Argent Energy Trust provides third quarter results and increased production guidance

Argent Energy Trust provides third quarter results and increased production 
guidance 
CALGARY, Nov. 13, 2012 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") 
(TSX: AET.UN) is pleased to provide its financial and operating results for 
the quarter ended September 30, 2012, being the first interim report for 
Argent since completing its initial public offering and the commencement of 
operations in Texas. Argent is also pleased to provide increased guidance for 
its forecast 2012 exit and 2013 average production rates. The Trust's 
unaudited interim consolidated financial statements for the three months and 
period ended September 30, 2012 and related management's discussion and 
analysis have been filed with the securities regulators and will be available 
shortly under the Trust's issuer profile on the SEDAR website at www.sedar.com 
and are available on the Trust's website at www.argentenergytrust.com. 
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. 
Highlights for the quarter ended September 30, 2012 


    --  Completed initial public offering for gross proceeds of $212.3
        million together with over-allocation for additional gross
        proceeds of $31.84 million, through the issuance of a total of
        24,414,500 units at $10.00 per unit.
    --  Completed acquisition on August 10, 2012, of operated oil and
        gas assets in Texas for cash consideration, including closing
        adjustments and restricted cash, of $203.6 million. Working
        interest production from the acquired assets was initially
        approximately 1,630 boe/d, comprised of 23% oil and natural gas
        liquids and 77% natural gas. As a result of drilling activity
        since acquisition, production on these assets alone as at
        November 12, 2012, is approximately 2,300 boe/d comprised of
        60% oil and NGLs and 40% natural gas.
    --  Completed acquisition on August 28, 2012, of the Forest
        Over-ride for approximately US$19 million. The interest
        generated $517,443 in revenue for the Trust during the period.
    --  Negotiated a US$8 million operating credit facility with a
        Canadian chartered bank, which was undrawn as at September 30,
        2012. Since increased to a syndicated US$45 million facility,
        of which US$13 million has been drawn.
    --  Completed and tied in two (2 net) wells in the Austin Chalk oil
        formation that had been drilled prior to closing of the Denali
        Acquisition and commenced drilling of a third well targeting
        this and an additional formation. Commenced drilling of two (2
        net) wells in the Eagle Ford Shale oil formation and one (1
        net) well targeting an additional oil formation, all in the
        Fayette and Gonzales counties in Texas. First production has
        now commenced on the first of these Eagle Ford wells, with the
        second due for completion later in November.
    --  Commenced unitholder distributions at a rate of $1.05 per unit
        per year ($0.0875 per unit per month).
    --  Recorded funds flow from operations of $0.8 million ($0.06 per
        unit), reflecting the expensing of $0.3 million of acquisition
        costs connected with completing the Denali acquisition, as well
        as the general and administrative expenses incurred in Calgary
        prior to active operations commencing on August 10, 2012.
    --  Currently hedged for 2013, a total of 1,000 bbl/d oil with a
        floor price of US$90/bbl WTI and 2,000 mmbtu/d of natural gas
        at average swap price of US$4.04 mmbtu NYMEX.

Summary of Quarter Results

The following table shows selected information for the Trust's fiscal quarter 
ended September 30, 2012. As this is the first quarter in which the Trust had 
active operations, no comparatives are available.
                                                

(000s unless stated)                   Q3 2012

Total production (boe/d)                   1,618

% Oil and NGLs                             35.5%
                                                

Oil, NGL and natural gas sales           $ 3,326

Total Revenue                            $ 3,843
                                                

Netback                                  $ 2,405

Netback ($/boe)                           $22.89
                                                

Funds flow from operations

- per boe                                  $9.82

- per Trust Unit, basic                   $ 0.06
                                                

Loss

- per Trust Unit, basic                   $ 0.33
                                                

Total Assets                           $ 278,911

Current Liabilities                     $ 47,303

Non-current Liabilities                 $ 14,310

Unitholders' Equity                    $ 217,298

Capital Expenditures                    $ 12,967

Units outstanding for accounting ((1))    13,511

(1) Units outstanding for accounting purposes exclude restricted trust
units units due to the performance conditions that have to be met to
enable such units to be vested.

