North American oil & gas industry for 2023 looks to be an ever better year than 2022 according to a recent report from Deloitte, an industry audit, consulting, tax and advisory firm.
Oil and gas industry earned record profits in 2022 as momentum is expected to continue for 2023
The report said: "The oil and gas industry earned record profits in 2022, providing ample cash flow to fund their strategies in 2023. And while O&G companies recognize geopolitical and macroeconomic uncertainty in the year ahead, they've also been given a clear mandate to secure supply in the short term while transitioning to cleaner energy in the long term."
"Our 2023 outlook explores... trends that can help shape the path forward for O&G companies. While the oil and gas industry isn't new to supply disruptions and price volatility, the situation today is unique. A confluence of economic, geopolitical, trade, policy, and financial factors have exacerbated the issue of underinvestment and triggered a readjustment in the broader energy market. As a result, all three components of a balanced energy equation—energy security, supply diversification, and low-carbon transition—are now facing a "trilemma" of concerns… the immediate impact of this imbalance is high energy prices and record cash flows for O&G companies…"
It continued: "The O&G industry will likely enter 2023 with its healthiest balance sheet yet and with continued capital discipline. The positivity of this situation is reflected in our survey, in which 93% of O&G executives state they're positive about the industry in the coming year. This momentum could help companies overcome the energy underinvestment of recent years and help enable an accelerated energy transition."
The report focused on several trends, saying: "Healthy balance sheets (will) create opportunities for oil and gas in the upstream (sector). By practicing capital discipline and focusing on cash flow generation and payout, the global upstream industry is projected to generate its highest-ever free cash flows… Now all eyes are on upstream companies to see if they will continue to prioritize shareholder payouts or increase their hydrocarbon reinvestment rate, driven by the urgency to provide affordable energy to the world."
Permex Petroleum Corporation, an independent energy company engaged in the acquisition, exploration, development and production of oil and natural gas properties on private, state and federal land in the U.S., has completed its updated independent reserve evaluation, effective November 21, 2022, in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas activities and in accordance with the Canadian Oil and Gas Evaluation Handbook.
Reserve evaluation:
The net present value of net future revenues, (net of royalties, operating costs and capital expenditures, including asset retirement obligations) before income tax, discounted at 10% ("NPV 10%" or "PV10") of the total proved plus probable reserves is estimated at $428 million, or $221.53 per outstanding share (basis).
- Reserves comprised of 93% light oil, and x7% natural gas
- Total Proved Reserves of 9.2 million BOE and PV10 value of $198 million, an increase of 51% Year-over-Year
- Total Probable Reserves of 17.8 million BOE and PV10 value of $230 million, an increase of 46% Year-over-Year
- Total Proved & Probable Reserves of 27.0 million BOE and PV10 value of $428 million, an increase of 48% Year-over-Year
Summary of net oil and gas reserves and net present value of revenue:
Before Income Taxes as of September 30, 2022 - Forecast Prices and Costs
- Natural Gas: 5.98 Mcf/boe
- Report used McDaniel's & Associates price forecast effective September 30, 2022
"This independent report reconfirms the large reserves in place, and we remain focused on drilling and developing while redeploying the expected strong cash-flow from the completed wells back into drilling programs," said Mehran Ehsan, president and CEO of Permex. "We look forward to providing additional updates as we continue to ramp up our drilling operations to drive organic growth for our company and sustainable value for our shareholders."
