Dune Energy, Inc. Reports Mid-Year 2013 Proved Reserves Of 16.5 MMboe, Up 10% From Year-End 2012
Dune Energy, Inc. Reports Mid-Year 2013 Proved Reserves Of 16.5 MMboe, Up 10% From Year-End 2012 PR Newswire HOUSTON, Aug. 28, 2013 HOUSTON, Aug. 28, 2013 /PRNewswire/ -- Dune Energy, Inc. (OTCBB: DUNR) today reported mid-year 2013 proved oil and gas reserves of 7,570 MMbo and 53.8 Bcf of gas or 16,545 Mboe. Oil volumes increased 985 Mbo or 15% and gas volumes increased 3.2 Bcf or 6% over year-end 2012 reported reserves. The majority of these increases were associated with the recently completed drilling program in our Leeville field in Lafourche Parish, Louisiana. PV@10% value of these reserves, as calculated in accordance with applicable financial and reporting standards of the SEC, totaled $339 million or 30% above the year-end 2012 PV@10% value of $260.6 million. DeGolyer and MacNaughton, the Company's independent reservoir engineering consultant provided the mid-year report of reserves, while the year-end reserves were determined by the company's reservoir engineering staff. Year-End 2011 vs. Mid-Year 2013 The following table compares proved, probable and possible reserve amounts for year-end 2011 when Dune completed its financial restructuring and mid-year 2013. MMboe MMboe Reserve Category Year-End 2011 Mid-Year 2013 Increase Proved Developed (PDP) 5.0 5.1 2% Proved Developed Behind Pipe (PDNP) 3.6 4.1 14% Proved Undeveloped (PUD) 4.6 7.4 61% Total Proved 13.2 16.6 26% Probable 1.1 6.3 83% Possible .6 7.7 92% Grand Total 14.9 30.6 105% In this 18 month time frame proved reserves increased 26% and proved, probable and possible reserves increased 105%. The following table compares PV@10% value of our reserves by category from year-end 2011 to mid-year 2013. Pricing at year-end 2011 was $92.91/Bo and $4.12/MCFG and pricing for mid-year 2013 was $104.79/Bo and $3.65/MCFG. (MM$) (MM$) Reserve Category Year-End 2011 Mid-Year 2013 Increase Proved Developed (PDP) 96.2 107.9 11% Proved Undeveloped (PDNP) 42.8 60.1 42% Proved Undeveloped (PUD) 111.0 170.9 54% Total Proved 250.0 338.9 35% Probable 36.8 198.9 440% Possible 2.4 217.5 896% Grand Total 289.2 754.9 161% In this 18 month period proved reserve value increased 35% while proved, probable and possible increased 161%. As seen below, over this time frame we have invested $56.4 million of new capital, excluding ARO, and produced 1.28 MMboe which results in a finding and development cost of $12.26/Boe. Reserve replacement has been 359% in this 18 month period. Reserve Reconciliation MMboe Year-End 2011 Proved Reserves 13.23 18 Months Production <1.28> Additions/Revisions 4.60 Mid-Year 2013 Proved Reserves 16.55 Investment (MM$) 56.40 Finding and Development Cost $/Boe 12.26 Leeville Field, Lafourche Parish, Louisiana As stated earlier, the majority of the increases in reserves were the result of the drilling program at our Leeville Field. We invested approximately $18 million in the field over the timeframe. Below shows the increase in reserves and PV@10% value associated with the Leeville Field. (MMboe) (MMboe) (MM$) (MM$) Reserve Category Mid-Year 2011 Mid-Year 2013 Year-End Mid-Year 2013 2011 Proved 2.1 6.4 45.1 180.6 Possible/Probable --- 14.0 ----- 409.8 Total 2.1 20.4 45.1 590.4 Major Field Breakout by Reserves (MMboe) Field Proved Possible/Probable Total Leeville 6.4 12.8 19.2 Garden Island Bay 1.7 .6 2.3 Bateman Lake 2.0 .3 2.3 Chocolate Bayou .6 .3 .9 Other 5.9 ----- 5.9 Total 16.6 14.0 30.6 Major Field Breakout by PV@10% Value (MM$) and Capital Investment (MM$) Capital Investment Field Proved Possible/Probable Proved Possible/Probable Leeville 180.6 399.8 46.9 71.1 Garden Island Bay 32.9 3.2 17.1 8.9 Bateman Lake 18.3 2.2 12.4 1.8 Chocolate Bayou 11.9 10.6 1.8 2.1 Other 94.8 .6 20.6 .2 Total 338.5 416.4 98.8 84.1 Leeville now accounts for 39% of our proved reserves and 96% of our probable/possible reserves. 