Argent Energy Trust provides year-end 2012 results with over 300% production growth and increased reserves

Argent Energy Trust provides year-end 2012 results with over 300% production 
growth and increased reserves 
CALGARY, March 5, 2013 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") 
(TSX: AET.UN) is pleased to provide its audited financial results for the 
period from establishment of the Trust to December 31, 2012, and its reserves 
as at December 31, 2012. The Trust was created on January 31, 2012 and 
commenced operations on August 10, 2012 with the acquisition of 1,600 boe/d 
(33% oil) from Denali. The Trust has seen significant but prudent expansion 
with a portfolio approach of organic growth through the drill bit of 1,300 
boe/d and growth by acquisition (from Energy Quest and Wapiti) of 2,300 boe/d 
in under five months. Argent exceeded its Q4 production guidance by 
successfully drilling five Austin Chalk wells, two Eagle Ford wells and one 
well in an additional formation since inception (100% success rate). 
Subsequent to year-end the Trust has successfully completed an additional 
Austin Chalk well and an Eagle Ford well, both of which are on production. 
Argent is currently producing at a 30-day average rate of approximately 5,300 
boe/d (65% oil), on track to meet Q1 production guidance of 5,200 boe/d. 
Management has added reserves (mostly oil) at an attractive finding, 
development & acquisition ("FD&A") cost of $13.82/boe, resulting in a recycle 
ratio (operating netbacks divided by FD&A) of 2.3 times and a reserves 
replacement ratio of 316%. Operating netbacks continue to increase as more 
oil is successfully drilled and added, with Austin Chalk operating netbacks 
currently over $50/boe (recycle ratio of 2.6 times) and Eagle Ford operating 
netbacks of approximately $70/boe (recycle ratio of 3.4 times) driven by low 
operating costs of approximately $12.00/boe and attractive premium realized 
oil pricing (WTI plus approximately $10.00 per barrel). 
This press release contains statements that are forward looking. For more 
information regarding forward-looking statements, see "Note about forward 
looking statements" in this press release and "Forward Looking Statements and 
Risk Factors", "The Industry" and "Risk Factors" in Argent's Annual 
Information Form dated March 4, 2013 (the "AIF") along with Argent's other 
public disclosure documents. The Trust's consolidated financial statements for 
the period ended December 31, 2012, related management's discussion and 
analysis ("MD&A"), and reserves information as required under National 
Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 
51-101") along with the Trust's AIF, have been filed with the securities 
regulators. Copies of the MD&A, AIF and Argent's other public disclosure 
documents are available 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 
In this press release, references to "Argent" or the "Trust" include the Trust 
and its operating subsidiaries. 
2012 Highlights 


    --  Completed initial public offering ("IPO") 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.  Proceeds were
        used to complete the acquisition of operated oil and gas assets
        in Texas ("Denali Assets") for cash consideration, including
        closing adjustments and restricted cash, of approximately
        $203.2 million.
    --  Completed acquisition on August 28, 2012, of an overriding
        royalty interest ("Forest Override") from Forest Oil
        Corporation for approximately US$19 million.  The Forest
        Override generated $1.5 million in revenue, before royalties,
        for the Trust since acquisition.
    --  In each of October and December 2012, the Trust completed
        additional bought deal financings totaling $227 million which
        were used to acquire the EnergyQuest ("EQ Assets") and Wapiti
        ("Wapiti Assets") oil & gas properties respectively.
    --  Successfully drilled and completed five Austin Chalk wells, two
        Eagle Ford wells and one well in an additional oil formation
        (100% success) since the IPO in August.  Argent's third Eagle
        Ford well has been successfully drilled with completion
        operations finalized in late February 2013.
    --  The Trust exited the year at approximately 3,700 barrels of oil
        equivalent ("boe") per day, (excluding the 1,400 boe/d from the
        Wapiti Assets acquired on December 28, 2012) about 100 boe per
        day above the year-end guidance target of 3,500 to 3,600 boe
        per day. The Trust continues to receive oil prices of US$5.00
        to US$10.00 per barrel in excess of WTI on its Texas oil
        production.
    --  As at December 31, 2012, total working interest reserves were
        32,333 MBoe on a proved plus probable basis, consisting of
        17,364 Mbbls oil, 2,099 Mbbls NGLs and 77,221 MMcf of natural
        gas.  The net present value of future net revenues of the
        proved plus probable reserves, discounted at 10%, was US$515.2
        million, with 82.8% of the value represented by oil, 3.8% by
        NGLs and 13.4% by natural gas.
    --  Since acquiring its Assets, the Trust has added 2,327 Mboe of
        reserves at a cost of $52.7 million, with resulting finding and
        development ("F&D") cost of $22.65/Boe.  Taking into account
        the acquisitions, the Trust's FD&A cost for the period was
        $13.82/boe and its recycle ratio was 2.3 times.
    --  Commenced Unitholder distributions at a rate of $1.05 per unit
        per year ($0.0875 per unit per month).
    --  In 2012 Q4, the first full three months of operations, the
        Trust recorded funds flow from operations of $7.4 million, or
        $0.21 per Unit. Average production in 2012 Q4 was 3,169 boe/d,
        consisting of 57% of oil and NGL, compared to 1,618 boe/d in
        2012 Q3, consisting of 36% oil and NGL.
    --  Income for 2012 Q4 was $270,000, or $0.01 per Unit.
    --  For the period from inception on January 31, 2012 to December
        31, 2012, funds flow from operations of $6.8 million, or $0.50
        per unit, reflecting the expensing of $0.6 million of
        acquisition costs connected with completing the three property
        acquisitions, as well as the general and administrative
        expenses incurred in Calgary prior to active operations
        commencing on August 10, 2012.
    --  For the period from inception on January 31, 2012 to December
        31, 2012, loss was $5.7 million, or $0.42 per Unit.
    --  Negotiated a US$95 million credit facility with a syndicate of
        Canadian and US banks.

