26 Nov

Reserves and Resources Update

AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com ASX ANNOUNCEMENT 26 NOVEMBER 2021 RESERVES AND RESOURCES UPDATE AXP Energy Limited (ASX: AXP, OTC US: AUNXF), ( ‘ AXP’ , ‘ Company’ ) announces its assessment of Reserves and Contingent Resources as at 1 October 2021. The Reserves and Resources below are net to AXP unless stated otherwise. They include, for the first time, the Reserves and Resources gained with the acquisitions of Appalachian Basin asset (MHP) and the new Illinois Basin asset (Trey Exploration). ? 2P Reserves of 6.37 million barrels of oil equivalent (MMboe) comprised of 1.06 million barrels of oil (MMbbl), 24.7 billion cubic feet (Bcf) of gas and 1.17 million barrels NGL; substantially up from 0.124 MMboe; ? 2C Contingent Resources of 211.95 million barrels of oil equivalent, up from 192.93 million barrels of oil equivalent. Reserves AXP’s 2P Reserves at 1 October 2021 are assessed to be 6.371 million barrels of oil equivalent (MMboe) compared with the previously reported figure of 0.124 MMboe (which included only the previous Denver-Julesburg Basin asset in Colorado and a portion the Illinois Basin asset, being the Kentucky Exploration asset). Therefore, the main contribution to the significant movement in 2P was the acquisition of the Appalachian Basin asset, which closed on 26 February 2021, and the acquisition of the Illinois Basin asset, which closed 1 October, 2021. RESERVE CATEGORY OIL [MMbbl 1 ] GAS [Bcf 2 ] NGL [MMbbl 1 ] TOTAL 3 [MMboe 4 ] Proved (1P) 0.71 22.58 1.04 5.52 Probable 0.35 2.12 0.13 0.86 Proved + Probable (2P) 1.06 24.70 1.17 6.37 Possible 0.50 10.81 0.39 2.69 Proved + Probable + Possible (3P) 1.56 35.51 1.56 9.06 1. MMbbl means one million barrels; 2. Bcf means one billion standard cubic feet; 3. Totals may not exactly reflect arithmetic addition due to rounding; 4. MMboe means one million barrels of oil equivalent. Gas is converted at 6 Mcf to 1 boe and at 5 Mcf to 1 boe in the Denver- Julesburg Basin (due to the high calorific value of this gas). The above totals represent an aggregation of the assessed Reserves for the Company’s 3 producing areas. A more detailed breakdown of the above by producing area is provided in Appendix 1. ANNOUNCEMENT AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com Contingent Resources AXP’s 2C Contingent Resources at 1 October 2021 are assessed to be 211.95 million barrels of oil equivalent (MMboe), compared with the previously reported figure of 192.93 MMboe. Again, the main contribution to the significant increase was the acquisition of the Appalachian Basin asset (MHP), which closed on 26 February 2021, and the acquisition of the Illinois Basin asset (Trey Exploration), which closed 1 October, 2021. CONTINGENT RESOURCE CATEGORY OIL [MMbbl 1 ] GAS [Bcf 2 ] NGL [MMbbl 1 ] TOTAL 3 [MMboe 4 ] Low Estimate (1C) 46.82 507.16 2.28 149.02 Mid Estimate (2C) 68.32 713.99 3.70 211.95 High Estimate (3C) 96.55 1,041.92 9.25 306.27 1. MMbbl means one million barrels; 2. Bcf means one billion standard cubic feet; 3. Totals may not exactly reflect arithmetic addition due to rounding; 4. MMboe means one million barrels of oil equivalent. Gas is converted at 6 Mcf to 1 boe and at 5 Mcf to 1 boe in the Denver- Julesburg Basin (due to the high calorific value of this gas). The above totals represent an aggregation of the assessed Contingent Resources for the AXP’s 3 producing areas. A detailed breakdown by producing area is provided in Appendix 2. AXP Commentary The Company is encouraged by the Reserves and Contingent Resources brought in under the 2 recent acquisitions, as they substantially underpin the Company’s value. As AXP has only owned the Appalachian Basin and the majority of the Illinois Basin’s acreage for a short period of time, the Reserves are based on production and plans in respect of current productive formations only. Planned drilling, well production enhancements by workovers and stimulation, and the implementation of a comprehensive field development plan (incorporating evaluations of certain Contingent Resources based on the results of the drilling and