Samson Oil & Gas Announces 100% Increase in Proved Reserve Value

DENVER & PERTH, Australia--()--Samson Oil and Gas Limited (NYSE SSN, ASX SSN) advises that as at March 31st 2014, Ryder Scott Company (RSC) has estimated the company’s Proved reserves to be 1.805 MMBOE and valued at $47.7 million.

Probable reserves have been estimated by RSC to be 1.09 MMBOE and valued at $12.8 million.

Possible reserves have been estimated by RSC to be 0.80 MMBOE and valued at $7.1 million.

The valuations are based on a discount rate of 10% and utilize the SEC pricing model.

Based on this new estimate, Samson has doubled its Proved NPV10 in the 11 month period from a NPV10 of $23.612 million as at April 30th 2013, to $47.722 million after accounting for production during that 11 month period.

The details of this estimate are as follows:

      AS AT MARCH 31ST 2014
   

NET OIL
MBBLS

   

NET GAS
MMCF

   

NET BOE
MBBLS

   

NPV 10
$ MILLION

PDP 702     1,103     886     $29.530
PDNP 150 62 160 $5.395
PUD 645 684 759 $12.797
TOTAL PROVED 1,497 1,849 1,805 $47.722
PROBABLE UNDEVELOPED 924 1,003 1,091 $12.756
POSSIBLE UNDEVELOPED     684     698     800     $7.126

Notes to Reserves Estimates
BOE MBBBLS is thousand barrels of oil equivalent
BOE is calculated using a heating value of gas and converted as 1 BOE equals 6 MCF
PDP is Proved Developed Producing
PDNP is Proved Developed Non Producing
PUD is Proved Un-Developed
NPV 10 is Net Present Value at 10% discount rate

The SEC pricing model that has been used is as follows:

      Benchmark     Proved realized     Probable realized     Possible realized
Oil     $98.30/BBL     $91.62/BBL     $92.45/BBL     $92.45/BBL
Gas     $3.99/MMBTU     $6.90/MCF     $7.38/MCF     $7.38/MCF

The PDP and PDNP reserve estimates and forecasts of future production rates are based on historical performance and analogy data. If no production decline trend has been established, future production rates and decline curves are based on analogous wells. If a decline curve is established, this trend is used as the basis for estimating future production rates.

The reserve estimates utilize historical operating costs of the wells and leases, subject to the report, and are held constant for the life of a well. Development costs are based on authorizations for expenditure for the proposed work or actual costs for similar projects. Abandonment costs are assumed to offset by the salvage value as all of these projects are located onshore.

The Probable reserves are largely those associated with the Three Forks Bench 1 in the North Stockyard field, which is initially being drilled this month with two Bootleg wells. To qualify as Proved, the Three Forks Bench 1 has to be evidenced as economically productive in an immediately adjacent drilling area. There are three producing competitor wells in the Sections immediately adjacent and to the north of Samson’s acreage, but the production data from these wells are being held in confidence and therefore don’t qualify as evidence. However, presentations by this competitor suggest that the Three Forks is producing adequately in this area. Accordingly, we expect that the initial Bootleg wells will be successfully completed and the initial Three Forks wells will then be moved from Probable to PDP, with the balance of the Probable reserves moving to PUD.

A similar situation exists for the Possible reserves category where these reserves are associated with the Three Forks Bench 1 in the Rainbow field. Whilst Samson believes that there is sufficient local evidence that the Three Forks Bench 1 will be productive in this field, it does not yet qualify as Proven.

The estimated reserves quoted in this release are based on, and fairly represent, information and supporting documentation prepared by Stephen E Gardner an employee Ryder Scott Company, L.P., an independent petroleum engineering consulting firm based on the definitions and disclosures guidelines of the United State Securities and Exchange Commission (SEC). The reserves included in this release were estimated using deterministic methods and presented as incremental quantities.

Mr. Gardner is a qualified petroleum reserves and resources evaluator within the meaning of the ASX Listing Rules, and is a member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.

Mr. Gardner and Ryder Scott Company, L.P. have each consented to the form and context in which the estimated reserves and supporting documentation are presented in this release.

The reference point used in the reserve estimates is the sales point, and the reserves and their value are wholly attributable to Samson’s economic interest, net of royalties, operating and development costs, and production and ad valorem taxes.

The PDP reserve estimate is comprised of 30 individual wells which fall into two groups and have the following net revenue interest, reserve volumes and value.

PDP   Well count   Avg. NRI   Net Oil

MBBLS

  Net Gas

MMCF

  Net BOE

MBBLS

 

NPV 10

$ MILLION

North Stockyard 9 21% 581 690 696 $25.638
Other 21 13% 121 413 190 $3.892
Total 30   702 1,103 886 $29.530

North Stockyard is operated by Zavanna LLC and Slawson Exploration Company Inc.

