ARC Front final 3/4/02 9:26 AM Page 34
Based on an independent engineering evaluation conducted by Gilbert Laustsen Jung Associates Ltd. (GLJ) effective December 31, 2001, ARC had proved plus risked probable reserves of 386 bcf of natural gas and 114 mmbbls of crude oil and natural gas liquids. Approximately 64 per cent of ARC’s reserves are crude oil and natural gas liquids and 36 per cent are natural gas on a 6:1 boe conversion basis. Total reserves at December 31, 2001 were 178.5 mmboe, an increase of 37 per cent from the previous year. The following tables summarize ARC’s reserves of natural gas, crude oil, and natural gas liquids as evaluated by GLJ. These reserves reflect ARC’s interest before royalties. Probable reserves are risked at 50 per cent to calculate the established reserves. All estimates of future net cash flow in these tables are calculated without any provision for income taxes, general and administrative costs, or management fees, but include provisions for future well abandonment liabilities. Reserve Life Index (RLI) is calculated by dividing the reserves by annual production (either current year annual production or the independent evaluator’s forecast of the first year’s production). This provides a simplified representation of the number of years of reserves remaining if production remained constant. The actual productive life of the reserves is significantly longer due to a declining production rate over time. To account for the impact and timing of acquisition and divestment activity, the tables use the independent evaluator’s forecast of the first year’s production in determining RLI, as this results in a more consistent representation over time.