CALGARY, ALBERTA--(Marketwire - Oct. 3, 2012) -


Argent Energy Trust ("Argent" or the "Trust") (TSX:AET.UN) is pleased to announce that Argent Energy (US) Holdings Inc., a wholly-owned subsidiary of the Trust, has entered into a binding agreement with an arms length third party to acquire producing petroleum properties in the Manvel Field in Brazoria County, Texas and the NE Davis, SW Mayville and Payne Fields in Southern Oklahoma (the "Acquired Assets") for a purchase price of US$132.5 million, subject to closing adjustments (the "Acquisition"). The Acquired Assets are principally low decline oil properties covering approximately 4,030 net acres of land with total estimated gross reserves of approximately 3.9 million barrel of oil equivalent ("boe") on a proved basis and approximately 5.7 million boe on a proved plus probable basis as at December 31, 2011. Working interest before royalty production from the Acquired Assets in June 2012 was approximately 890 boe per day ("boe/d"). Oil represents approximately 94% of the total proved plus probable reserves volumes and natural gas represents the remaining 6%.

This Acquisition will add significant oil production and a proved reserves component to the overall asset base of Argent and is aligned with Argent's strategy of acquiring, exploiting and developing long-life crude oil and natural gas reserves in established producing basins primarily in the U.S. This Acquisition also supports and strengthens Argent's distribution sustainability and reserves per unit of the Trust ("Unit") on a pro forma basis after giving effect to the Offering, as discussed below. The Acquisition will be funded from the net proceeds of the Offering, an advance of approximately US$25 million under Argent's Credit Facility, as discussed below, and approximately US$3.5 million of working capital.

Highlights of the Acquisition

The Acquired Assets have a long reserve life and are expected to generate long term sustainable cash flow, which will positively contribute to the strong and growing near-term cash flow of Argent's Austin Chalk and Eagle Ford development program.

Key Acquisition attributes:

  • Working interest before royalty production of approximately 890 boe/d (86% oil) for June 2012
  • Over 97% of the Acquired Assets will be operated by Argent
  • Estimated proved reserves of 3.9 million boe (93% oil by volume, 97% oil by value (based on the net present value of future net revenue, discounted at 10%, as evaluated by Sproule Associates Limited ("Sproule")) and total proved plus probable reserves of 5.7 million boe (94% oil by volume, 97% oil by value (based on the net present value of future net revenue, discounted at 10%, as evaluated by Sproule)
  • Proved and proved plus probable Reserve Life Index ("RLI") of 12.0 years and 17.5 years, respectively
  • For the first six months of 2012, the field netback for the Acquired Assets was US$52.68 per boe
  • Acquisition costs are US$33.84 per boe on a proved basis and US$23.41 per boe on a proved plus probable basis, excluding future development costs
  • Significant potential tertiary recovery opportunities in the Manvel field

Impact of the Acquisition

The Acquisition is expected to increase Argent's oil weighting to 54% on a production basis and 50% on a total proved plus probable reserves basis. The Acquisition is also expected to increase Argent's ratio of proved reserves as a percentage of total proved plus probable reserves. Argent's sustainability ratio, calculated as the sum of cash distributions and capital expenditures (net of escrow funds) divided by funds flow from operations, is expected to improve as a result of the Acquisition. The Acquisition is also accretive to proved reserves per Unit and is expected to be accretive to production per Unit and funds flow from operations per Unit commencing in 2014.

The Offering

In conjunction with the Acquisition, Argent has entered into an agreement with a syndicate of underwriters (the "Underwriters") co-led by Scotiabank, CIBC and RBC Capital Markets pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 11,000,000 Units at a price of C$10.00 per Unit, for aggregate gross proceeds of approximately C$110,000,000 (the "Offering"). In addition, the Underwriters have been granted an over-allotment option, exercisable in whole or part, from time to time, for a period of 30 days from closing of the Offering, to purchase up to 1,650,000 additional Units at a price of C$10.00 per Unit. If the over-allotment is exercised in full, gross proceeds from the Offering will be approximately C$126,500,000. The Offering is expected to close on or about October 25, 2012 and is subject to certain conditions including, but not limited to, closing of the Acquisition, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities.

Unitholders of record on October 31, 2012 will be entitled to a cash distribution of $0.0875 per Unit to be paid on November 23, 2012, which Argent anticipates will be declared by its directors in the normal course.

