- 20 per cent increase in Proved plus Probable oil reserves to
536.7 MMbbl
- 23 per cent increase in unrisked prospective oil resources to
2,772 MMbbl
- 17 per cent increase in contingent gas resources to 2,820 Bcf
- 281 per cent Reserve Replacement Ratio
- Extended Reserve Life Index to 10.8 years
CALGARY, Feb. 4 /PRNewswire-FirstCall/ - Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC), today announces that its Board of Directors has accepted a reserve report prepared by Netherland, Sewell & Associates Inc., independent oil and natural gas reservoir engineers ("NSAI"), that evaluates all of the Corporation's petroleum reserves and certain resources (the "NSAI Report"). As at December 31, 2008, NSAI estimates gross working interest proved plus probable reserves for the Corporation to be 536.7 MMbbl, representing an increase of 20 per cent over the quantities estimated by NSAI at December 31, 2007 and a reserves replacement ratio of 281 per cent. In addition, the Corporation produced an average of 136.5 thousand barrels per day ("Mbbl/d") of oil during 2008, representing an increase of 8 per cent over 2007 and in line with previous guidance. Production for the fourth quarter of 2008 averaged 142.5 Mbbl/d.
This announcement coincides with the filing of a material change report by the Corporation which can be accessed through the Corporation's website at www.addaxpetroleum.com and through www.sedar.com. Unless otherwise indicated, the reserve estimates in this release are based on forecast prices and costs and are gross working interest proved plus probable estimates. Except as otherwise indicated, references to "$" and to "dollars" refer to the currency of the United States of America.
CEO's Comment
Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "I am very pleased to report excellent operational results for a tenth consecutive year. Our accomplishments in 2008 continue Addax Petroleum's successful track record of simultaneously growing both production and reserves. During 2008, we met our revised targets for production levels and exceeded our expectations for reserves growth by adding close to three times the amount we produced during the year, primarily through new discoveries and extensions of previous discoveries. We also significantly increased our prospective oil resource inventory despite having drilled thirteen exploration and appraisal wells during the year. Further, we continue to invest wisely to develop our existing fields while expanding our reserves and resources base with a dynamic exploration program. We are proud of the success we have delivered in 2008 to Addax Petroleum's shareholders and stakeholders and look forward to continuing this successful trend this year and beyond."
The NSAI Report
The NSAI Report was prepared for the Corporation at the direction of the Technical and Reserves Committee of Addax Petroleum's Board of Directors, using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101. In addition to oil reserves on the Corporation's license areas, the NSAI Report includes prospective oil resources for the Corporation's license areas in West Africa and the Kurdistan Region of Iraq and contingent gas resources for the Corporation's Nigeria license areas.
Selected Oil Reserves Highlights
Highlights of oil reserves reported in the NSAI Report and the
Corporation's 2008 production, with comparatives to 2007 results, are as
follows:
- Total reserves increased by 20 per cent to 536.7 MMbbl as at
December 31, 2008 from 446.7 MMbbl as at December 31, 2007. The
Corporation did not make reserves acquisitions or disposals in 2008
and the 2008 reserves additions arise primarily from the
Corporation's operational activity, including extensions and
discoveries, and favourable economic factors.
- In Nigeria, reserves increased by 23 per cent to 324.0 MMbbl as at
December 31, 2008 from 262.7 MMbbl as at December 31, 2007. The most
significant additions to reserves in Nigeria came from additional
appraisal activity at the Kita Marine field in OML123 which increased
the reserves of that field by 34.0 MMbbl and the recently announced
Njaba discovery which was estimated to have reserves of 42.0 MMbbl
prior to additional appraisal drilling which is currently underway.
Oil production for 2008 in Nigeria averaged 108.0 Mbbl/d representing
an increase of 3 per cent over 2007.
- In Gabon, reserves decreased by 6 per cent to 103.3 MMbbl as at
December 31, 2008 from 109.4 MMbbl as at December 31, 2007,
predominantly from oil production which totalled 10.4 MMbbl during
the year. Oil production for 2008 in Gabon averaged 28.5 bbl/d
representing an increase of 33 percent over 2007.
