Zargon Oil & Gas Ltd. (the "Company" or "Zargon") (TSX:ZAR) (TSX:ZAR.DB) is
pleased to provide a Little Bow Alkaline Surfactant Polymer ("ASP") tertiary oil
recovery project update, an operational update, 2014 production and capital
guidance and 2013 year end reserves. Zargon intends to release its 2013 audited
financial results on March 11, 2014, after market close.
LITTLE BOW ASP PROJECT UPDATE:
-- Zargon has commenced commissioning the Little Bow ASP tertiary oil
recovery project and continues to forecast that first chemical
injections will occur in March 2014. This ASP project entails the
injection of large volumes of a dilute chemical solution into a
partially depleted oil reservoir to recover incremental oil reserves.
-- The ASP project construction, which is more than 97 percent complete,
entails the construction of a water softening plant, chemical
handling/mixing facilities and a water injection plant. In addition, the
project has included oil battery upgrades, pipeline
replacements/upgrades, water injector conversions, well reactivations
and the drilling of two injection wells.
-- Including the $35.3 million (unaudited) and $6.5 million of ASP costs
spent in 2013 and 2012, respectively, the total capital cost of the
wholly owned phases 1 and 2 of the Little Bow ASP project will be
approximately $61 million (excluding the cost of capitalized ASP
chemicals). This estimate is essentially unchanged from the forecast
cost provided in February 2013 ($59 million) when the project was
sanctioned. The additional costs were spent on a project scope change to
drill two additional injection wells. The remaining expenditures for
this project are $7 million to be spent in the first half of 2014, and
then $12 million in 2015 relating to phase 2 implementation.
-- Zargon's independent reserves evaluator McDaniel & Associates
Consultants Ltd. ("McDaniel") in their 2013 year end report has assigned
4.48 million barrels of proved and probable oil and liquids reserves and
an incremental discounted cash flow (PVBT 10%) of $66.3 million to phase
1 and phase 2 of this project. Zargon's internal economics are based on
a 5.24 million barrel estimate (12 percent incremental tertiary
recovery) which has been scaled back from reservoir models that predict
6.50 million barrels of incremental oil can be achieved through
optimized chemical injections. The undiscounted cost of the optimized
phase 1 and 2 chemicals is forecast to be $78 million ($53 million PVBT
10%) and compares to the McDaniel proved and probable undiscounted
chemical cost estimate of $66 million. The phase 1 and 2 chemicals will
be injected over the seven year chemical injection period from 2014 to
2021.
-- Phase 1 of the Little Bow ASP project is expected to provide 100 barrels
of oil per day of incremental production in 2014, which will be
comprised of an initial production response in the 2014 third quarter
and a 2014 year end rate of 350 barrels of oil per day. Incremental
production is expected to exceed 900 barrels of oil per day in 2015 and
then increase to 1,550 barrels of oil per day in 2016, once phase 2
production begins.
-- Using forecast rates with an estimated field oil price of $67 per barrel
(assuming an Edmonton par price of $85 per barrel), a 12 percent
incremental tertiary royalty rate and operating costs of $10 per barrel
of incremental oil, the project is forecast to provide a field netback
of more than $48 per barrel of incremental oil production and deliver a
property capital recycle ratio (including sunk costs) of over 1.8 times.
Potential upsides to the project could come from follow-on phases,
higher oil prices, improved reservoir recoveries or Alberta Crown
tertiary royalty reform.
-- Follow-on capital expenditures of $77 million (including chemical costs)
for phases 3 and 4 of the Little Bow ASP project are expected to yield
an additional 3.6 million barrels of incremental oil, and Zargon's
combined Little Bow project's (phases 1 though 4) total production is
expected to stabilize at 2,200 barrels of oil per day in the 2021
through 2023 period. The long-life stable production profile of the ASP
project is well suited for Zargon's dividend paying business model. For
further information regarding the Little Bow ASP project, please refer
to the company's updated corporate presentation, which is available at
www.zargon.ca.
