TSX: TUI.UN
CALGARY, Feb. 9 /CNW/ - True Energy Trust ("True" or the "Trust")
announces the results of its 2008 year-end reserves as evaluated by GLJ
Petroleum Consultants Ltd. ("GLJ"), the independent reserves evaluator, for
100% of True's oil and gas properties prepared in accordance with National
Instrument 51-101 ("NI 51-101").
As True plans to announce its audited 2008 financial results on or about
March 12, 2009, certain financial estimates have been made by True in this
release to facilitate the discussion with respect to the performance of our
capital program. Readers are advised that these financial estimates are
subject to audit and may be amended as necessary.
True's corporate thrust in 2008 was to improve the Trust's balance sheet
by reducing total outstanding debt and streamlining its operating cost
structure. This strategy resulted in a reduced 2008 capital program of $43
million, from $88.9 million in 2007, and strategic divestitures which were
expected to negatively impact reserves and production.
The consequence of this planned activity was total net debt levels
decreasing by $36.2 million from $251.2 million at December 31, 2007 to $215
million at December 31, 2008 excluding unrealized commodity contract assets
and liabilities, future income taxes and asset retirement obligations. The
accompanying reduction posted in reserves and production was within the
planned parameters.
True continues to tighten its cost structure in the current economically
challenging climate with forecasted cuts of 30% to total operating expenses
which includes general and administrative costs ("G&A") and lease operating
costs in 2009. As stated in the press release dated January 20, 2009 True has
further reduced its capital budget in 2009 to $15 million and is forecasting
2009 production volumes to average approximately 10,000 boe/d.
As an added layer of protection of its cash flow forecast, True has
hedged approximately 50% of its estimated 2009 natural gas production for the
balance of the year at an average fixed price of $6.60 CAD per GJ ($7.25/mcf)
and approximately 18% of True's estimated natural gas production is hedged for
the first half of 2010 at an average price of $7.25 CAD per GJ ($7.96/mcf).
True's operating forecast for 2009 which assumes a CAD$/US$ exchange rate
of $0.82, WTI oil price ranging from US$50.00/bbl to US$55.00/bbl, AECO
natural gas price ranging from CAD$5.46/GJ ($6.00/mcf) to CAD$5.92/GJ
($6.50/mcf) and average annual production of approximately 10,000 boe/d
generates cash flow from operations ranging from $30 million to $40 million,
after deducting royalties, all operating costs, G&A and debt servicing costs.
Based on the foregoing assumptions and assuming 2009 distributions of $3.1
million coupled with the planned capital budget of $15 million the Trust would
utilize between 45% - 60% of the Trust's forecasted cash flow from operations.
OPERATING HIGHLIGHTS
True reports the following highlights as at December 31, 2008, including:
- True's net asset value, based on the GLJ evaluation at a 10%
discount rate, equates to $4.98 per unit and $4.96 per fully diluted
unit.
- The Trust's reserves life index has extended to 6.4 years for proved
reserves and 10.1 years for proved plus probable reserves.
- Approximately 50% of True's estimated 2009 natural gas production is
hedged for the balance of the year at an average fixed price of
6.60 CAD per GJ ($7.25/mcf) and approximately 18% of True's
estimated natural gas production is hedged for the first half of
2010 at an average fixed price of $7.25 CAD per GJ ($7.96/mcf).
- Total net proceeds from the sale of properties in 2008 were
$44.3 million; the net proceeds from the dispositions were used to
pay down debt.
- True's total net debt including the liability component of its
convertible debentures, excluding unrealized commodity contract
assets and liabilities, future income taxes and asset retirement
obligations, as at December 31, 2008 was $215.0 million, down from
$251.2 million as at December 31, 2007 and $275.8 million as at
December 31, 2006.
- As at December 31, 2008, True has approximately $132 million drawn on
its extendible, revolving bank credit facility leaving $20 million
available to assist in managing our operations and capital program.
- Based on the reserves information and other data as at December 31,
2008, the Trust has performed ceiling test calculations in accordance
with the requirements of CICA AcG 16 "Oil and Gas Accounting - Full
Cost". No ceiling test impairment of oil and gas properties is
anticipated for accounting purposes as at December 31, 2008.
