Corporate Overview and Outlook
June 2015
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Disclaimer - Forward Looking Information
Forward Looking Statements – This presentation includes forward-looking information within the meaning of applicable
Canadian and United States securities legislation. All statements, other than statements of historical facts, that address
activities, circumstances, events, outcomes and other matters that Argent budgets, forecasts, plans, projects, estimates,
expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future are considered
forward-looking information. The forward-looking information provided in this presentation is based on management's current
beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events.
Argent cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future
operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forwardlooking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and
production and sale of oil and gas.
These risks include, but are not limited to, oil and natural gas price volatility, Argent's access to cash flows and other sources of
liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current
financial climate on Argent's anticipated business and financial condition, a lack of availability of or increases in costs in goods
and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating
future oil and gas production or reserves, economic conditions and other risks as described in documents and reports that
Argent files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for
Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Argent's actual results and plans to
differ materially from those contained in the forward-looking information.
Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could
cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking
information is not a guarantee of future performance or an assurance that our current assumptions and projections are valid. All
forward-looking information speaks only as of the date of this presentation, and Argent assumes no obligation to, and expressly
disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place
undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk
factors contained in Argent’s periodic filings on SEDAR that discuss in further detail the factors that could cause future results
to be different than contemplated in this presentation.
Unlike fixed income securities, Argent has no obligation to distribute any fixed amount and reductions in, or suspension of, cash
distributions may occur that would reduce future yield. See "Risk Factors – Risks Relating to the Trust’s Structure and
Ownership of Units" and "Notice to Reader – Non-IFRS Measures" in Argent's Annual Information Form.
Reserves – The estimates of our reserves disclosed in this presentation have been prepared in accordance with National
Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101) of the Canadian Securities Administrators and
are based on report from GLJ Petroleum Consultants Ltd., an independent petroleum engineering firm, evaluating our reserves
as of December 31, 2014.
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Argent Energy Trust Snapshot
• Argent’s 2014 production averaged 6,641 BOE/d
–
~67% oil and NGLs
• Argent’s 2015E production is expected to average approximately 4,500 BOE/d
post-sale
–
~67% oil and NGLs
• Argent’s assets are located in Texas and Wyoming and consist of:
–
–
–
–
Stable low decline oil fields in Texas and Wyoming
Oil resource properties in Parkman and Turner in Powder River Basin
Natural gas assets in South Texas
Agreement entered into to sell Oklahoma and Kansas, to close in June 2015
• Argent operates ~95% of its oil and gas production and has the ability to adjust
drilling and capital expenditures as needed
• Analyst coverage: Scotia, RBC, BMO
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Corporate Overview (AET.un)
Market Capitalization:
Enterprise Value:
Units Outstanding (basic):
Unit Price Annual Range:
~$20 MM(1)
~$277 MM (~ $269 MM, post-sale)
64.3 MM
$0.26 – 3.17 per unit
Credit Facility:
Amount Drawn on Credit Facility:
Convertible Debentures:
2015 Capital Budget:
US$110 MM ( to be redetermined post-sale)
~US$87 MM (~US$69 MM post-sale)
$149 MM
US$12 MM
2015 Average Production Guidance:
~4,500 BOE/d
Reserve Life Index:
2P WI Reserves:
~16.0 years(2)
~32.6 MMBOE
(1) Based on June 5, 2015 unit price of $0.30/unit at close.
(2) Based on Q4 2014 production.
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Strategic Plan
1) Preserve cash and maintain compliance and liquidity in the low commodity price
environment.
2) Complete sale of Oklahoma and Kansas with proceeds to pay down credit facility.
3) Further reduction of overhead and operating costs.
4) Manage through challenging market conditions and maintain financial flexibility
to position Argent for recovery.
5) Expect to average 4,500 boe/d production in 2015 after asset sales, with 3,000
boe/d hedged.
6) Continued participation in Wyoming Parkman/Turner development.
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Argent Assets
• Diversified portfolio of opportunities in
Texas and Wyoming
Asset Location
– Texas and Wyoming oil
Legacy fields
Established long lived production
– Power River Basin Parkman and Turner
– South Texas natural gas
• Oil weighted asset base
– ~67% liquids (2014)
• Long life reserve base
– 2P RLI of ~16.0 years(1)
– 1P RLI of ~8.9 years(1)
2015 Production
2015 Revenue
(1) Based on Q4 2014 production.