Selected Annual Information
                                  

($000 unless stated)             January 31 to December 31, 2012( (1))
                                                                      

Total Revenue, before royalties                                $22,255
                                                                      

Production                                                            

-  Oil (bbl/d)                                                   1,225

-  NGL (bbl/d)                                                     145

-  Natural Gas (mcf/d)                                           7,432

Total Production (boe/d)                                         2,609

% Oil and NGLs                                                     53%
                                                                      

Total Netback                                                  $13,373

Netback from production only                                   $11,917

-  per boe                                                      $31.72
                                                                      

Funds flow from operations                                      $6,780

-  per boe                                                      $18.05

-  per Trust Unit, basic                                         $0.50
                                                                      

Loss                                                          ($5,703)

-  per Trust Unit, basic                                       ($0.42)

-  per Trust Unit, fully diluted                               ($0.42)
                                                                      

Total Assets                                                  $548,475

Non-current Liabilities                                        $62,107

Distribution per Trust Unit                                      $0.41

Capital Expenditures ((2))                                     $52,669

Unitholders' Equity                                           $421,810
                                                                      

Note (1): Oil, NGL and Natural Gas sales and production levels reflect
          the period from close of the Denali Assets
          acquisition on August 10(th) through December 31, 2012.

Note (2): Capital expenditures exclude corporate acquisitions

Oil, NGL and Natural Gas sales and production levels reflect the period from 
August 10 through December 31, 2012 which includes results from both the close 
of the Denali Assets acquisition on August 10(th) and the close of the EQ 
Assets acquisition on October 25(th). Production during the period of 
operations from August 10(th) through December 31, 2012 (the "Operating 
Period") totaled 375,686 boe or an average of 2,609 boe/d, with oil and NGL 
sales at 1,370 bbls/d, being 53% of the total sales volume and natural gas 
sales being approximately 7.4 mmcf/d, or 47% of the total sales volume on a 
boe basis. As the Trust continues drilling oil wells, it is expected that the 
percentage of sales volume related to oil will increase in the near term.

Oil, NGL and Natural Gas sales totaled approximately $20.7 million. Oil and 
NGL sales during the Operating Period were approximately $17.8 million, or 86% 
of the total sales, while Natural Gas sales totaled $2.8 million or 14% of the 
total Oil, NGL and Natural Gas sales. The oil price received for the 
Operating Period averaged $96.60 per bbl which represents an uplift of $7.20 
per bbl over the WTI oil price of $89.40 per bbl, while natural gas price 
averaged $2.66 per mcf compared to the Henry Hub spot gas price of $3.07 per 
mcf. 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.

RESERVES INFORMATION

The Trust had its reserves independently evaluated by Sproule Associates 
Limited ("Sproule") and GLJ Petroleum Consultants Ltd ("GLJ") in accordance 
with NI 51-101. The following table summarizes the aggregate of the 
independent reserves estimates and values as at December 31, 2012, based on 
the evaluations by Sproule and GLJ:
                                                
                           Company Gross ((1))   NPV of Future Net
                                               Revenue before Income
                                               Taxes, discounted at
                                                   10%/yr ((2))

Reserves Category                       (Mboe)              (US$000)

Proved:                                                             

  Developed Producing                    8,922               214,597

  Developed Non-Producing                  811                22,096

  Undeveloped                            7,998                54,483

Total Proved                            17,731               291,175

Probable                                14,603               223,991

Total Proved Plus Probable              32,333               515,166

Notes  

(1):  Gross reserves are Argent's total working interest share before
      the deduction of any royalties.


  Estimates of after-tax future net revenue are not presented
(2):  because neither US Opco nor the Trust will be subject to taxes in 
  Canada. 
  Present values of estimated future net revenue shown above are
(3):  based on Sproule's escalated price forecast as of December 31, 
  2012, which assumes a base 2013 WTI oil price of US$89.63/bbl and 


      base 2013 Henry Hub gas price of US$3.65/MMBTU.

(4):  Totals may not add due to rounding.

