Serinus Energy Inc. (“Serinus”, “SEN” or the “Company”) (TSX:SEN, WSE:SEN), announces the results of a competent person’s report (“CPR”) of its oil and gas Reserves as at September 30, 2017. The report was prepared by RPS Energy Canada Ltd. (“RPS”) in accordance with the AIM Guidance Note for Mining, Oil and Gas Companies dated June 2009, and includes the Reserves in Serinus’ properties in Tunisia and Romania. RPS also conducted a Contingent Resources assessment of the Company’s properties. The Company engaged RPS to conduct the CPR as part of its continued investigation in listing on the Alternative Investment Market (“AIM”) of the London Stock Exchange. The table below compares the CPR versus the Company’s 2016 year-end Reserves report completed by RPS in accordance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.
Company Gross Reserves – Using Forecast Prices
| September 30, 2017 (CPR) | December 31, 2016 (NI 51-101) | ||||||||
| Oil / Liquids | Gas | BOE | Oil / Liquids | Gas | BOE | Change | |||
| (Mbbl) | (MMcf) | (Mboe) | (Mbbl) | (MMcf) | (Mboe) | (%) | |||
| TUNISIA (Company Working Interest) | |||||||||
| Proved | |||||||||
| Producing | 383 | 908 | 534 | 1,068 | 1,985 | 1,399 | -62% | ||
| Non-Producing | 71 | 176 | 100 | 481 | 1,961 | 808 | -88% | ||
| Undeveloped | 827 | 1,951 | 1,152 | 699 | 1,641 | 973 | 18% | ||
| Total Proved (1P) | 1,281 | 3,035 | 1,787 | 2,247 | 5,587 | 3,178 | -44% | ||
| Probable | 4,086 | 9,614 | 5,688 | 5,169 | 14,455 | 7,578 | -25% | ||
| Total Proved & Probable (2P) | 5,367 | 12,649 | 7,475 | 7,416 | 20,042 | 10,756 | -31% | ||
| ROMANIA (Company Working Interest) | |||||||||
| Proved | |||||||||
| Producing | – | – | – | – | – | – | N/A | ||
| Non-Producing | – | – | – | – | – | – | N/A | ||
| Undeveloped | 13 | 6,380 | 1,076 | – | – | – | N/A | ||
| Total Proved (1P) | 13 | 6,380 | 1,076 | – | – | – | N/A | ||
| Probable | 27 | 8,636 | 1,466 | – | – | – | N/A | ||
| Total Proved & Probable (2P) | 40 | 15,016 | 2,543 | – | – | – | N/A | ||
| TOTAL COMPANY | |||||||||
| Proved | |||||||||
| Producing | 383 | 908 | 534 | 1,068 | 1,985 | 1,399 | -62% | ||
| Non-Producing | 71 | 176 | 100 | 481 | 1,961 | 808 | -88% | ||
| Undeveloped | 840 | 8,331 | 2,229 | 699 | 1,641 | 973 | 129% | ||
| Total Proved (1P) | 1,294 | 9,415 | 2,863 | 2,247 | 5,587 | 3,178 | -10% | ||
| Probable | 4,113 | 18,250 | 7,155 | 5,169 | 14,455 | 7,578 | -6% | ||
| Total Proved & Probable (2P) | 5,407 | 27,665 | 10,018 | 7,416 | 20,042 | 10,756 | -7% | ||
The price of Brent Crude started at just under US$57/bbl in early January, and stayed within a narrow price band of US$53-US$57 per barrel. In March, the Brent oil price quickly dropped to just overUS$50/bbl before recovering back to above US$56/bbl in mid-April 2017. Oil prices then began to show higher volatility from mid-April to the end of mid-June, fluctuating within a $45/bbl-$55/bbl band before reaching $44.82 on June 21, 2017, this being the yearly low to date. The prices then began to gradually strengthen the remainder of the year to date to the end of November. The yearly high oil price was reached on November 6, 2017, at $64.27/bbl. The oil price has sustained levels above $50/bbl for most of 2017 to date, creating more price certainty for the industry after two years of operating in a mostly sub-$50/bbl price environment.
Total Company 1P and 2P Reserves decreased from 2016 year-end by 10% and 7%, respectively. The shut-in of the Sabria and Chouech Es Saida fields due to social unrest in Tunisia were the dominant factor in first nine months of 2017. The reduced reserves volumes are due to the continued shut-in of the Chouech Es Saida field awaiting the management decision to restart the field and delays in some development plans. There were positive and negative revisions which are discussed below. The negative reserve revisions in Tunisia were offset by the reclassification of Romanian Contingent Resources to Reserves as the Company has begun construction of the Moftinu Gas Development Project, with first gas production anticipated for Q1 2018.
