Wapiti Sells To Argent

Purchase of 14,990 net acres of land in Texas with proven plus probable reserves of 8.7 million BOE.

The U.S. subsidiary of Argent Energy Trust (Toronto: AET.UN) purchased East Texas oil and gas assets from Wapiti Oil & Gas LLC for $114 million.

The assets include the Newton, Livingston and Double AA Wells North fields, and cover about 14,990 net acres of land with about gross proven plus probable reserves of 8.7 million barrels of oil equivalent (BOE) as of March 31. Nearly two thirds of the reserves base comes from oil. Natural gas represents about 23%.

Working interest production from the assets was about 1,705 BOE per day, about 78% of which is oil and liquids. Oil from the assets is priced against Louisiana Light Sweet crude, which trades at a premium to West Texas Intermediate.
The purchase adds oil and NGL production and reserves to the asset base for Argent, which produces in excess of 4,000 BOE per day.

Acquisition costs for the deal are $72,507 per BOE per day and $13.77 per BOE of proved plus probable reserves. Argent will operate about 97% of the assets. At current production rates, the reserve is expected to last about 13 years.

Argent management stated the acquisition is aligned with its strategy of making purchases in established producing basins. Argent believes that, due to the expected increase in U.S. capital gains tax rates in 2013, there has been an increase in U.S. based oil and gas assets for sale in the fourth quarter of 2012.

Argent plans to find the purchase by issuing 10,755,000 trust units on a bought deal basis for gross proceeds of C$100,021,500.

The deal is scheduled to close on Dec. 28. The deal has an effective date of Oct. 1.