Oil, NGL and Natural Gas Sales and production levels in the quarter reflect 
the period from close of the Denali Acquisition on August 10(th) through 
September 30, 2012. Production during the period of operations since close of 
the Denali Acquisition (the "Operating Period") totaled 84,153 boe or an 
average of 1,618 boe per day, with oil and NGL sales at 576 bbls per day, 
being 36% of the total sales volume and natural gas sales being approximately 
6.3 mmcf per day, or 64% of the total sales volume on a boe basis. Oil price 
for the Operating period averaged US$100.65 per bbl (Cdn$99.02) which 
represents an uplift of US$5.79 per bbl over the WTI Benchmark of US$94.86 per 
bbl, while natural gas price averaged US$2.37 per mcf (Cdn$2.34) compared to 
the NYMEX Benchmark of US$2.81 per mcf.

The breakdown of netback by product during the period was $77.69/bbl for oil 
production, $20.56/bbl for NGL production and $5.17/boe for Natural Gas 
production. This reflects the strong economics from oil production in Texas, 
such that with the Trust's focus on oil drilling in the near term, management 
expects the average aggregate netbacks to improve.

While oil and natural gas production was initially lower than projected for 
the interim period primarily due to delays in the start-up of planned new 
wells and the shut-in of some wells for minor workovers, production levels 
subsequent to the quarter end are already at the Trust's previously forecast 
year-end 2013 production rate of between 2,300 and 2,400 boe/d from just the 
Denali Acquisition assets. The Trust is currently producing approximately 
2,300 boe/d, with 60% being oil and NGL volumes and 40% being natural gas 
volumes, from these assets. An additional 850 boe/d (97% oil) is being 
produced from the assets acquired from Energyquest II, LLC, on October 25, 
2012, for a current total of 3,150 boe/d, of which 70% is oil and NGLs.

Outlook

By the end of 2012 the Trust expects to complete both Eagle Ford wells, and 
both Austin Chalk wells that were being drilled during the third quarter. 
Furthermore, the Trust expects to drill approximately two (2 net) new wells 
from October 1, 2012 to the end of 2012, both in the Austin Chalk, one of 
which should be completed by year end.

This activity, together with the completion of the EnergyQuest acquisition in 
October, leads the Trust to increase its forecast production exit rate for 
2012 to between 3,500 and 3,600 boe/d. The Trust is also increasing its 2013 
average production guidance to 4,100 to 4,200 boe/d, of which approximately 
63% is expected to be oil.

Until further notice, the Trust intends to continue making monthly 
distributions at a rate of $0.0875 per Unit to Unitholders of record as of the 
close of business on the last business day of each month which are expected to 
be paid to Unitholders on or about the 23rd day of the following month or, if 
not a business day, the next business day thereafter. As results of operations 
may vary, the distribution of cash is not guaranteed. The Trust intends to 
make these monthly distributions from a portion of its available cash and use 
the remainder of its available cash, and advances under its credit facilities, 
to fund growth through additional acquisitions and capital expenditures.

Non-IFRS Financial Measures

Statements throughout this press release make reference to the terms "netback" 
and "funds flow from operations" which are non-International Financial 
Reporting Standards ("IFRS") financial measures that do not have any 
standardized meaning prescribed by IFRS and are therefore unlikely to be 
comparable to similar measures presented by other issuers. Management believes 
that "netback" and "funds flow from operations" provide useful information to 
investors and management since such measures reflect the quality of 
production, the level of profitability, the ability to drive growth through 
the funding of future capital expenditures and the sustainability of 
distributions to unitholders. Funds flow from operations is calculated before 
changes in non-cash working capital. Field netback is calculated by 
subtracting royalties and operating costs from revenues. See the "Non-IFRS 
measures" section of the MD&A for a reconciliation of funds flow from 
operations and field netback to income for the period, the most directly 
comparable measure in the Trust's audited annual consolidated financial 
statements. Other financial data has been prepared in accordance with IFRS.

