Exploration & Production | Quarterly / Earnings Reports | Third Quarter (3Q) Update | Forecast - Production

Argent 'Significantly' Exceeds 3Q Guidance; Credits Eagle Ford

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   |    Thursday,October 16,2014

Argent Energy Trust reported that third quarter 2014 production averaged approximately 7,263 barrels of oil equivalent per day, (approximately 65% oil and NGLs), significantly exceeding previously announced third quarter production guidance of 6,400-6,500 boe/d. This level of production represents a 14% increase over second quarter 2014 volumes and results in average production of approximately 6,675 boe/d for the nine months ended September 30, 2014. Third quarter production levels reflect a series of successful workovers as well as new Eagle Ford oil wells and South Escobas natural gas wells completed at the end of the second quarter that are subject to high decline rates.

Given continued strong production performance, as reflected in the Trust's most recent 30-day production average of approximately 6,900 boe/d, Argent is increasing its average annual production guidance for 2014 from the previously expected range of 6,200-6,300 boe/d to 6,500-6,600 boe/d.  Fourth quarter 2014 production is expected to be approximately 6,500 boe/d.

The Trust has approximately US$109 million drawn on its US$160 million credit facility, leaving approximately US$51 million of undrawn capacity. With the vast majority of the 2014 capital program having been spent, the Trust expects to utilize the positive cash flow being generated from operations to further reduce indebtedness over the remainder of the year. The Trust continues to be compliant with all the credit facility covenants.

Importantly, for the second half of 2014 Argent is approximately 65% hedged on its oil volumes at WTI oil prices of US$90 /bbl or higher and approximately 55% hedged on its natural gas volumes at an average price of US$4.09 /mmbtu, meaning fluctuations in oil and natural gas prices have less of an impact than likely perceived by the market. In 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 of US$4.12 /mmbtu.

Argent also announces that the cash distribution to be paid on November 24, 2014 , in respect of the period from and including October 1 to October 31, 2014 , for unitholders of record on October 31, 2014 will be $0.02 per trust unit. The ex-distribution date is October 29, 2014 .  The annualized distribution of $0.24 per trust unit represents a cash-on-cash yield of approximately 13.3% based on the closing price of the trust units on the Toronto Stock Exchange on October 15, 2014 of $1.80 . The current distribution level of $0.02 per unit per month represents approximately 35% to 40% of cash flow from operations.