Petrocapita Announces Release of Year End Reserves, Financial Statements and MD&A and Update on Re-Organization
Petrocapita Income Trust (CSE:PCE.UN) ("Petrocapita" or the "Trust") announces that the Oil and Gas Reserves, the Audited Financial Statements and Management's Discussion and Analysis for the years ended December 31, 2016 and December 31, 2015 have been filed with the Canadian Securities Exchange ("CSE") and on the System for Electronic Document Analysis and Retrieval ("SEDAR") and may be accessed at www.sedar.com.
Additionally, during the process of evaluating the Trust's proved plus probable oil and gas reserves for 2016, and pursuant to a previously announced re-organization of the Trust, the Trust's independent third party valuator has appraised the potential economic value of the produced water disposal and treating facilities equivalent to the proved and probable oil and gas properties of the Trust owned by its subsidiaries, Petrocapita Processing L.P. and Petrocapita Oil and Gas L.P., respectively. Apportionment of the value of the mid-stream facilities associated with, but apart from, the Trust's reserves was based on a net present value of future net revenues from these facilities in each case after tax and discounted at 10%. The estimated values are related to, but not included in, the Trust's reserves, do not necessarily represent fair market values, and have been derived by the Trust's independent valuators utilizing various assumptions, including transfer pricing at market and a facility-to-reserves life index adjusted utilization as between Petrocapita and third parties of 64% Petrocapita total proven and 93% Petrocapita proven plus probable. Based on these parameters, the produced water and treating facilities equivalent to proved plus probable are valued at $155.7 million ($71.1 million total proved).
The focus on infrastructure development for Petrocapita began in 2013 and continued into 2016 when the Trust acquired the heavily mid-stream focused assets of Palliser Oil & Gas Corporation, as well as complimentary transportation and well servicing assets. The intent is to continue to focus on building out a portfolio of infrastructure/mid-stream assets as Petrocapita continues to believe that the integration of such assets, together with a core base of production, will result in increasing profitability, which is particularly beneficial in a low oil price environment. Coincidentally, oil and gas production assets in the Trust's area of interest continue to be offered on a heavily discounted basis, the acquisition of which will allow the core base of production to grow and utilization of mid-stream assets to improve. Finally, utilization of the same mid-stream assets by third parties will again improve profitability and reduce consolidated operating costs.
Petrocapita Income Trust is a Specified Investment Flow Through trust developing and acquiring heavy oil production and infrastructure assets in the Lloydminster area of east central Alberta and west central Saskatchewan through its wholly owned subsidiaries, Petrocapita Oil and Gas L.P. and Petrocapita
Processing L.P. Petrocapita owns and operates 445 gross (426.3 net) oil wells, 91 gross (22 net) gas wells, 19 produced water disposal facilities, 3 custom oil processing facilities, 3 natural gas compressor stations, 72.75 km in pipelines, oil well service rigs and trucks, fluid haul tractors and trailers, motor graders, and well site processing equipment. It is seeking accretive opportunities to acquire both oil production and complimentary midstream assets during a cyclical low in the oil and gas markets.
SOURCE: Petrocapita Income Trust
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