2012 FINANCIAL AND OPERATING HIGHLIGHTS
-- Increased average production to 2,768 boe/d, a gain of 17% over 2011 despite selling 218 boe/d early in the year, and exited 2012 at a record level of over 4,000 boe/d. Fourth quarter production rose to a new quarterly high of 3,339 boe/d, up 36% from the same period of 2011 and a 30% increase over the 2012 third quarter.-- Crude oil and liquids volumes grew 44% compared to the fourth quarter of 2011,to a record 1,480 bbls/d, of which 71% is oil and condensate, and represents 44% of total production.-- Reduced annual operating costs 13% to $10.13/boe from $11.61/boe a year ago, while fourth quarter operating expenses fell 26% to $9.25/boe versus $12.42/boe recorded in the same period of 2011.-- Increased proved plus probable reserves by 30% to 29.6 mmboe, highlighted by a 47% increase in proved plus probable crude oil and liquids reserves to 7.3 mmbbls and grew proved reserves by 33% to 17.1 mmboe.-- Replaced 2012 production of 1,013 mboe by 5.6 times and 8.4 times with proved and proved plus probable reserves additions, respectively.-- Invested $59.9 million in capital expenditures, including $7.0 million on land acquisitions in our core areas and $44.8 million on drilling and completion activities, resulting in the successful drilling of 13 (7.8 net) wells with a 100% success rate.-- Executed a $19.4 million strategic disposition of 218 boe/d at Leduc Woodbend in central Alberta at attractive metrics of approximately $89,000/flowing boe and $28/boe for proved plus probable reserves. The sale facilitated capital expansion and significant growth in the Company's core operating area of Inga, British Columbia. Following a successful four- well drilling program conducted late in the year, Leduc Woodbend volumes are back above pre-disposition production levels at approximately 650 boe/d.-- Achieved all-in finding, development and acquisition ("FD&A") costs, including future development costs ("FDC"), of $10.96/boe on proved plus probable reserves and $13.39/boe on proved reserves. Finding and development costs were $12.37/boe on a proved plus probable basis, including FDC but excluding acquisitions and dispositions.-- Achieved a top tier recycle ratio of 2.3 times based on proved plus probable FD&A costs of $10.96/boe and Artek's fourth quarter 2012 operating netback of $25.47/boe.-- Increased proved plus probable reserves value 17% to $257.4 million (before tax at 10% discount), despite lower overall crude oil and natural gas prices utilized in the current reserves report prepared by the independent engineers.-- Increased undeveloped land acreage 12% to 120,846 net acres.-- Net asset value at December 31, 2012 increased to approximately $251 million or $4.51 per diluted share.-- Increased operating bank line to $65 million, while maintaining the acquisition/development line of credit at $10 million.
(i) More detailed information in respect of the results of Artek's independent reserves evaluation for the year ended December 31, 2012 (the "Sproule Report") as evaluated by Sproule Associates Limited ("Sproule"), capital efficiencies including finding and development costs and finding, development and acquisition costs and related information was contained in Artek's press release dated March 7, 2013 and will be contained in Artek's Annual Information Form to be filed on SEDAR on or before March 31, 2013. It should not be assumed that the discounted future net revenues estimated by Sproule represent the fair market value of the reserves.