All PDP reserves are held by production.

The PNDP reserve estimate is comprised of 4 wells in two groups that have the following net revenue interest, reserve volumes and value.

PNDP   Well count   Avg. NRI   Net Oil

MBBLS

  Net Gas

MMCF

  Net BOE

MBBLS

 

NPV 10

$ MILLION

North Stockyard 2 20% 104 59 114 $4.211
Other 2 53% 46 3 46 $1.184
Total 4   150 62 160 $5.395

All PNDP reserves are held by production.

The PUD reserve estimate is comprised of 7 individual wells which fall into two groups that have the following net revenue interest, reserve volumes and value.

PUD   Well count   Avg. NRI   Net Oil

MBBLS

  Net Gas

MMCF

  Net BOE

MBBLS

 

NPV 10

$ MILLION

North Stockyard 3 29% 256 287 304

$7.077

Rainbow 4 29% 389 397 455 $5.720
Total 7   645 684 759 $12.797

Slawson Exploration Company Inc. operates North Stockyard, Samson and Continental each operate two of the Rainbow PUDs.

The North Stockyard PUD reserves are held by production, the Rainbow PUD reserves are subject to a single well drilling commitment to be met prior to December 2014, after which the reserves are held by production.

The Probable Undeveloped reserve estimate is comprised of 12 individual wells which fall into two groups and have the following net revenue interest, reserve volumes and value.

PRB UD   Well count   Avg. NRI   Net Oil

MBBLS

  Net Gas

MMCF

  Net BOE

MBBLS

 

NPV 10

$ MILLION

North Stockyard 8 21% 614 686 728 $10.220
Rainbow 4 29% 310 317 363 $2.536
Total 12   924 1,003 1,091 $12.756

Slawson Exploration Company Inc. operates North Stockyard, Samson and Continental each operate two of the Rainbow Probable Undeveloped wells.

The North Stockyard Probable reserves are held by production, the Rainbow Probable reserves are subject to a single well drilling commitment to be met prior to December 2014, after which the reserves are held by production.

The Possible Undeveloped reserve estimate is comprised of 8 wells and have the following net revenue interest, reserve volumes and value.

POS UD   Well count   Avg. NRI   Net Oil

MBBLS

  Net Gas

MMCF

  Net BOE

MBBLS

 

NPV 10

$ MILLION

Rainbow 8 29% 684 698 800 $7.126

Samson and Continental each operate 4 of the Rainbow Possible Undeveloped wells.

The Rainbow Possible reserves are subject to a single well drilling commitment to be met prior to December 2014, after which the reserves are held by production.

Samson’s Ordinary Shares are traded on the Australian Securities Exchange under the symbol "SSN". Samson's American Depository Shares (ADSs) are traded on the New York Stock Exchange MKT under the symbol "SSN". Each ADS represents 20 fully paid Ordinary Shares of Samson. Samson has a total of 2,837 million ordinary shares issued and outstanding (including 230 million options exercisable at AUD 3.8 cents), which would be the equivalent of 141.85 million ADSs. Accordingly, based on the NYSE MKT closing price of US$0.30 per ADS on May 9th, 2014 the Company has a current market capitalization of approximately US$43.8 million (the options have been valued at an exchange rate of 0.9362). Correspondingly, based on the ASX closing price of A$0.017 for ordinary shares and a closing price of A$0.006 for the 2017 options, on May 9th, 2014, the Company has a current market capitalization of approximately A$49.6 million.

SAMSON OIL & GAS LIMITED

TERRY BARR
Managing Director

Statements made in this press release that are not historical facts may be forward looking statements, including but not limited to statements using words like “may”, “believe”, “expect”, “anticipate”, “should” or “will.” Actual results may differ materially from those projected in any forward-looking statement. There are a number of important factors that could cause actual results to differ materially from those anticipated or estimated by any forward looking information, including uncertainties inherent in estimating the methods, timing and results of exploration activities. A description of the risks and uncertainties that are generally attendant to Samson and its industry, as well as other factors that could affect Samson’s financial results, are included in the prospectus and prospectus supplement for its recent Rights Offering as well as the Company's report to the U.S. Securities and Exchange Commission on Form 10-K, which are available at www.sec.gov/edgar/searchedgar/webusers.htm, as well as in continuous disclosure notices given by Samson to ASX.

Contacts

Samson Oil & Gas Limited
Terry Barr, CEO, 303-296-3994 (US office)
970-389-5047 (US cell)

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Contacts

Samson Oil & Gas Limited
Terry Barr, CEO, 303-296-3994 (US office)
970-389-5047 (US cell)