CALGARY, ALBERTA–(Marketwired – Jan. 30, 2018) – BlackPearl Resources Inc. (“we”, “our”, “us”, “BlackPearl” or the “Company”) (TSX:PXX) (OMX:PXXS) is pleased to provide a construction update on its Onion Lake thermal expansion project and Q4 2017 production information, as well as, announce the results of its 2017 independent year-end oil and gas reserve and resource evaluation.

Highlights and accomplishments included:

• Construction of the Phase 2 expansion of the Onion Lake thermal project is ahead of schedule and within budget. Commissioning of the facilities has begun and steam injection is expected to begin in February.
• Q4 2017 production averaged 10,600 boe/day; full year production averaged 10,199 boe/day.
• 24% year over year increase in total proved (1P) reserves to 94.4 mmbbls. The increase primarily reflects positive technical revisions due to the performance from Phase 1 of the Onion Lake thermal project as well as an increase in the Onion Lake thermal development area to which reserves were assigned.
• 48% increase in net present value, before tax, discounted at 10% of our 1P reserves to .1 billion, or .23 per common share.
• 1P reserve additions replaced 583% of 2017 production.
• Net present value, before tax, discounted at 10% of our proved plus probable (2P) reserves was billion, or .00 per common share. This value is comparable to 2016 despite a 48% drop in 2P reserve volumes. The decrease in 2P reserve volumes was due to the previously announced reclassification of the probable reserves to resources associated with the first phase of the Blackrod SAGD project. This reclassification is the result of a change in the Company’s strategic plan to accelerate the expansion of the Onion Lake thermal project before we commence development of the first phase of the Blackrod SAGD project. The reclassification does not impact management’s positive assessment of or its commitment to develop the Blackrod project.
• 28% increase in 2P reserve volumes at Onion Lake.
• Risked contingent resources (best estimate) for our three core properties totaled 640 million barrels of oil equivalent, a 28% increase compared to year-end 2016 resource estimates. The increase reflects the reclassification of the Blackrod reserves discussed above.

John Festival, President of BlackPearl, indicated that “we are very pleased with the progress of the Onion Lake expansion project. Due to our committed operations staff and favourable weather conditions we are going to complete the project well ahead of schedule. We expect to commence steam injection in February.

We are also pleased with the significant increase in proved reserves, which reflects the positive results of our Onion Lake thermal project. These results were one of the primary reasons we made a change in our strategic plan to accelerate the next expansion of Onion Lake before we tackle development of our Blackrod SAGD project. Full cycle economics of our Onion Lake thermal project are best in class compared to North American oil projects. The increased cash flow generated from an expanded Onion Lake project will put us in a better financial position to develop the large Blackrod project. The consequence of this shift in strategy is that regulatory rules necessitate the reclassification of the Blackrod reserves to resources, but we are still very committed to development of this large resource.”

Onion Lake Construction Update

We have made excellent progress over the last two months on the construction of the 6,000 barrel per day phase 2 thermal expansion at Onion Lake and construction is nearing completion, approximately five months ahead of our original estimate. Capital costs are trending toward the low end of our original estimates of 0- 185 million. We have started the commissioning of the central processing facilities and steam is expected to be delivered to the first pad of wells in February. Steam injection to the second pad of wells will occur approximately one month later. First oil is expected before the end of Q2 2018. We anticipate reaching peak production approximately 12 months after initial steam injection, a similar timeline to that achieved for phase 1.

Production Update

BlackPearl’s Q4 2017 oil and gas sales volumes were 10,600 boe per day, a 17% increase over production during the third quarter. The increase in fourth quarter production is mainly attributable to the successful restart of the Onion Lake thermal facilities after completion of a facility turnaround during the third quarter.

Oil and Gas Reserves

The following tables summarize certain information contained in the independent reserves report prepared by Sproule Associates Limited (“Sproule”) as of December 31, 2017. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserve information as required under NI 51-101 will be included in the Company’s Annual Information Form which is expected to be filed on SEDAR on February 22, 2018. It should not be assumed that the net present value of reserves estimated by Sproule represents the fair market value of these reserves.