production enhancements) may see Contingent Resources moved to Reserves in time. The Company will be hosting a Webinar on Wednesday, 1 December at 10:30am AEDT to provide further details on the latest reserves and resources assessment. Please use the following link to sign up: https://attendee.gotowebinar.com/register/6361063313588632331 Qualified Petroleum Reserves and Resources Evaluator Statement The above petroleum reserve and resource information has been prepared under the supervision of Mr. Russell Hamilton (Vice President and General Manager of AXP Energy, Inc - US) by independent experts Wright & Company, Inc, Brentwood, Tennessee (for Appalachian Basin and Illinois Basin) and Gustavson Associates, LLC, Boulder, Colorado (for Denver-Julesburg Basin and the contribution to Illinois Basin of AXP’s Kentucky Exploration asset). Mr. Hamilton is a licensed professional geologist in the state of Tennessee (license number 5624) and has been employed by AXP Energy, Inc, Kentucky, since 2005 including in the position of Senior Geologist. Mr Hamilton has also held positions at the Kentucky State Department of Mines and Minerals (Oil ANNOUNCEMENT AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com & Gas Conservation) as an Oil & Gas Inspector and Hinkle Environmental as an Environmental Scientist and Project Geologist. He holds a Bachelor of Geology from the Eastern Kentucky University, Richmond, Kentucky and has over 20 years’ experience in the Appalachian and Illinois Basins’ hydrocarbon geology. Notes on Calculation of Reserves & Contingent Resources As required by The VALMIN Code , 2015 Edition (VALMIN), the independent expert’s reports were prepared in accordance with the definitions and guidelines of the Petroleum Resources Management System, revised June 2018 (“PRMS”), issued by the Society of Petroleum Engineers (SPE) and sponsored (among others) by the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE). The estimates of reserves and resources contained in the independent experts’ reports were determined by accepted industry methods as determined by the PRMS and the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (revised 2019) – in accordance with VALMIN 2015. The independent experts also reviewed certain properties that may have contingent or prospective resources as defined in the PRMS. Reserves and Contingent Resources reports are prepared using deterministic and probabilistic methods. The Reserves and Contingent Resources estimate methodologies incorporate a range of uncertainty relating to each of the key reservoir input parameters to predict the likely range of outcomes. Under PRMS (2018), Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status. Categorization of Reserves according to the level of certainty associated with them is prescribed as follows: Proved or 1P Reserves are those quantities of Petroleum that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable from known reservoirs and under defined technical and commercial conditions. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). Possible Reserves are those additional reserves that analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P). ANNOUNCEMENT AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, by the application of development project(s) not currently considered to be commercial owing to one or more contingencies. Contingent Resources have an associated chance of development. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the range of uncertainty associated with the estimates and should be subclassified based on project maturity and/or economic status and have denotations such as 1C (low risk), 2C (same technical confidence as probable reserves but not commercially matured to reserves), and 3C (same technical confidence as possible reserves, but not commercially matured to reserves). AXP has identified several potential upside projects that target deeper horizons known to be productive, but have not been exploited at this time. These were assessed and the estimate gross reserves potential and assigned to the 1C, 2C, or 3C category based on available data, risk of