Argent's Credit Facility

Argent expects to draw approximately US$25 million from its existing credit facility (the "Credit Facility") to fund a portion of the purchase price of the Acquired Assets. In conjunction with the Acquisition, Argent has also entered into a commitment letter with a syndicate of chartered banks which will increase the borrowing base of its existing Credit Facility from US$8 million to US$45 million concurrent with closing of the Acquisition. Such commitment is subject to certain conditions that are typical of transactions of this nature, including the closing of the Acquisition. After the closing of the Acquisition, and assuming the over-allotment has not been exercised, Argent expects to have approximately US$20 million of undrawn capacity available under the Credit Facility.

No securities regulatory authority has either approved or disapproved of the contents of this news release. The securities being offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States unless pursuant to an exemption therefrom. This press release is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Argent Energy Trust in any jurisdiction.

The preliminary prospectus, which contains important information relating to Argent and the Offering, will be filed by October 10, 2012 and may be obtained on the SEDAR website at under Argent's profile. The preliminary prospectus will be subject to completion or amendment. There will not be any sale or acceptance of an offer to buy the Units until a receipt for the final prospectus has been issued.

About Argent Energy Trust

Argent is a mutual fund trust under the Income Tax Act (Canada) (the "Tax Act"). Argent's objective is to create stable, consistent returns for investors through the acquisition and development of oil and natural gas reserves and production with low risk exploitation potential, located primarily in the United States.

Argent's Units are traded on the Toronto Stock Exchange under the symbol AET.UN.

Forward Looking Statements

This press release includes forward-looking information within the meaning of applicable Canadian and United States securities legislation. All statements, other than statements of historical fact, that address activities, circumstances, events, outcomes and other matters that Argent budgets, forecasts, plans, projects, estimates, expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future are considered forward-looking information. In particular, forward-looking information contained in this press release include, but are not limited to, information and statements concerning the Offering, the Acquisition and the Credit Facility, including the funding for the Acquisition and that both the Acquisition and the Offering will close as expected; the Units to be issued pursuant to the Offering; regulatory and other approvals required for the Offering and the Acquisition; the use of proceeds from the Offering; the availability and the increase in the borrowing base under the Credit Facility; the performance and production characteristics of the Acquired Assets; that the Acquired Assets will be able to generate long term, sustainable cash flows; the key metrics of the Acquisition; the financial and operational benefits of the Acquisition to the Trust and the expected impact of the Acquisition on the Trust's commodity profile, reserves profile, sustainability ratio and to production and funds flow from operations per Unit. In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserve estimates of the Trust's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. The forward-looking information provided in this press release is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Argent cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.

These risks include, but are not limited to, oil and natural gas price volatility, Argent's access to cash flows and other sources of liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current financial climate on Argent's anticipated business and financial condition, a lack of availability of or increases in costs in goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, economic conditions and other risks as described in documents and reports that Argent files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Argent's actual results and plans to differ materially from those contained in the forward-looking information.

Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking information is not a guarantee of future performance or an assurance that our current assumptions and projections are valid. All forward-looking information speaks only as of the date of this press release, and Argent assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk factors contained in Argent's filings on SEDAR that discuss in further detail the factors that could cause future results to be different than contemplated in this presentation.

The reserves data set forth herein is based upon an evaluation by Sproule dated effective December 31, 2011, using Sproule's December 31, 2011 forecast prices and costs. Reserve Life Index, as referenced herein, is calculated by dividing the applicable total proved or total proved plus probable reserves by current working interest before royalty production.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio of six Mcf to one bbl may be misleading as an indication of value.

Non-IFRS Financial Measures

Statements in this press release make reference to the terms "field netback", "cash flow" and "sustainability ratio", which are non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Investors should be cautioned that these measures should not be construed as an alternative to net income calculated in accordance with IFRS. Management believes that "field netback", "cash flow" and "susmdukitainability ratio" provides useful information to investors and management since these terms reflect the quality of production, the level of profitability, the ability to drive growth through the funding of future capital expenditures and the sustainability of, distributions to unitholders. Funds flow (i.e., cash flow) from operations is calculated before changes in non-cash working capital. Field netback is calculated by subtracting royalties and operating expenses from revenue. Sustainability ratio is calculated by dividing the sum of cash distributions and capital expenditures (net of funds held in escrow which are eligible to offset future capital expenditures) by funds flow from operations.

Contact Information:

Argent Energy Trust
Brian Prokop
Chief Executive Officer
(403) 770-4807

Argent Energy Trust
Sean Bovingdon
Chief Financial Officer
(403) 770-4803