Latest / Financial Survival Network / Prospera Energy Increases Reserve Valuation 5X (PDP) & Forecasts 2.5X Production by Q4

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Prospera Energy Increases Reserve Valuation 5X (PDP) & Forecasts 2.5X Production by Q4 · Financial Survival Network

• 0:00
  I'll just kind of go through a couple of the highlights we add in the
• 0:03
  press release that was released yesterday. You mentioned the PDP reserves the increased five
• 0:08
  hundred and eight percent. So last year, twenty twenty two's reserves were four
• 0:13
  point four PDP value of twenty seven million, this year at a discover right
• 0:18
  of ten percent, and so that's a direct reflection of the twenty twenty three
• 0:22
  development program that the team execute them your SAP, and what that really means
• 0:27
  is that it identifies our opens up a variety of different conventional financing options for
• 0:35
  prosper and non delude of financing options, asset based debt and so on.
• 0:42
  And what it allows us to do is get away from some of the higher
• 0:44
  red financing so we've done historically, take those that will consolidate our balance sheet
• 0:50
  and ultimately fund the upcoming twenty twenty four development program. The Financial Survival Network
• 0:58
  now more than ever, the Financial Survival Network. Welcome. This is Financial
• 1:07
  Survival Network. I'm your host, Carrie Lutz, and we were about to
• 1:10
  get a much requested update from CEO Samuel David and CFO Cress Lutkey of Prospera
• 1:15
  Energy yesterday, Sam, you released your latest reserve report for twenty twenty three,
• 1:22
  and I kind of thought there was a typo I was looking at it.
• 1:26
  It said five hundred and eight percent increase in reserve value PDP, and
• 1:33
  I mean, I've never seen numbers going up that high before. That's right,
• 1:40
  Kerrie Prospero team is very proud and pleased to convey that appreciation of the
• 1:49
  asset value. And really I feel we are just scratching the surface on the
• 1:56
  asset the real asset value of the entire reservoir we have and the oil in
• 2:02
  place, and we're just being to tap into the reserves. We're just accessing
• 2:08
  the reserves with the horizontals that we just drilled. There's a large upside to
• 2:15
  this asset value. For example, we haven't really started exploiting one of our
• 2:21
  largest oil in place property and we're just commencing that. The reason that hasn't
• 2:27
  commenced so far is because we've been doing a lot of due diligence, studying
• 2:31
  all the technical technical parameters, historical performance. It is pressure depleted and we're
• 2:38
  finding the most effective ways to apply that and we'll be quilting that this year.
• 2:44
  So you can see even the largest oil and place property is not reflected
• 2:51
  in this current appreciation of eight percent appreciation in approve and developed value. Chris,
• 3:00
  this reserve report really kind of a game changer in terms of how the
• 3:06
  company moves ahead, how it raises funds. You just tell us explain what
• 3:12
  the difference is now, Yeah, certainly, Carrie. I'll just kind of
• 3:15
  go through a couple of the highlights we adding the press release that was released
• 3:20
  yesterday, you mentioned the PDP reserves increased five hundred and eight percent. So
• 3:25
  last year, twenty twenty two's reserves were four point four PDP value of twenty
• 3:31
  seven million. This year at a discover right of ten percent, and so
• 3:35
  that's a direct reflection of the twenty twenty three development program that the team executed
• 3:39
  them out and what that really means that it identifies or opens up a variety
• 3:46
  of different conventional financing options for prosper and non delude of financing options, asset
• 3:55
  based debt and so on. And what it allows us to do is get
• 3:59
  away from some of the higher refinancings that we've done historically, take those out,
• 4:02
  consolidate our balance sheet, and ultimately fund the upcoming twenty twenty four development
• 4:09
  program from an np the standpoint, now, what do you reckon the NPV
• 4:15
  of the reserves? It is all of them, P two P and PDP.
