- Leucrotta Exploration (LXE) has announced its 2020 year-end reserves
- 2020 net capital expenditures of $5.5 million
- One well was drilled and construction of the Two Rivers facility was completed
- Leucrotta estimates that it currently has $57.5 million in cash and working capital and no debt
- Leucrotta is planning a 2021 capital program of approximately $30 million
- Leucrotta Exploration Inc is a Canadian-based oil and gas company
- Leucrotta Exploration Inc. (LXE) is down 1.61 per cent, trading at C$0.61 per share at 10:30 am ET
Leucrotta Exploration (LXE) is pleased to announce its 2020 year-end reserves as independently evaluated by GLJ Ltd. (GLJ) effective December 31, 2020.
During 2020 and early 2021, Leucrotta made the decision to focus primarily on the Mica Project. To better align corporate plans with the GLJ Report, Leucrotta decided to remove certain undrilled locations in the Doe and Two Rivers areas that did not fit into Leucrotta’s near-term plans.
Proved and probable reserves totalling 13.8 million Boe and the associated future development capital (“FDC”) totalling $97 million were removed from the 2020 GLJ Report. As a result, Leucrotta will be left with a more manageable $ 227 million of FDC booked.
Subsequent to year-end, the Doe property was sold for gross proceeds of C$30 million, which will further reduce reserves in the year-end 2021 evaluation.
Current (Year-end 2020) proved plus probable reserves booked to the disposition lands are 10.8 million Boe (86% associated with undrilled locations) and the related future development capital totalling $38 million.
The 2020 GLJ Report books reserves on only a small percentage of the Mica Project development area and uses existing wells that had one-mile lateral lengths and approximately 40 fracs per well to project performance of future wells.
In 2021, Leucrotta plans to drill and complete its test Pad that will have approximately 1.5-mile lateral lengths and materially increase the frac intensity. Performance of the new wells will have an effect on locations booked in 2020 as well as any additional lands booked in the future.
For 2021, Leucrotta will use production data from the pad development to build out the reserve base for the Mica Project.
2020 Review
During 2020, Leucrotta invested $13.7 million in capital projects that were offset by $8.2 million in dispositions that resulted in net capital expenditures of $5.5 million.
One well was drilled and construction of the Two Rivers facility was completed. While minimal capital was spent on Leucrotta’s main property in Mica, more production data was collected to prove the existing production curves.
Leucrotta wells continue to experience year after year increased recoveries. For 2020, producing wells had increased recoveries of 6% due to well performance.
Outlook for 2021
Leucrotta estimates that it currently has $57.5 million in cash and working capital and no debt.
Leucrotta is planning a 2021 capital program of approximately $30 million that includes a 3 well test pad in the Montney that incorporates longer horizontal lengths and materially increased frac intensity.
A more detailed capital program for 2021 is anticipated to be released in the near future.
Overview of 2020 Reserve Bookings
Leucrotta decreased the number of locations booked by 14 net wells on a proved plus probable basis.
As previously noted, locations removed and associated FDC of $97 million will better align the GLJ Report with the planned development.
On a cumulative basis, Leucrotta has booked 17 horizontal Montney wells and 42 horizontal Montney locations. These locations are booked based on one-mile horizontal lengths and previously used frac intensity.
Capital Expenditures
Capital allocation by category is as follows:
| ($000s) | 2020 | 2019 | ||||||
| Property acquisition | – | 1,543 | ||||||
| Undeveloped land | 1,115 | 897 | ||||||
| Property and equipment dispositions | (8,206 | ) | (4,767 | ) | ||||
| Sub-total acquisitions/dispositions | (7,091 | ) | (2,327 | ) | ||||
| Drilling and completion | 5,828 | 4,203 | ||||||
| Facilities and related infrastructure | 6,630 | 8,112 | ||||||
| Geological, geophysical and other | 143 | 242 | ||||||
| Sub-total capital expenditures | 12,601 | 12,557 | ||||||
| Total all-in capital | 5,510 | 10,230 |
Reserves Summary
Leucrotta’s December 31, 2020 reserves as prepared by GLJ effective December 31, 2020 and based on the GLJ (2021-01) future price forecast are as follows (1,4):
| Working Interest Reserves (2) | Tight Oil (Mbbl) | Shale Natural Gas (Mmcf) | NGLs (Mbbl) | Total Oil Equivalent (Mboe) (3) |
| Proved | ||||
| Producing | 467 | 22,543 | 286 | 4,511 |
| Developed non-producing | 0 | 4,328 | 77 | 799 |
| Undeveloped | 800 | 44,481 | 1,268 | 9,482 |
| Total proved | 1,268 | 71,352 | 1,632 | 14,791 |
| Probable | 3,150 | 135,008 | 3,120 | 28,772 |
| Total proved & probable | 4,418 | 206,360 | 4,752 | 43,563 |
Notes:
(1) Numbers may not add due to rounding.
