Enerplus strives to maintain long-life reserves to ensure
sustainable distributions for its Unitholders. Reserves are
added primarily through accretive acquisitions, but are
also added through low risk development of existing
properties. During high commodity price cycles, as seen
in 2001, the Fund emphasized development versus
acquisition.
Through such development drilling and
the associated positive reserve revisions, Enerplus added
14 million barrels of established reserves on a combined
basis in 2001. This offset 61% of the reserve declines
associated with 2001 combined production of
22.8
MMBOE for the year. The net reserve reduction was
less than 3% even though acquisitions were offset
by dispositions.
Enerplus’ reserves of crude oil, natural gas and NGLs have been evaluated by Sproule Associates Limited. This
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firm of independent petroleum engineers has evaluated year end reserves representing 83% of the Fund’s total value
(discounted at 12%). All evaluations of future net production revenues set forth in the tables are stated without
provision for income taxes, general and administrative costs and management fees. Probable reserves and values
have been reduced by a factor of 50% to account for risk.
Established reserves (proven plus 50% probable) at year end 2001 have been estimated at 113.7 million barrels of oil,
1,081 billion cubic feet of natural gas and
18.5 million barrels of natural gas liquids for a total of 312.4 million barrels
of oil equivalent based on a natural gas to oil conversion of 6:1. Natural gas reserves represent 58% of the Fund’s
established reserves.
Enerplus follows the Canadian practice of reporting gross production and reserve volumes, which are prior to the
deduction of royalties and similar payments. In the U.S., production and reserve volumes are reported after deducting
these amounts. The Canadian practice of using escalating prices and costs when estimating the quantities of
reserves is also followed by Enerplus. In the U.S., reserve estimates are calculated using prices and costs held constant
at amounts in effect at the date of the reserve report. Enerplus also follows the Canadian practice of using "Established
Reserves", which include proved reserves and the probable reserves portion that has been reduced by a risk factor
of 50%. As a consequence, our production volumes and reserve estimates may not be comparable to those made by
U.S. companies.
 |
| Combined Reserves Summary |
Crude oil
Mbbl |
Natural gas
MMcf |
NGLs
Mbbl |
Total
MBOE |
|
| Total established reserves as at December 31, 2001 |
122,114 |
1,085,942 |
18,696 |
321,800 |
| | |
| Proven, producing |
86,770 |
722,692 |
13,685 |
220,904 |
| Proven, non-producing |
8,077 |
228,441 |
2,429 |
48,579 |
| | |
| Total proven |
94,847 |
951,133 |
16,114 |
269,483 |
| Total probable at 50% |
18,821 |
130,345 |
2,337 |
42,882 |
| | |
| Total established reserves at December 31, 2001 |
113,668 |
1,081,478 |
18,451 |
312,365 |
|
|
Combined Reserves Reconciliation |
Crude oil
Mbbl |
Natural gas
Bcf |
NGLs
MMbbl |
Total
MMBOE |
Established
MMBOE |
| Prov. |
Prob. |
Prov. |
Prob. |
Prov. |
Prob. |
Prov. |
Prob. |
|
| EnerMark Reserves at Dec. 31, 2000 |
57.2 |
31.1 |
655.4 |
183.5 |
11.4 |
3.0 |
177.8 |
64.7 |
210.2 |
| Enerplus Reserves at Dec. 31, 2000 |
44.2 |
10.3 |
298.7 |
80.1 |
5.6 |
0.4 |
99.6 |
24.0 |
111.6 |
| | |
| Combined Opening at Dec. 31, 2001 |
101.4 |
41.4 |
954.1 |
263.6 |
17.0 |
3.4 |
277.4 |
88.7 |
321.8 |
| Acquisitions |
4.9 |
1.3 |
24.6 |
6.0 |
0.5 |
0.1 |
9.5 |
2.4 |
10.7 |
| Divestments |
(5.2) |
(1.8) |
(22.7) |
(8.2) |
(0.6) |
(0.1) |
(9.5) |
(3.3) |
(11.2) |
| Production |
(8.8) |
- |
(74.4) |
- |
(1.7) |
- |