- The Trust and operating subsidiaries of the Trust have approximately
$495 million in tax pools available for deduction against future
income.
- True has over 377,763 net undeveloped acres in Alberta, British
Columbia and Saskatchewan.
- On a proved basis only, True established finding and development
costs (including acquisitions) of $18.20/boe excluding future
development costs and $20.90/boe including future capital.
- Finding and developing costs for proved plus probable reserves
(including acquisitions) were $31.50/boe excluding future development
costs and $36.10/boe including future development costs; the three
year cost averages were $23.50/boe and $25.40/boe respectively.
- The Trust established a recycle ratio, after hedging and excluding
future development costs, of 1.34x on a proved basis and 0.77x on a
proved plus probable basis.
- On October 1, 2008, True closed the purchase of further working
interests in the Mantario, Saskatchewan area for $4.3 million in cash
after adjustments. Effective October 1, 2008, this tuck-in
acquisition adds approximately 225 bbls/d of heavy oil production for
metrics of $19,100 per boe/d and $8.60/boe.
RESERVES
The Trust believes, as its assets continue to mature, as steam assisted
gravity drainage ("SAGD") at Kerrobert is further implemented and as the tight
gas in west central Alberta continues to demonstrate harmonic decline
behavior, that positive revisions to the reserve base could occur.
True's average production for 2008 is estimated to be 11,900 boe/d,
weighted 63% toward natural gas, 24% toward heavy oil with the 13% balance
being light oil and natural gas liquids. After giving recognition to property
dispositions in 2008, proved and probable working interest reserve additions
in 2008 replaced approximately 32% of production.
At December 31, 2008 the Trust's proved and probable working interest
reserves, using forecast prices and costs, were 39,278 mboe, a decrease of 13%
compared to 45,405 mboe at December 31, 2007; property dispositions accounted
for 3,180 mboe or 52% of the decrease. By commodity type, natural gas makes up
55%, heavy oil 34%, and light oil and natural gas liquids 11%. At December 31,
2008, True's total proved working interest reserves were 23,306 mboe, a
decrease of 15% compared to 27,587 mboe at December 31, 2007, property
dispositions of 2,325 mboe accounted for 54% of the decline.
2008 capital expenditures excluding acquisitions and dispositions are
estimated to have been $36.7 million.
PRODUCTION
For the 2008 year, sales volumes averaged 11,900 boe/d compared to 16,139
boe/d for the same period in 2007, representing a 26% decrease. The reduction
in average sales volumes from the 2007 year to 2008 is a result of natural
production decline, the impact of dispositions totaling approximately 1,000
boe/d that were closed during the first half of 2008 and minimal 2008 capital
spending. Effective October 1, 2008, True closed the purchase of further
working interests in the Mantario, Saskatchewan area which added approximately
225 bbls/d of heavy oil production.
Assuming minimal capital spending of $15 million, and normal declines,
2009 production volumes are anticipated to average approximately 10,000 boe/d.
TOTAL DEBT
True's net debt, excluding unrealized commodity contract assets and
liabilities, future income taxes and asset retirement obligations, as at
December 31, 2008 was $215.0 million, representing $132.4 million outstanding
on the credit facility, $81.1 million in convertible debentures (liability
component) and the net balance of a working capital deficiency.
CAPITAL EXPENDITURES
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Years ended December 31,
(unaudited/$000s) 2008 2007
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Lease acquisitions and retention 1,244 2,084
Geological and geophysical 318 4,275
Drilling and completion costs 19,008 64,638
Facilities and equipment 16,129 15,294
Other Capital(2) - 1,056
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Exploration and development(1) 36,699 87,347
Corporate and property acquisitions 6,303 1,505
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Total capital expenditures - cash 43,002 88,852
Property dispositions - cash (44,340) (31,808)
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Total net capital expenditures - cash (1,338) 57,044
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Other - non-cash(3) 3,710 (530)
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Total net capital expenditures(1) 2,372 56,514
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(1) Excludes capitalized costs related to asset retirement obligation
expenditures incurred during the year.
(2) Other capital for 2007 includes natural gas input costs incurred
during the initial "warm-up" phase at the Kerrobert SAGD expansion
project.
