Highlights:
- Before-tax NPV10 for Proved (1P) reserves to U.S.$261 million representing NPV10 of C$2.34 per share.
- Before-tax NPV10 for Proved plus Probable (2P) reserves to U.S.$393 million representing NPV10 of C$3.51 per share.
- Before-tax NPV10 for Proved plus Probable plus Possible (3P) reserves to U.S.$439 million representing NPV10 of C$3.92 per share.
- 1P net reserves life index of 14.0 years and a 2P reserves life index of 21.8 years.
On April 17, 2024, LNGEG Growth I Corp. ("LNG Venezuela”), a wholly-owned subsidiary of LNG Energy Group, entered into binding productive participation contracts (the "CPPs”) with PDVSA Petroleos S.A. ("PPSA”), a subsidiary of Petroleos de Venezuela S.A. ("PDVSA”), the Venezuelan national oil company, for the operation of the Nipa-Nardo-Nieblas and the Budare-Elotes onshore Venezuela (collectively, the "Venezuela Blocks”). LNG Venezuela has applied for a specific license from the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC”) in order to ensure that LNG Venezuela and all its stakeholders, including any U.S. persons operating in connection with the Venezuela Blocks, can do so in compliance with applicable U.S. economic sanctions laws.
All of the certified reserves set out in the Interim Reserves Report are located onshore Venezuela within 13 fields across the Nipa-Nardo-Nieblas and Budare-Elotes blocks. The acreage of the Venezuela Blocks is approximately 422,797 acres and consisting predominantly of light and medium crude oil of approximately 30 API on average.
"Venezuela is home to some of the world's most precious oil and gas resources. We are very pleased to see the results of this independent reserves assessment and can clearly delineate a pathway now to showing that LNG Energy Group becoming a leader in the Latin American oil and gas industry. We have the assets, we have the reserves, we have the technical and operational team and we have amazing strategic partners with extensive operational experience,” commented Angel Roa, Chief Financial Officer of LNG Energy Group. "While it has been difficult for the market to fully appreciate what we have today, the release of this Interim Reserves Report hopefully contributes to a broader understanding. Given the opportunity, we will be able to reinvigorate these assets and unlock their full potential. We are excited about our accomplishments in Venezuela over such a short period of time and hopefully the release of this Interim Reserves Report enables all shareholders to appreciate the opportunity before us all.”
Angel Roa commented further: "It is very important to note that this Interim Reserves Report only covers approximately 15.5% of the existing well inventory for reactivations and considers no new locations. Today, these assets have gross production of approximately 2,890 bbl/d and 12 MMcf/d from 30 active wells; however, at peak historical production these assets were producing approximately 120,000 bbl/d from more than 1,000 wells.”
Venezuela Interim Reserves Report
For the period ended April 30, 2024, LNG Energy Group reported the following:
- The before-tax net present value at a 10% discount rate ("NPV10”) for the net 1P reserves is U.S.$261 million at April 30, 2024. See the Net Present Value Before-Tax summary table below for more information.
- The before-tax NPV10 for the net 2P reserves is U.S.$393 million at April 30, 2024.
- The before-tax NPV10 for the net 3P reserves is U.S.$439 million at April 30, 2024.
- Total 1P net reserves of 11.9 MMboe(1) consisting of 70.1% light and medium oil and 29.9% conventional natural gas.
- Total 2P net reserves of 18.6 MMboe(1) consisting of 69.4% light and medium oil and 30.6% conventional natural gas.
- Total 3P net reserves of 21.7 MMboe(1) consisting of 67.9% light and medium oil and 32.1% conventional natural gas.
- As at April 30, 2024, 1P net reserves life index of 14.0 years and a 2P reserves life index of 21.8 years.
Venezuela Certified Net Reserves Volumes
| April 30, 2024 | |||
| Reserves Category | Light and Medium Oil | Natural Gas | Total |
| Mbbl | MMcf | Mboe(1) | |
| Proved Developed Producing (PDP) | 3,904 | 10,319 | 5,624 |
| Proved Undeveloped (PUD) | 4,419 | 11,369 | 6,313 |
| Total Proved (1P)(2) | 8,322 | 21,687 | 11,937 |
| Probable | 4,498 | 12,850 | 6,640 |
| Total Proved Plus Probable (2P) | 12,821 | 34,537 | 18,577 |
| Possible(2) | 1,790 | 7,899 | 3,107 |
| Total Proved Plus Probable Plus Possible (3P) | 14,611 | 42,436 | 21,684 |
(2) There are no proved developed non-producing reserves.
