed reserve information will be presented in the Company's upcoming Statement of Reserves Data and Other Oil and Gas Information section of the Company's Annual Information Form scheduled to be filed on SEDAR on or before March 31, 2016.

Company Gross Reserves
Based on Forecast Price and Costs as at December 31, 2015









Light/Medium

Oil

Heavy

Oil

Natural Gas

NGL

Total(2)

Reserves category

(Mbbl)

(Mbbl)

(MMcf)

(Mbbl)

(Mboe)

Proved







Producing

7,265

2,061

56,786

1,375

20,165


Non-producing

292

38

9,477

53

1,962


Undeveloped

4,159

493

12,093

282

6,949

Total proved

11,716

2,592

78,356

1,710

29,077

Probable

9,368

2,848

46,142

858

20,765

Total proved plus probable

21,084

5,441

124,497

2,567

49,842







Total Producing Category






Proved plus probable producing

9,986

2,736

76,085

1,785

27,188







Notes:


(1)

Company Gross Reserves consists of Journey's working interest (operated and non-operated) share of reserves before deduction of royalties payable and without including royalties receivable by the Company.

(2)

In the case of natural gas volumes, boe's are derived by converting natural gas to oil using the ratio of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf:1 bbl).

(3)

Total values may not add due to rounding.



Net Present Values of Future Net Revenue (Based on Forecast Prices and Costs)




Before Tax Net Present Value ($000's)

Reserves category

0%

5%

10%

15%

20%

Proved







Producing

339,292

262,408

212,341

178,335

154,080


Non-producing

33,149

16,093

9,696

6,415

4,438


Undeveloped

157,048

87,645

53,585

34,083

21,825

Total proved

529,489

366,145

275,622

218,833

180,343

Probable

543,090

321,661

210,179

146,648

107,139

Total proved plus probable

1,072,579

687,806

485,801

365,481

287,482







Total Producing Category






Proved plus probable producing

522,470

374,147

287,053

232,091

194,968







Notes:


(1)

Total values may not add due to rounding

(2)

Forecast pricing used is the average of the published price forecasts for GLJ Petroleum Consultants Ltd., Sproule Associates Ltd. and McDaniel & Associates Consultants Ltd. as at December 31, 2015.

(3)

It should not be assumed that the net present values of future net revenues estimated by GLJ represent fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material.



The forecast prices and foreign exchange rates used in the GLJ Report is as follows:


WTI Cushing

Oklahoma

($US/bbl)

Edmonton Par

40 API

($Cdn/bbl)  

Alberta

AECO-spot

($Cdn/mmbtu)

Foreign

Exchange

($US/$CDN)

2016

44.67

55.89

2.57

0.735

2017

55.20

66.47

3.14

0.767

2018

63.47

73.21

3.47

0.802

2019

71.00

81.35

3.80

0.817

2020

74.77

84.57

3.99

0.833

2021

78.24

87.88

4.13

0.842

2022

81.75

92.01

4.30

0.842

2023

85.37

96.24

4.48

0.842

2024

87.32

98.17

4.60

0.842

2025

88.90

99.94

4.70

0.842

2026

90.54

101.79

4.79

0.842

2027

92.22

103.69

4.88

0.842

2028

93.90

105.55

4.96

0.842

2029

95.62

107.49

5.05

0.842

2030

97.40

109.49

5.15

0.842

Thereafter

+1.8%/yr

+1.8%/yr

+1.8%/yr

0.842






FINDING, DEVELOPMENT AND ACQUISITION COSTS ("FD&A")

Journey's finding and development ("F&D") and finding, development and acquisition ("FD&A") costs for 2015, 2014 and the three year average are presented in the tables below.  The capital costs used in the calculations are those costs related to: land acquisition and retention, seismic, drilling, completions, tangible well site, tie-ins, and facilities, plus the change in estimated future development costs ("FDC") as per the independent evaluator's reserve report.  Acquisition costs are the net cash outlays in respect of acquisitions; minus the proceeds from the disposition of properties during the year.  Due to the timing of capital costs and the subjectivity in the estimation of future costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated FDC's generally will not reflect total FDC's related to reserve additions for that year.  The reserves used in this calculation are working interest reserve additions, including technical revisions and changes due to economic factors.  The 2015 capital expenditures are unaudited as the financial results are in the process of being finalized.

Proved Finding, Development & Acquisition Costs

2015

2014

3 Year

Average

Capital expenditures (including acquisitions; net of
dispositions;
(unaudited in $000's)(2)

48,051

260,390


Change in future capital ($000's)

(16,911)

30,143






Total capital for FD&A (unaudited 000's)

31,140

290,533






Reserve additions, including acquisitions (Mboe)

2,654

19,826






Proved FD&A costs – including changes in future capital
($/boe)

11.73

14.65

15.13

Proved FD&A costs – excluding changes in future capital
($/boe)

18.11

13.13

14.72

Recycle ratio(1)









Including changes in future capital

1.1

2.1

1.6






 

Proved plus Probable Finding, Development & Acquisition Costs

2015

2014

3 Year 




Average

Capital expenditures (including acquisitions; net of
dispositions; (unaudited, in $000's) (2)

48,051

260,390


Change in future capital ($000's)

(27,832)

73,527






Total capital for FD&A (unaudited; in 000's)

20,219

333,917






Reserve additions, including acquisitions (Mboe)

3,942

28,320






Proved plus Probable FD&A costs – including changes in
future capital ($/boe)

5.13

11.79

11.38

Proved plus Probable FD&A costs – excluding changes in
future capital ($/boe)

12.19

9.19

10.08

Recycle ratio (1)









Including changes in future capital

2.6

2.6

2.1






 

 


Proved Finding & Development Costs

2015

2014

3 Year

Average

Capital expenditures (excluding acquisitions, unaudited,
$000's)(2)

40,536

88,218


Change in future capital ($000's)

(18,774)

5,480






Total capital for F&D (unaudited $000's)

21,762

93,698






Reserve additions, excluding acquisitions (Mboe)

2,318

5,442






Proved F&D costs – including changes in future capital
($/boe)

9.39

17.22

16.81

Proved F&D costs – excluding changes in future capital
($/boe)

17.49

16.21

19.36

Recycle ratio (1)










Including changes in future capital

1.4

1.8

1.4










Proved Plus Probable Finding & Development Costs

2015

2014

3 Year

Average





Capital expenditures (excluding acquisitions, unaudited,
$000's)(2)

40,536

88,218


Change in future capital ($000's)

(31,274)

13,681






Total capital for F&D (unaudited $000's)

9,262

101,899






Reserve additions, excluding acquisitions (Mboe)

2,513

7,138






Proved  plus Probable F&D costs – including changes in
future capital ($/boe)

3.69

14.28

12.41

Proved plus Probable  F&D costs – excluding changes in
future capital ($/boe)

16.13

12.36

14.49

Recycle ratio (1)









Including changes in future capital

3.6

2.1

1.9

Alex G. Verge, President and Chief Executive Officer, 403-303-3232, alex.verge@journeyenergy.ca or Gerry Gilewicz, Chief Financial Officer, 403-303-3238, gerry.gilewicz@journeyenergy.ca: Journey Energy Inc., 700, 517 - 10th Avenue SW, Calgary, AB, T2R 0A8, 403-294-1635, www.journeyenergy.ca