November Distribution Confirmed
CALGARY, Nov. 14 /CNW/ - (TSX-PGX.UN) - Progress Energy Trust ("Progress"
or the "Company") today announced that it plans to invest between $110 million
and $125 million in its 2008 capital program with 70 percent directed toward
drilling activities, 20 percent to toward major facilities construction and 10
percent toward land and seismic acquisition. Progress expects 2008 production
to average approximately 23,500 barrels of oil equivalent ("boe") per day and
is dependent on actual capital invested. This forecast is inclusive of a major
turnaround at the McMahon gas plant in northeast British Columbia in June
2008. The Company expects to drill approximately 50 net wells on its core
"We have provided a range for our capital investment in 2008 because of
the uncertainty and volatility in natural gas prices and the strength of the
Canadian dollar," said Michael Culbert, President and Chief Executive Officer
of Progress. "We have substantial flexibility in our program to shift the
timing of our investments to capitalize on a rising price environment which
may occur in 2008. Our capital program will be directed at the continued
expansion of our key plays in the Foothills of northeast British Columbia and
the Deep Basin of northwest Alberta where we have demonstrated
industry-leading capital and operating cost efficiencies."
Approximately 55 percent of the 2008 program will be directed towards the
Company's growing position in the Foothills region in northeast British
Columbia and 40 percent towards its multi-zone opportunities in the Deep Basin
of northwest Alberta.
Continued tight gas focus in the northeast B.C. Foothills
In the second quarter of 2007, Progress added to its expansive position
in the northeast British Columbia Foothills by acquiring producing assets and
undeveloped land in the same known geologic horizons that have underpinned
Progress' success. In addition to the pervasive Halfway sand, which has been
the Company's primary target, Progress has been expanding its inventory with
success in the lightly explored Cretaceous and Mississippian sections.
On the Company's Bubbles property, a 20 percent reduction in required
days to drill a well has reduced the overall cost of drilling. In addition,
with the well-developed and operated infrastructure, Progress has been able to
reduce the time to tie-in production. The Company currently has five rigs
drilling in the Foothills.
Progress is currently producing approximately 10,000 boe per day in
northeast British Columbia which represents 42 percent of total corporate
production. This includes 6,500 boe per day in the Foothills, 2,500 boe per
day in the Plains and 1,000 boe per day at Ojay in the Deep Basin area south
of the Peace River in British Columbia.
Robust economics in the Deep Basin
In the Deep Basin of northwest Alberta, Progress will continue to target
the multiple stacked horizons including the Falher, Bluesky, Gething, Charlie
Lake and Halfway formations. Recent drilling success again confirms the upside
potential of the Deep Basin and the depth of the Company's inventory.
Progress' three most recently drilled wells, two at the Wapiti property and
one at Gold Creek, have tested in the range of two to four million cubic feet
per day and will be tied-in prior to year-end. The Company currently has two
rigs drilling in the Deep Basin including drilling its first well on the
Copton/Lynx property acquired in the second quarter of 2007.
The gas produced by Progress in the Deep Basin is high heat content and
operating costs are low which generates high netbacks relative to other
natural gas-weighted producers in Western Canada. In addition, the area has
well developed infrastructure which helps to lower the overall cost of well
In total, Progress is currently producing approximately 11,000 boe per
day from the Deep Basin of northwest Alberta which represents 46 percent of
total Company production.
Growing undeveloped land position
Since the beginning of 2007, Progress has grown its undeveloped land
position by more than 50 percent and currently holds 550,000 net undeveloped
acres of land and 10,000 net acres under option. The Foothills and Deep Basin
regions have experienced the most dramatic increases with the Foothills
doubling to nearly 150,000 net undeveloped acres and the Deep Basin increasing
by 80 percent to 230,000 net undeveloped acres. These lands are in the heart
of the most desirable natural gas growth regions in the Western Canadian
Sedimentary Basin and provide the raw material for the Company's continued
focus on sustainability through the drill bit.
On October 25, 2007, the Alberta Government ("government") announced the
New Royalty Framework, ("framework'), which will take effect on
January 1, 2009. Progress has reviewed the information currently provided by
the government and believes that the changes to the Alberta royalties may
increase Progress' Alberta royalty rate from 27 percent to 31.5 percent based
on current production and a realized natural gas price of $7.00 per gigajoule.
Using the same production and price assumptions, Progress' royalty rate is
estimated to increase marginally from 25 percent to 27.5 percent, on a
corporate basis, resulting in an approximate five percent reduction in 2009
The framework proposes a new simplified royalty formula for natural gas
that will operate on a sliding scale determined by commodity prices, well
productivity and drilling depth. Progress' Deep Basin well depths range
between 2,300 to 2,700 meters which will be eligible for the new measured
depth drilling formula. Progress is attracted to the Deep Basin because of the
quality and pedigree of the region with its higher than average well
productivity. The new royalty formula will increase Progress' royalties
payable but is not expected to materially impact the economics of drilling in
the Deep Basin.
"We have developed our outlook based on the information provided by the
provincial government to this point," said Mr. Culbert. "Higher royalties
payable in Alberta will cause us to shift capital investment into British
Columbia where we can generate the strongest economic returns for our
unitholders going forward. We are not opportunity constrained in northeast
British Columbia as we have demonstrated with our growing tight gas resource
position in the Foothills."
November Distribution Confirmed
Progress today confirmed a distribution of $0.10 per trust unit for the
month of November. The distribution will be paid on December 17, 2007 to
unitholders of record on November 30, 2007. The ex-distribution date is
expected to be November 28, 2007.
Progress is a Calgary based, natural gas focused trust targeting
sustainable production and reserves per unit through the utilization of its
technical capability and capital investment efficiencies. Primary operating
areas include the Deep Basin of northwest Alberta and the Foothills and Plains
regions of northeast British Columbia. Units of Progress trade on the Toronto
Stock Exchange (TSX) under the symbol PGX.UN. Exchangeable Shares of Progress
Energy Ltd. trade on the TSX under the symbol PGE and its convertible
debentures trade on the TSX under the symbol PGX.DB.
Forward-Looking Statements - Certain information regarding Progress set
forth in this document, including management's assessment of Progress' future
plans and operations, contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, certain of which
are beyond Progress' control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources. Progress' 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 Progress will derive therefrom.
In this news release, production and reserves information may be
presented on boe basis with six mcf of natural gas being equivalent to one
barrel ("barrel") of crude oil or natural gas liquids. Boe's may be misleading
particularly if used in isolation. A boe 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 wellhead.
For further information:
For further information: Mr. Michael Culbert, President & Chief
Executive Officer, Phone: (403) 539-1820; Mr. Greg Kist, Vice President,
Investor Relations & Marketing, Phone: (403) 539-1809; Progress Energy Ltd.,
1200, 205 - 5th Avenue S.W., Calgary, Alberta, T2P 2V7, Toll Free:
1-866-216-2510, Fax: (403) 216-2514, Email: email@example.com, Web: