2010-03-10-2009-12-14

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
180MM
Description

To acquire partnership with interests in Ante Creek, Alberta, gaining 12.6 MMBOE 2P, 2,000 BOE/d.

ARC Energy Trust, Calgary, (Toronto: ARX) plans to acquire a partnership with oil and gas asset holdings in northern Alberta for C$180 million in cash. The identity of the partnership was not disclosed.

The deal will significantly boost ARC's presence in the Ante Creek area, which has been a focus for the company since 2000.

The acquisition price is C$25.71 per proved barrel of oil equivalent and C$14.30 per proved plus probable barrel of oil equivalent, not including the value of a gas plant and undeveloped land.

The assets include 7 million barrels of oil equivalent of proved reserves and 12.6 million barrels of oil equivalent of proved plus probable reserves, based on estimates as of Sept. 30, 2009. The assets being acquired have current production of approximately 2,000 barrels of oil equivalent per day (75% gas). ARC says it expects 2010 production from the assets will average 2,500 barrels of oil equivalent per day.

Also included in the acquisition are 30.5 sections of developed land and 163.5 sections of undeveloped land, increasing ARC's undeveloped land base by 20%. The company will also gain the remaining 30% working interest in an Ante Creek gas plant, which it currently operates.

With this acquisition, ARC's production from Ante Creek will increase to approximately 6,500 barrels of oil equivalent per day, while its land base will increase by 70% to 148,500 acres. The company says it has identified at least 30 horizontal drilling opportunities on the acquired properties.

To finance the acquisition, ARC plans to sell 10.3 million trust units at C$19.40 each in a bought deal for proceeds of approximately C$200 million. RBCCapital Markets will lead the syndicate of underwriters.

ARC chief executive John Dielwart says, "This acquisition significantly increases our land position in the Ante Creek region, which is a key growth area for us. Ante Creek is a tight Montney oil and gas property where we have grown production from 1,500 barrels of oil equivalent per day in 2000 to over 5,000 barrels of oil equivalent per day today through the drilling of over 125 successful wells and property consolidation."