Arrow Energy Ltd.
TSX VENTURE : AOF

Arrow Energy Ltd.

November 02, 2005 17:08 ET

Arrow Announces Updated Reserves

CALGARY, ALBERTA--(CCNMatthews - Nov. 2, 2005) -

(Not for dissemination in the United States of America)

Arrow Energy Ltd. (TSX VENTURE:AOF) ("Arrow") is pleased to announce that Sproule Associates Limited ("Sproule") has prepared an updated reserves report, effective September 30, 2005, concerning Arrow (the "Sproule Report") to reflect changes in corporate reserves, pricing and costs.

In accordance with the reserves definition included in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, Sproule prepared the Sproule Report evaluating, as at September 30, 2005, Arrow's oil, NGL and natural gas reserves. The tables below are a summary of the oil, NGL and natural gas reserves of Arrow and the net present value of future net revenue attributable to such reserves as evaluated in the Sproule Report based on forecast price and cost assumptions. The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly.

The net present value of future net revenue attributable to Arrow's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by Sproule. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to Arrow's reserves estimated by Sproule represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of Arrow's oil, NGL and natural gas reserves provided herein are estimates only and actual reserves may be greater than or less than the estimates provided herein.

The Sproule Report is based on certain factual data supplied by Arrow and Sproule's opinion of reasonable practice in the industry. The extent and character of ownership and all factual data pertaining to Arrow's petroleum properties and contracts (except for certain information residing in the public domain) were supplied by Arrow to Sproule and accepted without any further investigation. Sproule accepted this data as presented and neither title searches nor field inspections were conducted.



Reserves Data - Forecast Prices and Costs

Summary of Oil and Gas Reserves

Gross Reserves Net Reserves
----------------------------------------------------
Natural Gas Natural Gas
Liquids Natural Gas Liquids Natural Gas
----------------------------------------------------
Mbbls Mmcf Mbbls Mmcf
----------------------------------------------------
Proved
Developed Producing 0.50 2,004 0.30 1,604
Developed Non-producing - 239 - 202
Undeveloped - 895 - 678
----------------------------------------------------
Total proved 0.50 3,137 0.30 2,483

Total Probable 0.20 2,501 0.10 1,963
----------------------------------------------------

Total Proved plus
Probable 0.70 5,638 0.40 4,446
----------------------------------------------------
----------------------------------------------------


Net Present Value of Future Net Revenue of Oil and Gas Reserves

Before Future Income Taxes and Discounted at (1)
----------------------------------------------------
0% 5% 10% 15%
----------------------------------------------------
Proved (M$) (M$) (M$) (M$)
Developed Producing $ 9,963 $ 9,162 $ 8,469 $ 7,886
Developed
Non-producing 1,243 905 712 591
Undeveloped 4,360 3,705 3,238 2,890
----------------------------------------------------
Total proved 15,566 13,772 12,419 11,367

Total Probable 10,235 8,403 7,062 6,072
----------------------------------------------------

Total Proved plus
Probable $ 25,801 $ 22,174 $ 19,481 $ 17,439
----------------------------------------------------
----------------------------------------------------

(1) Includes ARTC


Summary of Selected price Forecasts
(Effective September 30, 2005)
------------------------------------------------------------------------

Edmonton Alberta
WTI Cushing Par Price AECO-C
Oklahoma 40 degree API Spot Henry Hub
Year ($US/bbl) ($Cdn/bbl) ($Cdn/MMBtu) ($US/MMBtu)
------------------------------------------------------------------------
Historical
2000 30.30 44.03 5.07 3.89
2001 25.94 39.06 6.23 4.27
2002 26.09 40.12 4.04 3.22
2003 31.14 43.23 6.66 5.39
2004 41.42 52.91 6.87 6.14
Forecast
2005 66.60 79.73 11.46 12.30
2006 67.41 80.73 10.97 10.68
2007 61.17 73.10 9.57 8.71
2008 43.92 52.04 6.62 6.27
2009 42.45 50.24 6.39 6.10
2010 43.09 51.00 6.42 6.14
2011 43.74 51.77 6.53 6.23
2012 44.39 52.55 6.64 6.33
2013 45.06 53.34 6.76 6.42
2014 45.74 54.14 6.88 6.52
2015 46.42 54.96 7.00 6.62
2016 47.12 55.79 7.12 6.71
Escalation rate of 1.5% thereafter


With the change in the reserve estimate, the Company's Net Asset Value (NAV) per share has increased from $1.12 at December 31, 2004 to $1.42 at September 30, 2005. The increase in NAV can be attributed to a net increase in corporate natural gas reserves of 735 Mmcf from 4,903 Mmcf at December 31, 2004 to 5,638 Mmcf at September 30, 2005. In addition, forecasted pricing and costs on proven plus probable reserves has increased from $2.87 per Mcf of reserves at December 31, 2004 to $3.46 per Mcf of reserves at September 30, 2005. The results of the change in NAV are summarized as follows:



Net Asset Value
($000's except per share amounts)

Sept. 30, 2005 Dec. 31, 2004
---------------------------------
Proved plus Probable Reserves
Discounted at 10% $ 19,481 $ 14,094
Value of Undeveloped Land 1,140 1,104
Working Capital (Estimated at
September 30, 2005) 100 174
---------------------------------
Net Asset Value $ 20,721 $ 15,372
---------------------------------
---------------------------------

Common Shares Outstanding (000's) 14,139 13,612
---------------------------------
---------------------------------
Common Shares Outstanding
- Diluted (000's) 15,604 15,255
---------------------------------
---------------------------------

Net Asset Value Per Share $ 1.47 $ 1.13
---------------------------------
---------------------------------
Net Asset Value Per Share - Diluted $ 1.42 $ 1.11
---------------------------------


Arrow Energy Ltd., a Calgary based company, engages in the exploration, development, acquisition and production of natural gas and light gravity crude oil reserves in Western Canada. With a focus on natural gas, Arrow's primary area of exploration is in central Alberta.

This press release includes forward-looking statements and assumptions respecting the Company's strategies, future operations, expected financial results, financing sources, commodity prices, costs of production and quantum of oil and natural gas reserves and discusses certain issues, risks and uncertainties that can be expected to impact on any of such matters. By their nature, forward-looking statements are subject to numerous risks and uncertainties that can significantly affect future results. Actual future results may differ materially from those assumed or described in such forward-looking statements as a result of the impact of issues, risks and uncertainties whether described herein or not, which the Company may not be able to control. The reader is therefore cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any intention or obligation to update or revise these forward-looking statements, as a result of new information, future events or otherwise.



Notes on Abbreviations

Kpa means kilopascal
Mmcf means a million cubic feet of natural gas. Mmcf/d means Mmcf
per day.
Mcf means a thousand cubic feet of natural gas. Mcf/d means Mcf per day.
Mbbls means a thousand barrels
bbl means barrel
MMBtu means a million British thermal units
M means thousand
W.I. means working interest
PV means present value
NAV means net asset value
$Cdn means Canadian dollars
$US means United States dollars


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Arrow Energy Ltd.
    Eric G. Gosselin
    President & CEO
    (403) 266-4536
    Email: gosseline@arrow-energy.com
    or
    Arrow Energy Ltd.
    Jeff Thomson
    VP Finance & CFO
    (403) 538-3465
    Email: thomsonj@arrow-energy.com
    or
    Arrow Energy Ltd.
    Suite 300, 407 - 2nd Street S.W.
    Calgary, Alberta T2P 2Y3
    (403) 266-4564