-- Proven net reserves increase 150% over 2005
-- Proved developed net reserves increase 244% over 2005
-- Average daily production increases 132% over 2005
DENVER & CALGARY, ALBERTA, February 27 /CNW/ - Storm Cat Energy Corporation (AMEX: SCU; TSX: SME) today announced 2006 proved reserve estimates.
2006 Year-end Reserve Estimates
At year-end 2006 Storm Cat had proven net reserves of 25.0 billion cubic feet (Bcf), probable reserves of 5.9 Bcf and possible reserves of 26.4 Bcf. Approximately 54% of the proven reserves were classified as proved developed. The 2006 estimated quantities of proven reserves are 150% higher than year-end 2005 proven reserves of 10.0 Bcf. In addition, Storm Cat increased proved developed reserves by 244% at year-end 2006. All of Storm Cat's reserves are located in the Powder River Basin (PRB).
Storm Cat's estimated, pre-tax future net cash flows discounted at 10% (commonly known as the SEC PV-10 figure) for proved reserves at year-end was $32.04 million The 2006 PV-10 calculation used net year-end Colorado Interstate Gas (CIG) commodity prices of $4.46 per thousand British thermal units (Mbtu) of natural gas as compared to year end 2005 SEC CIG price of $7.72 per Mbtu of natural gas. The PV-10 calculation does not include Storm Cat's financial hedges which are substantially higher than year end SEC CIG prices. All reserve estimates are based on an evaluation of the reserves prepared by independent reservoir engineering consultants, Netherland Sewell and Associates. All reserves conform to the definitions as set forth in the SEC Regulation S-X Part 210.4-10 (a) as clarified by subsequent SEC Staff Accounting bulletins. The proved reserves are also in accordance with Financial Accounting Standards Board Statement No. 69 requirements.
In addition to the SEC proved reserve report, the Company also estimated year end proven, possible and probable reserves using current strip pricing. Using current strip pricing, proven reserves were 28.7 Bcf, probable reserves were 9.0 Bcf and possible reserves were 28.2 Bcf. The PV-10 calculation using current strip pricing was $75.299 million for proven reserves.
Storm Cat Energy Corp.
Reserves
December 31, 2006
SEC CIG Pricing - $4.46 per Mbtu
Net Gas PV 10
Reserve Category (Bcf) (MM$)
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PDP 5.2 9.853
PDNP 8.2 14.075
PUD 11.6 8.109
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Total Proved 25.0 32.036
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Prepared by Netherland, Sewell and Associates, Inc.
Storm Cat Energy Corp.
Reserves
December 31, 2006
Natural Gas Sensitivity - Current Available Strip Pricing
Net Gas PV 10
Reserve Category (Bcf) (MM$)
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PDP 5.5 18.802
PDNP 8.2 27.365
PUD 15.1 29.132
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Total Proved 28.7 75.299
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Probable 9 17.161
2P (PV. + PB.) 37.7 92.46
Possible 28.2 73.882
3P (PV. + PB. + PS.) 66.0 166.341
Prepared by Netherland, Sewell and Associates, Inc.
Year-end 2006, PRB exit-rate production was 15 million cubic feet of natural gas per day (MMcf/d) gross and 8 MMcf/d net. Average daily production during 2006 was 4.4 MMcf/d net compared to 1.9 MMcf/d net in 2005, a 132% increase. PRB gas production currently comprises 100% of the Company's production.
J. Scott Zimmerman, President and Chief Executive officer, said: "I am extremely pleased with the reserves that Storm Cat was able to book for 2006, building on a strong year of drilling successes and production growth. We are well prepared to capitalize on the success we experienced in the PRB during the past year and the 2007 capital program is contemplated in a way that allows Storm Cat to increase cash flow and continue to build a strong proven reserve base. Management is committed to strengthening shareholder value throughout 2007 by focusing on execution and delivering quantifiable results."
About Storm Cat Energy
Storm Cat Energy is an independent oil and gas company focused on the pursuit, exploration and development of large unconventional gas reserves from fractured shales, coal beds and tight sand formations. The Company has producing properties in Wyoming's Powder River Basin, exploitation and development acreage in Canada and Alaska. The Company's shares trade on the American Stock Exchange under the symbol "SCU" and in Canada on the Toronto Stock Exchange under the symbol "SME."
Forward-looking Statements
This press release contains certain "forward-looking statements", as defined in the United States Private Securities Litigation Reform Act of 1995 and within the meaning of Canadian securities legislation, relating to matters such as the Company's drilling and other exploration plans and projected well economics. Forward-looking statements are statements that are not historical facts; they are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur. Forward-looking statements are based on the beliefs, estimates and opinions of Storm Cat's management on the date the statements are made; including production and reserve estimates, and they involve a number of risks and uncertainties. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Storm Cat undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include, but are not limited to receipt of necessary approval from regulatory bodies, the volatility of natural gas prices, the possibility that exploration efforts will not yield economically recoverable quantities of gas, accidents and other risks associated with gas exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company's need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company's exploration and development plans, and the other risk factors discussed in greater detail in the Company's various filings on SEDAR (www.sedar.com) with Canadian securities regulators and its filings with the U.S. Securities and Exchange Commission, including the Company's Form 20-F/A for the fiscal year ended December 31, 2005.
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