The private company being acquired had average production of approximately 1.7 mmcf per day (283 BOE/d) in June of 2004. Production is 100% operated with an average working interest of 85%. Total proved and probable reserves at September 1, 2004 are 10.8 bcf of natural gas (1.8 million barrels of oil equivalent). Proven reserves represent 83% of total proven and probable reserves. Reserves are based on the Trust's internal evaluation which was prepared in accordance with National Instrument 51-101. The properties acquired include 5,760 gross acres of undeveloped land (5,760 net acres) and the associated ownership in natural gas gathering and compression facilities. This acquisition provides accretion on cash flow per unit, production per unit and proved reserves per unit. The acquisition closed and was effective September 1, 2004.
This acquisition supports Focus' strategy of continually strengthening the solid sustainable foundation of the Trust. The acquisition of this shallow gas (Second White Specs, Medicine Hat and Milk River) production provides the trust with an operating presence in one of the largest gas fairways in the Western Canadian Basin.
Focus sees significant infill and step-out drilling and facility optimization opportunities on the acquired properties. As a result, Focus is increasing its 2004 capital program by $2.8 million to undertake a 10 well development drilling and facility optimization program prior to the end of the year.
Focus Energy Trust is a natural gas weighted energy trust. Focus is committed to maintaining its emphasis on operating high quality oil and gas properties, delivering consistent distributions to unit holders and ensuring financial strength and sustainability.
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