(2) “Working Interest” or “Gross” reserves mean Leucrotta’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of Leucrotta.
(3) Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil.
(4) Disclosure of Net reserves is included in Company’s AIF available on SEDAR at www.sedar.com. “Net” reserves mean Leucrotta’s working interest (operated and non-operated) share after deduction of royalties, plus Leucrotta’s royalty interest in reserves.
Reserves Values
The estimated future net revenues before taxes associated with Leucrotta’s reserves effective December 31, 2020 and based on the GLJ (2021-01) future price forecast are summarized in the following table (1,2,3,4):
| Discount factor per year | |||||
| ($000s) | 0% | 5% | 10% | 15% | 20% |
| Proved | |||||
| Producing | 42,386 | 36,926 | 32,580 | 29,137 | 26,382 |
| Developed Non-producing | 4,925 | 3,573 | 2,642 | 2,000 | 1,548 |
| Undeveloped | 69,192 | 40,906 | 23,625 | 12,777 | 5,745 |
| Total proved | 116,503 | 81,406 | 58,847 | 43,914 | 33,675 |
| Probable | 297,680 | 170,565 | 103,075 | 64,141 | 40,008 |
| Total proved & probable | 414,183 | 251,971 | 161,922 | 108,054 | 73,684 |
Notes:
(1) Numbers may not add due to rounding.
(2) The estimated future net revenues are stated prior to provision for interest, debt service charges or general administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures.
(3) The estimated future net revenue contained in the table does not necessarily represent the fair market value of the reserves. There is no assurance that the forecast price and cost assumptions contained in the GLJ Report will be attained and variations could be material. The recovery and reserve estimates described herein are estimates only. Actual reserves may be greater or less than those calculated.
(4) The after-tax present values of future net revenue attributed to Leucrotta’s reserves are included in Company’s AIF available on SEDAR at www.sedar.com.
Price Forecast
The GLJ (2021-01) price forecast is as follows:
| Year | WTI Oil @ Cushing ($US / Bbl) | Edmonton Light Oil ($Cdn / Bbl) | AECO Natural Gas ($Cdn / Mmbtu) | Foreign Exchange (US$/Cdn$) |
| 2021 | 48.00 | 55.49 | 2.72 | 0.775 |
| 2022 | 51.50 | 60.78 | 2.67 | 0.765 |
| 2023 | 54.50 | 63.82 | 2.60 | 0.760 |
| 2024 | 57.79 | 68.14 | 2.60 | 0.760 |
| 2025 | 58.95 | 69.67 | 2.65 | 0.760 |
| 2026 | 60.13 | 71.22 | 2.71 | 0.760 |
| 2027 | 61.33 | 72.80 | 2.76 | 0.760 |
| 2028 | 62.56 | 74.42 | 2.81 | 0.760 |
| 2029 | 63.81 | 76.07 | 2.87 | 0.760 |
| 2030 | 65.09 | 77.59 | 2.92 | 0.760 |
| Escalate thereafter (1) | 2.0% per year | 2.0% per year | 2.0% per year |
Note:
(1) Escalated at two per cent per year starting in 2031 in the January 1, 2021 GLJ price forecast with the exception of foreign exchange, which remains flat.
Net Asset Value (“NAV”)
Leucrotta’s NAV as at December 31, 2020 and based on the GLJ (2021-01) future price forecast is as follows:
| ($000s, except per share amounts) | |
| Pre-tax net present value (“NPV”) of proved & probable reserves discounted at 10% | 161,922 |
| Undeveloped land (1) | 110,842 |
| Working capital | (5,807) |
| Net asset value | 266,957 |
| Shares outstanding (basic) | 200,526 |
| Net asset value per share | $1.33 |
Note:
(1) Undeveloped land is included at cost of approximately $665 per acre.
Reserve Life Index (“RLI”)
Leucrotta’s RLI presented below is based on the estimated Q4 2020 average production of 2,897 boe per day.
