Vancouver, BC, Canada – Range Energy Resources Inc. ("Range" or the "Company") (CSE: RGO) (FWB: YGK) announced today that, Gas Plus Khalakan ("GPK"), the sole contractor of the Khalakan PSC in the Kurdistan Region of Iraq, issued an operations update regarding the Shewashan field.
GPK, received a report from DeGolyer and MacNaughton (D&M) providing a revised year end 2016 reserve audit for the Shewashan field which has led to a material increase in the estimated reserves and net present worth of the Shewashan oil field.
The D&M 2016 reserve report estimate of Shewashan's 2P gross reserves is 113.8 Mbbl, representing a 53% increase in 2P gross reserves above the 2015 D&M reserve audit. The increase to GPK's reserves is attributed to the larger area mapped following seismic reprocessing.
The present net worth (discounted at 10%), of the future net revenue attributed to GPK's interest in the proved plus probable reserves of the Shewashan oil field, utilizing the Base Case price of U.S.$55.00 per barrel escalated at 3% per year from 2018, increased substantially to USD$ 422.5 million, an increase of 135% above the $179.8 million valuation in the 2015 D&M reserve audit.
Two oil price sensitivity cases ($45.00 and $65.00 per barrel) were evaluated by D&M to present alternatives outcomes to the future revenue estimates for the estimated reserves.
It is important to note that key producing wells in nearby fields have exhibited high rates of decline as a result of water breakthrough. The Shewashan field remains in the early stages of development and any further increase in both reserves and present net worth should be viewed on the basis that only future well performance will determine the level of recovery possible from the matrix.
D&M's estimates of the gross 1C, 2C and 3C contingent resources for the Shewashan Field are summarized as follows;
Operations Update: 1st Quarter 2017:
The 4th well drilled on the Shewashan field, Shewashan #4, continues to drill forward in the cretaceous reservoir. The well will now be completed as a deviated producer in the cretaceous reservoir. This well is to increase the near term production of the Shewashan field.
Production of the Shewashan field has been limited to the 2,000 bbl/d level during the first quarter 2017 as a result of ongoing selective well testing and a water isolation program. The downhole modifications of the Shewashan #3 well have successfully eliminated the earlier water production and maintained oil production at approximately 1,500 bbl/day. Further work is to be done with the intent of increasing oil production.
The Shewashan #2 well is currently on restricted production as the water isolation program is ongoing and the well will be recompleted. The Shewashan #2 modifications are to be completed in the second quarter 2017.
The Shewashan #1 well remains offline. The well is expected to be recompleted upon the conclusion of the Early Production Facility (EPF) construction and the Shewashan #2 well modifications.
Shewashan EPF under construction – April 2017
The Company continues to supply the Kurdistan Region's refining market and during the first quarter 2017 oil production averaged 2,097 bbl/d.
The recent stability of Brent oil prices has allowed GPK to operate profitably.
Readers are encouraged to read the full GPK Operations Update which can be found at the NewAge website. http://www.newafricanglobalenergy.com.
Mr. Toufic Chahine, Chairman of Range, commented: "The substantial increase in the Shewashan field's 2P reserves and present net worth help demonstrate the signficant value of the Shewashan field and we are pleased to see this growth over a relatively short period of time. We commend GPK's efforts to enhance the productivity of the Shewashan field and the Range board is committed to allow the company to continue the development of this oil field. With three wells successfully drilled it is still early in the fields development cycle and as we learn more about the underlying reservoir geology, we look forward to additional news from the Shewashan -4 drilling results."
The Company is a 24.95% indirect shareholder of GPK through its ownership of 49.9% of the shares of New Age Alzarooni 2 Limited ("NAAZ2"). NAAZ2 owns 50% of the shares of GPK.
Production rates and quantities, reserves and resources, both projected and historical are provided in this release according to disclosures provided by GPK. Range expects GPK to utilize reporting procedures that are in compliance with the COGE Handbook standards and NI 51-101 (National Instrument Standards of Disclosure for Oil and Gas Activities).
For further information on Range Energy Resources Inc., please visit the Company's web site at www.rangeenergyresources.com.
On Behalf of the Board of Directors:
This news release contains certain statements that may be deemed to include "forward-looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although Range Energy believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of Range Energy's management on the date the statements are made. Except as required by law, Range Energy Resources Inc. undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.