CONVENTIONAL OPERATIONS UPDATE:
-- Zargon's conventional oil exploitation business is characterized by low
decline production volumes coming primarily from the measured
exploitation of five conventional long-life pressure-supported core oil
properties (Williston Basin, Taber, Little Bow non-ASP, Hamilton Lake
and Bellshill Lake). Fourth quarter 2013 oil and liquids production
volumes averaged 4,625 barrels per day, a four percent decrease from
4,816 barrels per day in the prior quarter and two percent above
production guidance levels of 4,550 barrels per day. The quarter over
quarter reduction in oil production volumes was due in part to the
effect of 360 barrels per day of fourth quarter property sales that
reduced fourth quarter production volumes by 200 barrel of oil per day.
-- Fourth quarter 2013 natural gas production volumes averaged 15.90
million cubic feet per day, a three percent decrease from the prior
quarter rate of 16.46 million cubic feet per day and six percent above
production guidance levels of 15.00 million cubic feet per day, due in
part to prior period adjustments. On a combined basis, fourth quarter
2013 total production averaged 7,276 barrels of oil equivalent per day
(on a 6:1 equivalency basis), a four percent decrease from the prior
quarter's rate of 7,560 barrels of oil equivalent per day.
-- During the 2013 fourth quarter, Zargon spent $12.6 million (unaudited)
on field capital programs in addition to $11.7 million (unaudited) on
the Little Bow ASP project. The quarter's drilling activity totalled 8.5
net wells and included 5.5 net conventional oil exploitations wells and
3.0 net wells (2.0 injection wells and 1.0 disposal well) at the Little
Bow ASP project. The conventional drilling program was divided between
the Bellshill Lake and Williston Basin (Elswick) conventional oil
exploitation properties. Fourth quarter capital projects also included
pipeline and infrastructure upgrade expenditures at Steelman,
Saskatchewan and a pilot waterflood at Bellshill Lake (Killam), Alberta.
-- During the full year 2013, Zargon spent $40.8 million (unaudited) on
field activities and a further $35.3 million (unaudited) on the Little
Bow ASP project. The capital expenditures included 16.6 net wells that
resulted in 13.6 net oil exploitation wells at Taber, Bellshill Lake,
Harmattan and Williston Basin (Steelman, Elswick, Weyburn, Mackobee
Coulee) properties and 3.0 net ASP related service wells at Little Bow.
These expenditures were partially offset by a net $34.5 million
(unaudited) of property dispositions. In aggregate, the disposition
properties had been producing 626 barrels of oil equivalent per day
(comprised of 506 barrels of oil per day and 0.72 million cubic feet per
day of natural gas).
2014 CAPITAL AND PRODUCTION GUIDANCE:
-- Zargon's 2014 capital budget has been set at $35 million for (non-ASP)
conventional projects with the drilling of 18 net oil exploitation
wells, plus an additional $7 million to finish the first phase of the
Little Bow ASP project and $9 million for ASP chemical expenditures.
This $51 million capital program is forecast to be funded by cash flows,
the sale of a minimum of $5 million of minor non-strategic primarily
natural gas properties and increases in bank debt.
-- As at the end of the 2013 fourth quarter, Zargon's debt net of working
capital is $116.2 million (unaudited), a level that represents 52
percent of the $222.5 million of credit through convertible debentures
and syndicated loan facilities. Zargon has sufficient debt capacity to
manage a small increase in debt levels until ASP production is realized
by the end of 2014.
-- The 2014 conventional capital program will focus on Williston Basin
Midale type horizontal exploitation locations (9), Taber waterflood
horizontal development locations (4), Bellshill Lake Mannville vertical
stepout and infill locations (5). In all cases, the 2014 drilling
program targets the efficient development and/or acceleration of the
production from existing low production decline oil pools. For the 2014
first quarter, four horizontal locations are scheduled at the Williston
Basin, Saskatchewan properties at Weyburn (2), Elswick (1) and Ralph
(1).
-- Based on this 2014 capital program, Zargon expects oil production to
steadily grow from second quarter levels throughout 2014 as stable
conventional oil production volumes are augmented by growing Little Bow
ASP oil production volumes. Specifically, first and second quarter 2014
oil production is expected to average 4,300 barrels of oil per day and
then increase with ASP production gains to a year end rate of 4,650
barrels of oil per day.
-- Zargon continues to focus on conventional secondary (waterfloods) and
tertiary (ASP) oil exploitation while allocating minimal capital to
natural gas properties. For the 2014 first quarter, natural gas
production is anticipated to average 14.0 million cubic feet per day,
and calendar 2014's production forecast to average 13.5 million cubic
feet per day although this estimate will depend on the magnitude and
timing of the company's 2014 property disposition program.
