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Birchcliff Energy Ltd
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March 2024 Corporate Presentation
| Jeff Tonken | Page 37 of 11 |
April 30, 2024
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"March 2024 Corporate Presentation"
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BOE AND MCFE CONVERSIONS Boe amounts have been calculated by using the conversion ratio of 6 Mcf of natural gas to 1 bbl of oil and Mcfe amounts have been calculated by using the conversion ratio of 1 bbl of oil to 6 Mcf of natural gas. Boe and Mcfe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl and an Mcfe conversion ratio of 1 bbl: 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. MMBTU PRICING CONVERSIONS $1.00 per MMBtu equals $1.00 per Mcf based on a standard heat value Mcf. OIL AND GAS METRICS This presentation contains metrics commonly used in the oil and natural gas industry, including F&D costs, reserves life index, operating netback recycle ratio, net asset value, operating netbacks and net asset value per common share which have been determined by Birchcliff as set out below. These oil and gas metrics do not have any standardized meanings or standard methods of calculation and therefore may not be comparable to similar measures presented by other companies. As such, they should not be used to make comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide investors with measures to compare Birchcliff’s performance over time; however, such measures are not reliable indicators of Birchcliff’s future performance, which may not compare to Birchcliff’s performance in previous periods, and therefore should not be unduly relied upon. With respect to F&D costs: o F&D costs for PDP, proved or proved plus probable reserves, as the case may be, are calculated by taking the sum of: (i) exploration and development costs (F&D capital expenditures) incurred in the period; and (ii) where appropriate, the change during the period in FDC for the reserves category; divided by the additions to the reserves category after adding back production in the period. F&D costs exclude the effects of acquisitions and dispositions. o In determining the amounts of F&D costs for a PDP, proved and proved plus probable reserves, as the case may be, the estimated reserves during the period and the change during the period in estimated FDC are based upon the evaluations of Birchcliff’s reserves prepared by its independent qualified reserves evaluators, effective December 31 of such year. o The aggregate of the F&D capital expenditures incurred in the most recent financial year and the change during that year in estimated FDC generally will not reflect total F&D costs related to reserves additions for that year. o F&D costs may be used as a measure of the Corporation’s efficiency with respect to finding and developing its reserves. • Reserves life index is calculated by dividing PDP, proved or proved plus probable reserves, as the case may be, estimated by Birchcliff’s independent qualified reserves evaluator at December 31, 2023, by 75,500 boe/d (which represents the mid-point of Birchcliff’s annual average production guidance range for 2024). Reserves life index may be used as a measure of the Corporation’s sustainability. • For information regarding operating netback, operating netback recycle ratios and net asset value per common share and how such metrics are calculated, see “Non-GAAP and Other Financial Measures”. POTENTIAL FUTURE DRILLING LOCATIONS This presentation discloses potential net future horizontal drilling locations, specifically: in Pouce Coupe and Gordondale, 703 potential net future horizontal drilling locations to which proved plus probable reserves have been attributed by Deloitte. Proved plus probable locations consist of proposed drilling locations identified in the 2023 Deloitte Report that have proved and/or probable reserves, as applicable, attributed to them. Unbooked locations are internal estimates based on Birchcliff’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal technical analysis review. Unbooked locations have been identified by management as an estimate of Birchcliff’s multiyear drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. Birchcliff’s ability to drill and develop these locations and the drilling locations on which Birchcliff actually drills wells depends on a number of uncertainties and factors, including, but not limited to, the availability of capital, equipment and personnel, oil and natural gas prices, costs, inclement weather, seasonal restrictions, drilling results, additional geological, geophysical and reservoir information that is obtained, production rate recovery, gathering system and transportation constraints, the net price received for commodities produced, regulatory approvals and regulatory changes. As a result of these uncertainties, there can be no assurance that the potential future drilling locations that Birchcliff has identified will ever be drilled and, if drilled, that such locations will result in additional oil, condensate, NGLs or natural gas production and, in the case of unbooked locations, additional reserves. As such, Birchcliff’s actual drilling activities may differ materially from those presently identified, which could adversely affect Birchcliff’s business. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relatively close proximity to such unbooked drilling locations, some of the other unbooked drilling locations are farther away from existing wells, where management has less information about the characteristics of the reservoir and there is therefore more uncertainty whether wells will be drilled in such locations and, if drilled, there is more uncertainty that such wells will result in additional proved or probable reserves, resources or production. ADVISORIES