Surmont Energy Announces Results of Independent Resources Evaluation
of Its Oil Sands Leases Near Ft. McMurray, Alberta and Provides
Corporate and Operations Updates
CALGARY, ALBERTA -- (Marketwire) -- 12/07/12 -- Calgary-based Surmont
Energy Ltd. ("Surmont", or the "Company") is pleased to announce that
independent qualified reserves evaluation firm GLJ Petroleum
Consultants Ltd. ("GLJ") has updated its evaluation of Surmont's oil
sands leases located near Fort McMurray, Alberta (the "GLJ Report").
The updated GLJ Report was initiated as a result of Surmont's recent
submission of regulatory applications for its 12,000 barrel per day
("bbl/d") Wildwood oil sands project together with the completion of
The GLJ Report was prepared in accordance with National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities ("NI
51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE
Handbook"), with an effective date of November 30, 2012, and using
GLJ's forecast prices and costs as at that date.
HIGHLIGHTS OF THE GLJ REPORT
-- Of the 131.0 million barrels ("mmbbl") of Contingent Resources (Best
Estimate) assigned previously by GLJ (104.8 mmbbl net to Surmont's 80%
interest), 49.6 mmbbl have now been reclassified to Probable Res
(2P) (39.7 mmbbl net to Surmont).
-- This reserve reclassification reflects the continued progress and high
quality of Surmont's Wildwood SAGD Project.
-- 81.4 mmbbl continue to be classified as Contingent Resources (Best
Estimate) (65.1 mmbbl net to Surmont).
-- An additional 20.4 mmbbl of Prospective Resources (Best Estimate)
continue to be assigned (16.3 mmbbl net to Surmont).
SUMMARY OF RESERVES 4,5,6,9,10,11,12,13
Heavy Oil (Bitumen) (Millions of Barrels)
1P 2P 3P
Gross Lease 0 49.6 78.9
Total Company Interest 0 39.7 63.2
Net After Royalties 0 32.8 48.9
SUMMARY OF CONTINGENT RESOURCES
Heavy Oil (Bitumen) (Millions of Barrels)
Low Estimate Best Estimate High Estimate
Gross Lease 61.0 81.3 155.5
Total Company Interest 48.8 65.1 124.4
Net After Royalties 40.7 50.8 96.1
SUMMARY OF PROSPECTIVE RESOURCES 4,8,9,10,11,12,13
Heavy Oil (Bitumen) (Millions of Barrels)
Low Estimate Best Estimate High Estimate
Gross Lease 0 20.4 37.8
Total Company Interest 0 16.3 30.2
Net After Royalties 0 13.7 23.4
Note: "Gross Lease" represents 100% interest values; "Total Company
Interest" represents Surmont's 80%.
With Surmont now having achieved the major milestone of booking
initial reserves at its Wildwood SAGD Project and having filed its
application for approval for its 12,000 barrel per day Phase 1
project, Mr. William Cooper, the primary founding shareholder of
Surmont, has, as planned, provided his resignation from the role of
President of the Company. Mr. Cooper plans to continue as a Surmont
director and has committed to being actively involved in providing
financing for the Company.
Surmont's Chief Executive Officer, Mr. Mark R. Smith, commented that
"Bill has been the main driver of Surmont's creation, and his
exceptional achievements have allowed us to exceed the goals he set
for our company just over a year ago. We are grateful for his
contributions to date and look forward to his continued service as a
Board member and financing advisor."
Surmont submitted applications in early October 2012 for its 12,000
barrel per day Wildwood oil sands project, and together with its 20%
coventurer Bounty Developments Ltd., is planning further exploration
of the rest of the lease area in upcoming seasons with the objective
of developing additional expansions to the project. Su
expansions could further increase the project's life and peak rates.
Work has commenced for financing the engineering, procurement,
construction and drilling activities, with estimated capital
expenditures over the next several years in excess of $500 million.
1. Economic Contingencies
GLJ's evaluation of Contingent Resources is based upon the same
fiscal conditions as applicable in the assessment of reserves and, as
such, the estimated recoverable resource volumes are economically
recoverable resources; there is no economic contingency.
2. Technical Contingencies
Surmont's Wildwood development is based on the application of
Steam-Assisted Gravity Drainage (SAGD) technology, which is an
established technology in this oil sands formation in this geographic
area. There is no technical contingency with respect to the
application of SAGD technology to the Wildwood development. Given the
maturity of this project, additional drilling will, however, be
required to fully characterize the oil sands reservoir and for
development to proceed.
3. Non-Technical Contingencies
Non-technical contingencies include SAGD facility design, preparation
of more-detailed cost estimates and schedules to confirm project
economics, Company and coventurer sanctioning of firm plans to
proceed with the project, receipt of required regulatory approvals on
the schedule contemplated, the availability of required capital
investment funds on suitable terms, and the availability of required
equipment and services on the schedule contemplated.
4. Future Reclassifications
For reclassification of portions of the estimated Probable Reserves
(2P) to Proved Reserves (1P), Surmont expects that it will, at a
minimum, need to receive regulatory approval of its applications for
Phase 1 of the Wildwood Project development and develop
higher-accuracy cost estimates and schedules to confirm project
economics, with first major capital investments forecast to occur
within two to three years and first production within five years.
Surmont submitted in early October 2012 its Phase 1 Wildwood Project
regulatory applications. Additional delineation drilling and future
regulatory applications will be necessary to develop the entire
resource base and reserve base on these leases and correspondingly
assign additional resources and reserves.
