Calgary, Alberta, January 9, 2018, Pulse Oil Corp. (“Pulse” or the “Company”) (TSX-V: PUL) reports today on the independent resource assessment (the “Resource Assessment”) of the Company’s Nisku Enhanced Oil Recovery (“EOR”) project in the Bigoray area of Alberta (“Bigoray”).
The estimate, completed by Sproule Associates Limited (“Sproule”), an independent qualified reserves evaluator, with an effective date of December 6, 2017, includes the Bigoray EOR project potential only, and is in addition to the previously disclosed baseline independently assessed reserves in the Company’s core areas at Bigoray and Queenstown.
The Resource Assessment was prepared in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators (“NI 51-101″) and the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”). Sproule assessed a best estimate Discovered Petroleum Initially in-Place of 23.292 million barrels of oil (“boe”) within Pulse’s 100% controlled Nisku D and Nisku E Pools, which Pulse views as being conservative.
In addition, the Resource Assessment provides estimates categorized as “high”, “best” and “low” for contingent resources associated with the Bigoray EOR project on the two pools, with the unrisked high estimate being 8.07 million boe (92.6% Oil), a best estimate of 6.136 million boe (91.3% Oil) and a low estimate of 3.668 million boe (89.1% Oil).
Additionally, the Resource Assessment prepared by Sproule calculated risked contingent resources where the risked assessment assigned a 77% chance of Pulse proceeding with the EOR project (see Table 2 below) and resulting in a best estimate of risked contingent resources net to Pulse of 4.694 million boe (91.2% Oil).
Drew Cadenhead, Chief Operating Officer of Pulse, commented, “The Sproule Resource Assessment is a positive independent commercial confirmation for our Bigoray Nisku Enhanced Oil Recovery project. Although this assessment used a more conservative approach to Petroleum Initially in-Place (“PIIP”) compared with the PIIP estimates of the Alberta Energy Regulator, we are excited to see that even this more conservative approach resulted in a strong endorsement for the project. With an independent un-risked high case upside estimated at over 8 million boe’s of contingent resources (92% oil), the opportunity to move forward with our EOR project to bring on stream substantial cashflow while targeting to recover those types of oil volumes without drilling a well, creates a substantial opportunity to enhance value for Pulse and our shareholders.”
The Resource Assessment focussed exclusively on two Nisku pools only in the Bigoray area, and included just 2,720 acres of Pulse’s 44,720 acre core area holdings which includes 14,000 acres at Bigoray alone. Future evaluations may be done on Pulse’s Mannville, Cardium and Pekisko formations that are thought to also provide significant growth opportunities for the Company as well as additional Nisku assets/pools held within Pulse’s existing holdings.
Mr. Cadenhead further added, “As part of the Resource Assessment, the evaluator assessed a total risk of 77% that the project would proceed, citing economic factors and/or timing of development as one of the only risks associated with the project. All technical risks such as evaluation drilling, regulatory approvals, technology, legal factors, infrastructure and markets, political factors and social licence were all assigned 100% chance of commerciality. Our goal is to make this project happen in 2018 and with the oil price market appreciating heading into 2018, the economics of this EOR project and return for shareholders continue to look more and more attractive alongside improving oil prices.”
The Resource Assessment is based on the results from seventeen wells and, where available, core data. Where core was not available, the assessment considered log data.
Contingent Resource volumes for these discovered resources have been classified as ‘development unclarified’ with Sproule assessing that there is a high probability of the Bigoray EOR project becoming a commercial development. Pulse will continue to complete project planning associated with the project and move forward with its execution plans in 2018.
Summary table (Table 1) from the Contingent Resource Assessment of Pulse’s 100% owned Bigoray Nisku EOR Project are reproduced below.
