Pearl Exploration and Production Ltd.



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  Jun 4, 2012 - 17:00 ET
BlackPearl Adds 180 Million Barrels of Oil Reserves at its Blackrod SAGD Property

 

CALGARY, ALBERTA--(Marketwire - June 4, 2012) - BlackPearl Resources Inc. (TSX:PXX)(FIRST NORTH:PXXS) ("BlackPearl" or the "Company") is pleased to announce that it has filed an 80,000 barrel per day commercial development application with the Energy Resources Conservation Board (ERCB) and Alberta Environment for its Blackrod Steam Assisted Gravity Drainage (SAGD) Project in northern Alberta. The first phase of this project is planned for 20,000 barrels of oil per day. The filing of the commercial application is the culmination of three years of delineation drilling, source water testing, cap rock integrity testing and a successful SAGD pilot operation that has reached commercial production rates after 10 months of testing. The commercial application included extensive public consultation and numerous environmental studies, including baseline testing for air, sound, water and surface disturbance and a pro-active program to monitor and mitigate environmental impacts.

The project application is available for viewing on our website, www.blackpearlresources.ca, or on the ERCB website.

Sproule Unconventional Limited (Sproule), an independent reserves evaluator, has completed an update to the proved plus probable reserves and contingent resource assessment for the Blackrod project. Based on, among other items, the delineation drilling completed this winter, performance of the pilot and the filing of the commercial development application, Sproule has assigned 182 million barrels of proved plus probable reserves to the first phase of the commercial project. In addition, Sproule has ascribed a best estimate contingent resource to the remainder of the project of 476 million barrels.

John Festival, President & CEO of BlackPearl, commented that "Blackrod is obviously a very significant project for the company. The combination of reserve and resource value attributed to the property alone is nearly $10 per share We have operated a successful pilot for almost a year and with the positive results achieved, as well as all of the additional technical information gathered over the last three years, we are ready to move to the first phase of commercial development of the property. We expect that resources will continue to be converted into reserves as we move future phases into commercial development."

The following tables summarize Sproule's estimate of the Company's reserves and best estimate contingent resource from the Blackrod project.

Summary of Oil and Gas Reserves - Blackrod Project


Bitumen
Reserves
Net Present Values of Before Tax Future Net Revenue
as of May 31, 2012
Discounted at
0% 5% 8% 10% 12%
(MMbbl) ($million)
Proved 1.7 13 11 9 8 8
Probable 180.1 4,397 1,740 1,035 735 519
Total proved plus probable 181.8 4,410 1,751 1,044 743 527

Notes:

  1. The pricing assumptions were provided by Sproule Unconventional Limited
  2. None of the Company's future production is subject to a fixed or contractually committed price.

Definitions:

  1. "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
  2. "Probable" reserves 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 plus probable reserves.
  3. The Net Present Value (NPV) is based on Sproule Forecast Pricing and costs. The estimated NPV does not necessarily represent the fair market value of the Blackrod reserves. There is no assurance that forecast prices and costs assumed in the Sproule evaluations will be attained, and variances could be material.

Summary of Best Estimate (P50) Contingent Resources - Blackrod Project (1)(2)

Gross(3)
Heavy Oil/Bitumen
Net Present Values of Before Tax Future Net Revenue
as of May 31, 2012
Discounted at
0% 5% 8% 10% 12%
(MMbbl) ($million)
Best Estimate Contingent Resources 476 10,393 3,990 2,323 1,632 1,147

Notes:

  1. Contingent Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be 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. It is also appropriate to classify as Contingent Resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.
  2. Best estimate (P50) is a classification of estimated resources described in the COGE Handbook as being considered to be the best estimate of the quantity that will be actually recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the best estimate.
  3. "Gross" means the Company's working interest share in the contingent resources of bitumen and heavy oil before deducting royalties. The Company has a 100% working interest at Blackrod.
  4. The amounts included in the contingent resource table do not include the volume and value of BlackPearl's proved and probable reserves assigned by Sproule to the Blackrod property.

The pricing assumptions that were used in the Sproule evaluation are summarized below.



