19/03/2013
[19 March 2013, Hong Kong] MIE Holdings Corporation (“MIE” or the “Company”, together with the subsidiaries, the “Group”; Stock Code: 1555), an independent upstream oil and gas company engaged in the exploration, development and production of oil and gas in China, Kazakhstan and USA, is pleased to announce that our independent consultants have completed a review of our oil and gas reserves and resources as of yearend 2012.
These reviews were performed in accordance with the standards set in the SPE/WPC/AAPG/SPEE Petroleum Resources Management System (“SPE-PRMS”), last updated in 2007, as prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE); reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG); and the Society of Petroleum Evaluation Engineers (SPEE). By their very nature reserves and resources are forward-looking estimates subject to change and revision.
The following reserve/resource consultants issued reports covering in total all of our oil and gas properties: Ryder Scott Company, Chapman Petroleum Engineering Ltd., RISC Operations Pty Ltd, and GLJ Petroleum Consultants LTD. We have combined and consolidated data from these reports to present reserves and resources including our wholly owned subsidiaries and our portion of non-wholly owned subsidiaries by country and petroleum basin.
Our overall 2P and 3P oil reserves at yearend 2012 compared to yearend 2011 increased as summarized by Table 1. Proved oil reserves decreased due to production and performance adjustments for the Northeast China properties (comprised of Daan, Moliqing and Miao 3 held by MI Energy Corporation (“MI Energy”)) and production from Emir-Oil Kazakhstan properties. These reductions in Proved oil reserves exceeded additions from drilling on these same properties plus the additions to Proved oil reserves from the purchase of Pan-China Resources Ltd (“Pan China Resources”) and 50% of White Hawk by 9.9 million barrels (-16%). Three new discoveries on Emir-Oil properties in Kazakhstan contributed significantly to increases in 2P and 3P oil reserves by 2.4 million barrels (+2%) and 28.9 million barrels (+21%), respectively.
Gas reserves significantly increased by 35 BCF, 113 BCF and 242 BCF for Proved, 2P and 3P, respectively. With these increases the Company’s Proved, 2P and 3P gas reserves increased by 119%, 178% and 259% respectively, and have become a significant part of our reserves and of the Company’s value. The increases are attributable in large part to the acquisition of 51% equity interest in Sino Gas & Energy Limited (“Sino Gas & Energy”) with properties in China’s Ordos Basin, plus drilling success for Emir-Oil in Kazakhstan and Condor in the USA.
During 2012 the Company produced 5.1 million net barrels of oil and 1.6 BCF of gas. Based on these production rates and yearend 2012 reserves, for Proved reserves our reserve life indices for oil and gas are 10 years and 40 years, respectively; and for 2P reserves the corresponding indices are 22 years and 109 years.
The Prospective and Contingent Resources of the Company at yearend 2012 are summarized in Table 2. Our net, un-risked, best-estimate Prospective Resources are 206 million barrels of oil and 922 BCF of gas. Our mid-case, 2C, Contingent Resources are 43 million barrels of oil and 686 BCF. For oil these resources are mostly in MI Energy and Emir-Oil, and for gas they are predominately in Sino Gas & Energy.
The pricing assumptions used in determining yearend Reserves and Resources are listed in Table 3. Prices are based on 2012 averages or, in the case of Sino Gas & Energy, for which we have no current sales, on prices in the area.
Despite some necessary reserve adjustments to the Northeast China properties, the Company believes that these base properties will continue to produce and provide stable cash flows for a number of years. The Company will continue to optimize the production and reserves of these properties by monitoring and developing its horizontal well program and applying water injection and other new technologies on these base properties The Company is pleased with the reserves added from new discoveries in Kazakhstan and the USA, and with the additions from our 2012 acquisitions of Pan China Resources and 51% of Sino Gas & Energy. Our new additions will provide for significant future growth and diversification.
Notice about risk and uncertainty inherent in reserve and resource forecasting
Based on reserve and resource definitions in SPE/PRMS standards, these estimates include various levels of risk and uncertainty, and are based on continuation of existing economic conditions regarding pricing, costs, legal and regulatory framework, etc. In addition, even with the same data and conditions different professional experts will estimate different numbers for reserves and resources based on their experience and interpretation of the data they review, and may categorize them differently. The Company employs qualified independent third party professionals to determine these numbers in accordance with existing standards and industry practice; however, we have limited or no control over many of the factors affecting reserve and resource numbers. Actual future results will differ from the estimates presented herein.
About MIE Holdings Corporation
MIE is an independent oil and gas company engaged in the exploration and production of oil and gas in China, Kazakhstan and USA. The Group operates the Daan, Moliqing and Miao 3 oilfields in the Songliao Basins and Dagang – Kongnan block in the Huanghua Basin under four separate production sharing contracts with PetroChina, the largest oil company in China and holds a 51% stake in a joint venture that operates Linxing and Sanjiaobei with unconventional gas assets in the Ordos Basin under two separate production sharing contracts. The Group also holds an exploration contract and three production contracts that allow the Group to conduct exploration and production activities in the Mangistau province in the southwestern region of Kazakhstan. In addition, the Group pursues other development and production opportunities in China, and exploration, development and production opportunities internationally, both independently and in partnership with other major and independent oil companies.
MIE is listed on the main board of Hong Kong Stock Exchange with stock code 1555.
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