(3) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of the proved plus probable plus possible reserves.
Reserves Life Index ("RLI”)(1)
| Reserves Category | April 30, 2024 (Years) |
| Total Proved (1P) | 14.0 |
| Total Proved Plus Probable (2P) | 21.8 |
| Total Proved Plus Probable Plus Possible (3P) | 25.4 |
Net Present Value of Future Net Revenue Before Tax Summary(1)
| Reserves Category | April 30, 2024 NPV10 (U.S.$M)(2) | April 30, 2024
NPV10 (C$/share)(3) | ||
| Proved Developed Producing (PDP) | $135 | $1.20 | ||
| Proved Undeveloped (PUD) | $127 | $1.13 | ||
| Total Proved (1P) | $261 | $2.34 | ||
| Total Proved Plus Probable (2P) | $393 | $3.51 | ||
| Total Proved Plus Probable Plus Possible (3P)(4) | $439 | $3.92 | ||
(2) Includes FDC as at April 30, 2024 of U.S.$43.8 million for 1P reserves and U.S.$62.5 million for 2P reserves.
(3) Calculated by dividing the NPV10 value as at October 29, 2024 by 155,534,426 common shares issued and outstanding as at October 29, 2024 and using a U.S.$:C$ exchange rate of $1.39. The per share valuation does not attribute any value to the Company's ownership of its drilling rigs or other assets.
(4) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of provided plus probable plus possible reserves.
Neither the TSXV nor its Regulation Services Provider accept responsibility for the adequacy or accuracy of this news release.
Unless otherwise indicated all reserves referenced in this news release are the Company's working interest share before royalties. All dollar amounts in this news release and the Company's financial disclosures are in United States dollars, unless otherwise noted.
About LNG Energy Group
The Company is focused on the acquisition and development of natural gas production and exploration assets in Latin America. For more information, please visit www.lngenergygroup.com.
For more information please contact:
Angel Roa, Chief Financial Officer
LNG Energy Group Corp.
Website: www.lngenergygroup.com
Email: [email protected]
Find us on social media:
LinkedIn: https://www.linkedin.com/company/lng-energy-group-inc/
Instagram: @lngenergygroup
X: @LNGEnergyCorp
About LNG Energy Group's Venezuela Estimated Reserves
LNG Venezuela's estimated reserves were evaluated by Petrotech in their report entitled "Evaluation of the Interests of LNGE Growth I Corp. in the Nipa-Nardo and Budare-Elotes Blocks in the Eastern Venezuela Basin, Venezuela” dated October 28, 2024, with an effective date of April 30, 2024, in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook”), National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101”) and CSA Staff Notice 51-324. Petrotech is an independent qualified reserves evaluator as defined in NI 51-101.
The Interim Reserves Report includes 37 producing wells and 106 wells requiring workovers in the Nipa-Nardo-Nieblas and Budare-Elotes Blocks in the Eastern Venezuela Basin, comprising less than 16% of the Company's well inventory in Venezuela. These minimal reserves bookings leave upside for the Company to potentially book additional reserves in the future.
Additional reserves information as required under NI 51-101 will be included in the Company's statement of reserves data and other oil and gas information on Form 51-101F1, which is expected to be filed on SEDAR+ concurrently with or before the filing of the Company's financial statements for the year ended December 31, 2024. See "Advisory Note Regarding Oil and Gas Information” section in the "Advisories”, at the end of this news release.
Interim Reserves Report
Petrotech, an independent qualified reserves and resources evaluator, has conducted the reserves evaluation for the Venezuela Blocks in accordance with the COGE Handbook. It adheres in all material aspects to the principles and definitions established by the Calgary Chapter of the Society of Petroleum Evaluation Engineers regarding annual reserve and resource reports that are being released in the public domain. The COGE Handbook is incorporated by reference in NI 51-101.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:
This news release contains "forward-looking information” and "forward-looking statements” (collectively, "forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements, and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often using phrases such as "expects”, "anticipates”, "plans”, "budget”, "scheduled”, "forecasts”, "estimates”, "believes” or "intends”, or variations of such words and phrases, or stating that certain actions, events or results "may” or "could”, "would”, "should”, "might” or "will” be taken to occur or be achieved, are not statements of historical fact and may be forward-looking statements.
Specifically, this news release includes, but is not limited to, forward-looking statements relating to: the Company's business plans, strategies, priorities and development plans; the sustainability and low decline nature of our asset base; estimated crude oil, NGL and natural gas reserves and the net present values of future net revenue therefrom; the ability of the Company to book additional reserves in the future; and the forecasted future production, commodity prices, inflation rates and all future costs used by Petrotech in their evaluation. The Company's actual decisions, activities, results, performance, or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Company will derive from them.
