MINERAL HILL INDUSTRIES UPDATES THE OKLAHOMA ONE PROJECT AND TERMINATES THE LOI FOR THE PROPOSED SECOND PROJECT IN OKLAHOMA
Vancouver, BC, Canada – June 21, 2019
Mineral Hill Industries Ltd. (“Mineral Hill” or “Company”), trading on the TSX Venture Exchange under the trading Symbol “MHI”, on the Deutsche Boerse, Frankfurt under the trading Symbol “N8Z1”, and on OTC Market (US) under the Symbol “MHIFF”, updated its May 2018 approved NI 51-101 report in respect to its first Oklahoma project (“OKL-1 Project”) announced on May 25, 2018 (the “OKL-1 Report-1”).
The updated NI-51 101 report updated the OKL-1 Project assets in accordance with the Canadian OIL & Gas Evaluation (“COGE”) Handbook and the effective date of December 31, 2018 (“OKL-1 Report-2″). The OKL-1 Report-2 appraised the leaseholds located in Oklahoma’s counties Beaver, Canadian, Creek, Garfield, Garvin, Kingfisher, Oklahoma, Okmulgee, Woods and Woodward Counties with production data available through April 2019. The updated appraisal evaluated OKL-1 Project’s Proved Developed Producing (PDP), Proved Developed Non-producing (PDNP), Proved Undeveloped (PUD), and Probable Undeveloped (PrUD) reserves.
In comparison to the OKL-Report-1, the data in the OKL-1 Report-2 exceeded the total of Proved and Probable present worth from US$ 9,707,410 to US$10,425,620 when discounted by 15% per annum. The OKL-1 Report -2 used operating expenses and capital costs and escalation of 2% per year in its forecast price case.
The Reserves estimates contained in the NI-Report have been prepared using a maximum remaining Reserves life assigned to oil wells of 40 years and the Reserves estimates contained in this report have been prepared using standard engineering practices generally accepted by the petroleum industry. Decline curve analysis was used to estimate the remaining Reserves of pressure depletion reservoirs with enough historical production data to establish decline trends.
The OKL-1 Report-2 used the following price deck to calculate the present worth of future net revenue, based on forecast pricing and before income tax:
|Light and Medium Oil Prices||Conventional Nat’l Gas Price|
|Thereafter||2%/year increase||2%/year increase|
The historical hydrocarbon liquid prices were indexed to the monthly average of the daily closing prices received at the Cushing, Oklahoma delivery point. The average difference between the wellhead oil price and the NYMEX price represents adjustments for crude quality, marketing fees, BS&W, transportation costs and purchaser bonuses. These adjustments were applied to the NYMEX prices listed in table above.
Historical natural gas prices were indexed to the monthly Henry Hub prices posted in the Inside FERC publication. Historical prices were indexed for each month of available accounting data. The average difference between the wellhead price and the NYMEX price represents adjustments for BTU content, marketing, and transportation costs. These adjustments were applied to the NYMEX prices listed in table above.
The Company also wishes to announce that it will not proceed with the proposed acquisition of the second Oklahoma project (“OKL-2) as announced January 14, 2019 since funding for the buyout of OKL-2 project, as debtor in possession under Chapter 11 of the United States Bankruptcy Code, could not be secured
in spite of the fact that Mineral Hill commissioned and completed a full NI 51-101 Report especially in respect to the target’s oil and gas assets.
The parties to the OKL-2 Project agreed to a mutual termination in accordance to the LOI.
The Company seeks Safe Harbor
For further information, please contact:
President & CEO Phone: (604) 617-6794
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.