53% of the PV@10% value of proved reserves and 96% or the PV@10% value of the possible/probable reserves are associated with the Leeville Field. To bring all these reserves at Leeville to the proved developed producing category will require an investment of $118 million over the next several years. To bring all of the Company's defined reserves to a proved developed producing category will require an investment of $182.9 million. Garden Island Bay In addition to the opportunities defined in our mid-year reserve report we have identified an additional 17 prospects at Garden Island Bay with 21.8 MMboe of reserve potential requiring an investment of $219 million in order to convert these exploratory reserves into proved developed production. The much higher risk, higher potential subsalt potential could possibly add another 18.7 MMboe of reserve potential and would require a $147 MM capital commitment. Dune will record an impairment of oil and gas properties of $29.6 million in the third quarter of 2013. This impairment primarily resulted from the impact of lower expected future oil prices on the economic life of the Garden Island Bay field proved reserves. The application of this non-cash accounting assessment was triggered by the publication of the mid-year, D&M Reserve Report and the backwardation of the published strip price of WTI oil on the effective date of the Report Chocolate Bayou In the June 2013 report, the Wieting #31 was classified with probable reserves of 219 Mbo and 2.4 Bcfg gross. The well has been drilled through the 12,000 S sand and logged apparent hydrocarbon pays in this zone. We anticipate first production from this well in 30 to 45 days. The assumed initial production in the well based on the D&M reserve report is 3.3 MMcfg/day and a 306 Bo/day gross. Dune has a 50% working interest and a 44% net revenue interest in the well. Assuming a successful completion, these probable reserves will be reclassified as PDP reserves. Remainder 2013 / 2014 Budget The reserve report currently envisions $14.3 million of capital for the remainder of the year associated with the proved reserves and $45.8 million of capital in 2014 for exploitation of the proved reserves. The Company is in the process of developing a risk-adjusted budget that will fund some exploratory projects in our Garden Island Bay field in addition to some of the probable/possible reserves in our mid-year report for the remainder of 2013 and 2014. This risked capital budget will be adapted to the constraints of our available capital, which currently is limited to free cash flow and availability under our revolver. The revolver availability is currently $50 million with $20 million drawn and $2 million of standby letters of credit issued. However, actual availability is not based solely on the undrawn/unused portion of the revolver. Borrowing capacity is further limited by the quarterly Debt/EBITDAX of less than 4.0 to 1.0. The June reserve report has been submitted to our banks for a redetermination of the borrowing base as required under the credit agreement. James A. Watt, President and CEO of the company stated, "Post the restructuring late in 2011, we have made many successful investments that have increased reserves and production and defined additional upside exploratory opportunities. Our potential for organic growth far exceeds our current cash flow and availability under our revolver. We will continue carefully monitoring our capital program to achieve maximum production from our asset base while staying within the constraints of our credit agreements." Click here for more information: http://www.duneenergy.com/news.html?b=1683&1=1 FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Dune Energy, Inc.'s projects and other statements which are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although Dune Energy, Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company's projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Dune's Annual report on Form 10-K filed with the U.S. Securities and Exchange Commission. Investor Contact: Steven J. Craig Sr. Vice President Investor Relations and Administration 713-229-6300 SOURCE Dune Energy, Inc.