(3) Other includes non-cash adjustments for current period's asset
retirement obligations and unit based compensation capitalized. For
2007, it also includes a $(0.8 million) initial fair value adjustment
for marketable securities acquired.
PROPERTY ACQUISITIONS AND DISPOSITIONS
On October 1, 2008, True closed the purchase of further working interests
in the Mantario, Saskatchewan area for $4.3 million in cash after adjustments.
Effective October 1, 2008, this tuck-in acquisition adds approximately 225
bbls/d of heavy oil production for metrics of $19,100 per boe/d and $8.60/boe.
During the first quarter of 2008, True was successful in completing the
divestiture of a non-core property in Northeast Alberta for net proceeds of
$5.8 million. During the second quarter of 2008, True disposed of its
Dodsland-Stranraer property located in Saskatchewan for net proceeds of $38.5
million and other minor non-core properties in Alberta for net proceeds of
$0.3 million. Total net proceeds from the sale of properties in the 2008 were
$44.3 million; the net proceeds from the dispositions were used to pay down
debt.
TAX POOLS
At December 31, 2008, the Trust and operating subsidiaries of the Trust
had approximately $495 million in tax pools available for deduction against
future income as follows:
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Operating
($000s) Trust subsidiaries Total
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Intangible resource pools 15 306 321
Undepreciated capital cost - 128 128
Loss carryforwards (expire through
2027) - 40 40
Unit issue costs 4 2 6
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19 476 495
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Reserves, at December 31, 2008, as evaluated by GLJ, are summarized in the
following tables:
Summary of Oil and Gas Company Interest(1) Reserves(2) (Gross + Royalties
Receivable)
Forecast Prices and Costs
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As at
As At December 31, 2008 Dec. 31,
2007
Natural Heavy Light Natural Total Total
Gas(3) Oil and Gas
Medium Liquids
Oil
(mboe, (mboe,
(mmcf) (mbbl) (mbbl) (mbbl) 6:1) 6:1)
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Proved
Developed
producing 63,377 4,550 1,240 1,122 17,475 23,079
Developed non-
producing 8,801 0 45 53 1,565 1,656
Undeveloped 9,084 2,505 211 183 4,413 3,027
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Total proved 81,261 7,055 1,497 1,358 23,453 27,762
Probable 48,644 6,170 792 965 16,035 17,873
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Proved plus
probable,
producing 83,846 6,002 1,653 1,506 23,135 30,706
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Total proved plus
probable 129,906 13,226 2,289 2,322 39,488 45,635
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(1) "Company Interest" means True's working interest (operated or non
operated) share before deduction of royalties but after including any
royalty interests of True.
(2) May not add due to rounding.
(3) Includes 1,656 MMcf of total proved and 2,090 Gross MMcf total proved
plus probable assigned to coal bed methane reserves.
Summary of Oil and Gas Working Interest(1) Reserves(2) (Gross)
Forecast Prices and Costs
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As at
As At December 31, 2008 Dec. 31,
2007
Natural Heavy Light Natural Total Total
Gas(3) Oil and Gas
Medium Liquids
Oil
(mboe, (mboe,
(mmcf) (mbbl) (mbbl) (mbbl) 6:1) 6:1)
-------------------------------------------------------------------------
Proved
Developed
producing 62,776 4,529 1,235 1,110 17,336 22,905
Developed non-
producing 8,795 0 43 53 1,562 1,656
Undeveloped 9,053 2,505 211 182 4,407 3,026
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Total proved 80,624 7,035 1,490 1,344 23,306 27,587
Probable 48,358 6,165 791 957 15,972 17,819
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Proved plus
probable,
producing 83,098 5,976 1,646 1,492 22,963 30,488
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Total proved plus
probable 128,982 13,200 2,280 2,301 39,278 45,405
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(1) "Working Interest" means True's working interest (operated or non
operated) share before deduction of royalties and without including
any royalty interests of True. Also referred to as "Gross" reserves
under NI 51-101.
(2) May not add due to rounding.
(3) Includes 1,656 MMcf of total proved and 2,090 Gross MMcf total proved
plus probable assigned to coal bed methane.
Summary of Oil and Gas Net Reserves(1)(2) (Net)
Forecast Prices and Costs
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As at
As At December 31, 2008 Dec.
