Argent Energy Trust announces 32% increase to 2013 year-end reserves

CALGARY, Feb. 20, 2014 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) is pleased to announce the results of its 2013 year-end oil and gas reserves evaluation, featuring a 32% increase over year-end 2012 reserves. The increases reflect material organic growth through the drill-bit and the completion of several accretive oil acquisitions in 2013.

HIGHLIGHTS

  • Increased proved plus probable reserves by 32% to 42.9 MMboe (66% oil and NGLs) and proved reserves by 48% to 26.45 MMboe (66% oil and NGLs).
  • On a per unit basis increased proved plus probable reserves by 6% and proved reserves by 19%.
  • Organic proved plus probable reserve additions replaced 221% of production in the year and proved reserve additions replaced 182% of production, excluding reserves added through acquisitions.
  • Including reserves added through acquisitions, proved plus probable reserve additions replaced 791% of production in the year and proved reserve additions replaced 561% of production.
  • Reserve life index ("RLI") for proved plus probable reserves is 16.9 years and proved reserves is 10.4 years based on 2013 December production of 6,975 boe/d.
  • Total proved reserves comprise 62% of total proved plus probable reserves on a volume basis and 66% on a NPV10 basis.
  • Achieved finding, development and acquisition ("FD&A") costs of $15.78 per proved plus probable boe, excluding changes in future development costs ("FDC"), which results in a recycle ratio of 2.55 times.
  • Achieved finding and development ("F&D") costs of $22.33 per proved plus probable boe, excluding changes in FDC, which results in a recycle ratio of 1.8 times.
  • Including changes in FDC, Argent's proved plus probable F&D and FD&A costs were $28.44/boe and $19.93/boe, resulting in recycle ratios of 1.42 times and 2.02 times, respectively.

2013 YEAR-END RESERVES

Argent's year-end 2013 reserves were evaluated by independent reserves evaluator GLJ Petroleum Consultants Ltd. ("GLJ"). The evaluation of all of Argent's oil and gas properties was done in accordance with the 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 will be filed on SEDAR on or before March 31, 2014.

The following table summarizes the aggregate of the independent reserves estimates and values as at December 31, 2013, based on the GLJ evaluations:

     
2013 Company Gross (1,4) NPV of Future Net
Revenue before Income
Taxes, discounted at
10%/yr (2,3,4)
Reserves Category
Proved:
  Developed Producing
  Developed Non-Producing
  Undeveloped
(Mboe)
 
14,276
1,064
11,113
(US$000)
 
306,335
24,253
89,846
Total Proved
Probable
26,454
16,458
420,434
218,246
Total Proved Plus Probable 42,911 638,680

Notes:
      (1) Gross reserves are Argent's total company interest share before the deduction of any royalties.
      (2) Estimates of after-tax future net revenue are not presented because neither US Opco nor the Trust will be subject to taxes in Canada.
      (3) Present values of estimated future net revenue shown above are based on GLJ's escalated price forecast as of December 31, 2013, which assumes a base 2014 WTI oil price of US$97.50/bbl and base 2014 Henry Hub gas price of US$4.25/MMBTU.
      (4) Totals may not add due to rounding.

Capital Program Efficiency

The Trust's 2013 development capital expenditures of $106.1 million resulted in proved plus probable reserve additions from drilling and improved recoveries of 4,751 MBoe, at an F&D cost of $22.33/boe, excluding changes in FDC. With the addition of proved plus probable reserves from acquisitions, including the Kansas, Colorado and Wyoming acquisitions, for direct costs of $161.6 million, the FD&A cost was $15.78/boe, excluding changes in FDC, reflecting the accretive nature of the acquisitions undertaken by the Trust. Including changes in FDC, Argent's proved plus probable F&D and FD&A costs were $28.44/boe and $19.93/boe, respectively.