Summary of Oil and Gas Reserves

Estimated Future Development Capital

The following table summarizes the future development capital (“FDC”) Sproule estimates is required to bring total proved and total proved plus probable reserves on production.

Reconciliation of Changes in Reserves

The following table summarizes the changes in Sproule’s evaluation of the Company’s share of oil and natural gas reserves (before royalties) from December 31, 2016 to December 31, 2017.

Pricing Assumptions

The pricing assumptions used in the Sproule evaluation are summarized below.

Definitions:

1. “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
2. “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
3. “Developed” reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.
4. “Developed Producing” reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
5. “Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
6. “Undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.
7. The Net Present Value (NPV) is based on Sproule forecast pricing and costs. The estimated NPV does not necessarily represent the fair market value of our reserves. There is no assurance that forecast prices and costs assumed in the Sproule evaluations will be attained, and variances could be material.

Contingent Resources

In addition to the reserve evaluation discussed above, the Company also requested Sproule prepare resource evaluations for each of its core properties: Blackrod, Onion Lake and Mooney. The following tables summarize certain information contained in the contingent resource evaluations prepared by Sproule as of December 31, 2017. The reports were independently prepared in accordance with definitions, standards and procedures contained in the COGE Handbook.

It should not be assumed that the estimates of recovery, production, and net revenue presented in the tables below represent the fair market value of the Company’s contingent resources. There are certain contingencies which currently prevent the classification of these contingent resources as reserves. Information on these contingencies is provided in the footnotes to the tables below. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. Please refer to our Annual Information Form (to be filed on February 22, 2018) for a more detailed discussion of our contingent resources.

Summary of Best Estimate Contingent Resource Volumes – By Property ⁽¹⁾⁽²⁾

Summary of Net Present Value of Future Net Revenue of Development Pending Contingent Resources

The following table sets forth the net present value of BlackPearl’s best estimate risked contingent resources in the development pending project maturity sub-class at December 31, 2017.

An estimate of risked net present value of future net revenues of the “development pending” contingent resources subclass is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the Company proceeding with the required investment. It includes contingent resources that are considered too uncertain with respect to the chance of development to be classified as reserves. There is uncertainty that the risked net present value of future net revenue will be realized. The other subclass of resources (development on hold) is not included in this net present value amount, and therefore, this is not reflective of the value of the resources base.

Other

The Company is planning to release its 2017 year-end financial and operating results on February 22, 2018.
At December 31, 2017, the Company had 336,267,235 common shares outstanding.

Forward-Looking Statements

This release contains certain forward-looking statements and forward-looking information (collectively referred to as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. Forward-looking statements are typically identified by such words as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” or similar words suggesting future events or future performance. In particular, this release contains the following forward-looking statements:

• The estimated volumes and net present values of BlackPearl’s proved and probable reserves and contingent resources as well as the estimated future development capital to bring the reserves on production.
• The estimate that initial steam injection will occur in February 2018 on phase 2 of the Onion Lake thermal project and that peak production rates should occur within 12 months after initial steam injection
• The estimated capital costs to construct phase 2 of the Onion Lake thermal project of between 0 to 5 million.

The forward-looking information is based on, among other things, expectations and assumptions by management regarding its future growth, future production levels, future oil and natural gas prices, continuation of existing tax, royalty and regulatory regimes, foreign exchange rates, estimates of future operating costs, timing and amount of capital expenditures, performance of existing and future wells, recoverability of the Company’s reserves and contingent resources, the ability to obtain financing on acceptable terms, availability of skilled labour and drilling and related equipment on a timely and cost efficient basis, continuance of current general economic and financial market conditions, environment matters and the ability to market oil and natural gas successfully to current and new customers. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous known and unknown risks and uncertainties that contribute to the possibility that actual results will differ from those anticipated in the forward-looking statements. Further information regarding these risk factors may be found under “Risk Factors” in the Annual Information Form, which can be accessed on SEDAR at www.sedar.com.

Undue reliance should not be placed on these forward-looking statements. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will be realized. Actual results will differ, and the differences may be material and adverse to the Company and its shareholders. Furthermore, the forward-looking statements contained in this release are made as of the date hereof, and the Company does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

This is information that BlackPearl Resources Inc. is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication at 3:00 p.m. Mountain Time on January 30, 2018.