-- In 2014, Zargon will continue to actively pursue property dispositions
that improve its profitability and operational focus by selling (or
trading) primarily natural gas, non-strategic properties. Over time,
Zargon anticipates that these dispositions will enable Zargon to realize
a lower-cost, higher-netback structure through a disciplined focus on a
growing tertiary ASP oil recovery business and the stable production
volumes coming from the measured exploitation of five conventional long-
life low-decline core oil properties.
2013 YEAR END RESERVES:
-- Reflecting a year of transition, refocus and property sales, Zargon's
2013 year end proved and probable total reserves decreased 11 percent to
27.69 million barrels of oil equivalent. These reserves were appraised
by Zargon's independent reserves evaluator McDaniel & Associates
Consultants Ltd. ("McDaniel") and are effective as of December 31, 2013.
On a 6:1 equivalency basis, oil and liquids comprised 76 percent of
Zargon's total proved and probable reserves at year end 2013, up from a
74 percent weighting at the end of 2012.
-- Zargon's 2013 year end proved and probable oil and liquids reserves
decreased nine percent to total 20.97 million barrels. The proved and
probable oil and liquids reserves estimate includes 4.48 million barrels
of Little Bow ASP proved and probable undeveloped oil and liquids
reserves. Zargon's 2013 year end total proved oil and liquids reserves
decreased four percent to total 12.91 million barrels. The proved and
probable oil and liquids reserves estimate includes 1.53 million barrels
of Little Bow ASP proven undeveloped oil and liquids reserves.
-- Zargon's 2013 year end proved and probable natural gas reserves
decreased 18 percent to total 40.26 billion cubic feet and Zargon's year
end total proved natural gas reserves decreased 15 percent to total
25.48 billion cubic feet. The decreases were due to normal course
production and property sales. Continued declines in Zargon's natural
gas reserves can be anticipated as Zargon has not drilled a gas well
since the fall of 2010.
-- Zargon's oil properties are characterized by pressure supported
reservoirs (waterflood or natural aquifers) that provide long-life, low-
decline oil production. Consequently, Zargon's proved developed
producing oil and liquids reserve life index is 6.2 years and Zargon's
proved and probable producing oil and liquids reserve life index is 8.4
years. Finally, Zargon's total proved and probable oil and liquids
reserve life index is 12.4 years. The relatively large developed
producing reserve life indices are indicative of low decline oil
production that supports Zargon's dividend paying business model.
-- Zargon's year end 2013 "produce-out" net asset value is calculated to be
$12.29 per basic share. This estimate reflects McDaniel's estimate of
the Zargon properties' proved and probable future cash flow using a
before tax 10 percent discount rate and forecast prices and costs plus
an independent appraisal of Zargon's undeveloped land less an allowance
for the year end bank debt, the full future face value of the $57.5
million convertible debenture and working capital deficiencies. On a
total proved reserve assignment basis, Zargon's "produce-out" net asset
value is calculated to be $7.40 per basic share.
DETAILED RESERVE INFORMATION:
Reserves included herein are stated on a gross company working interest basis
unless otherwise noted. All reserves information has been prepared in accordance
with National Instrument 51-101 Standards of Disclosure ("NI 51-101"). In
addition to the detailed information disclosed in this press release, more
detailed information will be included in Zargon's 2013 Annual Information Form
to be filed on SEDAR (www.sedar.com) and posted on our website (www.zargon.ca)
in March 2014.
Based on the independent reserves evaluation conducted by McDaniel effective
December 31, 2013, and prepared in accordance with NI 51-101, Zargon had proved
and probable reserves of 27.69 million barrels of oil equivalent.
Company Reserves(1)
Oil and
Liquids Natural Gas Equivalents (2)
At December 31, 2013 (mmbbl) (bcf) (mmboe)
----------------------------------------------------------------------------
Proved producing 10.55 21.74 14.18
Proved non-producing 0.31 2.70 0.76
Proved undeveloped 2.05 1.04 2.22
----------------------------------------------------------------------------
Total proved 12.91 25.48 17.16
Probable additional producing 3.66 6.99 4.83
Probable non-producing and
undeveloped 4.40 7.79 5.70
----------------------------------------------------------------------------
Total probable additional 8.06 14.78 10.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total proved and probable
producing 14.21 28.73 19.01
----------------------------------------------------------------------------
Total proved and probable 20.97 40.26 27.69
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved producing reserve life
index, years (3) 6.2 3.7 5.3
Proved reserve life index,
years (3) 7.6 4.4 6.5
Proved and probable producing
reserve life index, years (3) 8.4 5.0 7.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved and probable reserve
life index, years (3) 12.4 6.9 10.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Company working interest reserves are gross reserves before deduction of
royalties, boe (6:1).
