The Board of Directors of Progress Energy Ltd. announced that it will maintain its current distribution policy for the first quarter of 2008 at $0.10 per trust unit per month.
"Since inception, investors have seen us maintain a disciplined approach to operational and financial management," said Michael Culbert, President and CEO of Progress. "Given the current outlook for natural gas prices we expect the combination of current distributions and our previously announced capital to be in balance with cash flow in 2008."
Consequently, Progress has declared a distribution of $0.10 per trust unit for the month of January. The distribution will be paid on February 15, 2008 to unitholders of record on January 31, 2008. The ex-distribution date is expected to be January 29, 2008.
Progress has hedged 60,000 gigajoules (GJ) per day (approximately 54 million cubic feet per day), or 45 percent of its before royalty forecast natural gas production, for the period from April 1, 2008 through to October 31, 2008 at an average equivalent AECO floor price of C$7.80 per thousand cubic feet (mcf) based on the Company's high heat content natural gas production. The summer hedging program was completed using a series of swaps and bull spread structures. The swap and bull spread structure that Progress utilizes sets a relatively high floor in the current market and allows participation up to an equivalent average summer 2008 AECO gas price of C$9.40 per mcf.
The fourth quarter of 2007 was one of Progress' most active drilling quarters since its inception in July 2004 drilling 39 wells (20.2 net) with a 96 percent success rate. Drilling success in the Deep Basin and Foothills contributed to strong production averaging approximately 24,200 boe per day in the quarter with approximately 1,500 boe per day behind pipe. In the Deep Basin area, 5.6 net wells were drilled in the quarter with four being recently completed and tested at rates of up to six million cubic feet per day. In the Foothills of northeast British Columbia, Progress drilled 10 net wells including 6 net wells in the Bubbles area. Elsewhere in the Foothills, the Company, along with its working interest partner, continued to refine completions techniques resulting in a significant increase in initial gas rates for wells drilled in the Cretaceous interval. This completion method will be utilized on other recently drilled wells and if positive results are achieved could result in a large number of re-completion opportunities.
On the drilling cost front, Progress maintains collaborative relationships with its service and supply contractors and expects industry costs to continue to trend lower in 2008 as industry wide activity slows as a result of reduced drilling and field activities. "Our capital efficiencies remain among the leaders in the oil and gas sector and given the depth of our inventory of drilling opportunities we believe we can achieve the same strong operational results as we have historically with capital investment targeted at the lower end of our forecast range," said Mr. Culbert.
Progress' strategy is to sustain production and reserves per unit from internally generated opportunities. The outlook for natural gas remains promising and Progress will continue to pursue sustainability in this environment while maintaining a focus on balance sheet strength. The Company's 2008 capital investment program of between $110 to $125 million is expected to be funded from internal sources.
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