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Production Highlights
•
•
Q1 2015 production averaged 5,819 boe/d (~67% oil and NGLs)
Argent provided average annual production guidance for 2015 of 4,500 boe/d
reflecting asset sales, reduced capital expenditure budget and natural declines.
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Areas of Operation
Argent Energy Trust – Total
- Q1 2015 production of 4,605 net boe/d (5,819 WI)
67% Oil & NGL production
- 17.2 NET MMBOE (21.5 CI) proved reserves, 71% Oil & NGL
- R/P = 9.2 yrs on net boe/d basis(1)
-
-
Powder River Basin Wyoming
Q4 2015 production of 861 net boe/d (1,011 WI)
4.6 NET MMBOE (5.5 CI) proved reserves, 99% Oil & NGL
R/P = 14.4 yrs(1)
Mid-Continent
Q1 2015 production of 542 net boe/d (631 WI)
2.1 NET MMBOE (2.4 CI) proved reserves, 89% Oil & NGL
R/P = 10.4 yrs(1)
-
-
Eagle Ford / Austin Chalk
Q1 2015 production of 801 net boe/d (1,019WI)
1.2 NET MMBOE (1.5 CI) proved reserves, 95% Oil & NGL
R/P = 3.1 yrs(1)
Gulf Coast
Q1 2015 production of 2,401 net boe/d (3,158 WI)
9.3 NET MMBOE (12.1 CI ) proved reserves, 50% oil
R/P = 9.6 yrs(1)
(1) Based on Q4 2014 actual production.
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Reserves and Value by Region
(1) Based on NPV10 of working interest proved plus probable reserves per GLJ independent reserve report as at December 31, 2014 using GLJ commodity pricing
forecast as at December 31, 2014
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Marketing Differentials(1)
WTI less $10-$15
WTI less $1
WTI less $3.64
NYMEX less $0.30
(1) Based on prices received in Q1, 2015. Differentials vary monthly.
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Sales and Funds Flow Highlights
Q1 2015 sales of $22.0 MM (1)
Q1 2015 funds flow from operations of $6.2 MM ($0.10/unit)
(1) Oil and gas sales before royalties and excluding risk management gains/losses
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Eagle Ford / Austin Chalk Fields
• Q1 2015 – Production of 801 net boe/d (1,019 WI)
96% Oil & NGL
Eagle Ford / Austin Chalk Fields
• Operations in 2015
• No drilling planned for 2015
• Upside Opportunities
• Additional infill drilling in the Austin Chalk and
Eagle Ford
• Continued operational improvements in costs and
lifting wells
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Gulf Coast Fields
• Q1 2015 – Production of 2,401 net boe/d (3,158 WI)
40% Oil & NGL
• Operations in 2015
• Sold Manvel Field
• Operations is focused on maximizing production
operations and cost management
Gulf Coast Fields
• Upside Potential
• Infill drill wells in AA wells
• Expect to continue evaluation of 3D seismic owned
or available on most of the fields
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Powder River Basin Fields
• 261 Producing Wells on approximately 50,000 net acres
• 60 Argent operated wells
• 201 non-op wells
• Q1 2015 – Production of 861 net boe/d (1,011 WI)
99% Oil & NGL
Powder River Basin Fields
• Operations in 2015
• 2 Turner wells completed (3% WI)
• 4 Parkman wells in completion stages
• 4 Parkman wells drilling
• Total of 1.25 net Parkman wells
• Evaluate seismic on key fields
• Upside opportunities
• Approximately 11,800 net acres of Parkman and 15,900 net
acres of Turner potential – see next slide
• PUD and PRB drill wells within existing fields, and
• Waterflood and tertiary flood upside
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Powder River Basin
Locator
Formations with Horizontal Potential
Current focus
Source: Bill Barrett Corporation presentation at EnerCom 2013
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Powder River Basin Wyoming – Parkman Upside
• Operators including Devon, EOG, Petro-Hunt, Yates
and others have been actively developing the
Parkman and Turner in the immediate area of
Argent acreage.
• Argent has identified approximately 11,800 net
acres with significant Parkman potential. Additional
acreage may become prospective as this play
further develops.
• Map to the right shows recent horizontal Parkman
activity near Argent’s acreage position in yellow. As
shown on the map these wells have excellent IP’s
and production.
• Argent has elected to participate in eight (8) wells
(1.25 net wells) being drilled by Devon representing
capital exposure of approximately $10MM (US).
• Additional drilling opportunities are under review.
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Powder River Basin Wyoming – Turner Upside
•
Operators including Devon, EOG, Petro-Hunt,
Yates and others have been actively
developing the Parkman and Turner in the
immediate area of Argent acreage.
