Progress Announces 2008 Year-end Results



    
        Drilling success continues; landbase expands; balance sheet
        strengthens
    

    CALGARY, Feb. 24 /CNW/ - (TSX - PRQ) - Progress Energy Resources Corp.
("Progress" or the "Company") announces results for the fourth quarter and
year-ending 2008.  The results include an update on recent operational
activities in the Gold Creek Project area, the Halfway formation in the
Foothills, and the Montney fairway in northeast British Columbia and northwest
Alberta.

    
    Highlights

    -  Announced the business combination on November 17, 2008 to form
       Progress Energy Resources Corp. which was completed on January 15,
       2009;

    -  Shareholders voted strongly in favor of the business combination; PRQ
       started trading on the Toronto Stock Exchange on January 21, 2009;

    -  Fourth quarter production averaged 35,488 barrels of oil equivalent
       ("boe") per day for Progress Energy Trust and ProEx Energy Ltd.
       combined (the "combined company");

    -  The combined company drilled 27 gross (23.5 net) wells in the
       fourth quarter and have drilled 17 gross (14 net) to-date in the first
       quarter with a combined 90 percent success rate;

    -  As at December 31, 2008, Progress had a combined company proved plus
       probable reserves base of 152.6 million boe with a reserve life index
       of approximately 12 years based on fourth quarter average production.
       Combined company proved plus probable reserves grew by 9 percent in
       2008;

    -  Achieved combined company proved plus probable finding, development
       and acquisitions ("FD&A") costs of $16.13 per boe including the change
       in future development capital ("FDC") or $13.47 per boe excluding the
       change in FDC. Excluding the major investment in exploration land of
       $70 million in 2008, the combined companies achieved an FD&A of $10.78
       per boe excluding the change in FDC;

    -  The combined company invested $70 million in exploration land in 2008
       adding over 300,000 net undeveloped acres of land through Crown land
       sales, farm-ins and purchases from industry competitors. Progress
       holds over 1.1 million net undeveloped acres;

    -  Completed a $30 million flow-through share private placement offering
       in November 2008 and a $140 million common share public offering in
       February 2009, raising gross proceeds of $170 million;

    -  Secured an increased revolving credit facility totaling $650 million
       through a syndicate of banks; and,

    -  Established a quarterly dividend policy.
    

    Operating Results

    The combined companies drilled 27 gross wells (23.5 net) in the fourth
quarter of 2008 and has drilled 17 gross wells (14 net) to date in the first
quarter of 2009, with a combined success rate of 90 percent. Through the first
quarter, Progress has had eight rigs operating, six in the Foothills and two
in the Deep Basin.
    In the fourth quarter and to-date in the first quarter, the combined
company added over 135,000 net undeveloped acres in its operating areas.
Progress holds over 1.1 million net undeveloped acres of land primarily in the
Deep Basin of northwest Alberta and the Foothills of northeast British
Columbia. With the slow down in competitor activity in the Company's key
operating areas, Progress expects to continue to selectively expand its land
holdings through Crown land sales, farm-ins and potential targeted
acquisitions.

    Reserves Additions

    Progress Energy Trust ("Progress Trust") replaced 137 percent of
production on a proved plus probable FD&A basis at a cost of $13.56 per boe
including the change in future development capital ("FDC") or $11.06 per boe
excluding the change in FDC. Progress Trust grew its proved plus probable
reserves base by four percent in 2008. ProEx Energy Ltd. ("ProEx") replaced
341 percent of production on a proved plus probable basis at a cost of $18.47
per boe including the change in FDC or $15.67 per boe excluding the change in
FDC. ProEx grew its proved plus probable reserves base by 18 percent in 2008.
    Cumulatively since inception of Progress Trust and ProEx in July 2004,
the combined companies have generated strong investment efficiencies.
Approximately $1.2 billion has been invested in exploration and development
activities resulting in a combined company proved plus probable F&D of $12.58
per boe. Including acquisitions of approximately $0.6 billion, the combined
company has achieved an all-in FD&A since inception of $13.46 per boe.