- In the Kurdistan Region of Iraq, reserves increased by 47 per cent to
109.5 MMbbl as at December 31, 2008 from 74.6 MMbbl as at December
31, 2007, all of which are contained in the Taq Taq field. This
increase in reserves was primarily the result of additional appraisal
drilling during 2008. There was minor oil production from the Taq Taq
field during 2008.
- The Corporation's overall 2008 reserves replacement ratio was 281 per
cent. The reserves replacement ratio is calculated by dividing the
reserves additions of 140.0 MMbbl (before deduction of 2008
production of 49.9 MMbbl) by the 2008 production.
- The Corporation's 2008 reserve life index, based on reserves as at
December 31, 2008 and average 2008 oil production, has been extended
to 10.8 years from 9.7 in 2007. The 2008 reserve life index is
calculated by dividing the reserves of 536.7 MMbbl as at December 31,
2008 by the 2008 production of 49.9 MMbbl.
- Total gross working interest proved plus probable plus possible
reserves have increased by 27 per cent to 738.4 MMbbl as at December
31, 2008 from 580.3 MMbbl as at December 31, 2007.
- The Corporation's oil production for the fourth quarter of 2008
averaged 142.5 Mbbl/d, comprised of 113.1 Mbbl/d in Nigeria and
29.4 Mbbl/d in Gabon.
The following table summarises selected reserves information as at
December 31, 2008:
Oil Reserves and Future Net Revenues
based on Forecast Prices and Costs as at December 31, 2008
-------------------------------------------------------------------------
Estimated
NPV 10% of
Future Net
Gross Working Revenue
Interest Reserves After Tax
------------------------------------ -------------
Proved plus
Proved plus Probable plus Proved plus
Proved Probable Possible Probable
------------------------------------ -------------
(MMbbl) (MMbbl) (MMbbl) ($million)
Nigeria 133.8 324.0 458.9 3,814
Gabon 66.7 103.3 127.0 1,676
Kurdistan Region of Iraq 13.7 109.5 152.6 1,032
Total 214.2 536.7 738.4 6,521
The following table reconciles changes in gross working interest proved
plus probable reserves:
Reconciliation of the Corporation's Reserves
based on Forecast Prices and Costs
-------------------------------------------------------------------------
Gross Working Interest
Proved plus Probable Reserves
-----------------------------
(MMbbl)
Estimated as at December 31, 2007 446.7
Acquisitions net of Disposals 0.0
Discoveries 52.5
Extensions and Improved Recoveries 70.9
Technical Revisions 10.5
Economic Factors 6.1
Production (49.9)
Estimated as at December 31, 2008 536.7
Selected Prospective Oil Resources Highlights
Highlights of prospective oil resources reported in the NSAI Report, with
comparatives to December 31, 2007, are as follows:
- Prospective oil resources were reported for the majority of the
Corporation's license areas in West Africa and in the Kurdistan
Region of Iraq.
- Total gross working interest best estimate unrisked prospective oil
resources increased by 23 per cent to 2,772 MMbbl as at December 31,
2008 from 2,246 MMbbl as at December 31, 2007. Risked prospective oil
resources increased by 12 per cent to 825 MMbbl as at December 31,
2008 from 738 MMbbl as at December 31, 2007.
- Of the year-end 2008 best estimate unrisked prospective oil
resources, 1,359 MMbbl or 49 per cent relate to the Corporation's
Deep Water Gulf of Guinea portfolio, 1,030 MMbbl or 37 per cent to
onshore Nigeria and shallow water offshore Nigeria and Cameroon,
248 MMbbl or 9 per cent to Gabon and 136 MMbbl or 5 per cent to the
Kurdistan Region of Iraq.
- The largest additions to best estimate unrisked prospective oil
resources are in OML137, where 179 MMbbl were added arising primarily
from the addition of new prospects, in the Deepwater Gulf of Guinea,
where 155 MMbbl were added arising primarily from the addition of new
prospects, in the Kurdistan Region of Iraq, where 136 MMbbl were
added to include this area for the first time, and in Gabon, where
64 MMbbl were added onshore due primarily to the acquisition of new
seismic data and 68 Mbbl were added offshore due primarily to the
acquisition of the Gryphon Marin license area during 2008.
The following table summarises selected prospective oil resources
information as at December 31, 2008:
Estimates of the Corporation's Prospective Oil
Resources in West Africa as at December 31, 2008
-------------------------------------------------------------------------
Best Estimate
Prospective Oil Resources
---------------------------
Unrisked Risked
-------------------------------------------------------------------------
(MMbbl) (MMbbl)
Shallow water and onshore Nigeria
and Cameroon
OML123 341 71
OML124 110 9
OML126 272 51
OML137 254 112
Ngosso (Cameroon) 54 12
Sub-total 1,030 255
Deep Water Gulf of Guinea
JDZ (1, 2, 3 & 4) 793 306
OPL291, Nigeria 566 188
Sub-total 1,359 493
Kurdistan Region of Iraq
Kewa Chirmila 10 1
Sangaw North 126 14
Sub-total 136 15
Gabon
Onshore 99 18
Offshore 149 43
Sub-total 248 61
-------------------------------------------------------------------------
Total 2,772 825
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Totals may not add because of rounding
Selected Contingent Gas Resources Highlights
Highlights of contingent gas resources reported in the NSAI Report, with
comparatives to December 31, 2007, are as follows:
- Contingent gas resources reported are limited to the Corporation's
producing license areas in the shallow water and onshore license
areas in Nigeria only. They are categorized as contingent because the
commerciality of the gas resources and the Corporation's rights to
produce the gas resources have yet to be established. The Corporation
is presently reviewing commercial development proposals for these
contingent gas resources.
- Total gross working interest best estimate contingent gas resources
increased by 17 per cent to 2,820 Bcf as at December 31, 2008 from
2,415 Bcf as at December 31, 2007. Best estimate liquids associated
with contingent gas resources increased by 8 per cent to 83.5 MMbbl
as at December 31, 2008 from 77.2 MMbbl as at December 31, 2007.
- The largest additions to best estimated contingent gas resources are
in OML137 where 411 Bcf and 8.7 MMbbl of associated liquids were
added arising from the Corporation's successful exploration and
appraisal efforts during 2008.
The following table summarises selected contingent gas resources
information as at December 31, 2008, including associated gas liquids
quantities:
Best Estimates of the Corporation's
Contingent Gas Resources in Nigeria as at December 31, 2008
-------------------------------------------------------------------------
Contingent Gas Associated
Resources(1) Gas Liquids(2)
(Bcf) (MMbbl)
-------------------------------------------------------------------------
OML123 1,013 25.2
OML124 377 22.8
OML126 92 1.5
OML137 1,337 34.0
Okwok 2 0
-------------------------------------------------------------------------
Total 2,820 83.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) after deductions for plant fuel and extraction of gas liquids
(2) includes LPG and C5+
Other Recent Exploration and Appraisal Drilling Activity
The Corporation also recently concluded the following appraisal activities
in Nigeria and Gabon:
- Ossu North (OML124 license area): Successful appraisal of the
northern area of the Ossu field in OML124 onshore Nigeria. The
Ossu 14 (North) well has expanded the areal extent of the Ossu field
by proving the presence of oil north of a saddle separating the main
field from an independent block. The well was drilled with the DWC 20
drilling rig and encountered a gross hydrocarbon column of 25 feet,
of which 12 feet is oil bearing.
- Adanga North Graben (OML123 license area): Gas was encountered
through the drilling of an appraisal well on the Adanga North Graben
prospect in OML123 offshore Nigeria. The Adanga North Graben prospect
on the southeastern part of the license area was drilled to a total
depth of 1,620 metres by the Tommy Craighead rig. The Adanga North
Graben well encountered two gas bearing intervals with individual
columns of approximately 16 feet each at depths ranging from 1,440 to
1,560 metres.
