The Trust's unaudited interim consolidated financial statements for the three months ended
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 three months ended
•Increased production by 30% to 6,373 boe/d (69% Oil & NGL) in Q2 2014 from 4,920 boe/d (64% Oil & NGL) in Q2 2013, reflecting new wells coming on production and the acquisition of oil weighted properties in
•Successfully completed and brought onstream one new South Escobas well (
•Q2 2014 oil & gas sales increased by 44% to
•Netbacks from sales volumes for Q2 2014 were
•Q2 2014 funds flow from operations was
•Q2 2014 loss was
•Successfully renewed the
•Declared unitholder distributions of
Oil and gas sales, before royalties
- Oil (bbl/d)
- NGL (bbl/d)
- Natural Gas (mcf/d)
Oil & gas production (boe/d)
% Oil and NGLs
Netback from sales volume only
- per boe
Funds flow from (used in) operations
- per boe
- per Trust Unit, basic
- per Trust Unit, basic
- per Trust Unit, fully diluted
Distribution per Trust Unit
Oil and gas production of 6,373 boe/d in Q2 2014 was flat compared to 6,390 boe/d in Q1 2014. Oil and gas sales before royalties, and total netback, in Q2 2014 remained relatively consistent with those in Q1 2014. While commodity prices realized of
During Q2 2014, the Trust incurred capital expenditures of approximately
During Q2 2014, the Trust successfully completed and brought on stream one new South Escobas well (
During the month of July, the Trust achieved a new all-time daily production high, a milestone that is reflected in the Trust's 30-day production average of approximately 7,600 boe/d. This production level reflects initial flush rates from the planned new Eagle Ford oil and South Escobas natural gas wells that were brought on as well as production increases resulting from workovers and facility upgrades.
During Q2 2014, the Trust successfully drilled two new Eagle Ford wells, Haydens 2H and Haydens 3H, both of which were successfully completed and brought onstream subsequent to the quarter's end. The Haydens 2H and Haydens 3H wells are in the initial stages of flowback, and it will be a number of weeks before the results of the wells can be fully evaluated. This marks the completion of the Trust's 2014 drilling program, with minimal capital expenditure expected for the remainder of the year.
The Trust continues to review plans to rationalize a portion of its assets. As part of this review process, the Trust has recently entered into a purchase and sale agreement to sell certain properties located in
The Trust is also currently evaluating offers on its third party operated production payment and royalty interest; however the timeline to close has been extended as a result of the recently announced Forest Oil Corporation (the operator) and
Given the above successful drilling and workover results, the Trust recently increased its average annual production guidance for 2014 from approximately 6,000 boe/d (approximately 68% oil and NGLs) to an expected range of 6,200 to 6,300 boe/d, and increased its Q3 2014 guidance to an expected range of 6,400 to 6,500 boe/d from previous guidance of 6,100 to 6,200 boe/d.
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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
This press release includes forward-looking information within the meaning of applicable Canadian and
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, operating costs, production growth, 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 facility, the ability to close on the sale of its third party operated production payment and
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.
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 (