2. Boes may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf:1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
3. Reserve life is calculated using annualized fourth quarter 2013
production.
A summary reconciliation of the 2013 year end reserve assignments with the
reserves reported in the 2012 year end report based on McDaniel's forecast
prices and costs is presented below:
Reserve Reconciliation (All Categories)
----------------------------------------------------------------------------
Oil and Liquids (mmbbl) Natural Gas (bcf)
----------------------------------------------------------------------------
Proved Proved
Proved Probable & Prob. Proved Probable & Prob.
----------------------------------------------------------------------------
December 31,
2012 13.41 9.64 23.05 29.92 18.90 48.82
Discoveries and
extensions (1) 2.47 (0.63) 1.84 1.54 0.09 1.63
Revisions 0.56 (0.15) 0.41 1.74 (2.75) (1.01)
Acquisitions and
dispositions (1.75) (0.80) (2.55) (2.03) (1.46) (3.49)
Production (1.78) - (1.78) (5.69) - (5.69)
----------------------------------------------------------------------------
December 31,
2013 12.91 8.06 20.97 25.48 14.78 40.26
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserve Reconciliation (All Categories)
----------------------------------------------------------------------------
Equivalents (mmboe)
----------------------------------------------------------------------------
Proved
Proved Probable & Prob.
----------------------------------------------------------------------------
December 31,
2012 18.40 12.79 31.19
Discoveries and
extensions (1) 2.73 (0.61) 2.12
Revisions 0.85 (0.60) 0.25
Acquisitions and
dispositions (2.09) (1.05) (3.14)
Production (2.73) - (2.73)
----------------------------------------------------------------------------
December 31,
2013 17.16 10.53 27.69
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Due to the partial reclassification of reserves related to the Little
Bow ASP project from proved and probable undeveloped to proved
undeveloped a negative extension is recorded in the probable oil
category.
On a total proved basis, Zargon's added 3.03 million barrels of oil and liquids
from revisions and field activities. This gain was partially offset by 1.75
million barrels of property dispositions and the net result was an increase of
1.28 million barrels of oil reserves. For total proved natural gas reserves,
Zargon added 3.28 billion cubic feet from revisions and field activities. This
gain was partially offset by 2.03 billion cubic feet of property sales. On a
total proved combined basis Zargon's 2013 net reserve additions were 1.49
million barrels of oil equivalent. Reflecting the first proved reserve
recognition for the Little Bow ASP project, the McDaniel year over year changes
in the future proved development capital was $48.3 million ($55.2 million at
December 31, 2013, compared with $6.9 million at December 31, 2012).
On a total proved and probable basis, Zargon's added 2.25 million barrels of oil
and liquids from revisions and field activities. This gain was more than offset
by 2.55 million barrels of property dispositions and the net result was a
decrease of 0.30 million barrels of oil reserves. For total proved and probable
natural gas reserves, Zargon added 0.62 billion cubic feet from revisions and
field activities. This gain was also more than offset by 3.49 billion cubic feet
of property sales. On a total proved and probable combined basis Zargon's 2013
net reserve additions (after dispositions) resulted in a decrease of 0.77
million barrels of oil equivalent. The McDaniel year over year changes in the
future proved and probable developement capital was a reduction of $2.2 million
($121.3 million at December 31, 2013, compared with $123.5 million at December
31, 2012).
Reserve Reconciliation (Developed Producing)
----------------------------------------------------------------------------
Oil and Liquids (mmbbl) Natural Gas (bcf)
----------------------------------------------------------------------------
Proved Proved
Proved Probable & Prob. Proved Probable & Prob.
