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Return Energy announces significant increase in 2P reserves


CALGARYFeb. 28, 2019 /CNW/ – Return Energy Inc. (“Return” or the “Company“) (TSX-V: “RTN”) today announced summary results of its 2018 independent reserve report (the “Reserve Report”), prepared by Sproule Associates Limited (“Sproule”), an independent qualified reserve evaluator, showing a significant increase in Proved Plus Probable (“2P”) reserves. The Reserve Report is effective as at December 31, 2018, and has been prepared by Sproule in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and COGEH reserve definitions. Additional reserve information as required under NI 51-101 will be filed on SEDAR in conjunction with the Company’s annual report on or by April 30, 2019. The following summarizes certain information in the Reserve Report.

Summary of Gross Oil and Natural Gas Reserves as at December 31, 2018

Light and

Medium Oil

Conventional

Natural Gas

Natural Gas

Liquids

Oil

equivalent (4)

RESERVES CATEGORY

 (Mbbl)

 (MMcf)

 (MBbl)

 (Mboe)

Proved Reserves

Proved Developed Producing

94.0

2,816

40.9

604.4

Proved Developed Non-Producing

19.8

923

12.0

185.6

Proved Undeveloped

119.2

1,119

16.2

321.9

Total Proved

233.1

4,858

69.1

1,111.9

Probable

545.7

3,843

55.0

1,241.1

Total Proved Plus Probable Reserves (1) (2) (3)

778.7

8,701

124.1

2,353.0

(1)

Reserves have been presented on a gross basis which are the Company’s total working interest before deduction of any royalties and without including any royalty interests of the Company.

(2)

Based on Sproule’s December 31, 2018 escalated price deck.

(3)

Totals may not add due to rounding.

(4)

Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil.

Summary of Net Present Values of Future Net Revenue as of December 31, 2018

 BEFORE INCOME TAXES ( IN $ THOUSANDS)

 DISCOUNTED AT (% / YEAR)

RESERVES CATEGORY

0

5

10

15

20

Proved Reserves

Proved Developed Producing

315

1,808

2,066

1,999

1,853

Proved Developed Non-Producing

736

636

526

432

356

Proved Undeveloped

4,957

3,389

2,355

1,662

1,183

Total Proved

6,008

5,833

4,948

4,093

3,391

Probable

23,594

16,538

12,061

9,098

7,040

Total Proved Plus Probable (1), (2), (3) (4)

29,602

22,371

17,008

13,191

10,432

(1)

Evaluated by Sproule as at December 31, 2018. Net present value of future net revenue does not represent fair value of the reserves.

(2)

Net present values equals net present value before income taxes based on Sproule’s forecast prices and costs as of December 31, 2018.  There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material.

(3)

Includes abandonment and reclamation costs as defined in NI 51-101.

(4)

Totals may not add due to rounding.

Return is very pleased to announce a significant increase in Proved Plus Probable (“2P”) reserves of 52% over December 31, 2017 2P reserves.  Correspondingly, the Company’s 2P net present value calculated using a 10% discount rate (“NPV10”) increased 68% to $17,008,000 ($0.154/share) compared to December 31, 2017.

The increase in Probable reserves assigned by Sproule was based primarily on the vertical wells drilled by Return in early 2018 in which the Triassic-aged Upper Charlie Lake dolomitic siltstone was encountered and, in the case of the 6-34-76-6W6 well, tested light oil.  This zone is the focus of several other industry players who have employed horizontal wellbores and multi-stage fracs in developing the reserves.  It is Return’s intention to pursue a similar program in developing its Upper Charlie Lake zone on its 100%-owned acreage once adequate funding is in place to do so, and to that end, the Company is actively seeking a partner.  Sproule has assigned “Sproule 2018 Charlie Lake Valhalla Upper” Tier 6 Type Curve probable reserves to three horizontal well locations in the Upper Charlie Lake formation. In all, the Company expects that up to 34 horizontal wells could be drilled on the Company’s existing land holdings targeting this zone in a development scenario consisting of four horizontal wells per section.

Corporate Proved Developed Producing (“PDP”) reserves dropped by 8% resulting in a corresponding decrease in NPV10 PDP value to $2,066,0000.  The decrease in PDP reserves is primarily due to the lower natural gas price forecast in combination with shutting–in of uneconomic wells under current commodity pricing, the selective sale of non-core assets, and depletion.

For further information

This news release is reproduced on Return’s website at www.returnenergyinc.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Reader AdvisoriesInformation Regarding Disclosure on Oil and Gas Reserves. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided in the Reserve Report.  The forecast cost and price assumptions used in the Reserve Report assume increases in wellhead selling prices and take into account inflation with respect to future operating and capital costs and are net of the associated royalties, operating costs, development costs, and abandonment and reclamation costs and are stated prior to provision for interest and general and administrative expenses.  Light crude oil, conventional natural gas and natural gas liquids benchmark reference pricing, inflation and exchange rates utilized by Sproule in the Reserve Report were Sproule’s forecast as at December 31, 2018.  Net present values have been presented on a before tax basis. Net present value of reserves do not represent fair market value.

Forward-Looking Statements.  This news release contains forward-looking statements and information. More particularly, this document contains statements and information concerning the timing of drilling, pipeline installations and general field operations. Forward-looking information is frequently characterized by words such as “anticipate”, “plan”, “expect”, “project”, “intend”, “will”, “believe”, “anticipate”, “estimate”, “scheduled”, “potential”, or other similar words, or statements that certain events or conditions “may”, “should” or “could” occur.  Use of the word “vertical” in describing a wellbore may include wells that are deviated slightly as opposed to wellbores that are horizontal. The forward-looking statements and information are based on certain key expectations and assumptions made by Return, including expectations and assumptions concerning availability of equipment, available funds and receipt of required regulatory approval. Although Return believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Return can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks that required regulatory approvals are not obtained and that specific equipment is delayed or not available. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Company at the time of preparation, may prove to be incorrect and readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to forward-looking information contained herein to reflect events or circumstances that occur after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

BOE Presentation. References herein to “BOE” mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

SOURCE Return Energy Inc



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