CALGARY, AB, Jan. 14, 2025 /PRNewswire/ – Horizon Petroleum Ltd. (TSXV: HPL) (“Horizon” or the “Company”) is pleased to report an updated reserve and resource report for the Lachowice gas field located in the Bielsko-Biala concession in Poland. The reserves were acquired by its 100% owned Polish subsidiary companies through the recently awarded Bielsko-Biala and Cieszyn concessions in Poland (which were awarded on November 19, 2024 subsequent to the year end of August 31, 2024).
Table 6 (CNW Group/Horizon Petroleum Ltd.)
David Winter, CEO of the Company commented: “We are excited to now be able to assign the 2P reserve and contingent resource values to the Company based on historical wells which were flow tested at rates up to 9 MMscf/d. The 34 BCF 2P reserves with a Net Present Value (discounted at 10%) of US$ 84.5 million provides a robust economic base to the company. The additional 163 BCF of risked 2C contingent resources with a Net Present Value (discounted at 10%) of US$ 431 million and risked best estimate prospective resources of 118 BCF provide Horizon with large development upside and an appraisal and development drilling inventory”.
RESERVES AND RESOURCES ACQUIRED SUBSEQUENT TO THE YEAR END AUGUST 31, 2024
The Company did not hold any properties with reserves or resources (in accordance with NI 51-101), at its most recent year end, August 31, 2024. Subsequent to the year end, on November 19, 2024, the Company was granted the Bielsko-Biala and Cieszyn concessions in Poland. Consequently, the reported reserves and contingent resources are the maiden assets of the Company, and their value can be assigned to the Company. The effective date of the report is August 31, 2024.
Horizon holds the rights to a 100% interest in two conventional oil & natural gas concessions in Poland known as Bielsko-Biala and Cieszyn through two wholly owned Polish subsidiary companies which the Company acquired from San Leon Energy. The full details of the acquisition are described in our Annual Financial Statements and Management Discussion and Analysis.
APEX Global Engineering Inc. (“APEX”) prepared the Reserves and Resource Report with an effective date of August 31, 2024 (issue date of December 4, 2024). APEX assigned the Probable Reserves and Contingent and Prospective Resources to the Lachowice field, which at 10,561 acres represents approximately 4% of the total lands to be held by Horizon under the concessions (see Table 1 below). The reserves and resources assigned are subject to significant risks. Please refer to the Risks section at the end of this press release.
Table 1: Concession Acreage
|
Concessions |
Acreage |
|
|
km2 |
Acres |
|
|
Bielsko-Biala |
805 |
198,821 |
|
-Lachowice field (included in the total Bielsko- |
43 |
10,561 |
|
Cieszyn |
326 |
80,507 |
|
Total Acreage |
1,131 |
279,328 |
Tables 2, 3 and 4 below summarize APEX’s estimates of Horizon’s conventional natural gas reserves and resources as at August 31, 2024. The natural gas is sweet, with up to 91% methane and 7 bbls/MMcf of condensate. The volumes shown are attributable to Horizon’s 100% working interest, before deduction of any associated royalty burdens. The economic values presented are shown after deduction of the associated royalty burdens, the NPI payment to San Leon, operating and capital expenses, but before any attributable income taxes. Table 4 summarizes the commodity pricing used in the economic evaluations. Any reference in this press release to PIIP, contingent resources and prospective resources are not, and should not be confused with oil and natural gas reserves.