Tunisia
For Tunisia, 1P Reserves decreased by 44%, while 2P Reserves decreased by 31% compared with the 2016 year-end Reserves report. The technical revisions to Reserves are:
- Positive revisions included:
- Removing SAB N1 workover and replacing with SAB N2, adding more potential recoverable volumes at lower cost;
- Improvement in SAB 11 production performance; and
- Positive revision for Win13, SAB NW1 and SAB N3H ultimate recoveries and initial rates.
- Negative revisions included:
- Re-classification of Chouech Es Saida, Ech Chouech and Sanghar fields from Reserves to Contingent Resources decreased 1P Reserves by 1,151 Mboe, 72 Mboe, and 51 Mboe, respectively;
- Decreased performance of Sabria Win-12bis well when production was restarted after an extended field shut-in period; and
- Decreased Resources due to the removal of future development plans for CS-5, CS Sil-10, CS Sil-1 & CS-8bis.
Romania
For Romania, the Moftinu gas discoveries have been reclassified from Contingent Resources to Reserves. The 2016 year-end risked 1C and 2C Contingent Resources were 547 Mboe and 1,615 Mboe, respectively. In comparison, the CPR 1P and 2P Reserves for Moftinu were 1,076 Mboe and 2,543 Mboe, respectively.
Net Present Value – After Tax, Using Forecast Prices
| September 30, 2017 (CPR) | December 31, 2016 (NI 51-101) | |||||||
| 0% | 10% | 15% | 0% | 10% | 15% | |||
| (US$ millions) | (US$ millions) | |||||||
| TUNISIA | ||||||||
| Proved | ||||||||
| Producing | (9.3) | (4.4) | (3.0) | 3.7 | 7.4 | 7.9 | ||
| Non-Producing | (1.0) | (0.5) | (0.4) | 9.9 | 8.1 | 7.0 | ||
| Undeveloped | 6.3 | 3.1 | 1.6 | 17.2 | 4.9 | 1.8 | ||
| Total Proved (1P) | (4.0) | (1.8) | (1.8) | 30.8 | 20.4 | 16.7 | ||
| Probable | 89.5 | 41.7 | 28.2 | 218.7 | 87.4 | 61.6 | ||
| Total Proved & Probable (2P) | 85.5 | 39.9 | 26.4 | 249.5 | 107.8 | 78.3 | ||
| ROMANIA | ||||||||
| Proved | ||||||||
| Producing | – | – | – | – | – | – | ||
| Non-Producing | – | – | – | – | – | – | ||
| Undeveloped | 14.3 | 12.5 | 11.8 | – | – | – | ||
| Total Proved (1P) | 14.3 | 12.5 | 11.8 | – | – | – | ||
| Probable | 38.8 | 31.0 | 27.9 | – | – | – | ||
| Total Proved & Probable (2P) | 53.1 | 43.5 | 39.7 | – | – | – | ||
| TOTAL COMPANY | ||||||||
| Proved | ||||||||
| Producing | (9.3) | (4.4) | (3.0) | 3.7 | 7.4 | 7.9 | ||
| Non-Producing | (1.0) | (0.5) | (0.4) | 9.9 | 8.1 | 7.0 | ||
| Undeveloped | 20.6 | 15.6 | 13.4 | 17.2 | 4.9 | 1.8 | ||
| Total Proved (1P) | 10.3 | 10.7 | 10.0 | 30.8 | 20.4 | 16.7 | ||
| Probable | 128.3 | 72.7 | 56.1 | 218.7 | 87.4 | 61.6 | ||
| Total Proved & Probable (2P) | 138.6 | 83.4 | 66.1 | 249.5 | 107.8 | 78.3 | ||
Net present values for Serinus’ Reserves increased by 155% and 12% for 1P and 2P Reserves, respectively. The contributing factors to the $6.5 million increase in the 1P PV10 valuation were:
- The reclassification of the Moftinu gas discoveries in Romania to Reserves from Contingent Resources added US$12.5 million to the 1P PV10 valuation, more than offsetting the US$6.0 million decrease to the 1P PV10 valuation in Tunisia;
- Lower Brent oil price forecast in the CPR versus the 2016 year-end Reserve report decreased the net present values for Tunisia;
- The reclassification of Chouech Es Saida, Ech Chouech, and Sanghar from Reserves to Contingent Resources contributed to the decreased net present values for Tunisia;
- Sabria 1P Reserves capital expenditures increased by US$4.0 million thereby having a negative impact of Sabria net present values;
- Higher assumed oil price differential to Brent for Tunisia oil sales had negative impact on Tunisia net present values; and
- Higher estimated annual field operating costs for Sabria.