----------------------------------------------------------------------------
December 31,
2012 12.74 4.57 17.31 26.61 9.14 35.75
Discoveries and
extensions 0.39 0.15 0.54 0.51 0.15 0.66
Revisions 0.76 (0.49) 0.27 1.88 (1.79) 0.09
Acquisitions and
dispositions (1.56) (0.57) (2.13) (1.57) (0.51) (2.08)
Production (1.78) - (1.78) (5.69) - (5.69)
----------------------------------------------------------------------------
December 31,
2013 10.55 3.66 14.21 21.74 6.99 28.73
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserve Reconciliation (Developed Producing)
----------------------------------------------------------------------------
Equivalents (mmboe)
----------------------------------------------------------------------------
Proved
Proved Probable & Prob.
----------------------------------------------------------------------------
December 31,
2012 17.18 6.08 23.26
Discoveries and
extensions 0.48 0.19 0.67
Revisions 1.07 (0.79) 0.28
Acquisitions and
dispositions (1.82) (0.65) (2.47)
Production (2.73) - (2.73)
----------------------------------------------------------------------------
December 31,
2013 14.18 4.83 19.01
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Zargon's reserves are characterized by a high developed producing component and
a corresponding high confidence level. Proved developed producing reserves
represent 83 percent of total proved reserves while proved and probable
developed reserves account for 69 percent of total proved and probable reserves.
The Little Bow ASP project represents 70 percent of the proved and probable
undeveloped reserves and 17 percent of Zargon's total proved and probable
reserves assignment.
NET ASSET VALUE:
Zargon's oil, liquids and natural gas reserves were evaluated using McDaniel's
price forecasts effective January 1, 2014, prior to provisions for income taxes,
interest, debt service charges, transaction costs and general and administrative
expenses. The estimated values of future net revenue disclosed do not represent
the fair market value of the reserves.
Before Tax Present Value of Future Net Revenue
(Forecast Prices and Costs)
Discount Factor
----------------------------------------------------------------------------
($ millions) 0% 5% 10% 15%
----------------------------------------------------------------------------
Proved producing 412.4 333.0 280.4 243.6
Proved non-producing 11.8 10.0 8.7 7.6
Proved undeveloped 63.9 45.8 32.6 22.9
----------------------------------------------------------------------------
Total proved 488.1 388.8 321.7 274.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Probable additional producing 177.5 104.7 70.1 51.3
Probable additional non-producing and
undeveloped 166.4 111.3 77.1 55.0
----------------------------------------------------------------------------
Total probable additional 343.9 216.0 147.2 106.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total proved and probable producing 589.9 437.7 350.5 294.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total proved and probable 832.0 604.8 468.9 380.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The following net asset value table shows what is customarily referred to as a
"produce-out" net asset value calculation under which the current value of
Zargon's reserves would be produced at McDaniel's forecast future prices and
costs. The value is a snapshot in time as at December 31, 2013, and is based on
various assumptions including commodity prices and foreign exchange rates that
vary over time. In this analysis, the present value of the proved and probable
reserves is calculated at a before tax 10 percent discount rate. In the net
asset value calculation, Zargon's 230 thousand net acres of land is valued at
$17.2 million based on the independent firm of Seaton-Jordan & Associates Ltd.
valuation as at December 31, 2013.
Net Asset Value
As at December 31 ($ millions) 2013
----------------------------------------------------------------------------
Proved and probable reserves (PVBT 10%) (1) 468.9
Undeveloped land 17.2
Working capital (excluding unrealized derivative
assets/liabilities) - unaudited (18.8)
Bank debt - unaudited (40.0)
Convertible debenture - unaudited (57.5)
----------------------------------------------------------------------------
Net asset value 369.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net asset value per share ($/basic share) (2) 12.29
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. McDaniel's estimate of future before tax cash flow discounted at PV 10
percent.
2. Calculated using basic total shares outstanding at December 31, 2013 of
30.088 million shares.
The following table provides net asset value estimates at December 31, 2013 for
all four reserve categories.
Net Asset
McDaniel PVBT Net Asset Value
10% Value ($/basic
Reserves Category ($ million)(1) ($ million)(2) share)(3)
----------------------------------------------------------------------------
Proved, developed, producing
reserves 280.4 181.3 6.03
Total proved reserves 321.6 222.6 7.40
Proved and probable, developed
producing reserves 350.5 251.4 8.36
Proved and probable reserves 468.9 369.8 12.29
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. McDaniel's estimate of future before tax cash flow discounted at PV 10
percent.
