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Acquisitions

ARC’s philosophy when acquiring new properties is to purchase high quality, long-life oil and gas assets. We take a disciplined approach to ensure each acquisition enhances unitholder value. ARC’s focus for 2002 was on smaller acquisitions that complemented our existing properties and strengthened our presence in established core areas such as Ante Creek, Medicine River and Jenner. ARC completed a total of $119 million in net acquisitions, concentrated in our central and northern Alberta core areas. The acquisitions added 4,100 boe per day of production and 13.0 mmboe of established reserves at an average cost of $9.18/boe. ARC’s largest acquisition in 2002 was the purchase of two major oil and gas properties for $71.1 million in the Ante Creek and Brown Creek areas. This acquisition strengthened ARC’s existing presence in Ante Creek and established a presence in the Brown Creek area. The acquisition will add an estimated 2,000 boe per day to ARC’s production. Acquisitions are important for a trust as they replenish depleting assets and provide fresh development opportunities. In 2003, ARC will continue to focus on potential acquisition opportunities that can add significant value for its unitholders.

Dispositions Each year ARC reviews its asset base to identify assets for potential disposition. As production declines in mature properties, ARC may divest these properties if there is limited remaining upside potential. In 2002, ARC disposed of $12.6 million of assets. 2002 Acquisition/Disposition Summary Purchase Price

Established* Reserves

Reserve Purchase Price

Production Rate

Production Purchase Price

Reserve Life Index

($ millions)

(mmboe)

($/boe)

(boe/d)

($/boe/d)

(years)

Acquisitions

131.7

14.3

9.22

4,729

27,871

9.6

Dispositions

(12.6)

(1.3)

9.56

(612)

20,588

5.9

Net acquisitions

119.1

13.0

9.18

4,117

28,936

10.2

* Established = proved plus 50 per cent probable

Summary of Finding, Development and Acquisition Costs ($ thousands)

Total capital expenditures

2002

2001

2000

1999

1998

1997

1996

207,391

624,877

207,917

255,731

10,595

102,717

207,433

Net change in established reserves 6,875

48,344

30,268

44,528

(1,722)

15,892

41,181

Annual production (mboe)

after production

15,485

15,736

10,012

8,093

4,649

4,375

1,751

Annual reserve additions (mboe)

22,360

64,080

40,280

52,621

2,927

20,267

42,932

Annual finding, development and acquisition costs ($/boe)

9.27

9.75

5.16

4.86

3.62

5.07

4.83

Three-year rolling average ($/boe)

8.21

6.94

4.95

4.87

4.85

Cumulative since inception ($/boe)

6.59

6.32

4.93

4.85

4.85

4.91

4.83

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2002  

Annual Report

2002  

Annual Report

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