APF Energy Trust

APF Energy Trust

March 03, 2005 21:30 ET

APF Energy Releases 2004 Reserves Information and Details of 2005 Capital Program


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: APF ENERGY TRUST

TSX SYMBOL: AY.UN
TSX SYMBOL: AY.DB

MARCH 3, 2005 - 21:30 ET

APF Energy Releases 2004 Reserves Information and
Details of 2005 Capital Program

CALGARY, ALBERTA--(CCNMatthews - March 3, 2005) - APF Energy Trust
(TSX:AY.UN) (TSX:AY.DB) ("APF" or the "Trust") is pleased to release
selected 2004 year-end reserves information and details of its 2005
budgeted capital program.

Highlights

- Proved plus probable reserves increased 46% to 58.7 million barrels of
oil equivalent.

- Drilling and optimization replaced 93% of 2004 production. Together
with acquisitions executed during the year, APF replaced 314% of its
annual production.

- Coalbed methane ("CBM") reserves increased 190% to 25.54 bcf. Daily
production from all of APF's CBM assets now amounts to 1,800 mcf/d.

- Net asset value per unit (proved plus probable at NPV 10%) increased
53% to $8.08 per unit.

- Finding, development and acquisition ("FD&A") costs, inclusive of
future capital obligations, were $16.86 per barrel of oil equivalent
(rolling three-year average of $14.74 per boe).



December December
Summary 31, 2004 31, 2003 % Change
------------------------------------------------------------------------
------------------------------------------------------------------------
Reserves (mboe)1
-----------------
Proved producing 35,019 24,652 42%
Total proved 43,017 29,894 44%
------------------------------------------------------------------------
Total proved plus probable 58,733 40,322 46%
------------------------------------------------------------------------

Proved plus probable RLI
(years) 8.9 8.5 5%
Net present value @ 10%
($millions) 619.1 316.5 96%
Net asset value @ 10%
($millions) 475.3 179.6 165%
Net asset value per unit $ 8.08 $ 5.27 53%
------------------------------------------------------------------------
------------------------------------------------------------------------

1) BOE's may be misleading, particularly if used in isolation. In
accordance with NI 51-101, a BOE conversion ratio for natural gas of
6 Mcf: 1 bbl has been used which is based on an energy equivalency
conversion method primarily applicable at the burner


Reserves

General Comments

All of APF's reserves were evaluated effective December 31, 2004. The
Trust's Canadian conventional reserves were evaluated by Gilbert
Laustsen Jung Associates Ltd. ("GLJ"), while APF's coalbed methane
("CBM") interests in Canada and the United States were evaluated by
Sproule Associates Ltd. ("Sproule"). Both evaluations were prepared in
accordance with National Instrument 51-101.



Company Interest Reserves at
December 31, 2004

Reserve
Light & Life
Natural Medium Heavy Index
(based on forecast Gas Oil Oil NGL's Total (years)
pricing and costs) (Mmcf) (Mbbl) (Mbbl) (Mbbl) (Mboe) (2)
------------------------------------------------------------------------
Proved
Developed
producing 98,935 15,483 1,106 1,941 35,019 5.3
Developed
non-producing 11,574 486 479 116 3,009
Undeveloped 15,224 2,169 154 130 4,989
------------------------------------------------------------------------
Total proved 125,733 18,137 1,738 2,186 43,017 6.5
------------------------------------------------------------------------
Probable 43,679 6,718 1,085 634 15,716
Proved plus
probable 169,412 24,855 2,823 2,820 58,733 8.9
------------------------------------------------------------------------
------------------------------------------------------------------------
Columns may not add due to rounding

1) Company Interest Reserves are defined as working interest (before
the deduction of royalties) plus royalty interest reserves.
2) As calculated by APF, using 18,000 boe/d


On a proved plus probable basis, APF added 5,423 mboe of reserves
through exploration discoveries, drilling extensions, infill drilling
and improved recoveries, replacing 93% of 2004 production. Together with
acquisitions, APF replaced 314% of annual production.

