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ARC Energy Trust announces strategic acquisition |
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Written by Newswire
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CALGARY, AB - ARC Energy Trust announced yesterday that it has entered into an agreement to purchase, directly and indirectly, all of the units of a general partnership formed to hold oil and gas assets in Ante Creek and other areas of northern Alberta for $180 million in cash consideration prior to normal closing adjustments. The acquisition will increase ARC’s current production by approximately 2,000 boe per day and its undeveloped land holdings by approximately 20 per cent while adding an estimated 12.6 million boe of proved plus probable reserves.
ARC has concurrently entered into an agreement to sell 10.31 million trust units at $19.40 per trust unit to raise gross proceeds of approximately $200 million on a bought deal basis. The issue will be made through a
syndicate of underwriters led by RBC Capital Markets. The net proceeds will be used to fund the acquisition and for general corporate purposes. This offering is subject to normal regulatory approvals and is expected to close on or about January 5, 2010. The trust units will be issued by way of a short-form prospectus to be filed in each of the provinces of Canada.
John Dielwart, ARC’s CEO, said, “This acquisition significantly increases our land position in the Ante Creek region, which is a key growth area for us. Ante Creek is a tight Montney oil and gas property where we have grown production from 1,500 boe per day in 2000 to over 5,000 boe per day today through the drilling of over 125 successful wells and property consolidation. At Ante Creek, we have proven that we can add significant
value through the application of technology. This acquisition provides effective control of the known play in the area and will allow us to expand our recently initiated successful horizontal drilling program.”
Acquisition Highlights:
- The assets being acquired currently produce approximately 2,000 boe per day, split 25 per cent liquids and 75 per cent natural gas. ARC expects 2010 production from these assets will average 2,500 boe per day.
- ARC estimates as at September 30, 2009 that 7 million boe of proved reserves and 12.6 million boe of proved plus probable (P+P) reserves are being acquired through this transaction. Approximately 80 per cent of the proved plus probable reserves have been evaluated by ARC’s independent reserve evaluator while the remainder were evaluated internally.
- Included in the acquisition are 30.5 sections of developed land and 163.5 sections of undeveloped land. This will be a 20 per cent increase in ARC’s undeveloped land base. In the Ante Creek area alone, the acquisition adds 95 sections (60,100 acres) of land, increasing ARC’s total land holdings in the area by 70 per cent to 232 sections (148,500 acres).
- Included in the acquisition is the remaining 30 per cent working interest in an ARC operated gas plant at Ante Creek - taking the Trust’s ownership of the plant to 100 per cent.
- Acquisition price of $25.71 per proved boe and $14.30 per proved plus probable boe prior to attributing value for the gas plant and the undeveloped land. Including future development capital, the acquisition
- price is $36.89 per proved boe and $20.50 per proved plus probable boe. This provides a greater than two times recycle ratio based on the current average field netback of approximately $30 per boe at Ante Creek and the proved plus probable acquisition price of $14.30 per proved plus probable boe.
- ARC has identified at least 30 horizontal drilling opportunities on the acquired properties with the potential for much greater development.
- $35 million has been added to the 2010 capital budget resulting in a revised budget of $610 million.
Additional information on ARC’s assets is available at www.arcenergytrust.com
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