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RMP Energy Provides Operations Update Highlighting Elmworth Delineation Success, Updates Market Guidance and Reports Year-End Reserves and Fiscal 2016 Financial Results | News & Events | Investors | RMP Energy Inc.

RMP Energy Provides Operations Update Highlighting Elmworth Delineation Success, Updates Market Guidance and Reports Year-End Reserves and Fiscal 2016 Financial Results

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March 21, 2017

CALGARY, ALBERTA--(Marketwired - March 21, 2017) - RMP Energy Inc. ("RMP" or the "Company") (TSX:RMP) is pleased to provide an update on its first quarter 2017 field operations and to announce its year-end independent reserves evaluation in addition to its financial results for the fourth quarter and fiscal year ended December 31, 2016.

OPERATIONS UPDATE

Waskahigan Montney, West Central Alberta

At Waskahigan in the first quarter of 2017, RMP successfully drilled and completed a 100% working interest Montney 'step-out' horizontal oil well (13- 30 -63-23W5), located on the western flank of the Company's acreage position. The flow test result from the recently completed hybrid slick-water operation was strong. Production flow testing was for a 200-hour period (approximately 8 days). Over the last 72 hours of the production test, the 13-30 well tested at an average rate of approximately 760 bbls/d of 40-degree API crude oil and 1.5 MMcf/d of associated sweet solution gas for an oil-equivalent rate of approximately 1,000 boe/d. RMP expects to have the 13-30 well tied into company-owned infrastructure and placed on-production later this week. The Company expects to book and assign proved developed reserves to this well and recognize proved undeveloped and probable undeveloped reserves for future locations offsetting the 13-30 well, none of which were booked or assigned in the year-end 2016 independent reserves report.

At Waskahigan, the Company's hybrid slick-water completions have resulted in improved well productivity, and corresponding improvement in well project economics. In addition to the 13-30 well, the Company is budgeted to drill three more (3.0 net) Montney horizontal wells at Waskahigan this year. In the first quarter of 2017, the Company increased its acreage position by five (5.0 net) sections (3,200 gross acres), and its land base at Waskahigan now consists of 78.5 (77.6 net) sections (50,240 gross acres) of operated acreage. RMP estimates its future Waskahigan drilling inventory to consist of approximately 200 potential unbooked and undeveloped drilling locations (of which only 47 locations have assigned proved and/or probable reserves in the Company's year-end 2016 independent reserves report).

Elmworth (Gold Creek) Montney, West Central Alberta

At Elmworth (formerly known as Gold Creek) during the first quarter of 2017, the Company commenced the strategic delineation of the areal extent of the hydrocarbon-bearing Middle Montney reservoir oil window.

As follow-up to last year's successful exploration well (3-22-68-3W6), RMP drilled two more wells at Elmworth. A 100% working interest, exploration well (8-25-68-4W6) was drilled and completed with hybrid slick-water, approximately one township to the west of the Company's 3-22 well. The 8-25 well production test results were successful, with flow-back results indicating the discovery of a new oil pool and demonstrating the Middle Montney reservoir to be oil bearing and gas charged. The 8-25 well was drilled to a total measured depth of 4,523 metres, with 2,208 metres of horizontal section. The production flow test was for a 173-hour period (approximately seven days). Over the last 72 hours of the production test, the 8-25 well tested at an average rate of approximately 220 bbls/d of 45-degree API crude oil and approximately 1.0 MMcf/d of natural gas, resulting in an oil-equivalent rate of approximately 390 boe/d. Please refer to Reader Advisories at the end of this news release.

The Company also successfully drilled and completed its third, 100% working interest well in the Middle Montney oil window at Elmworth (4-18-68-2W6). Drilled from the same surface lease pad as the 3-22 well, the 4-18 well is a 'step-out' to the southeast. The 4-18 delineation well, drilled to a total measured depth of 4,935 metres with 2,518 metres of horizontal length, was fracture stimulated with hybrid slick-water. The production flow test was for a 165-hour period (approximately seven days). Over the last 72 hours of the production test, the 4-18 well tested at an average rate of approximately 200 bbls/d of 45-degree API crude oil and 2.3 MMcf/d of natural gas, resulting in an oil-equivalent rate of approximately 600 boe/d. Please refer to Reader Advisories at the end of this news release.