APF registered positive technical revisions on a proved producing and
total proved basis, but the elimination of previously-booked drilling
locations resulted in nominal downward technical revisions of 574 mboe
on a proved plus probable basis.

Acquisitions

Almost all of APF's 2004 acquisition activity can be accounted for in
the $291.08 million purchase of Great Northern Exploration Ltd. ("GNL").
GNL's reserves were estimated to be 20,003 mboe (proved plus probable)
at December 31, 2003 by GLJ. At December 31, 2004, and accounting for
production, drilling, optimization and technical revisions, GNL's
closing reserves balance was 18,038.

Coalbed Methane ("CBM")

Since acquiring its initial CBM position with the purchase of CanScot
Resources in October of 2003, APF's daily CBM production has increased
from 500 mcf to 1,800 mcf currently. At the end of 2003, APF's booked
CBM reserves amounted to 1,475 mboe (proved plus probable), with a NPV
10% of $3.45 million. The December 31, 2004 evaluation has now assigned
proved plus Probable reserves of 4,268 mboe and a value of $31.20
million. In addition to lands assigned reserves, APF has assembled an
undeveloped CBM land position of 76,670 net undeveloped acres.



Corporate Reconciliation (including CBM)
-----------------------------------------
Proved Total Proved
Reconciliation (mboe) Producing Total Proved Plus Probable
------------------------------------------------------------------------
Opening balance 24,652 29,894 40,322
Exploration discoveries 111 111 189
Drilling extensions 336 485 699
Infill drilling 1,680 3,877 4,785
Improved recoveries 709 279 324
Technical revisions 1,301 789 (574)
Acquisitions 12,095 13,447 18,856
Dispositions (5) (5) (8)
Production (5,860) (5,860) (5,860)
------------------------------------------------------------------------
Closing balance 35,019 43,017 58,733
------------------------------------------------------------------------
------------------------------------------------------------------------

CBM Reconciliation
-----------------------------------------
Proved Total Proved
Reconciliation (mboe) Producing Total Proved Plus Probable
------------------------------------------------------------------------
Opening balance 127 142 1,475
Infill drilling 163 1,804 1,913
Technical revisions 28 486 394
Acquisitions 36 404 552
Production (66) (66) (66)
------------------------------------------------------------------------
Closing balance 288 2,770 4,268
------------------------------------------------------------------------
------------------------------------------------------------------------


Net Asset Value

APF invested significant capital in 2004 to create an asset base capable
of supporting a multi-year drilling program. Such activities included
increased land and seismic acquisitions. In addition to the evaluation
of its oil and gas reserves by GLJ and Sproule, the Trust's seismic
database was independently valued by Boyd Exploration Consultants Ltd.
at $20.21 million, while APF's 517,880 acres of net undeveloped land was
evaluated by GLJ at $64.74 million.



Net present value of future net revenue before income taxes

As of December 31, 2004
(based on forecast pricing
and costs, $000) 8% 10% 12%
------------------------------------------------------------------------
Proved
Developed producing 459,323 432,829 410,030
Developed non-producing 34,399 31,839 29,655
Undeveloped 31,987 27,684 24,060
------------------------------------------------------------------------
Total proved 525,709 492,352 463,745
------------------------------------------------------------------------
Probable 142,832 126,716 113,524
Proved plus probable 668,541 619,067 577,269
------------------------------------------------------------------------
------------------------------------------------------------------------
NPV values include allocations for asset abandonment


Net asset value of Proved Plus Probable reserves

As of December 31, 2004
(based on forecast pricing
and costs, $000) 8% 10% 12%
------------------------------------------------------------------------
Net present value 668,541 619,067 577,269
Land 64,735 64,735 64,735
Seismic 20,208 20,208 20,208
Bank debt (169,000) (169,000) (169,000)
Convertible debentures (47,697) (47,697) (47,697)
Working capital (11,991) (11,991) (11,991)
------------------------------------------------------------------------
Total net asset value 524,796 475,322 433,524
------------------------------------------------------------------------
Units outstanding 58,845 58,845 58,845
Net asset value per unit ($) 8.92 8.08 7.37
------------------------------------------------------------------------
------------------------------------------------------------------------