    Deep Basin of Northwest Alberta

    The combined company continued its successful program in the Gold Creek
Project area, drilling 6.9 net wells in the fourth quarter and five net wells
to date in the first quarter. The five wells which were completed in the first
quarter have each tested at rates in excess of two million cubic feet ("mmcf")
per day from various formations including the Nikanassin, Falher, Charlie
Lake, Bluesky, Gething and Halfway zones. Drilling of another 3.5 net wells
are planned in the area before breakup. The Company's Nikanassin program
included three wells, all of which were tested at rates of between one to
three mmcf per day.
    During the fourth and first quarters, the combined company completed new
compressor installations at Elmworth and Copton providing incremental
processing capacity of 21 mmcf per day.
    In January, the Company acquired rights to over 13,500 net undeveloped
acres across the Gold Creek Project area as part of its continued expansion
plans in this multi-zone region. The concentrated land capture also optimizes
the well developed area infrastructure in which the Company has direct
ownership.

    Foothills of Northeast British Columbia

    
    Foothills Drilling Program
    --------------------------
    The combined company drilled three Halfway vertical wells in the fourth
quarter with average initial production rates of 1.5 mmcf per day, consistent
with the Company's historical rates. The combined company also drilled four
Mississippian Debolt tests during the fourth and first quarters. All wells
tested at rates between one to five mmcf per day. Additional Debolt drills are
planned for the Lily Lake and Green areas before breakup.
    The combined companies again partnered with the Province of British
Columbia on infrastructure development and completed the construction of
approximately 8.5 kilometers of a gas gathering pipeline system in the
Caribou/Green area in January 2009 to tie-in new and existing wells.
    The expansion of the third-party owned Caribou Facility in the northern
portion of the Foothills is progressing and is expected to be completed in May
2009.

    Halfway Horizontal
    ------------------
    To date, the combined company has re-completed one standing horizontal
well at Bubbles and has drilled four grassroots Halfway horizontal tests at
Dogrib, Caribou, Sasquatch and Bubbles. The initial Bubbles recompletion is
currently producing at a restricted rate of 1.4 mmcf per day after seven
months on production. The first two wells at Dogrib and Green were completed
with an open-hole liner assembly and are on production at approximately 500
mcf per day each. The Sasquatch horizontal well was cased and completed using
a cemented liner and limited-entry fracture technology. It is currently on
production at a rate of over 4 mmcf per day at high flowing pressures. The
drilling of the grassroots Bubbles horizontal has just finished and the
completion will commence later this week. The Company has tested a variety of
completions techniques and is encouraged by the improving results.

    Montney
    -------
    
    In the fourth quarter, the combined company negotiated an 83
gross-section (45 net) farm-in in the Foothills adjacent to the Company's 100
percent working-interest Montney holdings. The first commitment well on this
farm-in will be operated by the Company's partner, a large independent
exploration and production company, this quarter with subsequent earning tests
later this year operated by Progress and its partner.
    Progress has continued to accumulate Montney rights and has one of the
largest landholdings in the Montney fairway totaling 720,000 net undeveloped
acres.

    Financial Strength

    Progress' Board of Directors has declared a quarterly dividend of 10
cents per share payable on April 15, 2009 to common shareholders of record as
of March 31, 2009. Based on the February 24, 2009 closing share price on the
Toronto Stock Exchange of $8.35, this represents an annualized yield of 4.8
percent. The amount of future cash dividends, if any, is subject to the
discretion of the Progress Board.
    Combined company exploration capital investment in 2008 was $361 million
including $220 million in drilling and completions, $70 million in land and
seismic, and $71 million in major facilities. The Company has a 365-day
revolving credit facility with a syndicate of banks totaling $650 million.
With the recent equity offering, the Company has approximately $250 million
available under this facility.
    The Company has hedges in place on approximately 45 mmcf per day, or 25
percent of its winter gas production, to March 31, 2009 at an average net
price of $10.54 per thousand cubic feet. At present, Progress has no further
hedges in place but recently crystallized a gain of approximately US$117,000
by closing out its summer AECO basis hedges.
    Progress has in excess of $1.7 billion of tax pools to shelter income
well into the future.

