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ARC ANNUAL 07

Message to Unitholders

Message to Unitholders Reserves

ARC ANNUAL 07

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Reserves included herein are stated on a company interest basis (before royalty burdens and including royalty interests) unless noted otherwise. All reserves information has been prepared in accordance with National Instrument (“NI”) 51-101. This report contains several cautionary statements that are specifically required by NI 51-101. In addition to the detailed information provided herein more detailed information on a net basis (working interest share after deduction of royalty obligations, plus royalty interests) and on a gross basis (working interest before deduction of royalties without including any royalty interests) will be included in ARC’s Annual Information Form (“AIF”). Based on an independent reserves evaluation conducted by GLJ Petroleum Consultants Ltd. (“GLJ”) effective December 31, 2007 and prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and NI 51-101, ARC had proved plus probable reserves of 286.4 mmboe (1) . Reserve additions from exploration and development activities (including revisions) were 21.4 mmboe while 1.7 mmboe were added through acquisitions (net of minor dispositions), bringing the total additions to 23.1 mmboe. This represents 101 per cent of the 22.9 mmboe produced during 2007. As a result, year-end 2007 reserves are slightly higher than the 286.1 mmboe of proved plus probable reserves recorded at year-end 2006. Proved developed producing reserves represent 85 per cent of total proved reserves and 65 per cent of proved plus probable reserves; total proved reserves account for 79 per cent of proved plus probable reserves. Approximately 55 per cent of ARC’s proved plus probable reserves are crude oil and natural gas liquids and 45 per cent are natural gas on a 6:1 boe conversion basis. (1)

Boe 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.

Reserves Summary Effective December 31, 2007 Using GLJ January 1, 2008 Forecast Prices and Costs COMPANY INTEREST (GROSS + ROYALTIES RECEIVABLE) Light and Medium Crude Oil (mbbl) Proved Producing Proved Developed Non-Producing Proved Undeveloped Total Proved Proved plus Probable

98,495 1,175 11,134 110,805 140,528

Heavy Crude Oil (mbbl) 2,436 117 11 2,564 3,390

Total Crude Oil (mbbl) 100,931 1,292 11,145 113,369 143,918

NGLs (mbbl) 9,448 486 1,484 11,418 14,423

Total Oil Oil Natural Equivalent Equivalent Gas 2007 2006 (bcf) (mboe) (mboe) 449.9 28.8 122.3 601.0 768.2

185,364 6,582 33,007 224,953 286,371

187,501 4,707 34,055 226,264 286,125

GROSS Light and Medium Crude Oil (mbbl) Proved Producing Proved Developed Non-Producing Proved Undeveloped Total Proved Proved plus Probable

98,381 1,174 11,131 110,686 140,384

Heavy Crude Oil (mbbl) 2,224 117 11 2,353 3,134

Total Crude Oil (mbbl)

NGLs (mbbl)

100,605 1,291 11,142 113,039 143,518

9,280 486 1,484 11,249 14,218

Total Oil Oil Natural Equivalent Equivalent Gas 2007 2006 (bcf) (mboe) (mboe) 438.9 28.8 122.1 589.8 754.9

183,042 6,581 32,970 222,592 283,550

184,959 4,706 34,017 223,681 283,015

2007  

Annual Report

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