CALGARY, April 8, 2015 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) announces it has entered into an agreement for the sale of its interests in the Manvel Field, Texas ("Manvel") and provides a management update.
Argent Energy (US) Holdings Inc., a wholly-owned subsidiary of the Trust, has entered into a sale agreement to sell its interest in Manvel Field to a third party for gross proceeds of US$20.5 million, subject to usual closing adjustments. Argent's holdings in the Manvel Field includes interests in 1,870 gross (1,816 net) acres and 31 active oil wells, with average working interest production of approximately 350 boe/d barrels of oil equivalent per day ("boe/d") before royalties. The transaction has an effective date of January 1, 2015 and is expected to close on or before May 14, 2015. Argent's production for 2015 is expected to average approximately 4,700 boe/d after taking account of this sale, compared to the previous forecast of 5,000 boe/d.
This transaction represents the first asset sale by Argent in accordance with its previously announced strategy to manage through the challenging market conditions and maintain financial flexibility. The net proceeds from the sale will be used to pay down amounts drawn on Argent's credit facility. Upon closing of the Manvel sale, Argent's credit facility (which is currently US$108 million drawn) will be set at US$110 million, and Argent expects to be approximately $89 million drawn. Argent will continue to market certain high operating cost assets with the goal to utilize proceeds to further pay down the existing credit facility, in order to maintain liquidity in the low commodity price environment.
Mr. John Elzner, the CEO and President, will be leaving Argent and resigning as a director, effective April 30, 2015. Argent would like to thank Mr. Elzner for his hard work and management with Argent since its IPO in August 2012 and through the recent challenging period. Mr. Richard Louden, the Executive Chairman, will oversee Argent's ongoing strategic plans, while Mr. Steven Hicks has been appointed the Chief Operating Officer and will oversee day-to-day operations out of the Houston office. Mr. Hicks was previously the Senior Vice-President, Business Development, having joined Argent in October 2012, and has 35 years of industry experience. Prior to joining Argent, Mr. Hicks worked in an executive or senior technical capacity with several private and public oil and gas companies in the U.S., including Hilcorp Energy Company, El Paso Corporation and Coastal Corporation, gaining experience in all aspects of operations, business development, reservoir engineering, land and regulatory practices. Mr. Sean Bovingdon will assume the office of President in addition to his current role as Argent's Chief Financial Officer.
In addition, as part of the previously announced cost cutting measures, Argent announces that it will be reducing its technical and administrative staff by approximately 30% over the next several weeks as the above asset sales are completed.
The Trust will also be rescheduling its previously announced Annual and Special General Meeting of May 20, 2015 to a future date to allow the board of directors sufficient time to fill the board vacancy to be created by Mr. Elzner's resignation.
This press release contains statements that are forward looking. Investors should read the Note Regarding Forward- Looking Statements at the end of this press release. In this press release, references to "Argent" or the "Trust" include the Trust and its operating subsidiaries.
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, oil, natural gas and NGL production rates, average production for 2015, operating costs, the expected closing date of the sale transaction, the Trust's ability to maintain compliance and liquidity, the Trust's ability to market certain assets and pay down amounts drawn under its credit facility, and the ability to reduce overhead costs and staff in Calgary and Houston.
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 and completion program with a success rate that, in turn, is based upon historical drilling and completion success and an evaluation of the particular wells to be drilled and completed, future recoverability of reserves from the assets, future potential and experience and performance of its management team, 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, a lack of performance of its staff or ability to retain experienced personnel, 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.
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 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: Richard Louden, Executive Chairman, Argent Energy Trust, (281) 847-1888; Sean Bovingdon, President & CFO, Argent Energy Trust, (403) 770-4809; Steve Hicks, Chief Operating Officer, Argent Energy Trust, (281) 847-1888