Note about forward-looking statements

Certain of the statements made and information contained in this press release 
are forward-looking statements and forward looking information (collectively 
referred to as "forward-looking statements") within the meaning of Canadian 
securities laws. All statements other than statements of historic fact are 
forward-looking statements. The Trust cautions investors that important 
factors could cause the Trust's actual results to differ materially from those 
projected, or set out, in any forward-looking statements included in this 
press release.

In particular, and without limitation, this press release contains forward 
looking statements pertaining to Argent's drilling and completion plans, and 
the Trust's expectation regarding its average working interest production 
exiting the year 2012 and for 2013. 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 both the Texas assets and the 
Oklahoma 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 for both the Texas assets and the Oklahoma 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 Trust's actual results could differ materially from those anticipated in 
these forward-looking statements as a result of the volatility of commodity 
prices, commodity supply and demand, fluctuations in currency and interest 
rates, inherent risks and changes in costs associated in the drilling and 
development of petroleum properties, unexpected operational delays and 
challenges, access to drilling equipment on a timely basis and at reasonable 
prices, ultimate recoverability of reserves, timing, results and costs of 
drilling activities and resulting production, availability of financing and 
capital, and new regulations and legislation that apply to the Trust and the 
operations of its subsidiaries. Additional risks and uncertainties affecting 
the Trust are contained in the Trust's IPO Prospectus dated August 1, 2012, 
under the heading "Risk Factors".

The success of Argent's drilling program is a key assumption in the production 
estimates for the 2013 financial year. The primary risk factors which could 
lead to Argent not meeting its production targets are: (i) production 
additions from drilling activity are less than expected; (ii) a lack of access 
to drilling rigs and related equipment on a timely basis and at reasonable 
prices due to high industry demand or poor weather; and (iii) unexpected 
operational delays and challenges. Increases in capital costs from forecast 
amounts can result from the foregoing reasons as well as general cost 
inflation in the industry.

Additionally, Argent may choose to decrease capital expenditures from those 
anticipated in its budget projections, therefore affecting production 
estimates for the 2012 and 2013 financial year. 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.

As a result of these risks, actual performance and financial results in 2012 
and 2013 may differ materially from any projections of future performance or 
results expressed or implied by these forward looking statements. New factors 
emerge from time to time, and it is not possible for management to predict all 
of these factors or to assess, in advance, the impact of each such factor on 
the Trust's business, or the extent to which any factor, or combination of 
factors, may cause actual results to differ materially from those contained in 
any forward looking statement. Undue reliance should not be placed on 
forward-looking statements, which are inherently uncertain, are based on 
estimates and assumptions, and are subject to known and unknown risks and 
uncertainties (both general and specific) that contribute to the possibility 
that the future events or circumstances contemplated by the forward looking 
statements will not occur. Although Management believes that the expectations 
conveyed by the forward-looking statements are reasonable based on information 
available to it on the date the forward-looking statements were made, there 
can be no assurance that the plans, intentions or expectations upon which 
forward-looking statements are based will in fact be realized. Actual results 
will differ, and the difference may be material and adverse to the Trust and 
its unitholders. The Trust does not undertake any obligation, except as 
required by applicable securities legislation, to update publicly or to revise 
any of the included forward-looking statements, whether as a result of new 
information, future events or otherwise.

Note regarding barrel of oil equivalency

This press release contains disclosure expressed as "boe" or "boe/d". All oil 
and natural gas equivalency volumes have been derived using the conversion 
ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") 
of oil. Equivalency measures may be misleading, particularly if used in 
isolation. A 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 well head. In addition, given that 
the value ratio based on the current price of oil as compared to natural gas 
is significantly different from the energy equivalent of six to one, utilizing 
a boe conversion ratio of 6 Mcf: 1 bbl would 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.

Brian Prokop Chief Executive Officer Argent Energy Trust (403) 770-4807

Sean Bovingdon Chief Financial Officer Argent Energy Trust (403) 770-4803

SOURCE: Argent Energy Trust

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CO: Argent Energy Trust
ST: Alberta
NI: ERN 

-0- Nov/13/2012 21:11 GMT


 
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