2006 Acquisition/Disposition Summary Purchase Price
Net Acquisitions
Proved plus Reserve Production Probable Purchase Production Purchase Reserves Price Rate Price
Reserve Life Index
($ millions)
(mmboe)
($/boe)
(boe/d)
($/boe) /d)
(years)
131.8
5.8
$22.55
1609
$81,914
9.9
Finding Development and Acquisition Costs (“FD&A”) Incorporating the net acquisitions during the year, ARC’s proved FD&A costs excluding FDC were $24.51 per boe while proved plus probable FD&A costs were $22.41 per boe. The following table outlines the impacts of the significant capital devoted towards future growth opportunities FD&A Costs – Impacts due to growth oriented spending Undeveloped Land EOR (1) Base Acquisitions Pre-investment Seismic Expenditures ($ millions) $ 420.8 $ 55.9 $ 13.2 $ 6.1 $ Total Proved ($/boe) $ 20.80 $ 2.76 $ 0.65 $ 0.30 $ Proved Plus Probable ($/boe) $ 19.03 $ 2.52 $ 0.59 $ 0.27 $ (1)
Total 496.3 24.51 22.41
Enhanced oil recovery (EOR) Pre-investment relates to capital expended in 2006 on projects where the expected reserve uplift has not yet been booked.
FD&A Costs – Company Interest Reserves (1) Proved plus Proved Probable FD&A Costs Excluding Future Development Capital Exploration and Development Capital Expenditures ($ thousands) $ 364,482 $ 364,482 Exploration and Development Reserve Additions Including Revisions (mboe) 16,062 16,298 Finding and Development Cost ($/boe) $ 22.69 $ 22.36 Three Year Average F&D Cost ($/boe) $ 18.06 $ 16.72 Net Acquisition Capital ($ thousands) $ 131,820 $ 131,820 Net Acquisition Reserve Additions (mboe) 4,184 5,845 Net Acquisition Cost ($/boe) $ 31.51 $ 22.55 Three Year Average Net Acquisition Cost ($/boe) $ 17.47 $ 14.49 Total Capital Expenditures including Net Acquisitions ($ thousands) $ 496,302 $ 496,302 Reserve Additions including Net Acquisitions (mboe) 20,246 22,143 Finding Development and Acquisition Cost ($/boe) $ 24.51 $ 22.41 Three Year Average FD&A Cost ($/boe) $ 17.77 $ 15.59 In all cases, the F&D, or FD&A number is calculated by dividing the identified capital expenditures by the applicable reserves additions. Boes may be misleading, particularly if used in isolation. In accordance with NI 51-101, a Boe conversion ratio for natural gas of 6 mcf: 1 bbl has been used which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
(1)
Future Development Capital (“FDC”) NI 51-101 requires that FD&A costs be calculated including changes in FDC. Changes in forecast FDC occur annually as a result of development activities, acquisition and disposition activities and capital cost estimates that reflect the independent evaluator’s best estimate of what it will cost to bring the proved undeveloped and probable reserves on production. The current high level of activity has resulted in increased capital costs throughout the industry that are now reflected in the estimates of future development costs effective December 31, 2006. ANNUAL REPORT REPORTF
Reserves
17