Prairie Provident: Additional Reserves Identified

Canadian energy company Prairie Provident issued a press release about “the results of an updated independent reserves evaluation of the Company’s interests in respect to specific reserve entities within three future undeveloped waterflood expansion areas in Evi “.

From our unlearned reading of the release, the company is suggesting “an incremental 2.1 MMboe of proved plus probable (“P+P”) undeveloped reserves (97% oil and liquids) have been assigned to future waterflood expansions, comprised of approximately 1.6 MMboe of proved undeveloped reserves and approximately 0.5 MMboe of probable undeveloped reserves. Relative to year-end reserves bookings for specific reserves entities within the three Evi Waterflood areas, the undeveloped reserves additions attributed to the future expansions represent an increase of nearly 40% in original recoverable reserves estimates on a proved (“1P”) basis for those areas. As a result of the increased reserves assignments at Evi, PPR’s total estimated corporate reserves volumes grow by 7.1% on a 1P basis and by 6.1% on a P+P basis, relative to year-end estimates“. 

That all sounds favorable – and given we spend most of the time reporting bad news – that’s a plus. However, as we noted the prior time we wrote about Prarie Provident BDC exposure at cost (Goldman Sachs BDC or GSBD) is $9.2mn and the FMV is only $0.2mn – all invested in non income producing equity. As of June 2019, the latest valuation was even lower than the quarter before. This type of news may boost future valuations, but Prairie has a long way to go in a tough industry. Either way, income to GSBD is not affected.