The following table shows the efficiency of Argent's capital program for the period ending December 31, 2013:

   
2013 Proved plus
Probable
Development Expenditures ($000)
Acquisitions ($000) (1)
106,089
161,574
Reserve Additions (Mboe)
   Development (2)
   Acquisitions
 
 
4,751
12,215
16,966
Reserves Replacement (3) 791%
Excluding Future Development Costs:
Finding and Development costs ($/boe)
Finding, Development & Acquisitions costs ($/boe) (4)
Recycle Ratio (5)
$22.33
$15.78
2.55
Including Future Development Costs:
Finding and Development costs ($/boe)
Finding, Development & Acquisitions costs ($/boe) (4)
Recycle Ratio (5)
$28.44
$19.93
2.02

Notes:
      (1) Reflects direct acquisition costs, including those related to the acquisition of the Kansas, Colorado and Wyoming Assets during 2013.
      (2) Includes reserve additions from drilling, extensions and improved recovery.
      (3) The reserves replacement is calculated using the development reserve additions and the reserve additions of the acquired assets in the Reserve Report.
      (4) Since acquisitions have a significant impact on Argent's annual reserves, Argent believes that FD&A costs provide a meaningful portrayal of Argent's cost structure.
      (5) The recycle ratio is calculated using the 2013 estimated operating netback on a blended product basis of $40.27/bbl divided by FD&A.
         

Non-IFRS Financial Measures

Statements throughout this press release make reference to the terms "netback" which is a non-International Financial Reporting Standards ("IFRS") financial measure that does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Management believes that "netback" provides useful information to investors and management since such measure reflects the quality of production and the level of profitability. Field netback is calculated by subtracting royalties and operating costs from revenues. See the "Non-IFRS measures" section of the MD&A for a reconciliation of field netback to income for the period, the most directly comparable measure in the Trust's audited annual consolidated financial statements.

Note about forward-looking statements

Certain of the statements made and information contained in this press release are forward-looking statements and forward looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. The Trust cautions investors that important factors could cause the Trust's actual results to differ materially from those projected, or set out, in any forward-looking statements included in this press release.

In particular, and without limitation, this press release contains forward looking statements pertaining to Argent's reserves, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

It should not be assumed that the present worth of estimated future cash flow presented in the tables above represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of Argent's crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.

All future net revenues are stated prior to provision for interest, general and administrative expenses and after deduction of royalties, operating costs and estimated future capital expenditures. Future net revenues have been presented on a before tax basis. Estimated values of future net revenue disclosed herein do not necessarily represent fair market value.

Finding and development costs both including and excluding acquisitions and dispositions have been presented above. While NI 51-101 requires that the effects of acquisitions and dispositions be excluded, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Trust's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Trust's cost structure.

With respect to forward-looking statements contained in this press release, assumptions have been made regarding, among other things, future oil and natural gas prices, future currency exchange and interest rates, the regulatory framework governing taxes in the US and Canada and the Trust's status as a "mutual fund trust" and not a "SIFT trust", estimates of anticipated production, which estimates are based on the proposed drilling program with a success rate that, in turn, is based upon historical drilling success and an evaluation of the particular wells to be drilled, future recoverability of reserves and the ability of the Trust to obtain financing on acceptable terms for its capital projects and future acquisitions.

The Trust's actual results could differ materially from those anticipated in these forward-looking statements as a result of the volatility of commodity prices, commodity supply and demand, fluctuations in currency and interest rates, inherent risks and changes in costs associated in the drilling and development of petroleum properties, unexpected operational delays and challenges, access to drilling equipment on a timely basis and at reasonable prices, ultimate recoverability of reserves, timing, results and costs of drilling activities and resulting production, availability of financing and capital, and new regulations and legislation that apply to the Trust and the operations of its subsidiaries.

As a result of these risks, actual performance and financial results may differ materially from any projections of future performance or results expressed or implied by these forward looking statements. New factors emerge from time to time, and it is not possible for management to predict all of these factors or to assess, in advance, the impact of each such factor on the Trust's business, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward looking statement. Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward looking statements will not occur. Although Management believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date the forward-looking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to the Trust and its unitholders. The Trust 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.

Note regarding barrel of oil equivalency

This press release contains disclosure expressed as "boe" or "boe/d". All oil and natural gas equivalency volumes have been derived using the conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.

Argent is a mutual fund trust under the Income Tax Act (Canada) (the "Tax Act"). Argent's objective is to create stable, consistent returns for investors through the acquisition and development of oil and natural gas reserves and production with low risk exploration potential, located primarily in the United States. Material information pertaining to Argent Energy Trust may be found on www.sedar.com or www.argentenergytrust.com.

SOURCE Argent Energy Trust

For further information:

Eric Tremblay
Executive Chairman
Argent Energy Trust
(403) 770-4817

Brian Prokop
Co-President & Chief Executive Officer
Argent Energy Trust
(403) 770-4807

Sean Bovingdon
Chief Financial Officer
Argent Energy Trust
(403) 770-4803

Lindsay Rimell
Manager, Investor Relations
Argent Energy Trust
(403) 770-4822