Razor Energy Corp. Announces 2022 Year-End Reserves and Operational Outlook

The highlights and reserves summary below set forth Razor’s gross reserves at December 31, 2022, as evaluated by Sproule Associates Limited (“Sproule”), qualified reserves evaluators, in an independent report dated February 24, 2023 (the “Sproule Report”). The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the “COGEH”) and the reserve definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserve information as required under NI 51-101 will be included in the Company’s Annual Information Form which is anticipated to be filed on SEDAR on or before April 14, 2023.

Razor’s 2022 annual audited consolidated financial statements have not been completed. Certain financial and operating information included in this news release is based on management’s estimates only and are subject to audit and may be subject to change upon completion of the Company’s annual audited consolidated financial statements. See “Reader Advisories – Unaudited Financial Information”.

HIGHLIGHTS

• Proved Developed Producing (“PDP) reserves value increased 7% year over year to $95.6 million discounted at 10% (“NPV10”).
• Razor continues to have a significant Proved Developed Non-Producing (“PDNP”) reserves value discounted at NPV10 of $67.9 million. These low-risk reactivations require minimal capital expenditures to bring production back online. Future development capital of $9.3 million is required to reactivate the PDNP, or “behind-pipe” production and reserves, in existing wells and convert them to PDP reserves. The associated production for these reactivations is estimated to be 1,500 boe/day and are scheduled throughout 2023 and 2024.
• The Company continues to maintain considerable exposure to WTI oil price. Razor’s Proved Developed reserve base, defined as PDP plus PDNP, has a NPV10 of $163.5 million from a volume of 14,148 MBoe and is comprised of 63% light 41° API oil, 2% medium 25° API oil, 25% natural gas liquids and 10% natural gas. On a cumulative basis, this equates to 90% oil and liquids.
• Razor’s corporate annual base decline remains below 13%.
• The Company’s Reserve Life Index¹ is calculated by taking the Company Gross Reserves from the Sproule Report and dividing them by the projected 2023 production as estimated in the Sproule Report: PDP 7.0 years, Total Proved 9.7 years and Total Proved plus Probable 12.0 years.
• The greater Swan Hills Area accounts for 68% of Razor’s PDP reserves volumes with the greater Kaybob and South District areas at 22% and 10% respectively.

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_{¹ “Reserve Life Index” does not have standardized meaning. See “Reader Advisories – Oil and Gas Metrics” contained in this news release.}

2022 INDEPENDENT RESERVES EVALUATION

Sproule carried out an independent reserves evaluation effective December 31, 2022, which was prepared in accordance with definitions, standards and procedures contained in the COGEH and in NI 51-101. The reserves evaluation was based on Sproule forecast pricing and foreign exchange rates at December 31, 2022 as outlined herein.

Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without the inclusion of any royalty interest) unless otherwise noted.

RESERVES SUMMARY

Summary of Gross Oil and Gas Reserves at December 31, 2022^{(1), (2), (3), (4)}

Net Present Value of Future Net Revenue Before Income Taxes Discounted at (% per Year) (M$)

^{Notes:
(1)   The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers due to rounding.
(2)   Gross reserves mean the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Razor before deductions of royalties payable to others and without including any royalty interests owned by Razor.
(3)   Based on Sproule’s December 31, 2022 escalated price forecast. See “Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs”.
(4)   The net present value of future net revenue attributable to the Company’s reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well ADR and IWC costs. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company’s reserves estimated by Sproule represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company’s oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.}

Reserves Reconciliation ⁽¹⁾

The following table sets forth the reconciliation of the Company’s reserves at Forecast Prices and Costs:

^{Notes:
(1)   The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers due to rounding.}Future Development Costs

The following table sets forth development costs deducted in the estimation of Razor’s future net revenue attributable to the reserve categories noted below:29dk2902l

The future development costs are estimates of capital expenditures required in the future for Razor to convert proved developed and undeveloped non-producing plus probable reserves to PDP reserves. The undiscounted future development costs are $21.1 million for proved reserves and $21.7 million for proved plus probable reserves, in each case based on forecast prices and costs.

Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs

The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs. Crude oil and natural gas benchmark reference pricing, inflation and exchange rates utilized by Sproule at December 31, 2022 were as follows:

OPERATIONAL OUTLOOK

Razor continues to progress its reactivation program. The Company anticipates bringing onstream primarily light oil and natural gas liquids from this program at similar declines to its existing reserve base. Once reactivated, the PDNP reserves from these wells will shift back to the PDP reserves category.

ABOUT RAZOR

Razor is a publicly traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth, focused on efficiency and cost control in all areas of the business. Razor currently trades on TSX Venture Exchange under the ticker “RZE”.
www.razor-energy.com

For additional information please contact:

Doug Bailey
President and Chief Executive Officer OR Kevin Braun
Chief Financial Officer

Razor Energy Corp.
800, 500-5th Ave SW
Calgary, Alberta T2P 3L5
Telephone: (403) 262-0242
www.razor-energy.com