Successful future drilling will be necessary to allow
reclassification of any portion of estimated Prospective Resources to
5. "Reserves" are estimated remaining quantities of oil and natural
gas and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on: (a) analysis of
drilling, geological, geophysical and engineering data; (b) the use
of established technology; and (c) specified economic conditions.
6. "Probable Reserves (2P)" are defined are those additional reserves
that are less certain to be recovered than proved reserves. It is
equally likely that the actual remaining quantities recovered will be
greater or less than the sum of the estimated proved and probable
7. "Contingent Resources" are defined in the COGE Handbook as those
quantities of resources estimated on a given date to be potentially
recoverable from known accumulations using established technology or
technology under development, but which do not currently qualify as
reserves or commercially recoverable due to one or more
contingencies. Contingencies may include factors such as economic,
legal, environmental, political and regulatory matters, or a lack of
markets. Contingent Resources are subject to the chance of
development. There is no certainty that it will be commercially
viable to produce any portion of the Contingent Resources or that
Surmont will produce any portion of the volumes currently classified
as Contingent Resources.
8. "Prospective Resources" are "undiscovered resources" as defined in
the COGE Handbook. Undiscovered resources are defined as those
quantities estimated on a given date to be contained in accumulations
yet to be discovered. The estimates of the potentially recoverable
portions of undiscovered resources are classified as Prospective
Resources. Prospective Resources are defined as those quantities of
resources estimated on a given date to be potentially recoverable
from undiscovered accumulations. They are technically viable and
economic to recover. Pursuant to s.5.9 (d)(v) of NI 51-101, Surmont
cautions that that there is no certainty that any portion of the
Prospective Resources will be discovered, and that if discovered,
there is no certainty that it will be commercially viable to produce
any portion of the volumes currently classified as Prospective
Resources or that Surmont will produce any po
rtion of the volumes
currently classified as Prospective Resources.
9. "Low Estimate" values are considered to be a conservative estimate
of the quantity of resources and reserves that will actually be
recovered. It is likely that the actual remaining quantities
recovered will exceed the Low Estimate. Those resources and reserves
at the low end of the estimate range have the highest degree of
certainty - a 90% confidence level - that the actual quantities
recovered will be equal or exceed the estimate.
10. "Best Estimate" values are considered to be the best estimate of
the quantity of resources and reserves that will actually be
recovered. It is equally likely that the actual remaining quantities
recovered will be greater or less than the Best Estimate. Those
resources that fall within the Best Estimate have a 50% confidence
level that the actual quantities recovered will be equal or exceed
11. "High Estimate" values are considered to be an optimistic
estimate of the quantity of resources and reserves that will actually
be recovered. It is unlikely that the actual remaining quantities of
resources and reserves recovered will meet or exceed the High
Estimate. Those resources and reserves at the high end of the
estimate range have a lower degree of certainty - a 10% confidence
level - that the actual quantities recovered will equal or exceed the
12. "Bitumen" is defined under NI 51-101 as naturally occurring
hydrocarbons with a viscosity greater than 10,000 centipoise. The
resources at the Wildwood Project have a viscosity greater than this
value and are classified as bitumen.
13. The Wildwood Project resource, reserve, and value estimates
provided herein are estimates, and actual resources, reserves, future
production, and value derived from such resources and reserves may be
greater than or less than the estimates. The size of the resource and
reserve estimates could be positively or negatively impacted,
potentially materially, if delineation wells or seismic data indicate
that the aerial extent, reservoir quality and/or the thickness of the
reservoir is different than estimated by GLJ, or if production
performance is different than estimated by GLJ.
ABOUT SURMONT ENERGY LTD.
Surmont Energy Ltd. is an unlisted oil sands company founded in
October 2011, and headquartered in Calgary, Alberta. The Company
focuses on utilizing environmentally responsible technologies to
carry out profitable development of oil sands and heavy oil projects
in western Canada.
Surmont's initial project is located on a 12,000-acre block of oil
sands leases in the heart of Alberta's
steam-assisted-gravity-drainage (SAGD) project region. The Company
has been conducting an accelerated exploration and delineation
program, and has made regulatory approvals for its 12,000 bbl/day
Wildwood SAGD project intended to lead to first production in 2015 or
For further information, please visit Surmont's website at
This information release contains certain "forward-looking
statements" within the meaning of such statements under applicable
securities law including but not limited to final regulatory approval
from the Alberta Energy Resources Conservation Board and Alberta
Environment. Forward-looking statements are frequently characterized
by words such as "plan", "expect", "estimate", "intend", "believe",
"anticipate", "proposed", "prospective" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on Surmont's experience and
current beliefs as well as assumptions made by, and information
currently available to, Surmont, and are subject to a variety of
risks and uncertainties including, but not limited to, those
associated with resource definition, unanticipated costs and
expenses, regulatory approvals, fluctuating oil and gas prices, and
the ability to access sufficient capital under suitable conditions to
finance future acquisitions and development. Although the Company
believes that the expectations represented by such forward-looking
statements are reasonable, there can be no assurance that such
expectations will prove to be correct. Readers are cautioned that the
assumptions and factors discussed in this information release are not
exhaustive and readers are not to place undue reliance on
forward-looking statements. Surmont expressly disclaims any intention
or obligation to update or revise any forward-looking statements as a
result of new information, future events or otherwise, subsequent to
the date of this message, except as required under applicable
securities legislation. The forward-looking statements are expressly
qualified by these cautionary statements.
Surmont Energy Ltd.
+1.800.972.8139 (Toll-free N. America)
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