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Reserves

Certain financial estimates have been made herein to facilitate discussion of the Company’s 2009 capital program. Readers are advised that these financial estimates are subject to the disclosure to be contained in the audited financial statements of Seaview for the year ended December 31, 2009, management’s discussion and analysis related thereto and its Annual Information Form expected to be filed on or about April 6, 2010.

The Company is pleased to report that a significant increase in reserves during 2009 as a result of its combined acquisitions and successful 2009 drilling program. The independent reserves evaluation has been completed by Sproule and Associates Limited “Sproule”, with an effective date of December 31, 2009, in a National Instrument 51-101 “NI 51-101” compliant report “Evaluation of the P&NG Reserves of Seaview Energy Inc.” Highlights of the report are summarized below:

  • Increased Proven Producing reserves by 52% to 5,973 MBoe, compared to 3,941 MBoe at December 31, 2008.

  • Increased Total Proven reserves by 49%, to 7,141 MBoe compared to 4,786 MBoe at December 31, 2008.

  • Increased Total Proven plus Probable reserves by 53% to 11,068 compared to 7,256 MBoe at December 31, 2008.

  • Probable Developed Producing reserves assigned to Proved Producing assets are 2,286 MBoe, increasing developed Proven plus Probable producing reserves to 8,259 MBoe or 75% of the Total Proven plus Probable reserves.  No future development capital is required to convert the Probable Producing reserves to Proven Producing over time.

  • Reserve Life Index of 7.2 years on a Total Proven basis and 11.1 years on a Total Proven plus Probable basis using December 31, 2009 reserves, and estimated Q4-09 production of 2,725 boe/d.

  • Total capital expenditures based on unaudited financial results were $46.7 million; including changes in FDC total capital costs for the purpose of calculating FD&A costs are $47.2 million.

    • Achieved FD&A costs of $14.93/boe Proven and $10.32/boe Proven plus Probable (Including changes in FDC).

    • Seaview completed five strategic property acquisitions in 2009, highlighted by the complimentary PRA assets acquired from a senior producer for $26.6 mm in June 2009.  Overall the acquisition program added 2,158 MBoe of Total Proven plus Probable reserves, or 47% of the Total Proven plus Probable reserve additions in 2009.

    • Seaview’s acquisitions and drilling success replaced production by 3.9 times on a Proven basis and 5.7 times on a Proven plus Probable basis.

  • Seaview completed an active drilling program in 2009 which included drilling 9 gross wells (8.4 net) with an 78% success rate. Capital expenditures based on unaudited consolidated financial results were $16.3 million directed towards drilling activity. Including changes to FDC, the total capital costs for the purpose of calculating F&D costs are $18.9 million.

    • Achieved F&D costs of $9.85/boe Proven and $7.67/boe Proven plus Probable (including FDC and after revisions).

    • Seaview enjoyed a very successful drilling program accounting for 2,458 mBoe or 53% of the Total Proven and Probable reserve additions in 2009.

    • Seaview’s drilling success replaced production by 2.1 times on a Proven basis and 3.1 times on a Proven plus Probable basis.

  • Seaview continues to drive reserve addition costs down through successful execution of the Company’s balanced acquisition, exploration and development strategy.  Management has been able to steadily reduce finding costs as a result of a strong prospect inventory and successful grass-roots exploration.  Seaview’s three year average reserve costs are:

    • Three year average Proven F&D costs of $14.04/boe Proven and Proven plus Probable costs of $11.02/boe (including FDC and after revisions).

    • Three year average Proven FD&A costs of $21.91/boe Proven and Proven plus Probable costs of $15.71/boe (including FDC and after revisions).

Historical Capital Efficiency Highlights

2009

2008

2007-2009

Total Proved

Total Proved plus Probable

Total Proved

Total Proved plus Probable

Total Proved

Total Proved plus Probable

Capital Costs ($thousands)

Exploration and development capital

$16,284

$16,284

$20,907

$20,907

$40,827

$40,827

Acquisitions, net of dispositions

$30,455

$30,455

$91,864

$91,864

$135,371

$135,371

Future development capital, beginning balance

$5,219

$12,982

$843

$1,475

$0

$0

Future development capital, end of period balance

$5,646

$15,551

$5,219

$12,982

$5,646

$15,551

Exploration and development capital including change in future development capital

$16,711

$18,853

$25,283

$32,414

$46,437

$56,378

All-in capital including change in future development capital

$47,166

$49,308

$119,098

$126,229

$183,890

$193,795

 