• 4:19
  Well, the two P reserves value that was published yesterday as well as
• 4:25
  a total three million. That's the corporate number, and that's a proved plus
• 4:30
  probable number. It increased sixty one million year over year, and that's really
• 4:34
  a reflection of an increase in the undeveloped reserves value along with the twenty twenty
• 4:41
  three development program. So pretty much what you're telling me then, is that
• 4:46
  the market cap of the company, which currently look at my latest number is
• 4:50
  clus thirty six million. It's almost triple. Your MPV is almost triple the
• 4:57
  market cap, that's right. But we calculate the the two PE reserve value
• 5:02
  over the total amount of shares the air outstanding currently we get approximately thirty one
• 5:08
  cents, which is considerably higher than where we're at currently. Total proven number
• 5:14
  is about twenty one cents, but both were higher. Sam Basically, looking
• 5:19
  at this kind of I saw a current recovery rate of nine percent, but
• 5:25
  the release seems to imply that it could go much higher. Oh yeah,
• 5:30
  definitely there's ample amount of room to be recovered, ample amount of reserves to
• 5:35
  be recovered. That nine percent is an overall average between three properties. As
• 5:44
  I mentioned, the largest oil in place property and the largest oil in place
• 5:48
  has approximately two hundred and ninety million barrels in place. That property has only
• 5:55
  recovery. We have only recovered about six percent of the oil of place.
• 6:00
  There's plenty of remaining reserves to be recovered. This year, we got a
• 6:08
  drill program. It's going to take place, and you've gotten a much earlier
• 6:13
  start to the process, aven't you. Definitely? Definitely Yeah. Last year,
• 6:19
  you know, everything got delayed to actually, you know, for us
• 6:25
  to work through. That's the first time we were executing the large development program
• 6:30
  for Prospera, and it stretched it into the winter till end of December,
• 6:36
  and a lot of that production and corresponding revenue we stop reflected in the balance
• 6:42
  sheet. It will be reflected in this year's balance sheet. But this year,
• 6:46
  yes, we have paused everything and preparing for an early start right after
• 6:53
  the breakup to commenced, really so we could see that those new wells hit
• 7:00
  the income statement before the end of the year. Then yes, you know,
• 7:06
  since we were doing a much earlier drilling in the summer. The results
• 7:13
  from the drilling will be reflected in the year end statement. Right, So
• 7:16
  cash flow standpoint Chris, company's position to finance this program adequately in addition to
• 7:25
  perhaps taking on new financing. Yeah, that's right. Carry The additional financing
• 7:30
  that the reserves will provide, combined with the company's cash flow, will support
• 7:35
  the twenty twenty four top of the requirements allow us to achieve the year end
• 7:40
  targets have been published earlier this year. Sam, the reserve life is now
• 7:46
  thirty years, but we know in the market that once you go past seven
• 7:49
  ten years, you don't really get any respect for that to you. Well,
• 7:55
  you know, there's longevity in these as it were, and we could
• 7:59
  have a steady stream of supply of oil and a cash flow for this company.
• 8:07
  Right. So obviously to get to realize this additional production, you're going
• 8:13
  to have to do a substantial number of infrastructure improvements. We already discussed technical
• 8:18
  advancements that are going to be kicking in as the process goes along. It's
• 8:24
  a big project, isn't it. These properties have adequate infrastructure in place.
• 8:31
  It's a little bit outdated, and we've been attending to that on an ongoing
• 8:37
  basis, and actually we have a turnaround plant for this summer. The previous
• 8:41
  year. Wintery conditions affected as quite a bit last year, but this year
• 8:48
  we were able to bounce back and resume production and appreciating production from the cold
• 8:54
  weather. So already there's improvements in the infrastructure, and there'll be additional improvements
• 9:00
  to infrastructure this summer. And also because there's existing infrastructure, all the drilling
• 9:07
  that we do, all the optimization could be brought online fairly quickly on a
• 9:13
  quick turnaround and easier permitting because it's just additional production and the same project,
• 9:18
  the same field, right same, Yeah, these are all multi well padlese
• 9:24
  and we just say yes, it's not the same existing infrastructure curio, I
• 9:28
  don't go out that that that helps reduce the capital will lay considerably as well.