    Outlook

    We are optimistic about the prospects for Progress given our high quality
asset base, inventory of opportunities, strong financial position, low cost
structure and strength of our technical and financial professionals.
    We have positioned Progress to benefit from all points in the commodity
and business cycles. During periods of low natural gas prices, as we are
experiencing now, we will focus on long-term resource capture to position us
for the next cycle. Our balance sheet provides the flexibility to take
advantage of unique opportunities which add long-term value for shareholders.
Our exploration and development capital program, originally set at between
$340 million and $360 million for 2009, will be flexible to respond to changes
in gas prices. In the near term, we expect to invest capital of $100 million
in the first quarter of 2009 as compared to the originally planned $130
million.
    The near-term weakness in natural gas prices has resulted from a
significant downturn in industrial demand and growth in supply from shale and
tight gas plays in the United States. These factors will continue to put
near-term downward pressure on prices and negatively impact the amount of
capital investment in natural gas drilling. Natural gas directed drilling is
down nearly 40 percent from its peak in the summer of 2008 and with very high
depletion rates in new wells drilled, we expect supply to be down on a
year-over-year basis in 2009 with a recovery in natural gas prices beginning
to occur sometime in the second half of the year.

    Filing of Annual Information Form

    Progress Energy Resources Corp. has filed its Annual Information Form
which contains the annual National Instrument 51-101 Form 1, Form 2 and Form 3
information. The information can be accessed electronically from the SEDAR
system at www.sedar.com or the Progress website at www.progressenergy.com.
    2008 Consolidated Financial Statements and Notes to the Consolidated
Financial Statements and Management's Discussion and Analysis for Progress
Energy Trust and ProEx Energy Ltd. have been filed on SEDAR (www.sedar.com)
under Progress Energy Resources Corp. and can also be accessed on the
Company's website at www.progressenergy.com.

    Annual and Special Meeting of Shareholders

    Progress' The Annual and Special Meeting of Shareholders is scheduled for
Thursday, April 30, 2009 at 3:30 p.m., Calgary time, at the Calgary Petroleum
Club, 319-5th Avenue S.W. Calgary, Alberta.

    Progress is a Calgary based, mid-size energy company primarily focused on
natural gas exploration, development and production in northwest Alberta and
northeast British Columbia. Common shares of Progress are listed on the
Toronto Stock Exchange under the symbol PRQ.

    Advisory Regarding Forward-Looking Statements

    This press release and supplementary information and supplementary
reserves information (collectively the "press release") contains
forward-looking statements and forward-looking information within the meaning
of applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing", "may", "will",
"project", "should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information or statements. In particular,
forward looking statements in this press release include, but are not limited
to, statements with respect to the focus of capital expenditures, the timing
of capital spending and the results therefrom; payment of dividends;
projections of future land holdings; completion of planned facility expansions
and the timing thereof; future drilling plans and programs, the timing thereof
and the results therefrom; expected commodity prices and industry conditions.
In addition, statements relating to "reserves" are deemed to be forward
looking statements, as the involve the implied assessment, based on certain
estimates and assumptions, that the reserves described can be profitably
produced in the future.
    The forward-looking statements and information are based on certain key
expectations and assumptions made by Progress, including expectations and
assumptions concerning prevailing commodity prices and exchange rates,
applicable royalty rates and tax laws; future well production rates; reserve
and resource volumes; the performance of existing wells; the success obtained
in drilling new wells; and the sufficiency of budgeted capital expenditures in
carrying out planned activities; and the availability and cost of labour and
services and future operating costs. Although Progress believes that the
expectations and assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be placed on
the forward looking statements and information because Progress can give no
assurance that they will prove to be correct.
    Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include, but are not
limited to, the risks associated with the oil and gas industry in general such
as operational risks in development, exploration and production; delays or
changes in plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve and resource estimates; the
uncertainty of estimates and projections relating to reserves, resources,
production, costs and expenses; health, safety and environmental risks;
commodity price and exchange rate fluctuations; marketing and transportation;
loss of markets; environmental risks; competition; incorrect assessment of the
value of acquisitions; failure to realize the anticipated benefits of
acquisitions; ability to access sufficient capital from internal and external
sources; changes in legislation, including but not limited to tax laws,
royalties and environmental regulations.
    Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release in order
to provide securityholders with a more complete perspective on the Company's
future operations and such information may not be appropriate for other
purposes. The Company's actual results, performance or achievement could
differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given that
any of the events anticipated by the forward-looking statements will transpire
or occur, or if any of them do so, what benefits that the Company will derive
there from. Readers are cautioned that the foregoing lists of factors are not
exhaustive. These forward-looking statements are made as of the date of this
press release and the company disclaims any ntest or obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or results or otherwise, other than as required by
applicable securities laws.
    Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could
affect the operations or financial results of Progress are included in reports
on file with applicable securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com). The forward-looking statements and
information contained in this press release are made as of the date hereof and
Progress undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.