GLJ Commodity Price
Assumptions - January 1, 2005

Foreign Heavy Light
WTI Oil Exchange Oil Oil AECO Gas
Year ($U.S./bbl) ($U.S./$Cdn.) ($Cdn./bbl) ($Cdn./bbl) ($Cdn./mmbtu)
------------------------------------------------------------------------
2005 42.00 1.2195 27.50 50.25 6.60
2006 40.00 1.2195 28.50 47.75 6.35
2007 38.00 1.2195 28.75 45.50 6.15
2008 36.00 1.2195 27.25 43.25 6.00
2009 34.00 1.2195 25.50 40.75 6.00
2010 33.00 1.2195 24.75 39.50 6.00
2011 33.00 1.2195 24.75 39.50 6.00
2012 33.00 1.2195 24.75 39.50 6.00
2013 33.50 1.2195 24.75 40.00 6.10
2014 34.00 1.2195 25.50 40.75 6.20
2015 34.50 1.2195 25.75 41.25 6.30
Escalate
thereafter 2%/yr - 2%/yr 2%/yr 2%/yr
------------------------------------------------------------------------
------------------------------------------------------------------------


Finding and Development

Finding, Development and Acquisition costs included expenditures of
approximately $15 million on land and seismic, with virtually no
corresponding reserves assigned in the GLJ and Sproule reports. APF
anticipates that a return on these investments will be generated within
the next two to three years as the Trust's drilling program continues to
expand.



Finding and Development Costs ("F&D")
------------------------------------------------------------------------
Proved + Probable 2004 2003 2002
------------------------------------------------------------------------
($000)
Total F&D 67,576 33,601 21,595
Change in future development 40,752 27,048 11,525
------------------------------------------------------------------------
Total 108,328 60,649 33,120
------------------------------------------------------------------------
Net reserve additions (mboe) 5,423 3,002 4,054
------------------------------------------------------------------------
($/boe except recycle ratio values)
------------------------------------------------------------------------
F&D Cost(1) $ 19.98 $ 20.20 $ 8.17
Operating Netback $ 22.56 $ 22.10 $ 17.83
Recycle Ratio 1.13 1.09 2.18
------------------------------------------------------------------------
Rolling three year average
F&D costs $ 16.19 $ 11.86 $ 7.88
------------------------------------------------------------------------
------------------------------------------------------------------------
1) Excluding land & seismic: 2004 - $17.23; 2003 - $19.85


Finding, Development and Acquisitions Costs ("F,D&A")
------------------------------------------------------------------------
Proved + Probable 2004 2003 2002
------------------------------------------------------------------------
($000)
Total FD&A 67,576 33,601 21,595
Change in future development 40,752 27,048 11,525
Net acquisitions 300,930 157,576 79,532
------------------------------------------------------------------------
Total 409,258 218,225 112,652
------------------------------------------------------------------------
Net reserve additions (mboe) 24,271 12,881 13,064
------------------------------------------------------------------------
($/boe except recycle ratio values)
------------------------------------------------------------------------
FD&A costs(2) $ 16.86 $ 16.94 $ 8.62
Operating netback $ 22.56 $ 22.10 $ 17.83
Recycle ratio 1.34 1.30 2.07
------------------------------------------------------------------------
Rolling three year
average F,D&A costs $ 14.74 $ 12.31 $ 9.59
------------------------------------------------------------------------
------------------------------------------------------------------------
2) Excluding land & seismic: 2004 - $16.25; 2003 - $16.85

Drilling Summary

Three Months Ended Twelve Months
December 31 Ended December 31
-----------------------------------------------------
2004 2003 2004 2003
Gross Net Gross Net Gross Net Gross Net
------------------------------------------------------------------------
Oil 15 6.4 15 5.7 37 12.4 60 19.4
Gas 112 60.4 38 21.7 135 71.1 80 40.2
Coalbed methane 55 20.3 19 4.4 104 42.2 19 4.4
Other - - - - 4 2.3 5 0.8
Dry and abandoned 3 2.0 - - 4 3.0 - -
------------------------------------------------------------------------
Total 185 89.1 72 31.8 284 131.0 164 64.8
------------------------------------------------------------------------
------------------------------------------------------------------------