Table 2 – Reserves
|
Reserve Category |
Remaining |
Before Tax Cash Flow NPV (MM$US)# |
|||||||
|
WI |
Net |
0 % |
5 % |
10 % |
15 % |
20 % |
|||
|
Probable Reserves |
|||||||||
|
L-7 with |
Gas (Bcf) |
14.5 |
13.3 |
123.9 |
67.0 |
39.3 |
24.4 |
15.8 |
|
|
Condensate (Mbbl) * |
110.2 |
101.3 |
|||||||
|
L-1 & S2K |
Gas (Bcf) |
19.9 |
18.2 |
160.8 |
82.0 |
45.3 |
26.3 |
15.6 |
|
|
Condensate (Mbbl) * |
151.5 |
138.6 |
|||||||
|
284.7 |
149.0 |
84.5 |
50.7 |
31.4 |
|||||
|
Total Probable Reserves |
|||||||||
|
Gas (Bcf) |
34.4 |
31.5 |
284.7 |
149.0 |
84.5 |
50.7 |
31.4 |
||
|
Condensate (Mbbl) * |
261.6 |
239.9 |
|||||||
|
284.7 |
149.0 |
84.5 |
50.7 |
31.4 |
|||||
|
Total Probable + Possible |
|||||||||
|
Gas (Bcf) |
34.4 |
31.5 |
284.7 |
149.0 |
84.5 |
50.7 |
31.4 |
||
|
Condensate (Mbbl) * |
261.6 |
239.9 |
|||||||
|
284.7 |
149.0 |
84.5 |
50.7 |
31.4 |
|||||
|
* 6 Mcf/Bbl Conversion |
|||||||||
|
The Net Present Values (NPV) do not necessarily represent Fair Market Value |
|||||||||
An estimate of risked net Contingent Resources (Development Unclarified) and the associated estimate of the net present value of future net revenues associated with the contingent resources is presented below. It is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the Company proceeding with the required investment. It includes contingent resources that are considered too uncertain with respect to the chance of development to be classified as reserves. There is uncertainty that the risked net present value of future net revenue will be realized.
Table 3 – Contingent Resources
|
Imperial Units |
||||||||
|
Reserve Category |
Remaining |
Before Tax Cash Flow NPV (MM$US)# |
||||||
|
WI |
Net |
0 % |
5 % |
10 % |
15 % |
20 % |
||
|
Contingent Development |
||||||||
|
Gas (Bcf) |
163.7 |
149.8 |
1,478.5 |
755.8 |
430.6 |
264.9 |
171.9 |
|
|
Condensate (Mbbl) * |
1246.0 |
1,140.0 |
||||||
|
1,478.5 |
755.8 |
430.6 |
264.9 |
171.9 |
||||
|
* 6 MCF/Bbl Conversion |
||||||||
|
#The Net Present Values (NPV) do not necessarily represent Fair Market Value |
||||||||
There is no certainty that any portion of the contingent resources will be developed or commercially viable to produce.
Prospective Resources
Prospective Resources were assigned to the undrilled structures in the Bielsko-Biala Concession that were not previously tested by drilling but are up dip from known gas accumulations.
Table 4 – Prospective Resources – Imperial Units
|
Undiscovered PIIP (bcf) – Best Estimate |
Unrisked Prospective Conventional Tight Natural Gas Resources-Play (Bcf) (Sale Gas Volumes) (Net of Recovery Factor and Sales Factor) Best Estimate |
Chance of Development |
Chance of Discovery |
Risked Prospective Conventional Tight Natural Gas Resources-Play (Bcf) (Sale Gas Volumes) (Net of Recovery Factor and Sales Factor) Best Estimate |
Recoverable Condensate (MBbl) * |
|
764.37 |
466.97 |
68.60 % |
Variable depending on Horizon interpretation |
118.72 |
874.73 |
* 6MCF/Bbl Conversion
There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Table 5: Commodity Pricing
|
YEAR |
Natural |
Natural |
Gas |
Net Gas |
Condensate |
Electricity |
Electricity |
|
$US/MMbtu |
% |
$US/Mcf |
$US/Mcf |
$US/bbl |
$US/MWh |
$US/MMbtu |
|
|
2024 |
13.55 |
109 |
1.00 |
13.77 |
79.63 |
112.50 |
8.10 |
|
2025 |
12.10 |
109 |
1.00 |
12.19 |
75.00 |
112.50 |
8.10 |
|
2026 |
10.95 |
109 |
1.00 |
10.94 |
80.00 |
125.00 |
9.00 |
|
2027 |
10.35 |
109 |
1.00 |
10.28 |
80.00 |
127.50 |
9.18 |
|
2028 |
10.00 |
109 |
1.00 |
9.90 |
81.60 |
130.05 |
9.36 |
|
2029 |
10.00 |
109 |
1.00 |
9.90 |
83.23 |
132.65 |
9.55 |
|
2030 |
10.20 |
109 |
1.00 |
10.12 |
84.90 |
135.30 |
9.74 |
|
2031 |
10.40 |
109 |
1.00 |
10.34 |
86.59 |
138.01 |
9.94 |
|
2032 |
10.61 |
109 |
1.00 |
10.57 |
88.33 |
140.77 |
10.14 |
|
2033 |
10.82 |
109 |
1.00 |
10.80 |
90.09 |
143.59 |
10.34 |
|
*The Heating Modifier recognizes the higher heating value of the gas as it includes the ethane and butane still retained within the gas |
|||||||
History and Development Plan
The Lachowice field is at an early stage of conventional natural gas development. Lachowice-1, Lachowice-7 and Stryszawa-2K are the primary wells of interest on the field and, despite being essentially vertical in their design and utilizing sub-optimal drilling and completion methods for naturally fractured formations, tested at rates of up to 5.8 MMcf/d, 8.9 MMcf/d, and 2.5 MMcf/d, respectively. Each of these wells was drilled and tested, with reservoir depths of 2,700-4,000 meters targeting a naturally fractured carbonate reservoir of Middle Devonian age. The natural gas is sweet, with up to 91% methane and 7 bbls/MMcf of condensate.