•
Argent has identified approximately 15,900
net acres in the Turner trend.
•
Map to the right shows horizontal Turner
activity near Argent acreage in yellow.
•
Argent is in the process of evaluating this
developing play.
•
Argent has participated with a small interest in
two long Turner wells. Production has
commenced from one of these wells, the
second well should be on production in June.
Capital exposure for these wells is $0.6MM
(US).
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2015 Capital Opportunities
̶
Approximately 11,800 net acres prospective in fairway of active Parkman and 15,900 net acres
prospective in fairway of Turner horizontal oil play.
̶
Active operators include Devon Energy Resources, EOG Resources, Yates Petroleum, Ballard
Petroleum, Petro-Hunt LLC and others.
̶
Argent has elected to participate in the drilling of 2 Turner and 8 Parkman wells in 2015 to date
representing about $10.6MM (US) capital exposure.
̶
Additional drilling opportunities in Wyoming and Texas to round out the previously announced
budget are presently under review.
̶
The team continues to optimize facilities and focus on remedial work to enhance production at
nominal costs.
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Summary
• Long life assets
– P+P Reserve Life Index (RLI) = ~16.0 years(1)
– Proved RLI = ~8.9 years(1)
• Control over operations (Argent office and field staff) and capital spending
• Oil weighted production
– ~67% of production volumes including ~5% NGL in 2015 – accounts for ~91% of revenue
– Hedging summary
–
2015: 2,000 B/d oil hedged at US$90/B+ | 6,000 mmbtu gas hedged at avg of US$4.12/mmbtu
2016: 1,000 B/d oil hedged at US$65/B+ | 4,000 mmbtu gas hedged at avg of US$4.06/mmbtu
Proximity to Gulf Coast refining results in favorable pricing
(1) Based on Q4 2014 production.
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Contact:
Sean Bovingdon, President and CFO
Steve Hicks, COO
500, 321 – 6th Ave SW
Calgary, AB T2P 3H3
403.770.4809
[email protected]
www.argentenergytrust.com
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Appendix
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Structure
• Tax efficient “mutual fund trust” structure
– Interest and operating deductions result in no
material U.S. taxes for several years
– No SIFT tax in Canada
– Only Canadian tax is at unitholder level,
deferred if in registered accounts
– No withholding tax for U.S. residents
(1)
Pursuant to the terms of the Administrative Services Agreement, the Administrator will perform all administrative, operational and investment services that may be required. The
Administrator and the Trust have also entered into the Services Agreement with Aston Hill, pursuant to which Aston Hill will perform certain technical and administrative services
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Argent Energy Trust Executive Team
Executive
Background
Rick Louden
•
•
•
•
Over 35 years of executive and management experience in oil and gas industry
Former Co-CEO & President of Argent Energy Ltd.
Former President & CEO of Denali
B.S. Mechanical Engineering , Louisiana Tech University
•
•
•
Over 20 years of financial executive experience, 14 in oil and gas industry
Former CFO of Great Plains Exploration Inc., Controller of Western Oil Sands
B.A. (Honours) in Accounting and Economics, University of Kent and a member of the Institute of
Chartered Accountants in England and Wales
•
•
•
•
35 years of industry experience of which over 25 have been in leadership roles
Leadership roles in Acquisitions at Hilcorp Energy, El Paso Corporation and Coastal Corporation
B.S. Petroleum Engineering, University of Oklahoma
Registered Professional Engineer in the State of Texas
Executive Chairman
Sean Bovingdon, ACA
President and CFO
R. Steven Hicks, P.E.
Chief Operating Officer
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Argent Energy Trust Board of Directors
Director
Background
Rick Louden
•
See management bios
•
•
Senior Partner & Head of the Tax Department of the law firm Burnet, Duckworth & Palmer LLP
Director of a number of energy and energy-related corporations, including Crew Energy, Baytex and
TORC Oil and Gas
Played key role in establishing original royalty trust structures in Canada
Executive Chairman
John Brussa
Vice Chairman
•
William Robertson
Director
Glen Schmidt
Director
•
•
Fellow Chartered Accountant and was formerly the lead oil & gas specialist at Price Waterhouse LLP
and PricewaterhouseCoopers LLP
Director of Inter Pipeline Fund
•
•
•
Over 30 years of experience in the oil & gas industry
President & CEO of Laricina Energy Ltd.
Former President & CEO of Deer Creek Energy Limited
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