Reserve additions (including technical revisions)

Exploration and development (MBoe)

1,696

2,458

1,393

2,321

3,309

5,118

Acquisitions, net of dispositions (Mboe)

1,464

2,158

3,409

4,654

5,085

7,214

Total reserve additions (MBoe)

3,160

4,616

4,802

6,976

8,395

12,332

Finding and development costs (F&D), including change in future development capital ($/boe)(1)

$9.85

$7.67

$18.16

$13.96

$14.04

$11.02

Finding, development  and acquisition costs (FD&A), including change in future development capital ($/boe)

$14.93

$10.32

$24.80

$18.09

$21.91

$15.71

 

Operating Efficiency

Operating net-back ($/boe)

$21.64

$21.64

$34.49

$34.49

 

 

Finding, development  and acquisition costs (FD&A), excluding change in future development capital ($/boe)

$14.79

$10.13

$23.89

$16.44

 

 

Recycle-Ratio

1.5

2.1

1.4

2.1

 

 

 

Reserve Replacement

Reserve additions, including revisions (MBoe)

3,160

4,616

4,802

6,976

 

 

Annual production (MBoe)

804

804

427

427

 

 

Production replacement ratio

3.9

5.7

11.3

16.3

 

 

NI 51-101 Reserves Disclosure

Seaview has a Reserve Committee comprised of independent board members, which reviews the qualifications and appointment of the independent reserve evaluators. The committee also reviews the processes and technical data used to determine the reserves booked.

The Company will file on April 6, 2010 its Annual Information Form which includes Seaview’s reserves data and other oil and gas information for the year ended December 31, 2009 as mandated by “NI 51-101 – Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.”

The December 31, 2009, evaluation was prepared by Sproule utilizing the methodology and definitions as set out under NI 51-101. The reserves presented herein include the total Company’s working interest reserves before deduction of royalties and exclude royalty interest reserves as at December 31, 2009.

Table 1 NI 51-101

Summary of Oil and Gas Reserves
 as of December 31, 2009
Forecast Prices and Costs

 

Gross Reserves

Net Reserves

 

Light and Medium Crude Oil

Heavy Crude

Natural Gas Liquids

Natural
Gas

Light and Medium Crude Oil

Heavy Crude

Natural Gas Liquids

Natural
Gas

 

Mbbls

Mbbls

Mbbls

Mmcf

Mbbls

Mbbls

Mbbls

Mmcf

Proved

 

 

 

 

 

 

 

 

Developed Producing

1,210.4

0

127.7

27,812

1,065.9

0

77.4

20,607

Developed Non‑Producing

46.8

0

10.9

4,371

44.3

0

6.6

3,086

Undeveloped

20.4

0

15.4

1,853

16.2

0

11.4

1,853

Total Proved

1,277.6

0

154.0

34,257

1,126.4

0

95.4

25,546

Probable

519.9

0

123.5

19,699

445.0

0

80.6

14,106

Total Proved plus Probable

1,797.5

0

277.5

53,956

1,571.3

0

176.0

39,653


Table 2 NI 51-101

Summary of Net Present Values of Future Net Revenue
as of December 31, 2009
Forecast Prices and Costs

 

Before Future Income Tax Expenses and Discounted at

Unit Value Before Income Tax Discounted at

 

0%

5%

10%

15%

20%

10%/yr

 

(M$)

(M$)

(M$)

(M$)

(M$)

($/boe)

Proved

 

 

 

 

 

 

Developed Producing

181,089

125,766

98,253

81,755

70,676

21.46

Developed Non‑Producing

17,586

14,034

11,614

9,881

8,586

20.55

Undeveloped

8,418

6,387

5,124

4,269

3,654

15.23

Total Proved

207,093

146,186

114,992

95,905

82,916

20.99

Probable

123,676

68,343

46,006

34,124

26,746

15.99

Total Proved plus Probable

330,769

214,530

160,997

130,029

109,661

19.27

 

 

After Future Income Tax Expenses and Discounted at

 

0%

5%

10%

15%

20%

 

(M$)

(M$)

(M$)

(M$)

(M$)

Proved

 

 

 

 

 

Developed Producing

151,858

107,378

84,894

71,260

62,029

Developed Non‑Producing

13,012

10,353

8,542

7,246

6,278

Undeveloped

6,207

4,557

3,528

2,833

2,336

Total Proved

171,077

122,288

96,964

81,339

70,643

Probable

91,771

50,445

33,659

24,691

19,108

Total Proved plus Probable

262,848

172,733

130,623

106,030

89,751

Table 3 NI 51-101

Total Future Net Revenue Undiscounted
as of December 31, 2009
Forecast Prices and Costs