2. McDaniel's estimated value, adjusted for the following unaudited items
at December 31, 2013:
- Undeveloped land value as assessed by Seaton-Jordan of $17.2
million; and
- Net debt of $116.2 million, which includes full value of the
convertible debenture of $57.5 million.
3. Calculating using basic total shares outstanding at December 31, 2013 of
30.088 million shares.
Forward-Looking Statements - This press release contains forward-looking
statements relating to our plans and operations as at February 19, 2014.
Forward-looking statements typically use words such as "anticipate", "continue",
"estimate", "expect", "forecast", "may", "will", "project", "should", "plan",
"intend", "believe" and similar expressions (including the negatives thereof).
In particular, this press release contains forward-looking statements relating,
but not limited to: our business strategy, plans and management focus; the
timing of release of our 2013 financial results and 2013 Annual Information
Form, our 2014 and beyond capital expenditure program, the source of funding of
our 2014 and beyond capital program, anticipated 2014 and beyond production
guidance and product mix, drilling, completion, development and exploitation
plans and the results therefrom, future drilling locations, plans to sell
non-strategic assets and to review and implement cost saving opportunities,
plans with respect to our Little Bow ASP project, anticipated netbacks, capital
expenditures and other costs associated with the ASP project and the anticipated
results from this project, and sources of funding for our capital expenditure
program. In addition, all statements relating to reserves, including ASP
reserves, in this press release are deemed to be forward-looking as they involve
an implied assessment, based on certain assumptions and estimates, that the
reserves described, can be properly produced in the future.
By their nature, forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond our control, such as those relating to
results of operations and financial condition, general economic conditions,
industry conditions, changes in regulatory and taxation regimes, volatility of
commodity prices, escalation of operating and capital costs, currency
fluctuations, the availability of services, imprecision of reserve estimates,
geological, technical, drilling and processing problems, environmental risks,
weather, the lack of availability of qualified personnel or management, stock
market volatility, the ability to access sufficient capital from internal and
external sources and competition from other industry participants for, among
other things, capital, services, acquisitions of reserves, undeveloped lands and
skilled personnel. Risks are described in more detail in our Annual Information
Form, which will be available on sedar and our website. Forward-looking
statements are provided to allow investors to have a greater understanding of
our business.
You are cautioned that the assumptions, including, among other things, future
oil and natural gas prices; future capital expenditure levels; future production
levels; future exchange rates; the cost of developing and expanding our assets;
our ability to obtain equipment in a timely manner to carry out development
activities; our ability to market our oil and natural gas successfully to
current and new customers; the impact of increasing competition; our ability to
obtain financing on acceptable terms; and our ability to add production and
reserves through our development and acquisition activities used in the
preparation of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance should not
be placed on forward-looking statements. Our actual results, performance, or
achievement could differ materially from those expressed in, or implied by,
these forward-looking statements. We can give no assurance that any of the
events anticipated will transpire or occur or, if any of them do, what benefits
we will derive from them. The forward-looking information contained in this
document is expressly qualified by this cautionary statement. Our policy for
updating forward-looking statements is that Zargon disclaims, except as required
by law, any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Other Advisories - Boe's may be misleading, particularly if used in isolation. A
boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead. In addition, given that the value ratio
based on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1, utilizing a
conversion ratio on a 6:1 basis may be misleading as an indication of value. The
estimates of reserves and future net revenue for individual properties may not
reflect the same confidence level as estimates of reserves and future net
revenue for all properties, due to the effects of aggregation.
FURTHER INFORMATION:
Zargon Oil & Gas Ltd. is a Calgary based oil and natural gas company working in
the Western Canadian and Williston sedimentary basins that has delivered a long
history of returns and dividends (distributions). Zargon's business is focused
on oil exploitation projects that profitably increase oil production and
recovery factors from existing oil reservoirs.
In order to learn more about Zargon, we encourage you to visit Zargon's website
at www.zargon.ca where you will find a current shareholder presentation,
financial reports and historical news releases.
FOR FURTHER INFORMATION PLEASE CONTACT:
Zargon Oil & Gas Ltd.
C.H. Hansen
President and Chief Executive Officer
403-264-9992
J.B. Dranchuk
Vice President, Finance and Chief Financial Officer
403-264-9992
zargon@zargon.ca
www.zargon.ca
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