Net Asset Value

Zargon’s oil, liquids and natural gas reserves were evaluated using McDaniel’s price forecasts effective January 1, 2019, prior to provisions for income taxes, interest, debt service charges, transaction costs and general and administrative expenses. The estimated values of future net revenue disclosed do not represent the fair market value of the reserves.

Net Asset Value

As at December 31, 2018 ($ millions)

Proved and probable reserves (PVBT 10%)(1) 83
Undeveloped land – unaudited 2
Working capital (excluding unrealized derivative assets/liabilities) – unaudited 2
Bank debt – unaudited (5)
Convertible debenture – proforma as at January 17, 2019
Net asset value 82
Net asset value per share
Total ($/basic share)(2) 0.18
  1. McDaniel’s estimate of future before tax cash flow discounted at PV 10 percent.
  2. Calculated using basic total shares outstanding at January 17, 2019 of 459.811 million shares.

The net asset value table above shows what is customarily referred to as a “produce-out” net asset value calculation under which the current value of Zargon’s reserves would be produced at McDaniel’s forecast future prices and costs. The value is a snapshot in time as at December 31, 2018, and is based on various assumptions including commodity prices and foreign exchange rates that vary over time. In this analysis, the present value of the proved and probable reserves is calculated at a before tax 10 percent discount rate.