Birchcliff Energy Ltd. Announces Filing of Its 2016 Year End Disclosure Documents, Highlights of Its Montney/Doig Resource Assessment and Retirement of Senior Executive
Birchcliff Energy Ltd. ("Birchcliff") (TSX:BIR) is pleased to announce that it has filed its Annual Information Form (the "AIF") and its Audited Annual Financial Statements and related Management's Discussion and Analysis for the financial year ended December 31, 2016 (collectively, the "Annual Filings") on the System for Electronic Document Analysis and Retrieval ("SEDAR"). Birchcliff is also pleased to provide highlights of its 2016 Independent Montney/Doig Resource Assessment and an operational update.
The 2016 Audited Annual Financial Statements are consistent with the unaudited financial results disclosed in the press release issued by Birchcliff on February 8, 2017. The AIF includes the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), as well as supplemental information relating to Birchcliff's contingent and prospective resources. The Annual Filings are available electronically on Birchcliff's website at www.birchcliffenergy.com and on SEDAR at www.sedar.com.
Birchcliff's 2017 first quarter average production is forecast to be approximately 62,000 boe/d. Birchcliff confirms its 2017 annual average production guidance of 70,000 to 74,000 boe/d and its 2017 fourth quarter average production guidance of 80,000 to 82,000 boe/d.
Birchcliff has drilled 18 (18.0 net) wells year-to-date, consisting of 11 (11.0 net) Montney/Doig horizontal natural gas wells in the Pouce Coupe area and 7 (7.0 net) Montney horizontal wells in the Gordondale area. Of the 11 wells drilled in the Pouce Coupe area, 7 are Montney D1 interval wells, 3 are Basal Doig/Upper Montney interval wells and 1 is a Montney D4 interval well. Of the 7 wells drilled in the Gordondale area, 4 are Montney D1 interval wells and 3 are Montney D2 interval wells. Birchcliff currently has five drilling rigs at work: three are drilling Montney/Doig horizontal wells in the Pouce Coupe area and two are drilling Montney/Doig horizontal wells in the Gordondale area.
The Phase V expansion of Birchcliff's 100% owned and operated natural gas plant in the Pouce Coupe (the "PC Gas Plant") is on schedule and on budget. Phase V will increase the processing capacity from 180 MMcf/d to 260 MMcf/d. Field installation commenced in January 2017 and it is expected that Phase V will be on-stream in October 2017.
UPDATE ON TRANSPORTATION
Birchcliff has submitted a binding bid to TransCanada Pipelines ("TCPL") for the firm service transportation of 175,000 GJ/d in aggregate (approximately 155 MMcf/d) of natural gas on TCPL's Canadian Mainline, whereby natural gas will be transported from the Empress receipt point in Alberta to the Dawn trading hub located in Southern Ontario. The term is for ten years and has early termination rights that can be exercised following the initial five years of service (upon payment of an increased toll for the final two years of the contract). The toll for the Empress to Dawn portion of the service is $0.77/GJ plus fuel. Subject to regulatory approval, this service is expected to become available in three tranches on November 1 of each of 2017, 2018 and 2019. This firm service is expected to provide Birchcliff with greater and more diverse access to natural gas markets. Provision of the service is conditional on, among other things, TCPL receiving National Energy Board approval on terms and conditions satisfactory to TCPL.
In addition, Birchcliff intends to submit a non-binding expression of interest for additional transportation service which may become available on the Alliance pipeline system to the Chicago market hub as announced by Alliance Pipeline on March 13, 2017.
RETIREMENT OF SENIOR EXECUTIVE
Birchcliff announces that Mr. James W. Surbey will be retiring as Vice-President, Corporate Development and Corporate Secretary effective June 30, 2017. Mr. Surbey was a co-founder of Birchcliff and has been with the company or its predecessors since 2004. Management intends to nominate Mr. Surbey for election as a director at Birchcliff's upcoming annual and special meeting of shareholders, which is scheduled for May 11, 2017. In addition, it is expected that Mr. Surbey will stay on as a consultant to Birchcliff following his retirement.
"Jim Surbey has been an extremely valuable and integral member of the Birchcliff team since inception. His strong leadership, expertise and insight has helped shape the company to where it is today, with the NPV10 (BT) of Birchcliff's proved plus probable reserves estimated to be $5.8 billion," said Jeff Tonken, President and Chief Executive Officer. "Although Jim will be missed as a member of our executive team, we believe that given his knowledge and expertise, he will make an excellent addition to our board of directors and will help us continue Birchcliff's success."
2016 INDEPENDENT MONTNEY/DOIG RESOURCE ASSESSMENT
Birchcliff engaged Deloitte LLP ("Deloitte"), independent qualified reserves evaluators of Calgary, Alberta, to prepare an independent evaluation of resources in respect of Birchcliff lands that have potential for the Montney/Doig Resource Play effective December 31, 2016, which is contained in a report dated March 15, 2017 (the "2016 Resource Assessment"). Deloitte also prepared a resource assessment effective December 31, 2015 (the "2015 Resource Assessment"). The 2016 Resource Assessment and the 2015 Resource Assessment were prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and NI 51-101 in effect at the relevant time.
Resource estimates contained herein at December 31, 2016 and 2015 are extracted from the relevant resource assessment and reflect only resources on Birchcliff's Montney/Doig lands. The resource assessments did not include Birchcliff's Charlie Lake Light Oil Resource Play or any of Birchcliff's other properties. All anticipated results disclosed herein were prepared by Deloitte, who is an independent qualified reserves evaluator. Deloitte utilized probabilistic methods to generate high, best and low estimates of resources volumes.
