CALGARY, Oct. 16, 2014 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) is pleased to announce that third quarter 2014 production averaged approximately 7,263 barrels of oil equivalent per day ("boe/d"), (approximately 65% oil and NGLs), significantly exceeding previously announced third quarter production guidance of 6,400-6,500 boe/d. This level of production represents a 14% increase over second quarter 2014 volumes and results in average production of approximately 6,675 boe/d for the nine months ended September 30, 2014. Third quarter production levels reflect a series of successful workovers as well as new Eagle Ford oil wells and South Escobas natural gas wells completed at the end of the second quarter that are subject to high decline rates.
Given continued strong production performance, as reflected in the Trust's most recent 30-day production average of approximately 6,900 boe/d, Argent is increasing its average annual production guidance for 2014 from the previously expected range of 6,200-6,300 boe/d to 6,500-6,600 boe/d. Fourth quarter 2014 production is expected to be approximately 6,500 boe/d.
The Trust has approximately US$109 million drawn on its US$160 million credit facility, leaving approximately US$51 million of undrawn capacity. With the vast majority of the 2014 capital program having been spent, the Trust expects to utilize the positive cash flow being generated from operations to further reduce indebtedness over the remainder of the year. The Trust continues to be compliant with all the credit facility covenants.
Importantly, for the second half of 2014 Argent is approximately 65% hedged on its oil volumes at WTI oil prices of US$90/bbl or higher and approximately 55% hedged on its natural gas volumes at an average price of US$4.09/mmbtu, meaning fluctuations in oil and natural gas prices have less of an impact than likely perceived by the market. In 2015, Argent has approximately 2,000 net bbl/d of oil hedged at WTI oil prices of US$90/bbl equivalent or higher and approximately 6,000 net mmbtu/d of natural gas hedged at an average price of US$4.12/mmbtu.
Argent also announces that the cash distribution to be paid on November 24, 2014, in respect of the period from and including October 1 to October 31, 2014, for unitholders of record on October 31, 2014 will be $0.02 per trust unit. The ex-distribution date is October 29, 2014. The annualized distribution of $0.24 per trust unit represents a cash-on-cash yield of approximately 13.3% based on the closing price of the trust units on the Toronto Stock Exchange on October 15, 2014 of $1.80. The current distribution level of $0.02 per unit per month represents approximately 35% to 40% of cash flow from operations.
The Trust expects to release full operating and financial results for the third quarter ended September 30, 2014 on Wednesday, November 12, 2014 after market close.
Note About Forward-Looking Statements
This press release includes forward-looking information within the meaning of applicable Canadian and United States securities legislation. All statements, other than statements of historical facts, that address activities, circumstances, events, outcomes and other matters that Argent budgets, forecasts, plans, projects, estimates, expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future, are considered forward-looking information.
In particular, forward-looking information contained in this press release includes, but is not limited to, Argent's capital program, drilling and completion plans, oil, natural gas and NGL production rates, cash flow generated from operations, hedging activities, the payment of cash distributions by the Trust, including the amount and timing of payment of cash distributions, level of debt drawn on its credit facilities, source of funding for capital expenditures and repayment of debt, and the Trust's expectation regarding its average working interest production rate for the fourth quarter and full year 2014. 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 from the Trust's assets, 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 from the assets, future capital expenditures and the ability of the Trust to obtain financing on acceptable terms for its capital projects and future acquisitions, and the Trust's capital budget (which is subject to change in light of ongoing results, prevailing economic circumstances, commodity prices and industry conditions and regulations).
The forward-looking information provided in this press release is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Argent cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.
These risks include, but are not limited to, oil and natural gas price volatility, Argent's access to cash flows and other sources of liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current financial climate on Argent's anticipated business and financial condition, a lack of availability of or increases in costs of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, economic conditions and other risks as described in documents and reports that Argent files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Argent's actual results and plans to differ materially from those contained in the forward-looking information.
There are many factors that could result in production levels being less than anticipated, including greater than anticipated declines in existing production due to poor reservoir performance, the unanticipated encroachment of water or other fluids into the producing formation, mechanical failures or human error or inability to access production facilities, among other factors. Furthermore, unlike fixed income securities, Argent has no obligation to distribute any fixed amount and reductions in, or suspension of, cash distributions may occur that would reduce future yield.
Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking information is not a guarantee of future performance or an assurance that our current assumptions and projections are valid. All forward-looking information speaks only as of the date of this press release, and Argent assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk factors contained in Argent's periodic filings on SEDAR that discuss in further detail the factors that could cause future results to be different than contemplated in this press release.
Note regarding barrel of oil equivalency
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio of six Mcf to one bbl may be misleading as an indication of value.
SOURCE: Argent Energy Trust
For further information: concerning this press release, please contact: John Elzner, President & Chief Executive Officer, Argent Energy Trust, (832) 320-9206; Sean Bovingdon, Chief Financial Officer, Argent Energy Trust, (403) 770-4809