Current Report No. 15/2017Date: 2017-03-17Issuer's
trading name: SERINUS ENERGY INC.
Title: 2016 Year End Reserves
Legal basis: other regulations
Content:Pursuant to Article 62.8 of the Act of 29 July 2005
on Public Offering [...] the Management of SERINUS ENERGY INC. ("Serinus"
or the "Company") informs that in Canada via the SEDAR system it has
published information on the results of the 2016 year-end evaluation of
its oil and gas reserves. The evaluation was prepared by RPS Energy
Canada Ltd. ("RPS") in accordance with Canadian National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities, and
includes the reserves in Serinus' Tunisian properties. RPS also
conducted a contingent resources assessment of the Company's Satu Mare
licence in Romania.
It was another challenging year for Serinus in 2016, and the petroleum
industry in general. For the industry, the continuing issue was the low
relative oil prices, although the price did begin to recover towards the
end of 2016. The price of Brent Crude started at just under $47/bbl in
early January, quickly dropping to the yearly low of $36.25/bbl on
January 20, 2016. Oil prices then begin to gradually strengthen from
January to the end of June, reaching $54.28 on June 28, 2016. The prices
then fluctuated between a $45/bbl-$55/bbl band to the end of November,
before strengthening through December, holding at prices above $50/bbl.
The yearly high oil price was reached on December 28, 2016, at
$58.07/bbl. The oil price has sustained levels above $50/bbl into 2017,
creating more price certainty for the industry after two years of
operating in a mostly sub-$50/bbl price environment.
Total corporate 1P and 2P reserves decreased from 2015 by 11% and 8%,
respectively. Persistent low commodity prices were the dominant factor
in 2016, especially in the first half. These reduced reserves volumes
are due to earlier economic cut-offs and delays in some development
plans. There were positive and negative revisions which are discussed
TUNISIAIn Tunisia, 1P reserves decreased by 11%, while 2P
reserves increased by 8%. The technical revisions to reserves are:
Positive revisions included:- Improved performance of CS-3 well at
Chouech Es Saida Field; and
Negative revisions included:- Brent price forecast has decreased for
2016 reserve report versus that in the 2015 reserve report, resulting in
a higher economic production limit;- 2015 YE evaluation contemplated
fracture treatment of WIN-13 which has been removed from the plan;-
Decreased production performance of Sabria wells N3H, Sab-11 and NW-1;-
Decreased production performance during 2016 of CS-1 and CS-9;-
Decreased production performance of the EC-1 well on no current plan for
workover; and- Shut-in of CS-8bis due to poor production and shut-in
of Sanrhar SNN-1 due to economic conditions.
Summary of Company reserves is shown in the attachment.
NET PRESENT VALUENet present values for Serinus' reserves
declined by 79% and 20% for 1P and 2P reserves, respectively. The
contributing factors to the $16.2 million decline in the 1P PV10
- a lower price forecast in 2016 versus 2015 (minus $21.9 million in
2016 PV10 valuation);
- lower production volumes in 2016 versus 2015 due to higher economic
production limit (minus $3.1 million in 2016 PV10 valuation);
- higher assumed abandonment costs in 2016 (minus $10.6 million in 2016
- lower costs, royalties and taxes associated with lower production
assumed in 2016 (positive $19.4 million in 2016 PV10 valuation).
Summary of net present value is presented in the attachment.
CONTINGENT RESOURCES - ROMANIAIn addition to the 1P and
2P reserves assigned to the Company's properties in Tunisia, contingent
resources are also assigned to the Moftinu discovery in Romania made in
Serinus will concentrate on the development of the Moftinu Gas
Development Project in Romania which will include building surface
facilities. This is a near-term project that is expected to begin
producing from the gas discovery wells Moftinu-1001 and Moftinu-1000 in
early 2018. The Corporation has obtained all necessary approvals for,
and will soon commence, the construction of a gas plant with 15 MMcf/d
of operational capacity. Construction of the project will proceed over
2017 with expected first gas from this project in Q1 2018. The Company
is also developing the drilling program to meet work commitments for the
extension of the Satu Mare Concession obtained on October 28, 2016.
The above valuation results reflect the Company's 60% working interest
in the Satu Mare Concession, and that the partner, Rompetrol who is
currently in default will not participate in their share of capital
spending. This Company WI case assumes the Company will have 100%
capital interest and 60% working interest in production, revenue,
operating expenses and abandonment costs. However, the Company is
confident that it will be able to recover the full revenue through the
project joint accounts.
Commodity price forecasts used by RPS in preparing its evaluation of
Serinus' oil and gas properties are presented in the attachment.
CAUTIONARY STATEMENTBOEs may be misleading, particularly if
used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Test results are not necessarily indicative of long-term performance or
of ultimate recovery. The test data contained herein is considered
preliminary until full pressure transient analysis is complete.
This text contains selected excerpts from the original news release in
English, which has been filed by Company in Canada (country of its
registered office) by way of the SEDAR system and is available at the
website www.sedar.com by entering the Company name at
The Polish translation of the entire text of the news release is
available at the website: www.serinusenergy.com