development, and geologic control. Project and field totals are aggregated by arithmetic summation by category. Aggregated 1P and 1C estimates may therefore be conservative, and aggregated 3P and 3C estimates may be optimistic due to the effects of arithmetic summation. This announcement has been authorised by the Board of AXP Energy Limited. END FURTHER INFORMATION Simon Johnson Non-Executive Chairman: 0417 478 818 Sam Jarvis , Non-Executive Director: 0418 165 686 Robert Lees , Company Secretary: 0411 494 406 ABOUT AXP ENERGY LIMITED AXP ENERGY Limited (ASX: AXP) (formerly Fremont Petroleum Corporation Limited) is an oil & gas production and development company with operations in Colorado, Illinois, Kentucky, Tennessee and Virginia. AXP’s focus is to aggressively grow daily production by improving current asset performance and opportunistically acquiring onshore USA oil & gas assets with the following characteristics: producing conventional oil & gas wells; production that can be enhanced through low-cost field operations and workovers; leases which are held by production and which do not require ongoing drilling commitments; and economies of scale which can be achieved by acquiring and carrying out similar enhancement strategies on contiguous or nearby fields with similar characteristics. DISCLAIMER This announcement contains or may contain “forward looking statements” within the meaning of Section 27A of the Securities Act of1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be “forward looking statements.” Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as “expects”, “will,” “anticipates,” “estimates,” “believes,” or statements indicating certain actions “may,” “could,” or “might” occur. Hydrocarbon production rates fluctuate over time due to reservoir pressures, depletion, down time for maintenance and other factors. The Company does not represent that quoted hydrocarbon production rates will continue indefinitely. ANNOUNCEMENT AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com APPENDIX 1 RESERVE CATEGORY OIL [MMbbl 1 ] GAS [Bcf 2 ] NGL [MMbbl 1 ] TOTAL 3 [MMboe 4 ] Proved Appalachian Basin 0.478 22.581 1.041 5.282 Illinois Basin 0.181 - - 0.181 Denver-Julesburg Basin 0.053 - - 0.053 Total Proved (1P) 0.711 22.581 1.041 5.516 Probable Appalachian Basin 0.110 1.390 0.050 0.392 Illinois Basin 0.196 - - 0.196 Denver-Julesburg Basin 0.042 0.730 0.079 0.268 Proved + Probable (2P) 1.060 24.700 1.171 6.371 Possible Appalachian Basin 0.252 10.806 0.386 2.439 Illinois Basin 0.246 - - 0.246 Denver-Julesburg Basin - - - - Proved + Probable + Possible (3P) 1.558 35.507 1.556 9.056 1. MMbbl means one million barrels; 2. Bcf means one billion standard cubic feet; 3. Totals may not exactly reflect arithmetic addition due to rounding; 4. MMboe means one million barrels of oil equivalent. Gas is converted at 6 Mcf to 1 boe and at 5 Mcf to 1 boe in the Denver- Julesburg Basin (due to the high calorific value of this gas). ANNOUNCEMENT AXP Energy Limited | ABN 98 114 198 471 AUSTRALIAN OFFICE: Suite 302, Level 3, 17 Castlereagh Street, Sydney NSW 2000 | P: +61 2 9299 9580 www.axpenergy.com APPENDIX 2 CONTINGENT RESOURCE CATEGORY OIL [MMbbl 1 ] GAS [Bcf 2 ] NGL [MMbbl 1 ] TOTAL 3 [MMboe 4 ] Low Estimate Appalachian Basin 0.118 45.488 2.283 9.982 Illinois Basin 0.200 - - 0.200 Denver-Julesburg Basin 46.500 461.670 - 138.834 Total 1C 46.818 507.158 2.283 149.016 Mid Estimate Appalachian Basin 0.627 86.055 3.699 18.668 Illinois Basin 0.355 - - 0.355 Denver-Julesburg Basin 67.340 627.930 - 192.926 Total 2C 68.322 713.985 3.699 211.949 High Estimate Appalachian Basin 1.284 237.359 9.247 50.091 Illinois Basin 0.457 - - 0.457 Denver-Julesburg Basin 94.810 804.560 - 255.722 Total 3C 96.551 1,041.919 9.247 306.270 1. MMbbl means one million barrels; 2. Bcf means one billion standard cubic feet; 3. Totals may not exactly reflect arithmetic addition due to rounding; 4. MMboe means one million barrels of oil equivalent. Gas is converted at 6 Mcf to 1 boe and at 5 Mcf to 1 boe in the Denver- Julesburg Basin (due to the high calorific value of this gas).
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