In addition to delineation drilling of its Montney acreage, RMP also secured strategic infrastructure in the Elmworth area for hydrocarbon egress. As previously disclosed, the Company has entered into gathering, processing and transportation agreements with a regional mid-stream service provider to handle RMP's Elmworth crude oil and natural gas production. The agreements encompass an area dedication and are not subject to take-or-pay commitments. The mid-stream company is in the process of installing a gathering system in order to connect their existing infrastructure to RMP's oil battery facility located at 2-23-68-3W6, which is presently undergoing construction. The Company's Elmworth natural gas will be processed at the mid-stream company's Patterson Creek Gas Plant, which will undergo expansion later this year with an expected capacity level of 150 MMcf/d. This gas plant will provide pipeline connections for sales gas into both the TransCanada and Alliance gas systems. Oil volumes will be transported downstream of the gas plant with connectivity to a Pembina crude oil sales terminal. Barring any unforeseen delays, the gathering pipeline and oil battery facility is scheduled to be commissioned and operational in May 2017.

At Elmworth, RMP has now successfully drilled and completed three (3.0 net) Middle Montney horizontal wells. The Company has a large undeveloped land base consisting of 79 (78.5 net) sections (50,560 gross acres) of operated acreage. RMP estimates that it has potentially in excess of 300 unbooked and undeveloped drilling locations at Elmworth (of which only six locations have assigned proved and/or probable reserves in the Company's year-end 2016 independent reserves report). With drilling and completion results to-date, and continued exploration and development activity, Elmworth has the potential to be a long-term production and reserves growth asset for RMP.

Updated Market Guidance and 2017 Capital Budget

For 2017, the Company is budgeting to incur $49 million in exploration and development capital expenditures. In addition to key infrastructure investment at Elmworth, the 2017 capital plan includes the drilling of three (3.0 net) Middle Montney horizontal wells at Elmworth, of which two have been drilled already, and four (4.0 net) Montney horizontal wells at Waskahigan, of which one has been drilled to-date. The focus of the capital budget for the first half of this year is to maintain corporate base production levels through a pared-back level of drilling operations at Waskahigan while de-risking and delineating its large Elmworth resource potential with the strategic objective of establishing additional inventory and scale for the Company. Infrastructure commissioning at Elmworth is expected to bolster RMP's base production levels thereafter, providing production momentum for the second half of this year and into fiscal 2018. For the second half of this year, the Company is forecasting production to average approximately 4,500 boe/d (weighted 42% light crude oil and NGLs).

YEAR-END 2016 RESERVES

The following provides information on RMP's crude oil, natural gas and NGLs reserves as of December 31, 2016, as evaluated by the Company's independent qualified reserves evaluators, InSite Petroleum Consultants Ltd. ("InSite"). The evaluation of RMP's reserves was prepared in accordance with the definitions, standards and procedures prescribed in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook. Unless stated otherwise, all reserves referred to in this news release are stated on a company gross basis (working interest before deduction of royalties and without including any royalty interests). The reported reserves at December 31, 2016 exclude reserves that were disposed of in connection with the sale of the Company's Ante Creek asset (the "Ante Creek Disposition"), which closed on November 15, 2016. The Company's year-end 2016 reserves highlights include the following:

  • Total proved plus probable reserves at December 31, 2016 were 27.7 million boe. The Ante Creek Disposition (9.8 million boe), fiscal 2016 production (2.9 million boe) and a minor Pine Creek divestiture (1.2 million boe), partially offset by positive additions (net of revisions) of 3.1 million boe, resulted in lower reserves reported at year-end 2016 as compared to 38.5 million boe of proved plus probable reserves at December 31, 2015. Adjusting for production and the reserves disposed with the Ante Creek Disposition, total proved plus probable reserves increased year-over-year.
  • Total proved reserves at December 31, 2016 were 16.4 million boe. The Ante Creek Disposition (6.6 million boe), fiscal 2016 production (2.9 million boe) and a minor Pine Creek divestiture (0.7 million boe), partially offset by positive additions (net of revisions) of 1.2 million boe, resulted in lower reserves reported at year-end 2016 as compared to 25.3 million boe of proved reserves at December 31, 2015. Adjusting for production and the reserves disposed with the Ante Creek Disposition, total proved reserves increased year-over-year.
  • Total proved developed producing reserves at December 31, 2016 were 6.8 million boe, as compared to 15.1 million boe at December 31, 2015. The Ante Creek Disposition (6.2 million boe), a minor Pine Creek divestiture (0.1 million boe) and fiscal 2016 production (2.9 million boe) were partially offset by positive additions (net revisions) of approximately 1.0 million boe. Adjusting for production and the reserves disposed with the Ante Creek Disposition, total proved developed producing reserves increased year-over-year.
  • RMP's net asset value at December 31, 2016 is estimated at $2.19 per share (discounted at 10%). Refer to the detailed calculation under the Net Asset Value heading hereafter.
  • Booked and assigned initial reserves at Elmworth (formerly Gold Creek) at December 31, 2016, of 4.7 million boe proved plus probable and 1.5 million boe proved.
  • Achieved finding and development ("F&D") costs of $18.45 per proved plus probable boe, including changes in future development capital ("FDC"). Refer to the detailed calculation under the Capital Expenditures Efficiency heading hereafter.

