CALGARY, Sept. 11, 2014 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) notes renewed price volatility in Argent units, which may be related to volatility in the price of WTI crude oil, which recently dropped below US$92/bbl. Argent is approximately 65% hedged on its H2 2014 oil volumes at WTI oil prices of US$90/bbl or higher, meaning fluctuations in the oil price have less of an impact than likely perceived by the market.
With the strategic direction announced on April 10, 2014, Argent is focused on sustainability by developing the current asset base with improved capital efficiencies and rationalizing a portion of the asset base to reduce indebtedness and improve financial flexibility. The Trust is approximately US$109 million drawn on the US$160 million facility, and 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.
Furthermore, the current distribution level of $0.02 per unit per month represents approximately 35% to 40% of cash flow from operations and as such it is at a level the Trust is currently able to comfortably maintain. The Trust's production levels continue to support the Q3 2014 guidance of 6,400 – 6,500 boe/d and average full year 2014 guidance of 6,200 – 6,300 boe/d. The unit price volatility has no implications for the Trust's credit facility, exchange listing status nor its ability to pay distributions.
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, ability to dispose of certain assets, source of funding for capital expenditures and repayment of debt, and the Trust's expectation regarding its average working interest production rate for Q3 2014 and the 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", and estimates of anticipated production from the Trust's assets.
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.
Argent is a mutual fund trust under the Income Tax Act (Canada) (the "Tax Act"). Argent's objective is to create 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: 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