    Barrels of Oil Equivalent

    "Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic
feet of natural gas. Boe's may be misleading, particularly if used in
isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.


    
                          Supplementary Information

    For the year quarter and year ending December 31, 2008


                                  Progress Energy Trust  ProEx Energy Ltd.
                                       Q4-2008      2008   Q4-2008      2008
                                      ------------------- -------------------
    Financial information

    Cash flow ($ thousands)(*)          59,768   277,982    23,981   111,067
    Cash flow per unit/share,
     diluted(xx)                          0.53      2.45      0.41      1.93

    Capital expenditures
     ($ thousands)                      50,036   159,235    69,307   211,900

    Bank debt ($ thousands)            299,531   299,531   160,000   160,000
    Convertible debentures
     ($ thousands)                     124,708   124,708         -         -
    Working capital deficiency
     ($ thousands)                      20,556    20,556    17,264    17,264
                                      ------------------- -------------------
    Total debt ($ thousands)           444,795   444,795   177,264   177,264
                                      ------------------- -------------------
                                      ------------------- -------------------

    Average daily production

    Natural Gas (mmcf/d)               124,342   124,814    63,105    60,416
    Crude Oil (bbls/d)                   1,762     1,987       433       451
    Natural Gas Liquids (bbls/d)         1,748     1,794       304       311
                                      ------------------- -------------------
    Total Production (boe/d)            24,233    24,583    11,255    10,832
                                      ------------------- -------------------
                                      ------------------- -------------------
    Pricing

    Natural gas ($/mcf)                   7.14      8.59      6.98      8.40
    Crude oil ($/bbl)                    57.40     95.72     58.35     96.01
    Natural gas liquids ($/bbl)          49.63     73.85     59.90     84.97

    Highlights ($/boe)

    Petroleum and natural gas
     revenues                            44.37     57.21     42.83     54.57
    Realized gain (loss)on financial
     instruments                          3.47     (1.35)     3.85     (0.96)
    Royalties                            (8.52)   (12.88)    (8.97)   (11.62)
    Operating expenses                   (6.74)    (6.27)    (6.70)    (6.14)
    Transportation expenses              (2.10)    (2.11)    (4.60)    (4.52)
                                      ------------------- -------------------
    Operating netback                    30.48     34.60     26.41     31.33
                                      ------------------- -------------------
                                      ------------------- -------------------
    Gross drilling results
     (No. of wells)

    Natural gas                             21        80        14        58
    Crude oil                                -         3         -         -
    Dry                                      -         4         -         3
                                      ------------------- -------------------
    Total                                   21        87        14        61
                                      ------------------- -------------------
                                      ------------------- -------------------
    Net drilling results
     (No. of wells)

    Natural gas                           12.8      38.5      10.3      42.6
    Crude oil                                -       1.2         -         -
    Dry                                      -       0.7         -       2.4
                                      ------------------- -------------------
    Total                                 12.8      40.4      10.3      45.0
                                      ------------------- -------------------
                                      ------------------- -------------------
    Success rate (%)                       100        98       100        95
                                      ------------------- -------------------
                                      ------------------- -------------------

    (*)  Represents cash flow from operating activities before changes in
         non-cash working capital

    (xx) Total units outstanding for Progress Trust include trust units plus
         exchangeable shares (converted at period end exchange ratio)
         outstanding at period end.