|Table 1||Contingent Resources (1) (6)|
|Pool||Product||Low (2)||Best (3)||High (4)||Best (3)|
|Nisku D||Light & Medium Oil (Mbbl)||1,782.5||3,055.7||4,074.3||2,337.6|
|Solution Gas (MMcf)||734.0||1,258.0||1,504.0||962.0|
|Total Nisku D||2,011.8||3,372.3||4,432.0||2,579.8|
|Nisku E||Light & Medium Oil (Mbbl)||1,484.2||2,544.4||3,392.6||1,946.5|
|Solution Gas (MMcf)||587.0||872.0||1,031.0||667.0|
|Total Nisku E||1,656.3||2,763.9||3,638.6||2,114.4|
|Grand Total||Light & Medium Oil (Mbbl)||3,266.8||5,600.2||7,466.9||4,284.1|
|Solution Gas (MMcf)||1,321||2,130.0||2,536.0||1,630.0|
|Total Nisku D and E||3,668.0||6,136.2||8,070.6||4,694.2|
- Contingent Resources are sub-classified as Contingent – Development Unclarified
- Low represents the P90 volume estimate
- Best represents the mean volume estimate
- High represents the P10 volume estimate
- Risked: A 77% chance of development taking place (23% chance of development not taking place) as estimated by Sproule
- There is uncertainty that any portion of these discovered resources will be commercially viable to produce
|Contingent Resources Project Chance of Commerciality Estimates
(As of December 6, 2017)
|Timing of Production and Development||85%|
|Technology Under Development||100%|
|Infrastructure & Market||100%|
Significant positive factors relevant to the estimate of Pulse’s contingent resources from the Bigoray EOR project include success of miscible flood development in nearby analogous Nisku reservoirs, a discovered thick oil column providing volumes for the deployment of enhanced oil recovery through a miscible flood and a nearby infrastructure allowing for access to market. Significant negative factors relevant to the estimate of Pulse’s contingent resources from the Bigoray EOR project include uncertainty to how the previously fully waterflooded pools will respond to a miscible flood, economic viability uncertainty, as project capital and operating costs are unclear and areal uncertainties in the estimation of PIIP.
About Pulse Oil Corp.
Pulse is a Canadian company incorporated Under the Business Corporations Act (Alberta) and has plans to become a leading oil and gas company. Pulse has recently completed four transactions to consolidate its interests in the Bigoray area of Alberta, resulting in 100% control of Pulse’s Bigoray operations that include two Nisku oil Pinnacle Reefs. Pulse is moving forward to grow production and execute an Enhanced Oil Recovery project to unlock significant value for shareholders through control of approximately 65 net sections of land across the Mannville, Cardium, Pekisko/Shunda and Nisku trends in Western Canada. Pulse will focus on acquiring affordable, small to medium sized proven oil and gas assets with significant upside. The Company plans to achieve further growth through low-risk, technically diligent drilling, infrastructure ownership and reserve growth utilizing proven enhanced oil recovery techniques and implementation of technology.
Pulse Oil Corp.
Garth Johnson, CEO
Phone: (604) 306-4421
Drew Cadenhead, President and COO
Phone: (403) 714-2336
Neither the TSX Venture Exchange, Inc. nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) has neither approved nor disapproved of the contents of this press release.
This press release contains forward-looking information. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company based on information currently available to management. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those anticipated. Statements in this press release containing forward-looking information include but are not limited to the Bigoray EOR project and its planned development. Forward-looking information involves known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Important factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to: the volatility of commodity prices, product supply and demand, competition, access to and cost of capital, the assumptions underlying production forecast, the quality of technical data; environmental and weather risks, including the possible impacts of climate change, the ability to obtain environmental and other permits and the timing thereto, government regulation or action; the costs and results of EOR operations; the availability of equipment, services, resources and personnel required to complete the Company’s planned operating activities; access to and availability of transportation, processing and refining facilities, acts of war or terrorism; and general economic conditions and other financial, operational and legal risks and uncertainties. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 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
Resources encompasses all petroleum quantities that originally existed on or within the earth’s crust in naturally occurring accumulations, including Discovered and Undiscovered (recoverable and unrecoverable) plus quantities already produced. “Total Resources” is equivalent to “Total Petroleum Initially In-Place”. Resources are classified in the following categories:
Total Petroleum Initially In-Place (“TPIIP”) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.
Discovered Petroleum Initially In-Place (“DPIIP”) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves, and Contingent Resources; the remainder is unrecoverable.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies. Economic Contingent Resources (ECR) are those contingent resources that are currently economically recoverable.
Undiscovered Petroleum Initially In Place (“UPIIP”) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UPIIP is referred to as Prospective Resources and the remainder is unrecoverable.
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development.
Unrecoverable is that portion of DPIIP and UPIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks. Uncertainty Ranges are described by the Canadian Oil and Gas Evaluation Handbook as low, best, and high estimates for reserves and resources as follows:
Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
Development Unclarified is a project maturity sub-class of contingent resources that refers to the development plan evaluation is not complete and there is ongoing activity to resolve any risks or uncertainties.
Certain resource estimate volumes disclosed herein are arithmetic sums of multiple estimates of DPIIP or UPIIP, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class as explained under this Resource Definitions section.