Drake Pacific Nearly Doubles Reserves
Drake Pacific Enterprises Ltd. announces the summary results of its year-end December 31, 2007 reserve reports, prepared by Martin & Brusset Associates for DPE's Carmangay properties and by Sproule Associates for all other DPE properties, effective December 31, 2007. The reports were prepared for the purpose of evaluating the Company's Petroleum and Natural Gas Reserves according to the Canadian Oil and Gas Evaluation Handbook (COGEH) with reserve definitions consistent with National Instrument 51-101 Standards of Disclosure for Oil & Gas Activities.
At December 31, 2007, proved plus probable reserves nearly doubled, increasing to 311 thousand boe from 157 thousand boe at December 31, 2006, an increase of 98%. Total proved reserves increased by 78% to 207 thousand boe at December 31, 2007 compared to 116 thousand boe at December 31, 2006.
The value of before tax proved and probable reserves (NPV 10%) increased from $4.45 million to $6.19 million, based on forecast prices, an increase of 39%.
All reserves added during 2007 can be attributed to successful drilling operations at Carmangay and Gilby as well as production improvements on other company properties.
Expected production from the reactivation of wells at Sousa and the newly-drilled oil well at Swan Hills have not been evaluated with the reserve reports at this time. As previously announced, DPE expects that the Swan Hills well will have an initial production rate over 100 Bopd (Net 70 Bopd plus royalties) and Sousa reactivations will be approximately 130 Boepd (Net 22% to 57%) based on production rates at the time of shut in.
The Company plans to use the increased cash flow from Sousa and Swan Hills to further expand its aggressive drilling program this summer; however, a temporary drop in production in Q1 due to workovers and third party pipeline shut-ins will have a slight negative impact on these programs. DPE production at the end of the second quarter is expected to be near 250 boepd.
The changes in reserves increase the company's NAV per share to $0.50/Share. These calculations include $6,190,000 in reserves and assume a land value of $485,000, working capital of $15,000, bank debt of $1,430,000 with common shares outstanding of 10.6 million. Sousa and Swan Hills production will be assessed at a later date and is not considered in the NAV calculations.