In 2007, Paramount Energy Trust added 180.0 Bcfe of proved reserves and 130.7 Bcfe of probable reserves for total reserve additions of 310.7 Bcfe of proved and probable reserves, excluding production.
Offset by production of 62.3 Bcfe in 2007, proved reserves increased 66 percent from 177.1 Bcfe at year-end 2006 to 294.8 Bcfe at year-end 2007, and proved and probable reserves increased 95 percent to 509.9 Bcfe, primarily due to the significant reserve additions resulting from the acquisition of natural gas properties in east central Alberta ("Birchwavy Acquisition") completed in June 2007 and the success of the Trust's capital spending programs in 2007.
Proved and probable reserves per Trust Unit increased 53 percent at year-end 2007 to 4.65 Mcfe per Trust Unit from 3.04 Mcfe per Trust Unit as at December 31, 2006.
Excluding future development costs, PET realized finding, development and acquisition costs of $2.81 per Mcfe ($16.86 per BOE) on a proved reserves basis and $1.63 per Mcfe ($9.78 per BOE) on a proved and probable reserves basis in 2007.
Including future development costs, PET realized finding, development and acquisition costs of $3.26 per Mcfe ($19.56 per BOE) on a proved reserves basis and $2.56 per Mcfe ($15.36 per BOE) on a proved and probable reserves basis in 2007.
The Trust's reserve to production ratio ("reserve life index") increased to 7.6 years on a proved and probable reserves basis (4.7 years on a proved reserves basis) at year-end 2007, as compared to 4.9 years (3.6 years on a proved basis) in 2006.
Company interest reserves included herein are before royalty burdens and including royalty interests. Reserves information is based on an independent reserves evaluation report prepared by McDaniel January 31, 2008 with an effective date of December 31, 2007, and has been prepared in accordance with National Instrument 51-101 ("NI 51-101") using McDaniel's forecast prices and costs. Complete NI 51-101 reserves disclosure including after-tax reserve values, reserves by major property and abandonment costs will be included in PET's Annual Information Form ("AIF"), which will be filed in March 2008. PET reports the results of the Trust's 93 percent-owned subsidiary Severo Energy Corp. ("Severo") using consolidated accounting practices, and therefore the amounts shown include 100 percent of the volumes and values related to the natural gas reserves of Severo.
Approximately 98 percent of PET's proved and proved and probable reserves are natural gas and as such the Trust reports reserves in Mcf equivalent (Mcfe). Mcfe may be misleading, particularly if used in isolation. In accordance with NI 51-101 a Mcfe conversion ratio for oil of 1 Bbl: 6 Mcf has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead.
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