ABOUT HORIZON
Calgary-based Horizon is focused on the appraisal and development of conventional oil & natural gas resources onshore Europe. The Management and Board of Horizon consist of oil & natural gas professionals with significant international experience.
Oil and Gas Advisories and Risks
The reserve and resource estimates contained in this press release have been prepared in accordance with NI 51-101, is dated as of August 31, 2024 and prepared by APEX Global Engineering Inc. The Company held no reserves or reserves at year end but subsequently was granted the Bielsko-Biala and Cieszyn Concessions on November 19, 2024.
The reserve and resource estimates of natural gas and natural gas liquids reserves provided in this news release are estimates only, and there is no guarantee that the estimated reserves and/or resources will be recovered. Actual reserves and resources may eventually prove to be greater than, or less than, the estimates provided herein. It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves and/or resources. There are numerous uncertainties inherent in estimating quantities of natural gas and natural gas liquids reserves and/or resources and the future cash flows attributed to such reserves and/or resources.
These risks and uncertainties include but are not limited to: (i) the fact that there is no certainty that the zones of interest will exist to the extent estimated or that the zones will be found to have natural gas with characteristics that meet or exceed the minimum criteria in terms of net pay thickness and/or porosity, or that the natural gas will be commercially recoverable to the extent estimated; (ii) the fact that there is no certainty that any portion of the probable reserves and contingent and prospective resources will be commercially viable to produce; (iii) the fact that the Company must hire an operations team and executive team in both Calgary and Poland in order to execute on the development plan, and there are no guarantees that suitably qualified technical and professional staff and/or consultants will be available; (iv) the lack of additional financing to fund the Company’s development activities and continued operations; (v) the risks associated with obtaining approvals to access land to drill wells or install infrastructure and facilities in a reasonable time frame; the Polish regulatory regime is relatively stable but is marked with long approval processes relative to North American jurisdictions; (vi) the risks in acquiring or constructing adequate natural gas infrastructure to produce and sell natural gas, and whether capacity will be available in the existing main pipeline system at reasonable costs; (vii) the risk that there may not be a drilling rig available to drill the required wells, and the risk that if a rig mobilization is required from outside of Poland, that the costs may be prohibitive; (ix) risks inherent in the international oil and natural gas industry; * fluctuations in foreign exchange and interest rates; (xi)the number of competitors in the oil and gas industry with greater technical, financial and operations resources and staff; (xii) fluctuations in world prices and markets for oil and natural gas due to domestic, international, political, social, economic and environmental factors beyond the Company’s control; (xiii) changes in government regulations affecting oil and natural gas operations; (xiv) potential liabilities for pollution or hazards against which the Company cannot adequately insure or which the Company may elect not to insure; (xv) contingencies affecting the classification as reserves versus resources which relate to the following issues as detailed in the COGE Handbook: ownership considerations, drilling requirements, testing requirements, regulatory considerations, infrastructure and market considerations, timing of production and development, and economic requirements; (xvi) the fact that there is no certainty that any portion of the prospective resources will be discovered and if discovered, there is no certainty that it will be commercially viable to produce any portion of the resources; and (xvii) other factors beyond the Company’s control.
