Admiral Bay Receives Updated Reserves Report
Admiral Bay Resources has received an updated independent reserve report from Norwest Questa Engineering Corporation of Golden, Colorado. The report covers the Company's unconventional gas projects in the Cherokee Basin in southeast Kansas and the Appalachian Basin in Pennsylvania. Proved Reserves in Kansas increased by 52% to 35.3 Bcf, as at the Company's July 31, 2006 year-end. During this period, Proved Developed Reserves increased by 89% to 21.8 Bcf, with Probable Reserves remaining constant at 9.3 Bcf.
The total 3P Reserves were 277.6 Bcf. While total potential drilling locations increased from approximately 1,700 to 2,200 due to an increased acreage position, a change in estimation methodology by the reserve engineers for possible reserves caused a decrease in reserves per drilling location, relative to last year. Management expects to continue to increase the Company's acreage positions in most of the existing project areas in 2007, which will continue to increase the Company's 3P reserves.
For the 2006 fiscal year Admiral Bay had an All-in Finding Cost of US$1.17/Mcf, based on an overall capital expenditure for the period of US$15.7 million (including US4.7 million for new land acquisitions). The Finding Cost, including only drilling capital, was $0.86 per Mcf. The Full cycle Finding & Development cost (including future development capital and excluding non-drilling capital) was US$2.30/Mcf. Based on forecast prices, the PV-10 value of Proved plus Probable Reserves increased from US$85.4 million to US$109.2 million, a 28% increase. All reserve numbers are net after royalties.
Steve Tedesco, President and CEO of Admiral Bay commented, "This reserve report shows the value we have added through the drill bit during the last year. Our finding costs are very competitive and the increase in Proved Developed Reserves as well as the stable Probable Reserves demonstrates how we continue to high-grade our asset base through drilling." Mr. Tedesco further commented, "Our increase in total locations shows how we continue to add to the asset base even as we are aggressively developing the existing assets. Now that more data is available, our outside reserve engineers changed the methodology for evaluating the reserves per location for all categories of reserves from volumetrics to analogy. This change has reduced the reserves per well for certain possible reserves but does not change our view of the prospectively of our significant asset base."
Admiral Bay Resources Inc. is an emerging unconventional gas production company focused on the development of projects in the Cherokee Basin in southeast Kansas and the Appalachian Basin in Pennsylvania. Admiral Bay is listed on the TSX Venture Exchange under the symbol ADB.
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