- Andok (Maghena license area): Hydrocarbon shows were encountered in
the main objective interval and an up-dip sidetrack of the Andok
prospect in the Maghena license area onshore Gabon. The Andok well is
located approximately five kilometres east of the Corporation's
Tsiengui field and was drilled to a total depth of 1,746 metres.
Addax Petroleum plans to drill one exploration well in each of the
Maghena and Epaemeno license areas in 2009.
About Addax Petroleum
Addax Petroleum is an international oil and gas exploration and production company with a strategic focus on West Africa and the Middle East. Addax Petroleum is one of the largest independent oil producers in West Africa and has increased its crude oil production from an average of 8.8 Mbbl/d for 1998 to an average of 136.5 Mbbl/d for 2008. Further information about Addax Petroleum is available at www.addaxpetroleum.com or at www.sedar.com.
Reader Advisory Regarding Forward-Looking Information
Certain statements contained in this new release, including statements related to reserves and resources estimates, business strategy and goals, drilling plans, development plans and schedules, results of exploration activities and dates that areas may come on-stream, and statements that contain words such as "may", "will", "would", "could", "should", "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "propose", "project", and statements relating to matters that are not historical fact constitute forward-looking information within the meaning of applicable Canadian securities legislation.
Forward-looking information is subject to known and unknown risks and uncertainties attendant with oil and gas operations, and other factors, which include, but are not limited to: imprecision of reserves and resources estimates; ultimate recovery of reserves; commodity prices; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and market margins; the ability to produce and transport crude oil and natural gas to markets; weather and climate conditions; results of exploration and development drilling and other related activities; fluctuation in interest rates and foreign currency exchange rates; ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; international political events; and expected rates of return. More specifically, production may be affected by exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability and seismic costs.
In this news release the Corporation has made assumptions with respect to
the following:
- prices for oil and natural gas;
- oil and gas reserve and resource quantities and the discounted
present value of future net cash flows from these reserves and the
ultimate recoverability of reserves;
- timing and amount of future production, forecasts of capital
expenditures and the sources of financing thereof;
- the amount, nature, timing and effects of capital expenditures;
- plans for drilling wells and the timing and location thereof;
- expectations regarding the negotiation and performance of contractual
rights;
- operating and other costs;
- business strategies and plans of management;
- anticipated benefits and enhanced shareholder value resulting from
prospect development and acquisitions; and
- treatment under the fiscal terms of Production Sharing Contracts and
governmental regulatory regimes.
The Corporation's actual results could differ materially from those anticipated in these forward-looking statements if the assumptions underlying them prove incorrect, or if one or more of the uncertainties or risks described above materializes. Risk factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.
Readers are strongly cautioned that the above list of factors affecting forward-looking information is not exhaustive. Further, forward-looking statements are made as at the date they are given and, except as required by applicable law, Addax Petroleum does not intend, and does not assume any obligation, to update any forward-looking statements, whether as a result of new information or otherwise. The forward-looking statements contained in this new release are expressly qualified by this advisory.
Reader Advisory regarding Reserves and Resources
All estimates of reserves and resources are as at December 31, 2008, as set out in Addax Petroleum's Material Change Report dated February 4, 2009 (MCR), which can be found at www.sedar.com or www.addaxpetroleum.com.
Possible Reserves: 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 proved plus probable plus possible reserves.
Contingent Gas Resources: Contingent gas resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. All of the contingent gas resources are located in fields in which wells have been drilled through the gas portion of the reservoirs to help define the gas pay thickness, reservoir quality, and areal extent. There are no gas sales from the properties since no gas market connection is available, nor does Addax Petroleum currently own the gas rights. There is no certainty that it will be commercially viable to produce any portion of the resources.
Prospective Resources: 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. The prospective oil resources indicate exploration opportunities and development potential in the event a commercial discovery is made and should not be construed as reserves or contingent 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.
All resources quantities disclosed are based on "best estimate". Further information on high and low estimates for contingent resources and prospective resources can be found in Addax Petroleum's MCR.
