Forward Looking Advisory Statement
Certain statements on this website constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "intend", "propose", or similar words suggesting future outcomes or an outlook. Forward looking information on this website includes, but is not limited to:
- expected production volumes and the timing thereof;
- exploration, development and expansion plans and strategies for Cavalier’s properties;
- planned Hoole development schedules;
- resources estimates;
- predicted recovery factors including steam oil ratios and cumulative steam oil ratios;
- construction and startup timelines and schedules;
- anticipated development activity in areas where Cavalier assets are located;
- business strategies and objectives; and
- expected regulatory review and approvals and the timing and the outcome thereof.
Such forward-looking information is based on a number of assumptions which may prove to be incorrect. The following assumptions have been made, in addition to any other assumptions identified in this presentation:
- future crude oil, bitumen and natural gas prices;
- general economic and business conditions;
- the ability of the Company to obtain required capital to finance its exploration, development and operations;
- the ability of the Company to obtain equipment, services, supplies and personnel in a timely manner to carry out its activities;
- the ability of the Company to market its oil and natural gas successfully to current and new customers;
- estimates of input and labour costs for an oil sands project;
- the ability of the Company to secure adequate product transportation and storage;
- the ability of the Company to successfully apply oil sands technology and to capitalize on improvements thereto;
- the ability of the Company to obtain project success including obtaining production volumes, steam oil ratios, capital and operating costs consistent and timing with expectations;
- the timely receipt of required regulatory approvals and the scope of such approvals;
- estimated timelines being met in respect of the development of the Hoole oil sands properties;
- application and success of oil sands technologies;
- access to capital markets and other sources of funding; and
- currency exchange and interest rates.
Although the Company believes that the expectations reflected in such forward looking information is reasonable, undue reliance should not be placed on it, as the Company can give no assurance that such expectations will prove to be correct. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking information.
These risks and uncertainties include, but are not limited to:
- fluctuations in crude oil, bitumen and natural gas prices, foreign currency exchange rates and interest rates;
- the uncertainty of estimates and projections relating to, future production, costs and expenses including project cost overruns;
- the ability to secure adequate product processing, transportation and storage;
- operational risks in exploring for, developing and producing bitumen;
- the ability to obtain equipment, services, supplies and personnel in a timely manner;
- potential disruption or unexpected technical difficulties in designing, developing, expanding or operating the Company’s projects;
- risks and uncertainties involving the geology of bitumen;
- the uncertainty of resources estimates;
- changes to the status or interpretation of laws, regulations or policies;
- the receipt and timing of governmental or regulatory approvals;
- title defects;
- aboriginal land claims;
- ability to fund projects;
- environmental compliance and requirements;
- general business, economic and market conditions;
- the effects of weather; and
- other risks and uncertainties described elsewhere on this presentation and in Paramount’s other filings with Canadian securities authorities, including Paramount’s Annual Information Form.
The foregoing list of risks is not exhaustive. Additional information concerning these and other factors which could impact Cavalier and Paramount are included in Paramount’s most recent Annual Information Form. The forward-looking information contained in this presentation is made as of the date hereof and, except as required by applicable securities law, Cavalier and Paramount undertake no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.
Oil and Gas Measures and Definitions
This presentation contains disclosure of certain results of (i) an updated independent evaluation of the Company’s DEBIP and economic contingent bitumen resources from the Grand Rapids formation within the Company’s Hoole oil sands property as of June 30, 2012 by McDaniel & Associates Consultants Ltd. ("McDaniel") and (ii) an independent evaluation of the Company's Saleski and other carbonate bitumen assets as of October 31, 2011 by McDaniel (collectively, the “McDaniel Evaluations”).
"Contingent resources" are those quantities of bitumen resources estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are classified as a resource rather than a reserve due to one or more contingencies, such as the absence of regulatory approvals, detailed design estimates or near term development plans. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. For Cavalier, contingencies which must be overcome to enable the reclassification of bitumen contingent resources as reserves include finalization of plans for the initial development of the Hoole oil sands properties, regulatory application submission with no major issues raised, access to capital markets and other sources of funding, and intent to proceed by the Company evidenced by a development plan with major capital expenditures.
"Economic contingent resources" are those contingent bitumen resources that are currently economically recoverable based on specific forecasts of commodity prices and costs. There is no certainty that it will be commercially viable to produce any portion of the economic contingent resources.
“Contingent Resources (Technology Under Development)” are those quantities of bitumen estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are classified as a resource rather than a reserve due to one or more contingencies, such as the absence of regulatory approvals, detailed design estimates or near term development plans. There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources. For the Saleski property and the Other Carbonate Leases, because of the lack of demonstrated commercial SAGD production within carbonate reservoirs, the recoverable resources assigned are contingent upon successful application of SAGD to the subject reservoir or a reasonable analog. The successful implementation of SAGD technology in carbonate reservoirs is a significant contingency associated with these assignments that separate them from typical McMurray clastic SAGD contingent and prospective resources, where the technology has been proven effective. In addition to the technical contingency, additional contingencies applicable to the carbonate resources include being in the early evaluation stage, the economic viability of development and the absence of regulatory approvals. The economic status of these resources are undetermined.