Information and statements relating to reserves are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and can be profitably produced in the future. The recovery and reserve estimates of the Company's reserves provided herein are estimates only, and there is no guarantee that the estimated reserves will be recovered. Consequently, actual results may differ materially from those anticipated in the forward-looking statements (see the other advisories contained in this news release).
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include: general business, economic, competitive, political and social uncertainties; delay or failure to receive any necessary board, shareholder or regulatory approvals, factors may occur which impede or prevent LNG Energy Group's future business plans; and other factors beyond the control of LNG Energy Group. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, LNG Energy Group assumes no obligation to update the forward-looking statements, whether they change as a result of new information, future events or otherwise.
Non-Standardized Measures
This news release includes non-standardized measures, including reserves life index and FDC. Reserves life index is calculated as the net reserves in the referenced category divided by the equivalent production of the last year. It is a measure of how long the booked reserves will last if the production rate is maintained and no additional reserves are added. These measures should not be construed as alternative measures of financial performance. Such measures have been included to provide readers with additional means to evaluate the Company's performance, but these non-standardized measures are not reliable indicators of the Company's future performance and therefore must not be relied upon unduly. The Company's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies. Readers are cautioned that the information provided or derived by these measures should not be relied upon for investment purposes.
Advisory Note Regarding Oil and Gas Information
The reserves information contained in this news release has been prepared in accordance with NI 51-101, but only presents a portion of the disclosure required thereunder. Complete reserves disclosure required in accordance with NI 51-101 will be available on SEDAR+ at www.sedarplus.ca concurrently with or before the filing of the Company's financial statements for the year ended December 31, 2024. Actual oil and natural gas reserves and future production may be greater than or less than the estimates provided in this news release. There is no assurance that forecast prices and costs assumed in the Interim Reserves Report, and presented in this news release, will be attained and variances from such forecast prices and costs could be material. The estimated future net revenue from the production of the disclosed oil and natural gas reserves in this news release does not represent the fair market value of these reserves.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary.
The Company's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material. All evaluations and reviews of future net revenue are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. The tax calculations used in the preparation of the Interim Reserves Report are done at the field level in accordance with standard practice, and do not reflect the actual tax position at the corporate level which may be significantly different.
Boe Conversion
The term "boe” is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet to barrels is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, boe has been expressed using the conversion standard of 6.0 Mcf: 1 bbl. In addition, as the value ratio between oil and natural gas based on current market values is significantly different from the energy equivalency of 6.0:1, utilizing a conversion of 6.0:1 may be misleading as an indication of value.
| Definitions: | |
| 1P | Proved reserves |
| 2P | Proved plus Probable reserves |
| 3P | Proved plus Probable plus Possible reserves |
| bbl(s) | Barrel(s) of oil |
| Bcfe | Billion cubic feet of natural gas equivalent |
| boe | Refer to "Boe Conversion” disclosure above |
| boe/d | Barrel of oil equivalent per day |
| Gross Production | Refers to working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of the Company |
| Mboe | Thousand barrels of oil equivalent |
| $MM | Millions of dollars |
| MMboe | Million barrels of oil equivalent |
| Mcf | Thousand cubic feet |
| Net Production | Refers to working interest (operating or non-operating) share after deduction of royalty obligations, plus the Company's royalty interests in production or reserves |
| W.I. | Working interest |
"Proved Developed Non-Producing Reserves” are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is unknown.
"Proved Undeveloped Reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.
"Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. There is a 90 percent probability that the quantities actually recovered will equal or exceed the sum of proved reserves.
"Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. There is a 50 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable reserves.
"Possible” reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Light crude oil is crude oil with a relative density greater than 31.1 degrees API gravity, medium crude oil is crude oil with a relative density greater than 22.3 degrees API gravity and less than or equal to 31.1 degrees API gravity, and heavy crude oil is crude oil with a relative density greater than 10 degrees API gravity and less than or equal to 22.3 degrees API gravity.
CPPs
Please see the Company's news release dated April 24, 2024 and October 21, 2024 for additional information with respect to the CPPs. There can be no guarantee that the Company or LNG Venezuela shall be able to complete the acquisition terms required by PPSA.
The CPPs were executed within the term of General License 44 issued by OFAC. The Company intends to operate in full compliance with the applicable U.S. economic sanctions laws.
