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Highlights:
- Data from the L1lb-A06 well and that of the original discovery well,
L8-16x, located 5.9 kms to the north of L11b-A06, indicates that the
whole L8-D structure appears to be gas charged with a common
gas-water-contact.
- GLJ has assigned the L8-D structure a best estimate gross GIIP of 323
BCF.
- A first phase of development will involve production from only the
southern end of the L8-D field using the L11b-A06 well. This well is
expected to drain a single fault-bounded compartment which has best
estimate gross GIIP of 41.1 BCF (Cirrus interest 10.5 BCF). Reserves
assigned to the L11b-A06 well are as follows:
Reserves Data (Forecast Prices and Costs)
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of April 1, 2009
FORECAST PRICES AND COSTS - April 1, 2009
NATURAL GAS
-------------------------
Gross Net
RESERVES CATEGORY (MMcf) (MMcf)
------------------------------- ------------ ------------
PROVED
Undeveloped 3,471 3,195
------------ ------------
TOTAL PROVED 3,471 3,195
PROBABLE 2,499 2,301
------------ ------------
TOTAL PROVED PLUS PROBABLE 5,970 5,496
------------ ------------
------------ ------------
BEFORE AFTER
INCOME INCOME
TAXES TAXES
DISCOUNTED DISCOUNTED
RESERVES AT AT
CATEGORY (10%/year) (10 %/year)
------------------------------- ------------ ------------
(M$) (M$)
PROVED
Undeveloped 3,327 3,336
------------ ------------
TOTAL PROVED 3,327 3,336
PROBABLE 6,644 6,603
------------ ------------
TOTAL PROVED PLUS PROBABLE 9,970 9,939
------------ ------------
------------ ------------
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Background
The L8-D field is located on the Netherlands continental shelf approximately 50 kms north of the port of Den Helder in a water depth of 27m. The field, approximately 37.0 square kilometres in areal extent, has been unitized and Cirrus is the operator with a 25.479% working interest in the L8-D Unit.
The L11b-A06 well was drilled into the southern portion of the field and, at reservoir depth, is approximately 5.9 kms to the south of the L8-16x discovery well, drilled in 2004. Both wells are interpreted as part of the same L8-D field. The field consists of a large fault block containing an early Permian-aged Upper Slochteren Formation sandstone reservoir which is stratigraphically subdivided into three sand units, all of which were cored and subsequently tested in L11b-A06. The test results were announced on February 19, 2009.
The L11b-A06 well was drilled from an existing production platform, L11b-A, operated by a third party. The L8-D field partners have agreed to pursue a first phase of development of the L8-D field which will initially involve acquisition of the L11b licence, the L11b-A production platform and the tie-in of the L11b-A06 well. Agreement for acquisition of the L11b licence and the L11b-A platform from the L11b partners is currently being finalized and is expected to be completed in the third calendar quarter of 2009. Operatorship will be transferred concurrently with the acquisition. Once this process is completed, the L11b-A06 well will be tied-in and put into production which is anticipated during the fourth calendar quarter of 2009. All anticipated costs of L11b-A06 well tie-in, platform modification and future abandonment liability were included in the reserves evaluation.
The L8-D reserves are in addition to the 37.8 BCF of probable reserves assigned to the Company in the Netherlands as of August 31, 2008. Because of the different evaluation and effective dates, the new reserves assigned to L8-D cannot necessarily be added directly to the company's previous reserves balance.
Gas Initially in Place
GLJ have determined the entire L8-D structure to have a best estimate gross gas initially in place (GIIP) of 323 BCF (Cirrus interest 82 BCF). Under regulatory standards governing reserve assignments, a full field development plan and further drilling will be required to identify how much of this gas in place can be economically produced and ultimately considered as reserves.
Risks and Uncertainties
Development of the entire field and that proportion of the GIIP which will be recoverable is contingent on developing a full-field development plan and future drilling. The assumptions utilized in preparing the GIIP estimates are within standard technical applications currently being utilized by industry in other comparable applications. A recovery project cannot be defined for this volume of discovered GIIP at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.
Pricing Assumptions
The following sets forth the benchmark reference prices and field prices, as at April 1, 2009, reflected in the Reserves Data. These price assumptions were provided to the Company by GLJ, the Company's independent qualified reserves evaluator.
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Field
Brent NBP Price
US$/BBL USD/CAD$ CAD$/MMBTU CAD$/Mcf Inflation
------- -------- ---------- -------- ---------
2010 60.5 0.83 8.58 8.8 2%
2011 68.5 0.85 8.95 9.19 2%
2012 75.5 0.885 8.98 9.21 2%
2013 83.5 0.925 9.5 9.75 2%
2014 92.35 0.95 10.23 10.5 2%
2015 94.23 0.95 10.44 10.71 2%
2016 96.14 0.95 10.65 10.93 2%
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Cirrus Energy Corporation is an international oil and gas company headquartered in Calgary and currently has approximately 77.3 million fully diluted common shares outstanding.
Forward-Looking Statements
This press release may include forward-looking statements including opinions, assumptions, estimates and expectations of future production, cash flow and earnings. When used in this document, the words "anticipate", "believe", "estimate", "expect", "intent", "may", "project", "plan", "should" and similar expressions are intended to be among the statements that identify forward-looking statements. Forward-looking statements are subject to a wide range of risks and uncertainties, and although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, the volatility of oil and gas prices, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in oil and gas acquisition and drilling programs, operating risks, production rates, reserve estimates, changes in general economic conditions and other factors more fully described from time to time in the reports and filings made by Cirrus with securities regulatory authorities.
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Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release
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%SEDAR: 00021839E
SOURCE: Cirrus Energy Corporation
David Taylor, President and Chief Executive Officer; Glenn Gradeen, Executive Vice President and Chief Operating Officer, Cirrus Energy Corporation, Suite 208, 5 Richard Way S.W. Calgary, Alberta, T3E 7M8, Canada, Website: www.cirrusenergy.ca, Telephone: (403) 216-5030, Facsimile: (403) 265-9530
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