Operations
Canada
The Company has small interests in the following unitized oil and gas fields in Alberta:
South Edson Gas Unit No. 1
Cygam has an 8.9688 % working interest in the South Edson Gas Unit No. 1 located west of Edmonton. The Unit covers 45,120 gross acres of land and produces gas from the Elkton-Shunda formations. Two wells are currently on production, one is awaiting tie-in and six wells are shut-in or suspended. A new well (12-16-50-16 W5M) is scheduled to be drilled and completed in late 2006 and another well at 11-26-50-17 W5M is scheduled to be drilled and completed in early 2007.
Harmattan East Unit No. 1
The Company holds a 1.014525 % working interest in oil production and a 0.13331% working interest in natural gas production from the Harmattan East No. 1 Petroleum Unit and a 0.13331 % working interest in the natural gas production from the Harmattan East No. 1 Natural Gas Unit. The Petroleum Unit commenced production in 1961 and currently consists of twenty three producing wells and thirteen water injectors. The Natural Gas Unit has twenty three producing wells and three gas storage wells.
Additional Properties
Cygam holds minor working interests in three other oil units, namely Cynthia Cardium Unit No. 4, Snipe Lake Beaverhill Lake Unit No. 1 and Wainright Unit No. 6. The Company’s working interest in these three units ranges from 0.076 % (Snipe Lake and Wainright) to 0.32 % (Cynthia).
Reserve Summary
The Company’s net average daily production for the last quarter of 2005, expressed in barrels of oil equivalent per day (boe/d), was 38.04 boe/d. The daily production, expressed in boe/d, is based on the industry standard conversion factor of 6 Mcf equalling one barrel of oil.
An evaluation of the remaining recoverable reserves and the net present value attributable to five of Cygam’s unitized properties was completed by Fekete Associates Inc. at December 31, 2005. An independent appraisal of Cygam’s properties operated by Signalta Resources Limited was conducted by Matsalla Consulting (1981) Ltd.
Fekete Associates Inc. assigned a 10% net discounted present value of $ 1,666,200 to the proved producing, proved non-producing and probable reserves at December 31, 2005.
Remaining recoverable reserves, net to Cygam after royalties, as evaluated by Fekete amount to 505,000 Mcf of natural gas and 28,100 barrels of oil and natural gas liquids.
Preliminary appraisal by Matsalla Consulting (1981) Ltd. of approximately 209 gas and oil wells operated by Signalta Resources Limited indicates that the remaining recoverable reserves, net after royalties, for Cygam’s interest in such proved producing wells are approximately 235,000 Mcf of natural gas and 3170 barrels of oil and natural gas liquids, having an estimated net present value of approximately $ 829,000 at a 10 % discount rate.
Total remaining recoverable reserves at December 31, 2005, net after royalties, from all of Cygam’s properties are approximately 740,000 Mcf of natural gas and 31,270 barrels of oil and natural gas liquids, equivalent to 154,600 boe, with a combined net present value of approximately $ 2,495,000 at a 10 % discount.
The following table summarizes the net present value and the total remaining proved plus probable reserves, net after royalties, for all the combined Canadian properties owned by Cygam.
Net present values are provided for the forecast escalated cost and prices case: Remaining reserves also refer to the forecast escalated cost and prices case.
| NET PRESENT VALUE (Escalated Costs and Prices) | REMAINING RESERVES | ||
|---|---|---|---|
| @ 0% | $ 4,665,800 | GAS (Mcf) | 740,000 |
| @10% | $ 2,495,000 | OIL (bbls) | 18,400 |
| @12% | $ 2,281,700 | NGL (bbls) | 12,870 |
| @15% | $ 2,024,500 | ||