CALGARY--(CCNMatthews - Jan. 18) - NAL Oil
& Gas Trust (TSX:NAE.UN) (the "Trust") is scheduled to release 2005
operating and financial results on March 2, 2006. Those results are not
expected to be materially different from the guidance provided in the
November 9, 2005 press release and Third Quarter Report. This press
release will summarize our 2006 capital program and provide guidance on
our key operating metrics for full year 2006. President and CEO, Andrew
Wiswell, commented, "NAL has a strong historical track record of
consistent, reliable performance and is building positive momentum
heading into 2006. Our concentrated core areas, control through
operatorship of over 80% of our capital program and our strong inventory
of drilling locations position us well for continued positive
performance. Financial results will be supported by growing production
volume, above average netbacks and below average operating costs."
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2005 / 2006 Guidance
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2005 Guidance 2006 Guidance
(November 2005) (January 2006)
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Total production (boed) 19,000 19,200 - 19,800
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Capital expenditures ($MM) 70 - 72 95
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Cost structure ($/boe)
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Operating 7.70 - 7.85 8.30 - 8.70
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G & A 1.40 - 1.50 1.70 - 1.85
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Boe @ 6 Mcf :1 bbl
Capital Expenditures
The 2006 capital budget calls for total spending of $95 million
including $59 million on drilling, $12 million on recompletions of
existing wells, $12 million on production facilities, $4 million on land
acquisition, $3 million on seismic and $5 million in capitalized
G&A. NAL has not specifically allocated any funds for acquisitions
and it evaluates property and corporate acquisition opportunities on an
ongoing basis. NAL's strong balance sheet, its partnership with Manulife
Financial and access to public markets will allow the Company to
capture value-added opportunities as they arise.
Our operations are focused on three core areas: oil prone Southeast
Saskatchewan, more gas weighted Central Alberta and gas focused areas
largely in Alberta. In 2006, NAL expects to participate in a total of
179 wells including 49 in our Saskatchewan core area, 29 in our Central
Alberta core area and 74 elsewhere in Alberta plus 27 non-operated
wells, primarily in Lake Erie, Ontario. The Trust is planning to drill
72 net wells and operates over 80% of its capital program.
While NAL will undertake an active drilling program planned for
2006, the majority of its capital spending and drilling activity will
take place in the third and fourth quarters. Production volumes are
expected to be lower in the second quarter when production facilities
undergo normal maintenance.
Chief Operating Officer, Jonathan Lexier, said "Our 2006 capital
program is balanced across our core areas and captures a portfolio of
opportunities that will deliver production in 2006 and upside
opportunities for 2007/8."
Production
NAL's guidance for full year production for 2005 was 19,000 BOE per
day. Taking into account decline rates of about 20% annually, the
Company expects to produce an average of 19,200 to 19,800 barrels of oil
equivalent per day in 2006. NAL's weighting is targeted to be 50% crude
oil, 10% natural gas liquids and 40% natural gas.
Financial / Cost Structure
Consistent with its historical performance, the Company expects to
continue to generate above-average netbacks as it produces high quality
crude oil, enjoys competitive transportation arrangements and delivers
below industry average operating costs.
Because of the high level of industry activity, overall cost
inflation and the full year impact of the Addison acquisition, NAL
anticipates that its operating costs will increase into a range of $8.30
- $8.70 per barrel of oil equivalent for 2006. General and
administrative expenses will be higher, driven by market conditions, but
management fees are expected to be lower following a renegotiation of
the management fee structure, expected to be completed in the first
quarter of 2006.
Assuming a US$55 WTI oil price, Cdn$10 AECO average natural gas
price and monthly distributions remaining unchanged at $0.19 per unit
per month, NAL's payout ratio is targeted to be in the 70% range. The
Company's debt-to-cash flow ratio is forecast to be in the range of 0.7
to 0.8 times.
Risk Management
NAL has received Board approval to hedge up to 30% of its annual
production to protect cash flows and sustain distributions. NAL has
chosen to employ a collar and three-way participating strategy that
protects the downside while allowing some upside participation. Using
this approach, the Company has currently hedged 2,700 barrels of oil per
day effectively providing a floor of US$58.19 for prices down to
US$48.45 per barrel with a cap of US$72.83 per barrel. Also, the Company
has collared 1.9 million cubic feet of natural gas per day for full
year 2006 with a Cdn$9.50 floor and a Cdn$14.40 ceiling.
A more detailed guidance presentation will be posted on our website later today.
NAL Oil & Gas Trust is an open-end investment trust founded in
May 1996 that generates distributions through the acquisition,
development, production and marketing of oil, natural gas and natural
gas liquids. The Trust owns high quality assets in Alberta, Saskatchewan
and Ontario. Trust units trade on the Toronto Stock Exchange under the
symbol "NAE.UN".
Forward-Looking Statements
This disclosure contains certain forward-looking estimates that
involve substantial known and unknown risks and uncertainties, certain
of which are beyond NAL's control, including: the impact of general
economic conditions in Canada and the United States, industry
conditions, changes in laws and regulations including the adoption of
new environmental laws and regulations and changes in how they are
interpreted and enforced, increased competition, the lack of
availability of qualified personnel or management, fluctuations in
commodity prices, foreign exchange or interest rates, stock market
volatility and obtaining required approvals of regulatory authorities.
NAL's actual results, performance or achievement could differ materially
from those expressed in, or implied by, these forward-looking estimates
and, accordingly, no assurances can be given that any of the events
anticipated by the forward- looking estimates will transpire or occur,
or if any of them do so, what benefits, including the amounts of
proceeds, that NAL will derive therefrom.
Contact Information:
NAL Oil & Gas Trust
Gordon Currie
Manager of Investor Relations
NAL Oil & Gas Trust
Murielle Fisette
Investor Relations Coordinator
(403) 294-3620 or Toll Free: (888) 223-8792
Fax: (403) 515-3407
Email: Investor.Relations@nal.ca
Website: www.nal.ca