/NOT FOR DISTRIBUTION IN THE
UNITED STATES OR OVER UNITED
STATES WIRE SERVICES./
CALGARY, Dec. 17, 2014 /CNW/ - Argent Energy
Trust ("Argent" or the "Trust") (TSX: AET.UN) today
announces that in response to the current commodity price
environment, it is reducing both its 2015 capital budget by
approximately US$19.5 million and
reducing its monthly distribution to $0.01 per unit commencing with the distribution
for January 2015 due for payment on
February 23, 2015.
As previously announced, the Board of Directors approved a
preliminary capital budget for 2015 of US$39.5 million with a targeted annual production
for 2015 of approximately 6,500 boe/d. Given that current and
future oil prices have fallen significantly since that time, the
board has cut the 2015 capital budget in half to a level of
approximately US$20 million.
Planned capital expenditures along the Gulf Coast will be postponed
in favor of the capital opportunities in the Parkman and Turner formations in the Powder
River Basin of Wyoming, which
opportunities still provide a good rate of return even at the
current price of oil. The revised 2015 annual production
target will be approximately 6,000 boe/d (approximately 71% oil and
NGLs). The 2015 capital budget is based on a 2015 oil price
forecast for WTI of US$67 per barrel.
As it is too early to estimate the impact that lower commodity
prices will have on both operating and capital costs, the guidance
and 2015 capital budget do not include any benefits from potential
cost reductions.
Currently, Argent is paying a monthly distribution of
$0.02 per unit ($0.24 per unit annualized), which would represent
a total of approximately $14 million
cash outlay in 2015 based on 63.5 million units outstanding with
approximate 8% DRIP participation. The cash distribution to
be paid on January 23, 2015, in
respect of the period from and including December 1 to December 31, 2014, for unitholders
of record on December 31, 2014 will
be $0.02 per trust unit. The
ex-distribution date is December 29,
2014. The annualized distribution of $0.24 per trust unit represents a cash-on-cash
yield of approximately 47.06% based on the closing price of the
trust units on the Toronto Stock Exchange on December 16, 2014 of $0.51. While the Trust expects to have
sufficient funds flow from operations in 2015 to support this
distribution given the capital budget reduction, given the
commodity price forecast for 2015, the Trust believes it is prudent
to lower the amount of its monthly distribution to $0.01 per unit ($0.12 per unit annualized), for a total of
approximately $7 million cash outlay
in 2015, beginning with the January
2015 distribution payable in February
2015.
The two measures will allow for the Trust to manage through the
challenging market conditions and maintain financial flexibility
using its US$140 million credit
facility, while it continues with its strategic alternatives
process. Furthermore, for 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
ofUS$4.12/mmbtu, which will assist in supporting the funds flow
from operations.
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, realizable value of
the Trust's assets, the payment of cash distributions by the Trust,
the 2015 forecast funds flow from operations, 2015 capital budget,
2015 forecast annual production target and commodity mix, forecast
commodity prices, and the ability for repayment of debt. 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.
Additional GAAP Measure
In this press release, the Trust refers to an additional GAAP
measure that does not have any standardized meaning as prescribed
by IFRS. "Funds flow from operations" is considered an
additional GAAP measure and is equal to cash provided by operating
activities, before changes for non-cash working capital, as stated
in the Trust's unaudited interim consolidated financial
statements. We believe funds flow from operations, which is
not impacted by fluctuations in non-cash working capital balances,
is more indicative of operational performance.
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.
About Argent Energy Trust
Argent is a mutual fund trust under the Income Tax Act
(Canada). Material information
pertaining to Argent Energy Trust may be found on
www.sedar.com or www.argentenergytrust.com.
SOURCE Argent Energy Trust