• 9:33
  We're adding these new wells so we get the production right away, but
• 9:37
  we're not adding to spend any money on pipeline infrastructure or anything along those lines.
• 9:41
  So we're drilling new wells. We're adding them at roughly about six dollars
• 9:46
  a barrel of capital expenditure and it's not plagued by additial infrastructure costs that would
• 9:52
  ultimately bring that number up. Now that's in Saskatchewan and the heavy oil property,
• 9:58
  the medium oil development, it does require some infrastructure, concentrated infrastructure to
• 10:05
  production. So Chris, So the decline in production that happens in the winter,
• 10:13
  it is not an isolated event. I mean, I see the chat
• 10:16
  rooms go a little that could overreact to the winter decline. But this isn't
• 10:22
  just a prospera phenomena. This is industry in this part of the world,
• 10:26
  right Cort. Across the board, we see our peers impacted in a similar
• 10:31
  way, big and small companies across the board. I mean, operating a
• 10:37
  negative sixty degree weather is tough. But we you know, we as say
• 10:43
  I'm talked about, there's a lot of infrastructure upgrades and things like that,
• 10:46
  and preparedness that happens. There's always events that are on plopped. You're expanding
• 10:52
  your team right now, I understand, adding more people and this can also
• 10:58
  make an impact. And obviously it helped keep the oil flowing during the winter.
• 11:01
  Two well, at minus c two celsius, not too many things move.
• 11:07
  However, However, we can that's right, yeah, give other people.
• 11:13
  Well, we have added experienced staff to both the operation and production engineering.
• 11:20
  We also, I think you've mentioned before, we have a VP of
• 11:24
  experienced VPF operation as well, so we have added significant experienced individuals to accommodate
• 11:35
  the development that we have planned. So the money is there to do all
• 11:39
  this, Chris, and the team is there to do it all, Sam,
• 11:45
  what do you think end of the year. I mean I saw in
• 11:48
  the release it said you got a target of five thousand boe per day.
• 11:52
  Now that's right. It's a fairly ambitious target, but we feel it's it's
• 12:00
  attainable and prosper has come a long way since the restructured in restructuring that happened
• 12:09
  in twenty twenty one onward. But Prospero is a different company now and there's
• 12:16
  a cohesive team management team, an operation team, and we have executed and
• 12:22
  demonstrated the reaccessing undrained reserves, and we have retired very good wells all along
• 12:30
  the way, and we're reducing our operating expansion and liability as at retiremental liability
• 12:37
  as well, and we also have proved up our medium oilplay. So here
• 12:43
  on word, it's mostly execution and development to appreciate production. Also we have
• 12:54
  we'll be adding a key strategic acquisition to diversify your product from our heavy old
• 13:01
  dependency, and these are all when we add up all of this, we
• 13:05
  feel and that ambitious target is attainable. All right, well, I think
• 13:11
  really happy to get this update. As you know, I'm a shareholder as
• 13:16
  well as a prespera being a sponsor of the show, and it's great to
• 13:20
  see it moving ahead. Hopefully the market will will give you some respect in
• 13:24
  the near term once this information gets out there. It seems like it's a
• 13:31
  good prospect. We will keep on doing what we're doing and we'll let rest
• 13:37
  take care of it. Stuff. Thank you, Kerry. All right,
• 13:39
  thank you, Chris Sam. It's always great to talk with you. Go
• 13:43
  over to the company's website prespar Energy dot com, SiGe up for notifications the
• 13:48
  ticker symbols in the US g x r FF and of course in Canada Pei
• 13:54
  and he will be going for follow ups in the coming months and hopefully everything's
• 14:01
  going to work out awesome. Thank you. Thanks Garry. The Financial Survival Network