(22.9) |
- |
(22.9) |
| Drilling, Develop., Revisions |
2.5 |
(3.3) |
69.5 |
(0.7) |
0.9 |
1.3 |
15.0 |
(2.0) |
14.0 |
| | |
| Reserves at December 31, 2001 |
94.8 |
37.6 |
951.1 |
260.7 |
16.1 |
4.7 |
269.5 |
85.8 |
312.4 |
|
|
| Present Worth of Production Revenue ($millions)(including ARTC) |
10% |
12% |
|
Total combined established reserves at December 31, 2000 |
$ 2,320.4 |
$ 2,141.2 |
| | |
Proven, producing |
1,377.0 |
1,257.1 |
| Proven, non-producing |
249.3 |
219.3 |
| | |
Total proven |
1,626.3 |
1,476.4 |
| Probable @ 50% |
159.1 |
133.9 |
| | |
Total established reserves at December 31, 2001 |
$ 1,785.4 |
$ 1,610.3 |
|
|
| Net Asset Value ($millions, except per unit amount) |
10% |
12% |
|
Present value of established reserves at December 31, 2001 |
$ 1,785.4 |
$ 1,610.3 |
| Undeveloped acreage and seismic (acreage valued at $50/acre) |
24.3 |
24.3 |
| Bank debt |
(412.6) |
(412.6) |
| Working capital excluding distributions to Unitholders |
25.7 |
25.7 |
| | |
| Net asset value |
$ 1,422.8 |
$ 1,247.7 |
| | |
| Net asset value per Unit ¹ |
$ 20.46 |
$ 17.94 |
|
¹ based on 69.532 million Units outstanding as at December 31,2001
PRICING ASSUMPTIONS
The present value of future cash flow at December 31, 2001, was based upon crude oil and natural gas pricing
assumptions prepared by Sproule Associates Limited. These forecasts are adjusted for reserve quality, transportation
charges and the provisions of any applicable sales contracts. The base reference prices and exchange rate used by
Sproule are as follows:
|
| Year |
Crude oil |
Natural gas
30 day spot
Plant Gate Price
CDN$/MMcf |
CDN$/US$
Exchange
Rate |
WTI Cushing
Oklahoma
US$/bbl |
Light Crude
Edmonton ¹
CDN$/bbl |
|
| 2002 |
19.90 |
29.86 |
3.63 |
0.635 |
| 2003 |
20.64 |
30.96 |
4.18 |
0.635 |
| 2004 |
21.12 |
31.67 |
4.19 |
0.635 |
| 2005 |
21.44 |
32.15 |
4.18 |
0.635 |
| 2006 |
21.76 |
32.65 |
4.25 |
0.635 |
|
Prices escalated at a rate of 1.5% per year thereafter, exchange rate held constant.
¹ Edmonton refinery postings for 40° API, 0.4% sulphur content crude.
UNDEVELOPED LAND
During 2001, the Fund aggressively pursued the monetization of undeveloped lands acquired through previous
corporate acquisitions, most notably the lands acquired from Cabre Exploration. As a result of this aggressive
program, a total of 265,000 net acres (550,000 gross) or approximately one third of the undeveloped land available
at the beginning of the year, were monetized either through sales or farmouts.
A total of 124 wells were committed to be drilled through farmout or pooling arrangements during 2001. These
arrangements resulted in 24 producing wells, 62 wells that are now cased and standing, 15 dry holes and the
identification of 23 future drilling locations all at no cost for the Fund.
The total value realized from undeveloped land sales and farmouts in 2001 is estimated to be over $14 million.
Additional value may be realized over time from the future drilling locations earned on overriding royalty interests
or better than expected production from new wells. Enerplus also identifies and develops low risk development
drilling locations on undeveloped land which further increases the value associated with the remaining
undeveloped land.
|
Land Inventory at Dec. 31, 2001 |
Developed Acres |
Undeveloped Acres |
Royalty Acres |
|
| |
Gross |
Net |
Gross |
Net |
Net |
| | |
| Alberta |
2,410,768 |
806,072 |
820,008 |
408,579 |
693,265 |
| British Columbia |
217,967 |
47,010 |
118,683 |
51,505 |
158,023 |
| Saskatchewan |
153,335 |
79,865 |
36,559 |
25,595 |
136,911 |
| Other |
695 |
189 |
617 |
617 |
2,665 |
| | |
| Total |
2,782,765 |
933,136 |
975,867 |
486,296 |
990,864 |
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