Certain terms used herein are defined under the heading "Presentation of Oil and Gas Resources". Certain other terms used herein but not defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities ("CSA Staff Notice 51-324") or the COGE Handbook and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101, CSA Staff Notice 51-324 or the COGE Handbook, as applicable.
All of Birchcliff's resources are located in the Province of Alberta. The product types reasonably expected to be recovered from Birchcliff's resources disclosed herein are shale gas, NGLs and light crude oil and medium crude oil. Unless otherwise indicated, all volumes of Birchcliff's resources presented herein are on an unrisked basis, meaning that they have not been adjusted for the chance of commerciality, and all volumes are presented on a gross basis, meaning Birchcliff's working interest before deduction of royalties and without including any royalty interests of Birchcliff. Numbers in the tables presented herein may not total due to rounding.
The estimates of Birchcliff's resources provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. Actual resources may be greater than or less than the estimates provided herein and variances could be material. With respect to Birchcliff's discovered resources (including contingent resources), there is uncertainty that it will be commercially viable to produce any portion of the resources. With respect to Birchcliff's undiscovered resources (including prospective resources), there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Estimates of future net revenue, whether calculated without discount or using a discount rate, do not represent fair market value. See "Presentation of Oil and Gas Resources" and "Advisories" in this press release.
Additional information concerning Birchcliff's contingent and prospective resources, including a description of its projects, the risks and uncertainties associated with the contingent and prospective resources and the contingencies which prevent the classification of the contingent resources as reserves, is contained in the AIF, a copy of which is available on SEDAR at www.sedar.com. For further information regarding the presentation of Birchcliff's resource disclosure, please see "Presentation of Oil and Gas Resources" and "Advisories" in this press release.
Interest of Birchcliff in Resources in the Study Area
Birchcliff holds significant high working interest acreage in large contiguous blocks on the Montney/Doig Resource Play in the Peace River Arch area of Alberta. Birchcliff engaged Deloitte to evaluate the total PIIP and contingent and prospective resources on Birchcliff's lands for the Doig Phosphate ("DoigP"), Basal Doig ("BD") and Montney formations in the Montney/Doig Deep Basin area of northwest Alberta (the "Study Area"). In the Study Area, Birchcliff owns an interest in approximately 419.2 gross (407.4 net) sections of land which include Montney rights (inclusive of oil sections in the Gordondale area) and 377.8 gross (351.2 net) sections of land which include Doig rights. The Study Area ranges from Townships 69 to 80, Ranges 1 to 13W6 and is further bounded in a northwest-southeast direction by the Deep Basin edge. The geological section studied was divided into the DoigP, BD and Montney stratigraphic units. The Montney was further subdivided into seven intervals, from the top to the base: D5, D4, D3, D2, D1, TSE Valhalla and C.
Contingent resources have been attributed to Birchcliff's properties in the Pouce Coupe, Progress, Progress West, Gordondale, Elmworth, Elmworth North, Elmworth South and Gold Creek areas. Prospective resources have been attributed to Birchcliff's properties in the Pouce Coupe, Progress, Progress West, Gordondale, Elmworth, Elmworth North, Elmworth South, Gold Creek, Grande Prairie and Saddle Hills areas. Birchcliff's resources in the Pouce Coupe, Gordondale and Progress West areas are proximal to Birchcliff's lands to which reserves have been attributed and to the PC Gas Plant, as well as to third party gathering and processing infrastructure. Birchcliff's resources in the Elmworth North and South areas are proximal to Birchcliff's lands to which reserves have been attributed and to third party gathering and processing infrastructure.
Birchcliff's average working interest in its gross best estimate contingent resources is 96.2% and its average working interest in its gross best estimate prospective resources is 96.7%.
Summary of Discovered and Undiscovered Resources
As a result of Birchcliff's 2016 exploration successes and offset competitor drilling, a significant amount of resources that were classified as prospective resources at December 31, 2015 have been re-classified as contingent resources at December 31, 2016 and Birchcliff has more discovered PIIP than undiscovered PIIP at December 31, 2016. In addition, significant volumes of contingent and prospective resources are associated with the assets in Gordondale which were acquired by Birchcliff in July 2016. Comparing the 2016 Resource Assessment to the 2015 Resource Assessment: (i) Birchcliff's gross contingent resources on a best estimate case increased from 9,497.0 Bcfe at December 31, 2015 to 13,371.6 Bcfe at December 31, 2016, with the Gordondale assets accounting for approximately 72% of the increase over 2015 volumes; and (ii) Birchcliff's gross prospective resources on a best estimate case increased from 12,718.0 Bcfe at December 31, 2015 to 16,586.3 Bcfe at December 31, 2016, with the Gordondale assets accounting for approximately 59% of the increase over 2015 volumes. In addition, a portion of Birchcliff's contingent and prospective resources recognized at December 31, 2015 were re-classified as reserves at December 31, 2016.
Birchcliff is a Calgary, Alberta based intermediate oil and natural gas company with operations concentrated within its one core area, the Peace River Arch of Alberta. Birchcliff's common shares and cumulative redeemable preferred shares, Series A and Series C are listed for trading on the Toronto Stock Exchange under the symbols "BIR", "BIR.PR.A" and "BIR.PR.C", respectively.
SOURCE: Birchcliff Energy Ltd.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.