Any reference in this press release to PIIP, contingent resources and prospective resources are not, and should not be confused with oil and natural gas reserves.
Definitions
Total Petroleum Initially in Place (“PIIP”) refers to the total quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes the petroleum that exists in known accumulations prior to production and the estimated quantities yet to be discovered in the various leads and prospects identified by seismic and inferred by geology. A portion of the PIIP will be recoverable as determined by ultimate recovery factors and the estimated recoverable portion is further classified as Reserves, Contingent Resources or Prospective Resources.
Discovered Petroleum Initially in Place (“Discovered PIIP” or “DPIIP”) is the total quantity of Petroleum that is estimated as of the effective date of the Report to be contained in known accumulations prior to production.
Multiple development projects may be applied to each known accumulation which may be separated vertically into different formations or by area in different pools; each project will recover a portion of the PIIP according to its unique reservoir characteristics. The projects will be subdivided into Commercial and Sub-Commercial at the effective date with the estimated recoverable petroleum quantities being classified as Reserves and Contingent Resources.
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be commercially recoverable from known accumulations, from a given date forward, based on:
(a) analysis of drilling, geological, geophysical and engineering data;
(b) the use of established technology; and
(c) specified economic conditions (see the discussion of “Economic Assumptions” below).
Reserves are classified according to the degree of certainty associated with the estimates.
(d) 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.
(e) 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.
(f) Possible Reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved + probable + possible reserves
Company Gross Reserves are the Company’s working interest (operating or non-operating) share before deducting royalties and without including any royalty interests of the Company.
Resources are defined in the Canadian Oil and Gas Evaluation Handbook (COGEH) Volume 1, section 5 as follows:
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied projects are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality.
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. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be sub classified based on project maturity and/or characterized by their economic status.
Not all technically feasible development plans will be commercial. The commercial viability of a development project is dependent on the forecast of fiscal conditions over the life of the project. For Contingent Resources, the risk component relating to the likelihood that an accumulation will be commercially developed is referred to as the “chance of development.” For contingent resources, the chance of commerciality is equal to the chance of development.
Development Pending are contingencies that are being actively pursued; expect resolution in a reasonable time period; are directly influenced by the developer with both, internal approvals and commitment and development timing and; have a high chance of development (>80%).
Development on Hold are contingencies with major non-technical contingencies identified; have a reasonable chance of development (>50%); have contingencies that are beyond the control of the developer including but not limited to: external approvals, economic factors, market access, political factors and social license.
Development Unclarified are contingencies that have not been clearly defined; the project is currently under active evaluation; significant further appraisal may be required; progress is expected in a reasonable time period; chance of development is difficult to assess and could be a big range (20%-80%).
Development Not Viable are contingencies that have been identified; the project was evaluated and considered not viable or significant further appraisal may be required; progress is not expected in a reasonable time period and; has a low chance of development (