Gross Contingent Resources – Romania and Tunisia
In addition to the 1P and 2P Reserves assigned to the Company’s properties in Romania and Tunisia, Contingent Resources are also assigned to the Moftinu discovery in Romania and the Chouech Es Saida, Ech Chouech and Sanghar fields in Tunisia.
| TUNISIA – Contingent Resources | |||||||
| Resource Volumes (risked) | AT NPV (risked) | ||||||
| Oil/Liquids | Gas | BOE | 0% | 10% | 15% | Probability of Development | |
| (Mbbl) | (MMcf) | (Mboe) | (US$ millions) | ||||
| 1C Contingent Resources | 544 | 1,166 | 738 | (17.6) | (7.2) | (4.3) | 90% |
| 2C Contingent Resources | 1,169 | 2,482 | 1,583 | (8.3) | 7.7 | 9.1 | 90% |
| 3C Contingent Resources | 2,213 | 4,691 | 2,995 | 19.3 | 25.8 | 20.8 | 90% |
| ROMANIA – Contingent Resources | |||||||
| Resource Volumes (risked) | AT NPV (risked) | ||||||
| Oil/Liquids | Gas | BOE | 0% | 10% | 15% | Probability of Development | |
| (Mbbl) | (MMcf) | (Mboe) | (US$ millions) | ||||
| 1C Contingent Resources | 3 | 1,683 | 284 | 5.8 | 4.8 | 4.4 | 90% |
| 2C Contingent Resources | 15 | 5,707 | 966 | 26.0 | 17.7 | 14.8 | 90% |
| 3C Contingent Resources | 30 | 9,271 | 1,575 | 45.6 | 25.2 | 19.1 | 90% |
RPS used the following commodity price forecasts in preparing its evaluation of Serinus’ oil and gas properties:Competent Person’s Price ForecastsFor Romania, the Contingent Resources reflect untested additional zones that require production testing to establish the ability of these zones to produce at commercial rates. For Tunisia, the Contingent Resources classification for the Chouech Es Saida field is due to the field being shut-in since late February 2017 and the Company has not established a firm timeline as to when these resources will be brought back onto production.
| Tunisia Domestic Gas | Romania Gas Price | |||
| Brent | Sabria | Chouech | Moftinu | |
| (US$/Bbl) | (US$/Mcf) | (US$/Mcf) | (US$/MMbtu) | |
| Q4 2017 | 53.19 | 6.21 | 5.95 | – |
| 2018 | 55.00 | 6.42 | 6.15 | 4.91 |
| 2019 | 57.50 | 6.71 | 6.43 | 5.14 |
| 2020 | 59.00 | 6.89 | 6.60 | 5.27 |
| 2021 | 62.80 | 7.33 | 7.03 | 5.61 |
| 2022 | 66.50 | 7.76 | 7.44 | 5.94 |
| 2023 | 69.00 | 8.06 | 7.72 | 6.16 |
| 2024 | 72.00 | 8.41 | 8.06 | 6.43 |
| 2025 | 76.30 | 8.91 | 8.54 | 6.81 |
| 2026 | 79.00 | 9.22 | 8.84 | 7.05 |
| 2027 | 85.33 | 9.96 | 9.55 | 7.62 |
| 2028 | 87.04 | 10.16 | 9.74 | 7.77 |
| 2029 | 88.78 | 10.37 | 9.93 | 7.92 |
| 2030 | 90.55 | 10.57 | 10.13 | 8.08 |
| 2031 | 92.36 | 10.78 | 10.33 | 8.24 |
| 2032 | 94.21 | 11.00 | 10.54 | 8.41 |
| 2033 | 96.10 | 11.22 | 10.75 | 8.58 |
| 2034 | 98.02 | 11.44 | 10.97 | 8.75 |
| 2035 | 99.98 | 11.67 | 11.19 | 8.92 |
Abbreviations
| bbl | Barrel(s) | bbl/d | Barrels per day |
| boe | Barrels of Oil Equivalent | boe/d | Barrels of Oil Equivalent per day |
| Mcf | Thousand Cubic Feet | Mcf/d | Thousand Cubic Feet per day |
| MMcf | Million Cubic Feet | MMcf/d | Million Cubic Feet per day |
| Mcfe | Thousand Cubic Feet Equivalent | Mcfe/d | Thousand Cubic Feet Equivalent per day |
| MMcfe | Million Cubic Feet Equivalent | MMcfe/d | Million Cubic Feet Equivalent per day |
| Mboe | Thousand boe | Bcf | Billion Cubic Feet |
| MMboe | Million boe | Mcm | Thousand Cubic Metres |
| CAD | Canadian Dollar | MMbtu | Million British Thermal Units |
| USD | U.S. Dollar |
Cautionary Statement:
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
About Serinus
Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Tunisia and Romania.
For further information, please refer to the Serinus website (www.serinusenergy.com) or contact the following:
| Serinus Energy Inc.
Calvin Brackman Vice President, External Relations & Strategy Tel.: +1-403-264-8877 cbrackman@serinusenergy.com |
Serinus Energy Inc.
Jeffrey Auld Chief Executive Officer Tel.: +1-403-264-8877 jauld@serinusenergy.com |
Translation: This news release has been translated into Polish from the English original.
Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company’s projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial , political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company’s published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.