 

Revenue

Royalties

Operating Costs

Develop-
ment Costs

Abandon-
ment and Reclamation Costs

Future Net Revenue Before Income Taxes

Income Taxes

Future Net Revenue After Income Taxes

 

(M$)

(M$)

(M$)

(M$)

(M$)

(M$)

(M$)

(M$)

 

 

 

 

 

 

 

 

 

Total Proved Reserves

419,428

80,234

119,105

5,646

7,351

207,093

36,016

171,077

Total Proved plus Probable

679,616

138,380

185,554

15,551

9,363

330,769

67,922

262,848

Table 4 NI 51-101

Net Present Value of Future Net Revenue
By Production Group
as of December 31, 2009
Forecast Prices and Costs

 

Future Net Revenue Before Income Taxes and (Discounted at 10%/Year)

Unit Value Before Income Taxes (Discounted at 10%/Year)

 

(M$)

($/boe)

Proved

 

 

 

Light and Medium Crude Oil
(including solution gas and associated by-products)

33,938

26.28

 

Heavy Crude Oil
(including solution gas and associated by-products)

0

0

 

Natural Gas
(including associated by products)

85,054

19.35

Proved plus Probable

 

 

 

Light and Medium Crude Oil
(including solution gas and associated by-products)

43,723

24.45

 

Heavy Crude Oil
(including solution gas and associated by-products)

0

0

 

Natural Gas
(including associated by products)

117,274

17.86

Table 5 NI 51-101

Summary of Pricing and Inflation Rate Assumptions
As of December 31, 2009 Forecast Prices and Costs

 

CRUDE OIL

NATURAL GAS

NATURAL GAS
LIQUIDS

 

 

Year

WTI
Crude Oil

Edmonton Par Price
400 API
Crude Oil

Cromer Medium 29.30 API Crude Oil

Alberta
AECO Gas
Price

Pentanes Plus
FOB Field Gate

Butanes FOB
 Field Gate

Inflation

US/CAN Exchange Rate

 

($US/Bbl)

($Cdn/Bbl)

($Cdn/Bbl)

($Cdn/mmbtu)

($Cdn/Bbl)

($Cdn/Bbl)

(%)

($US/Cdn)

 

(1)

(2)

(3)

 

 

 

 

 

Forecast

 

 

 

 

 

 

 

 

2010

79.17

84.25

80.04

5.36

86.28

59.65

2.0

0.920

2011

84.46

89.99

84.59

6.21

92.16

63.72

2.0

0.920

2012

86.89

92.61

85.20

6.44

94.84

65.57

2.0

0.920

2013

90.20

96.19

87.53

7.23

98.51

68.11

2.0

0.920

2014

92.01

98.13

88.32

7.98

100.50

69.48

2.0

0.920

 

 

 

 

 

 

 

 

 

Thereafter

Various Escalation Rates

Net Asset Value per Class A Share
 Information Based on Sproule Reserves Evaluation as at December 31, 2009

 

Before Tax 10% Discount

($M except share amounts)

Proven Developed Producing

Total Proven Reserves

Total Proven plus Probable

Value of Reserves

98,253

114,992

160,997

Undeveloped Land (31,000 acres at $200 per acre)

6,200

6,200

6,200

Estimated Net Debt as at December 31, 2009(1)

(40,100)

(40,100)

(40,100)

Total Net Assets

64,353

81,092

127,097

 

 

 

 

Class A shares Outstanding (MM) as at December 31, 2009

65.43

65.43

65.43

Estimated Net Asset Value per Class A share

$0.98

$1.24

$1.94

Net Asset Value per Fully Diluted Share(1)
 Information Based on Sproule Reserves Evaluation as at December 31, 2009

 

Before Tax 10% Discount

($M except share amounts)

Proven Developed Producing

Total Proven Reserves

Total Proven plus Probable

Value of Reserves

98,253

114,992

160,997

Undeveloped Land (31,000 acres at $200 per acre)

6,200

6,200

6,200

Estimated Net Debt as at December 31, 2009(2)

(38,560)

(38,560)

(38,560)

Total Net Assets

65,893

82,632

128,637

 

 

 

 

Fully Diluted shares Outstanding (MM) as at December 31, 2009 (3)

77.34

77.34

77.34

Estimated Net Asset Value per Fully Diluted share

$0.85

$1.07

$1.66