Page 31

Reserves

Based on an independent engineering evaluation conducted by Gilbert Laustsen Jung Associates Ltd. (GLJ) effective December 31, 2002, ARC had proved plus risked probable reserves of 409 bcf of natural gas and 117 mmbbls of crude oil and natural gas liquids. Approximately 63 per cent of ARC’s reserves are crude oil and natural gas liquids and 37 per cent are natural gas on a 6:1 boe conversion basis. Total reserves at December 31, 2002 were 185 mmboe, an increase of approximately four 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 and general and administrative costs 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 the nature of oil and gas reservoirs which exhibit 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. Present Value of Reserves (thousands of $ before income taxes)

2002 Discount Factor Proved producing Proved non-producing Total proved Risked probable Established

2001

10%

12%

15%

10%

12%

15%

1,026,459

953,490

864,840

955,706

886,964

803,266

138,571

119,668

97,109

111,778

96,477

78,222

1,165,030

1,073,158

961,949

1,067,484

983,441

881,488

137,340

116,431

93,498

148,509

126,642

102,463

1,302,370

1,189,589

1,055,447

1,215,993

1,110,083

983,951

Net Asset Value ($ thousands, except per unit amounts)

2002 10%

2001 12%

10%

2000

1999

1998

12%

10%

12%

10%

12%

10%

12%

1,302,370 1,189,589 1,215,993 1,110,083

Value of established oil & gas reserves Add: Undeveloped lands Working capital Reclamation fund Less: Debt* Net asset value

944,804

868,071

530,400

484,309

278,353

253,529

22,293

5,698

5,698

11,994

11,994

2,655

2,655

5,805

5,805

6,339

6,339

15,761

15,761

(1,688)

(1,688)

10,147

10,147

9,897

9,897

7,165

7,165

4,504

4,504

(294,489)

(294,489)

(115,068)

(115,068)

(141,000) (141,000)

(72,499)

(72,499)

874,419

959,749

853,839

851,670

774,937

424,320

378,229

211,325

186,501

126,444

126,444

111,693

111,693

72,524

72,524

53,607

53,607

25,604

25,604

$ 7.81

$ 6.92

$ 8.59

$ 7.64

$ 11.74

$ 10.69

$ 7.92

$ 7.06

$ 8.25

$ 7.28

19,700

19,700

(10,067)

(10,067)

12,925

12,925

(337,728)

(337,728)

987,200

22,293

Units outstanding (thousands) (end of year)

NAV per Unit

* Does not include retention bonuses

25

2002  

Annual Report

2002  

Annual Report

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