Capital Program Efficiency

The Trust's capital expenditures of $52.7 million since the IPO resulted in 
proved plus probable reserve additions from drilling and improved recoveries 
of 2,327 MBoe, at an F&D cost of $22.65/boe. This reflects the decision to 
drill and test two additional formations in addition to the Upper Austin Chalk 
and a higher cost on one of the Eagle Ford wells drilled, as it required 
sidetracking and re-drilling the horizontal portion of the well. The costs 
of the Eagle Ford well completed in February 2013 were significantly lower and 
Management expects the F&D costs to decrease. With the addition of proved plus 
probable reserves from the Denali, EQ and Wapiti Asset acquisitions for direct 
costs of $421.6 million, the FD&A cost was $13.82/boe, reflecting the 
accretive nature of the acquisitions undertaken by the Trust.

The following table shows the efficiency of Argent's capital program for the 
period ending December 31, 2012:
                                                          
                                                         Proved plus
                                                            Probable

Development Expenditures ($000)                               52,716

Acquisitions ($000) ((1))                                    421,652

Reserve additions (Mboe)                                            
    Development ((2))                                           2,327
    Acquisitions                                               31,995
                                                              34,322

Finding and Development costs ($/boe)                         $22.65

Finding, Development  & Acquisitions costs ($/boe)( (3))      $13.82

Recycle Ratio ((4))                                             2.3x

Reserves Replacement( (5))                                      316%

Notes:  

(1)    Reflects the direct acquisition costs related to the acquisition
       of the Denali, EQ and Wapiti Assets during 2012.

(2)    Includes reserve additions from drilling, extensions and
       improved recovery.

(3)    Since acquisitions have a significant impact on Argent's annual
       reserves, Argent believes that FD&A costs provide a meaningful
       portrayal of Argent's cost structure.

(4)    The recycle ratio is calculated using the 2012 operating netback
       on a blended product basis of $31.72/bbl divided by FD&A, to
       properly reflect the netbacks arising from acquisitions.

(5)    The reserves replacement is calculated using the development
       reserve additions and the production from the effective date of
       the reserve additions of the acquired assets in the Reserve
       Reports, being January 1, 2012 for Denali Assets and September
       1, 2012 for the EQ Assets.

2013 Outlook
    --  The Trust's Board of Directors has approved a 2013 capital
        budget of US$41 million.  The Trust intends to drill
        approximately 10 Austin Chalk and two Eagle Ford wells in 2013
        in Fayette and Gonzales Counties. The budget excludes corporate
        and property acquisitions.
    --  The Trust expects first quarter production of approximately
        5,200 boe /d (63% oil, 6% NGL and 31% natural gas) including
        1,400 boe /d (64% oil, 14% NGLs and 22% natural gas) from the
        Wapiti Assets. The Trust is currently producing approximately
        5,300 boe/d, with 68% being oil and NGL volumes and 32% being
        natural gas volumes.
    --  The Trust is forecasting a 2013 average production rate of
        approximately 5,500 to 5,600 boe per day (65% oil, 7% NGLs, and
        28% natural gas) which includes relatively flat, low-decline,
        stable production from both the EQ and Wapiti Assets and
        production growth that will continue to come from Austin Chalk
        and Eagle Ford development.
    --  Operating costs per boe (including transportation and
        workovers) are expected to average between US$11.00 to US$12.00
        per boe, resulting in an average operating cash flow netback of
        approximately US$44.00 per boe.
    --  The Trust plans to continue to actively hedge to ensure its
        distribution and its capital program. Oil production is
        approximately 60% hedged at US$90 per bbl WTI or better for
        2013, and approximately 40% hedged at US$90 per bbl WTI or
        better in 2014.  Natural Gas is approximately 35% hedged at an
        average of US$4.05/Mcf for 2013.
    --  The Trust adopted a Premium Distribution(TM) and Distribution
        Reinvestment Plan in February 2013. With a modest DRIP
        participation of 25%, Argent forecasts a payout ratio of 48%
        and a sustainability ratio (distribution plus capital budget)
        of 96% of net cash flow for 2013.
    --  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. Netback is equal to oil, natural gas and 
NGL sales revenue less royalties, transportation costs, production taxes and 
operating expenses. See the "Non-IFRS measures" section of the MD&A for a 
reconciliation of funds flow from operations and 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 capital program, drilling and 
completion plans, oil, natural gas and NGL production rates, operating costs, 
hedging activities, forecast ratio and sustainability ratio, the payment of 
cash distributions by the Trust, including the amount and timing of payment of 
cash distributions, and the Trust's expectation regarding its average working 
interest production for the year and exiting 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 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).

In addition, statements relating to "reserves" are by their nature 
forward-looking information, as they involve the implied assessment, based on 
certain estimates and assumptions that the reserves described can be 
profitably produced in the future. The recovery and reserve estimates of the 
Trust's reserves provided herein are estimates only and there is no guarantee 
that the estimated reserves will be recovered. 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.

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 Annual Information Form dated March 4, 
2013, 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 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 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



For further information concerning this press release, please contact:

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- Mar/05/2013 13:00 GMT


 
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