Page 11

9

ARC ANNUAL 07

Message to Unitholders

Message ReviewtoofUnitholders Operations

ARC ANNUAL 07

99

There are three things that successful oil and gas companies have in common: quality assets, low cost structure and a team that delivers results. ARC’s technical team has a long history of delivering on all three of these measures.

ARC has traditionally executed a disciplined and successful capital program and our 2007 program was no exception. We always say that there are three things that successful oil and gas companies have in common: quality assets, low cost structure and a team that delivers results. ARC’s technical team has a long history of delivering on all three of these measures. ARC prides itself on its exceptional assets and the many opportunities imbedded in them. Beyond our excellent base operations with over 1,700 identified drilling locations, there is significant unrecognized value embedded in ARC’s tight gas resource play in the Montney zone in northeastern British Columbia and through enhanced oil recovery using CO2 injection. We made important progress on both initiatives in 2007 and expect to make further progress in 2008. With time, technology, and the efforts of our technical team we expect to unlock significant value for our investors.

Production For 2007, ARC’s production volumes averaged 62,723 boe per day. The 2007 production volume was slightly below our budget of 63,000 boe per day, primarily due to a third-party gas plant construction delay and unscheduled downtime at a non-operated facility. With the gas plant coming on stream in December, we exited the year at 65,000 boe per day, providing a great start for 2008. ARC’s production fluctuates throughout each quarter depending on the timing of new wells coming on and closures of facilities for maintenance. For 2008, ARC is forecasting average production volumes of 63,000 boe per day based on our existing assets and internal drilling activities, which will be the third consecutive year we have maintained this production level without any significant acquisitions.

Capital Expenditures ARC invested a record $397 million dollars on capital development in 2007, drilling a total of 278 gross well (220 net wells) on operated properties with a 99 per cent success rate. ARC also participated in the drilling of 156 gross wells (33 net wells) drilled by other operators. Our capital program replaced approximately 93 per cent of ARC’s production through our internal drilling and optimization activities. Approximately $230 million was spent on drilling and completion activities on ARC’s properties. The ability to sustain our production each year speaks to the quality of our assets and the ability of our technical team to exploit the opportunities associated with our properties. The capital development expenditures included the purchase of $77.5 million of undeveloped land, bringing the Trust’s undeveloped land holdings to 536,232 acres. Although these lands do not currently contribute reserves, primarily on land holdings in the Dawson area, or production; through disciplined development, those lands should play a role in sustaining production volumes in the future through internal drilling. ARC also spent $42.5 million on property acquisitions of light oil producing properties in southeast Saskatchewan and on developed and non-developed assets within our Dawson and Ante Creek areas. These assets contributed approximately 350 boe per day of production to our fourth quarter production volumes. For 2008, ARC has a similar capital development budget of $395 million with plans to drill approximately 310 gross wells on operated properties. We are budgeting $31 million toward exploration activities primarily related to the recently acquired land holdings in the Dawson area. We have also budgeted $18 million toward natural gas from coal (“NGC”) development and $13 million toward CO2 EOR initiatives.

2007  

Annual Report

Read more
Read more
Similar to
Popular now
Just for you