"Best estimate" is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50 percent confidence level that the actual quantities recovered will equal or exceed the estimate. "Low estimate" is considered to be a conservative estimate of the quantity of resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those resources at the low end of the estimate range have the highest degree of certainty – a 90 percent confidence level – that the actual quantities recovered will equal or exceed the estimate. "High estimate" is considered to be an optimistic estimate of the quantity of resources that will actually be recovered. It is unlikely that the actual remaining quantities of resources recovered will meet or exceed the high estimate. Those resources at the high end of the estimate range have a lower degree of certainty – a 10 percent confidence level – that the actual quantities recovered will equal or exceed the estimate. The volume of economic contingent resources disclosed represents the Company’s share of recoverable volumes before the deduction of royalties.
“Discovered Exploitable Bitumen In Place” or “DEBIP” is the estimated volume of bitumen, as of a given date, which is contained in a subsurface stratigraphic interval of a known accumulation that meets or exceeds certain reservoir characteristics, such as minimum continuous net pay, porosity and mass bitumen content. For the Hoole oil sands property, the presence of these characteristics is considered necessary for the commercial application of known recovery technologies. For the Saleski property and the Other Carbonate Leases, these volumes have been constrained to areas that have a minimum thickness of 10 meters of substantially clean, continuous predominantly bitumen-saturated carbonate with log porosity meeting a minimum of 10 percent and bitumen saturation greater than 50 percent, respectively and with both competent top and lateral reservoir containment. These carbonate bitumen resources are constrained to one mile in area around known data points that penetrate the zone and possess definitive geophysical log data. Discovered Exploitable Bitumen in Place for the Saleski property and the Other Carbonate Leases may be assigned outside of the one mile area if reservoir continuity between offsetting delineation is expected. The technology required to economically produce bitumen from carbonate formations is currently in the development stage and has not been proven on a commercial scale. There is no certainty that it will be commercially viable to produce any portion of the resources from the Hoole oil sands property, the Saleski property or the Other Carbonate Leases.
“Undiscovered Exploitable Bitumen In Place” or “UEBIP” is the volume of petroleum estimated, as of a given date, to be contained in accumulations yet to be discovered. These resources are mapped using known data points penetrating the zone and possess definitive geophysical log data along with seismic data and regional mapping. 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.
This website also contains certain disclosures of net present values ("NPV") from the McDaniel Evaluations. The NPVs disclosed represent the Company’s share of future net revenue, before the deduction of income tax from the economic contingent bitumen resources in the Grand Rapids formation within the Hoole oil sands properties. The calculation considers such items as revenues, royalties, operating costs, abandonment costs and capital expenditures. Royalties were calculated based on Alberta’s Royalty Framework applicable to oil sands projects in Alberta. The calculation does not consider financing costs and general and administrative costs. The NPVs were calculated assuming natural gas is used as a fuel for steam generation. Revenues and expenditures were calculated based on McDaniel’s forecast prices and costs as of June 30, 2012. The estimated net present value of economic contingent resources disclosed does not represent fair market value.
This website contains disclosure of certain results of an independent evaluation of discovered bitumen in place (“DBIP”) and undiscovered bitumen in place (“UDBIP”) prepared by McDaniel dated July 20, 2010 for the Eagles Nest area of Northern Alberta. McDaniel prepared a report that provides estimates for volumes of DBIIP and UDBIP for the assets in the Eagle’s Nest area (the “Report”). As a result of this assessment, McDaniel has estimated the DBIP and UDBIP resource to be about 0.4 million barrels and 1.6 million barrels, respectively. The Report, effective April 30, 2010, was prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook as published by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Petroleum Society of Canada (the “COGE Handbook”). There is no certainty that the Company’s assets located at Eagle’s Nest will produce any portion of the volumes currently classified as “discovered resources” or “undiscovered resources”. The primary contingencies which currently prevent the classification of the discovered or undiscovered resources disclosed above as reserves consist of: current uncertainties around the specific scope and timing of the development of the Eagle’s Nest assets; uncertainty regarding the presence, extent or quality of cap rock; lack of regulatory approvals for such projects; the uncertainty regarding marketing plans for production from the subject areas; improved estimation of project costs; commodity price fluctuations, timing, costs estimates and final approval of the Board of Directors.
The term “Discovered Bitumen in Place” (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered bitumen in place includes production, reserves, and contingent resources; the remainder is unrecoverable.
“Undiscovered Bitumen in Place” (equivalent to undiscovered resources) is that quantity of bitumen that is estimated, as of a given date, to be contained in accumulations yet to be discovered. The definition is taken from the COGE Handbook. DBIP is currently the most specific resource category assignable to the Eagle’s Nest assets. McDaniel was unable to classify the discovered resources into one of the subcategories because development projects could not be defined for the discovered resource volumes at this time. It is yet to be determined what recovery process will be applied in Eagle’s Nest due to current uncertainty of cap rock integrity. There is no certainty that it will be commercially viable to produce any portion of those discovered resources. Discovered resources do not constitute, and should not be confused with, reserves.