Year

WTI
Cushing
40° API

Edmonton
Par Price
40° API
Western
Canadian
Select
20.5° API

Alberta
AECO-C
Spot


Inflation
rate


Exchange
rate
(US$/bbl) (CDN$/bbl) (CDN$/bbl) (CDN$/MMBtu) (%/yr) (US$/Cdn$)
2012 105.24 94.68 79.53 2.11 2.0 1.005
2013 104.66 104.10 87.44 3.05 2.0 1.005
2014 100.12 99.59 83.65 3.52 2.0 1.005
2015 97.40 96.88 81.38 5.02 2.0 1.005
2016 99.37 98.84 83.02 5.74 2.0 1.005
2017 101.35 100.82 84.69 5.86 2.0 1.005
2018 103.38 102.83 86.38 5.98 2.0 1.005
2019 105.45 104.89 88.11 6.10 2.0 1.005
2020 107.56 106.99 89.87 6.23 2.0 1.005
2021 109.71 109.13 91.67 6.36 2.0 1.005
2022 111.90 111.31 93.50 6.50 2.0 1.005
Escalation rate of 2.0% thereafter

Forward-Looking Statements

This news release contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", "scheduled", "should", "outlook" or similar words suggesting future outcomes. In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to commercial production rates from the SAGD pilot, the Company's oil and gas reserves and contingent resource for the Blackrod project, as well as the estimated future net revenue amounts associated with these reserves and resources.

In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future.

The forward-looking statements in this news release reflect certain assumptions and expectations by management. The key assumptions that have been made in connection with these forward-looking statements include the continuation of current or, where applicable, assumed industry conditions, the continuation of existing tax, royalty and regulatory regimes, commodity price and cost assumptions, the continued availability of cash flow or financing on acceptable terms to fund the Company's capital programs, the accuracy of the estimate of the Company's reserves and resource volumes and that BlackPearl will conduct its operations in a manner consistent with past operations. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their very nature, forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those contained in forward-looking statements. These factors include, but are not limited to, risks associated with fluctuations in market prices for crude oil, natural gas and diluent; general economic, market and business conditions; substantial capital requirements; uncertainties inherent in estimating quantities of reserves and resources; extent of, and cost of compliance with, government laws and regulations and the effect of changes in such laws and regulations from time to time; the need to obtain regulatory approvals on projects before development commences; environmental risks and hazards and the cost of compliance with environmental regulations; aboriginal claims; inherent risks and hazards with operations such as fire, explosion, blowouts, mechanical or pipe failure, cratering, oil spills, vandalism and other dangerous conditions; potential cost overruns; variations in foreign exchange rates; diluent supply shortages; competition for capital, equipment, new leases, pipeline capacity and skilled personnel; uncertainties inherent in the SAGD bitumen and Alkali Surfactant Polymer recovery processes; credit risks associated with counterparties; the failure of the Company or the holder of licenses, leases and permits to meet requirements of such licenses, leases and permits; reliance on third parties for pipelines and other infrastructure; changes in royalty regimes; failure to accurately estimate abandonment and reclamation costs; inaccurate estimates and assumptions by management; effectiveness of internal controls; the potential lack of available drilling equipment and other restrictions; failure to obtain or keep key personnel; title deficiencies with the Company's assets; geo-political risks; risks that the Company does not have adequate insurance coverage; risk of litigation and risks arising from future acquisition activities. Further information regarding these risk factors and others may be found under "Risk Factors" in the Annual Information Form.

Undue reliance should not be placed on these forward-looking statements. Readers are cautioned that the actual results achieved will vary from the information provided herein and the variations could be material. Readers are also cautioned that the foregoing list of assumptions, risks and factors is not exhaustive. Consequently, there is no assurance by the Company that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained in this news release are made as of the date hereof, and the Company does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

BlackPearl's Certified Advisor on First North is Pareto Öhman AB.

Company Registration Number: 409596-1



FOR FURTHER INFORMATION PLEASE CONTACT:

BlackPearl Resources Inc.
John Festival
President and Chief Executive Officer
403-215-8313

BlackPearl Resources Inc.
Don Cook
Chief Financial Officer
403-215-8313
403-265-8324 (FAX)
www.blackpearlresources.ca
 
 

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