New Standard Energy upgrades Eagle Ford to 2P value
THE ROADHOUSE BOWSER: New Standard Energy Limited (ASX: NSE) released results from an independent reserves report on the company’s Eagle Ford acreage, which it claims has increased its Proved plus Probable (2P) reserves by 83 per cent, to 4.89 million barrels of oil equivalent (BOE), creating a 2P PV10 value of $72.3 million for its Atascosa project.
New Standard Energy said both the 1P and 2P reserves comprised 87 per cent oil and natural gas liquids (NGLs), which it claims has further reinforced the highly liquids prone nature of the Atascosa project.
The upgraded independent reserves report from Netherland, Sewell & Associates Inc (NSAI) also increases 1P and 3P reserves by 133 per cent and 33 per cent respectively.
The independent report calculated PV10 value for Eagle Ford reserves net to New Standard at:
$30.8 million for 1P; $72.3 million for 2P; and $148.5 million for 3P.
The company outlined reserves growth since January 2014 report at:
133 per cent increase in net 1P reserves to 3.58 million BOE;
83 per cent increase in net 2P reserves to 4.89 million BOE; and
33 per cent increase in net 3P reserves to 16.45 million BOE.
“New Standard’s business strategy in the United States is targeted on increasing reserves to increase the value of the company’s Atascosa project,” New Standard Energy managing director Phil Thick said in the company’s announcement to the Australian Securities Exchange.
“The increased reserves are a pleasing and robust measure of the progress we are making to execute that strategy.”
New Standard indicated the upgraded reserves report also places a Present Value discounted at 10 per cent (PV10) on the reserves.
Following this report, the company has now confirmed with Credit Suisse that the next draw under its enhanced debt facility is available as and when required, to support funding of the next two wells, the first of which spudded last week.
New Standard said it will continue to use this facility conservatively to manage risk.
The PV10 figures estimated by NSAI were US$27.1 million for 1P, US$63.6 million for 2P and US$130.6 million for 3P.
“The PV10 results from the reserves report highlight the increasing value of the Atascosa project, even during a period of low oil prices and despite the relatively short production history of the Peeler 5H and 6H wells,” Thick said.
“Even though we were conservative with our oil price assumptions the independent values are significant and clearly demonstrate there is still substantial upside as we drill our next wells.
“The large increase from the short production history of just two additional wells illustrates the enormous leverage associated with our Atascosa project and confirms it is primed for development to drive significant value.”
Website: www.newstandard.com.au