| Reserve Category | RLI |
| Proved plus Probable Reserves | 41.2 |
| Proved Reserves | 14.0 |
Reserves Reconciliation
The following summary reconciliation of Leucrotta’s working interest reserves compares changes in the Company’s reserves as of December 31, 2020, to the reserves as of December 31, 2019, based on the GLJ (2021-01) future price forecast (1,2):
| Total Proved | Light/Medium Oil | Tight Oil | Conventional Natural Gas | Shale Natural Gas | NGLs | Total Oil Equivalent |
| (Mbbl) | (Mbbl) | (Mmcf) | (Mmcf) | (Mbbl) | (Mboe) (3) | |
| Opening balance | 27 | 1,482 | – | 96,084 | 3,665 | 21,188 |
| Discoveries | – | – | – | – | – | – |
| Extensions and improved recovery | – | 62 | – | 1,762 | 45 | 401 |
| Technical revisions | 2 | 94 | – | (17,212) | (1,856) | (4,628) |
| Acquisitions | – | – | – | – | – | – |
| Dispositions | – | – | – | – | – | – |
| Economic factors | (16) | (209) | – | (4,194) | (83) | (1,008) |
| Production | (13) | (162) | – | (5,089) | (138) | (1,161) |
| Closing balance | – | 1,268 | – | 71,352 | 1,632 | 14,791 |
| Proved plus Probable | Light/Medium Oil | Tight Oil | Conventional Natural Gas | Shale Natural Gas | NGLs | Total Oil Equivalent |
| (Mbbl) | (Mbbl) | (Mmcf) | (Mmcf) | (Mbbl) | (Mboe) (3) | |
| Opening balance | 28 | 5,133 | 13 | 271,567 | 10,639 | 61,061 |
| Discoveries | – | – | – | – | – | – |
| Extensions and improved recovery | – | 74 | – | 2,011 | 51 | 460 |
| Technical revisions | 2 | (614) | (11) | (62,351) | (5,795) | (16,798) |
| Acquisitions | – | – | – | – | – | – |
| Dispositions | – | – | – | – | – | – |
| Economic factors | (17) | (13) | (2) | 220 | (5) | 2 |
| Production | (13) | (162) | – | (5,089) | (138) | (1,161) |
| Closing balance | – | 4,418 | – | 206,360 | 4,752 | 43,563 |
Notes:
(1) Numbers may not add due to rounding.
(2) “Working Interest” or “Gross” reserves means Leucrotta’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of Leucrotta.
(3) Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil.
Finding and Development Costs (“F&D”) and Finding, Development and Acquisition Costs (“FD&A”)
Leucrotta has presented FD&A and F&D costs below:
| 2020 | 2019 | 3 Year Cumulative | ||||
| Proved & | Proved & | Proved & | ||||
| ($000’s, except where noted) | Proved | Probable | Proved | Probable | Proved | Probable |
| F&D costs (excluding net acquisitions/dispositions) | ||||||
| Exploration and development expenditures | 12,601 | 12,601 | 12,557 | 12,557 | 59,197 | 59,197 |
| Change in FDC (1) | (44,713) | (97,021) | (14,515) | (5,204) | 5 | 59,795 |
| F&D costs excluding net acquisitions/dispositions (Including FDC) | (32,112) | (84,420) | (1,958) | 7,353 | 59,202 | 118,992 |
| FD&A costs (including net acquisitions/dispositions) | ||||||
| Exploration and development expenditures | 12,601 | 12,601 | 12,557 | 12,557 | 59,197 | 59,197 |
| Net acquisitions (dispositions) | (7,090) | (7,090) | (2,327) | (2,327) | (6,775) | (6,775) |
| FD&A costs including net acquisitions/dispositions | 5,510 | 5,510 | 10,230 | 10,230 | 52,421 | 52,421 |
| Change in FDC | (44,713) | (97,021) | (14,515) | (5,204) | 5 | 59,795 |
| FD&A costs including net acquisitions/dispositions (Including FDC) | (39,203) | (91,511) | (4,285) | 5,026 | 52,426 | 112,216 |
| Reserve Additions (Mboe) (2) | ||||||
| Exploration and development | (5,236) | (16,337) | 1,469 | 3,018 | 3,305 | 10,077 |
| Net acquisitions/dispositions | – | – | – | – | – | – |
| Total Reserve Additions | (5,236) | (16,337) | 1,469 | 3,018 | 3,305 | 10,077 |
| F&D costs excluding net acquisitions/dispositions ($/boe) | ||||||
| Excluding FDC | (2.41) | (0.77) | 8.55 | 4.16 | 17.91 | 5.87 |
| Including FDC | 6.13 | 5.17 | (1.33) | 2.44 | 17.91 | 11.81 |
| FD&A costs ($/boe) | ||||||
| Excluding FDC | (1.05) | (0.34) | 6.96 | 3.39 | 15.86 | 5.20 |
| Including FDC | 7.49 | 5.60 | (2.92) | 1.67 | 15.86 | 11.14 |
Notes:
(1) Future development capital (“FDC”) expenditures required to recover reserves estimated by GLJ. The aggregate of the exploration and development costs incurred in the most recent financial period and the change during that period in estimated future development costs generally may not reflect total finding and development costs related to reserve additions for that period.
(2) Sum of drilling extensions, technical revisions and economic factors in the reserves reconciliation included above.
Leucrotta Exploration Inc is an oil and natural gas company operating in Canada. It is mainly engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia, Canada.
Leucrotta Exploration Inc. (LXE) is down 1.61 per cent, trading at C$0.61 per share at 10:30 am ET.
Leucrotta Exploration Inc is an oil and natural gas company operating in Canada. It is mainly engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia, Canada.
Leucrotta Exploration Inc. (LXE) is down 1.61 per cent, trading at C$0.61 per share at 10:30 am ET.