2005 Capital Program

APF's 2005 capital budget contemplates the expenditure of $61.46
million. Based on this budget APF expects production to average 18,000
to 18,500 boe/d, pending rig and crew availability these numbers could
increase throughout the year. Funding for the program will be derived
from cash flow, the Distribution Reinvestment Plan ("DRIP") and debt.
Both conventional and CBM opportunities are expected to result in the
drilling of 221 (138.87 net) risked wells. In addition, capital
expenditures with respect to abandonment and reclamation initiatives are
expected to amount to $2.80 million.



Drilling &
Business Unit ($000) Development Land & Seismic Total
------------------------------------------------------------------------
Southeast Saskatchewan 8,554 1,300 9,854
Southern 7,952 2,000 9,952
Central 11,394 1,035 12,429
Western 5,781 3,300 9,081
CBM - Alberta 15,289 375 15,664
CBM - Wyoming 4,483 - 4,483
------------------------------------------------------------------------
Total 53,453 8,010 61,463
------------------------------------------------------------------------
------------------------------------------------------------------------


Southeast Saskatchewan Business Unit

Activity in this light oil area will be focussed at Queensdale,
Handsworth, Star Valley and Tableland, where APF's continued use of
3-dimensional seismic will assist in improved delineation of structures
in the Mississippian formation.

Southern Business Unit

APF's largest gas producing area will continue to be the focus of
downspacing in the shallow Cretaceous Milk River and Medicine Hat sands
of the Countess area. Elsewhere, the Trust will continue its development
of deeper horizons in the Barons, Bow Island and Sunburst zones, using
3-D seismic to assist in the identification of opportunities.

Central Business Unit

Activity in this area will increase in 2005 as a result of the Trust's
mid-2004 purchase of GNL and the acquisition of additional lands at
Crown sales. At Innisfail and Wood River, the shallow Edmonton and Belly
River sands are being targeted, while deeper horizons in the Pekisko and
Leduc zones will also be exploited.

Western Business Unit

APF's plans for 2005 will focus on finding new opportunities in this
multi-zone region, while continuing to develop its existing asset base
in the Paddle River, Leaman and Sakwatamau areas. Approximately 41% of
APF's total land and seismic budget has been allocated to the Western
Business Unit.

CBM

APF plans to aggressively pursue its South-Central Alberta Horseshoe
Canyon ("HSC") drilling program in 2005, allocating approximately 28% of
its total drilling and completions budget to this shallow gas play.
Unlike CBM operations in the Upper Mannville zone of Central Alberta,
the HSC produces no water. In total, 56 (41.37 net) risked HSC wells are
expected to be drilled in 2005.

Certain statements in this material may be "forward-looking statements"
including outlook on oil and gas prices, estimates of future production,
estimated completion dates of acquisitions and construction and
development projects, business plans for drilling and exploration,
estimated amounts and timing of capital expenditures and anticipated
future debt levels and royalty rates. Information concerning reserves
contained in this material may also be deemed to be forward-looking
statements as such estimates involve the implied assessment that the
resources described can be profitably produced in the future. These
statements are based on current expectations, estimates and projections
that involve a number of risks and uncertainties, which could cause
actual results to differ from those anticipated by APF. This news
release is not for distribution to U.S. newswire services or for
distribution in the U.S.


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    APF Energy Trust
    Steve Cloutier
    President
    (403) 294-1000 or Toll Free 1-800-838-9206
    or
    APF Energy Trust
    Alan MacDonald
    V.P. Finance
    (403) 294-1000 or Toll Free 1-800-838-9206
    or
    APF Energy Trust
    Christine Ezinga
    Corporate Planning Analyst
    (403) 294-1000 or Toll Free 1-800-838-9206
    (403) 294-1074 (FAX)
    Email: invest@apfenergy.com
    Website: www.apfenergy.com
    The Toronto Stock Exchange has neither approved nor disapproved of the
    contents of this news release.