Corporate Reserves Information

December 31, 2016 Reserves Summary (1) (company gross reserves)
Natural Gas (2) Oil (3) NGLs Oil Equivalent
(Columns may not add due to rounding) (Bcf) (Mbbls) (Mbbls) (Mboe) (6:1)
Proved developed producing 28.438 1,590.7 474.3 6,804.6
Proved developed non-producing 3.298 202.1 47.6 799.3
Proved undeveloped 34.684 2,496.6 480.8 8,758.0
Total Proved 66.419 4,289.4 1,002.7 16,361.9
Probable 41.285 4,037.5 421.1 11,339.5
Total Proved plus Probable 107.705 8,326.9 1,423.8 27,701.4
(1) Estimated using InSite's forecast prices and costs as of December 31, 2016.
(2) Includes conventional natural gas and shale gas.
(3) Substantially all tight oil.
December 31, 2016 Net Present Value Summary (1) (company gross reserves)
(Columns may not add due to rounding)
Discount factor: 0% 5% 10% 15% 20%
Proved developed producing $ 110,932 $ 90,689 $ 77,226 $ 67,625 $ 60,452
Total Proved 215,371 151,644 111,437 84,414 65,423
Probable 205,358 134,869 93,247 66,671 48,749
Total Proved plus Probable $ 420,729 $ 286,513 $ 204,684 $ 151,085 $ 114,172
(1) Net present values reported are before taxes based on InSite's forecast prices and costs as of December 31, 2016. No provision for bank debt interest and general and administrative expenses have been made within the net present values.

A summary of InSite's escalated price forecast assumptions as of December 31, 2016 are as follows:

Edm Par Price
YEAR WTI @ Cushing 40 API AECO-C Propane Butane Condensate Exchange Rate Inflation Rate
$US/bbl $C/bbl C$/GJ $C/bbl $C/bbl $C/bbl $C/$US %
2017 55.00 68.33 3.29 23.92 47.83 75.17 0.7500 2.00%
2018 60.00 72.32 3.24 25.31 52.07 79.55 0.7750 2.00%
2019 65.00 76.05 3.40 26.62 54.75 83.65 0.8000 2.00%
2020 70.00 79.54 3.72 27.84 57.27 87.50 0.8250 2.00%
2021 75.00 82.82 3.80 28.99 59.63 91.11 0.8500 2.00%
2022 80.00 88.60 3.95 31.01 63.79 97.46 0.8500 2.00%
2023 81.60 90.37 4.05 31.63 65.07 99.41 0.8500 2.00%
2024 83.23 92.18 4.20 32.26 66.37 101.39 0.8500 2.00%
2025 84.90 94.02 4.28 32.91 67.69 103.42 0.8500 2.00%
2026 86.59 95.90 4.37 33.57 69.05 105.49 0.8500 2.00%
2027 88.33 97.82 4.46 34.24 70.43 107.60 0.8500 2.00%
2028 90.09 99.77 4.54 34.92 71.84 109.75 0.8500 2.00%
2029 91.89 101.77 4.64 35.62 73.27 111.95 0.8500 2.00%
2030 93.73 103.81 4.73 36.33 74.74 114.19 0.8500 2.00%
2031 95.61 105.88 4.82 37.06 76.23 116.47 0.8500 2.00%
2032 97.52 108.00 4.92 37.80 77.76 118.80 0.8500 2.00%
2033 99.47 110.16 5.02 38.56 79.31 121.18 0.8500 2.00%
2034 101.46 112.36 5.12 39.33 80.90 123.60 0.8500 2.00%

Net Asset Value

The Company's net asset value details, as of December 31, 2016, are as follows:

(columns may not add due to rounding) NPV 10%