                     Supplementary Reserves Information


    Progress Energy Trust

    Proved

    Opening Balance as
     at January 1, 2008        61.74
    Net additions              10.06
    Production                 -9.00
                        -------------
    Closing balance as
     at December 31,
     2008                      62.80
                        -------------
                        -------------

    Proved plus
     probable

    Opening Balance as
     at January 1, 2008        86.82
    Net additions              12.33
    Production                 -9.00
                        -------------
    Closing balance as
     at December 31,
     2008                      90.15
                        -------------
                        -------------

    Total company
     interest reserves

    Production
     replacement (P+P %)         137


                                         Proved                 P+P
                             Capital    Reserve   Proved    Reserve      P+P
                        Expenditures  Additions    Costs  Additions    Costs
                          ($ million)    (mmboe)  ($/boe)    (mmboe)  ($/boe)
                        -----------------------------------------------------
    Finding, Development
     and Net Acquisition
     Costs

    Total 2008 proved
     FD&A costs including
     change in FDC          $  146.9       10.1 $  14.61         na       na
    Total 2008 P+P FD&A
     including change in
     FDC                    $  167.1         na       na       12.3 $  13.56
    3-year average proved
     FD&A including
     change in FDC          $  773.3       40.8 $  18.97         na       na
    3-year average P+P
     FD&A including
     change in FDC          $  827.8         na       na       55.2 $  15.01

    Finding and
     Development Costs

    Total 2008 proved F&D
     costs including
     change in FDC          $  168.9       10.7 $  15.73         na       na
    Total 2008 P+P F&D
     including change in
     FDC                    $  189.1         na       na       13.2 $  14.36
    3-year average proved
     F&D including change
     in FDC                 $  492.0       28.4 $  17.34         na       na
    3-year average P+P
     F&D including change
     in FDC                 $  546.5         na       na       39.9 $  13.70


    ProEx Energy Ltd.

    Proved

    Opening Balance as
     at January 1,
     2008                      35.73
    Net additions              10.65
    Production                 -3.96
                        -------------
    Closing balance as
     at December 31,
     2008                      42.42
                        -------------
                        -------------

    Proved plus probable

    Opening Balance as
     at January 1,
     2008                      52.86
    Net additions              13.52
    Production                 -3.96
                        -------------
    Closing balance as
     at December 31,
     2008                      62.42
                        -------------
                        -------------

    Total company
     interest reserves

    Production
     replacement (P+P %)         341


                                         Proved                 P+P
                             Capital    Reserve   Proved    Reserve      P+P
                        Expenditures  Additions    Costs  Additions    Costs
                          ($ million)    (mmboe)  ($/boe)    (mmboe)  ($/boe)
                        -----------------------------------------------------
    Finding, Development
     and Net Acquisition
     Costs

    Total 2008 proved
     FD&A costs including
     change in FDC          $  239.7       10.7 $  22.51         na       na
    Total 2008 P+P FD&A
     including change in
     FDC                    $  249.9         na       na       13.5 $  18.47
    3-year average proved
     FD&A including
     change in FDC          $  764.2       39.6 $  19.28         na       na
    3-year average P+P
     FD&A including
     change in FDC          $  800.5         na       na       56.4 $  14.20

    Finding and
     Development Costs

    Total 2008 proved F&D
     costs including
     change in FDC          $  230.8       10.7 $  21.67         na       na
    Total 2008 P+P F&D
     including change in
     FDC                    $  241.0         na       na       13.5 $  17.82
    3-year average proved
     F&D including change
     in FDC                 $  602.8       33.7 $  17.91         na       na
    3-year average P+P
     F&D including change
     in FDC                 $  639.0         na       na       47.9 $  13.34
    

    %SEDAR: 00020978E




For further information:

For further information: Greg Kist, Vice President, Investor Relations
and Marketing, Progress Energy Resources Corp., (403) 539-1809,
gkist@progressenergy.com

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