CALGARY--(CCNMatthews - March 2) - NAL Oil & Gas Trust (TSX:NAE.UN) (the "Trust"
or "NAL") today announced its 2004 year-end reserves, evaluated by McDaniel &
Associates Consultants Ltd. ("McDaniels"), independent engineering consultants
in Calgary, in accordance with National Instrument ("NI") 51-101. At December
31, 2004, the Trust's proved reserves total 26.8 million barrels of oil
equivalent(*) ("boe"), and proved plus probable (P+P) reserves amount to 37.6
million boe. The Trust's year-end reserves for 2004 do not include the reserves
of the recently acquired Addison Energy Inc., as the effective date of that
transaction was February 1, 2005.
/T/
Infill drilling and development activities resulted in:
- increased reserves attributable to improved recovery of 1,891 thousand
boes (proved plus probable) over and above the volumes previously
booked as undeveloped. These increases occurred mainly in the
Brent/Provost, Medicine River, Alida, Browning, Elswick and Star
Valley areas.
- NAL's proved producing reserves as a percentage of total proved
reserves increasing from 92.9 percent at year end 2003 to 95.6 percent
at year end 2004. This was mainly a result of our successful 2004
drilling program in southeast Saskatchewan, which developed reserves
previously booked as proved undeveloped.
/T/
The following tables summarize NAL's estimated reserves volumes and values using
the forward oil and natural gas prices in effect at the close of markets on
December 30, 2004, the final trading day prior to the effective date of the
evaluation. Gross reserves volumes are based on company working interests that
exclude any wells or properties in which NAL has only royalty interests, and are
before deduction of royalties payable. Net reserves include working interest
reserves after deducting royalties payable, plus royalty interest reserves.
/T/
(*) When converting natural gas to equivalent barrels of oil within this
report, NAL uses the widely recognized standard of 6 thousand cubic
feet (Mcf) to one barrel of oil equivalent (boe). However, boes may
be misleading, particularly if used in isolation. A boe conversion
ratio of 6 Mcf : 1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead.
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of December 31, 2004
FORECAST PRICES AND COSTS
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RESERVES
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LIGHT AND NATURAL NATURAL GAS
MEDIUM OIL GAS LIQUIDS BOE (6:1)
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Gross Net Gross Net Gross Net Gross Net
RESERVES CATEGORY (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
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PROVED
Developed
Producing 16,453 14,070 49,822 42,382 865 669 25,622 21,803
Developed Non-
Producing 96 83 860 721 25 19 264 223
Undeveloped 580 517 2,001 1,684 2 2 915 799
TOTAL PROVED 17,129 14,670 52,682 44,788 892 690 26,801 22,824
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PROBABLE 7,748 6,734 16,021 13,792 345 285 10,763 9,318
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TOTAL PROVED
PLUS PROBABLE 24,877 21,404 68,703 58,580 1,237 975 37,565 32,142
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NET PRESENT VALUES OF FUTURE NET REVENUE
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BEFORE INCOME TAXES, DISCOUNTED AT (percent/year)
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0 % 5 % 10 % 15 %
RESERVES CATEGORY (million $) (million $) (million $) (million $)
PROVED
Developed Producing 525.4 426.5 362.5 317.8
Developed Non-Producing 6.7 4.9 3.9 3.3
Undeveloped 10.5 8.5 6.9 5.5
TOTAL PROVED 542.7 439.8 373.3 326.7
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PROBABLE 250.1 166.1 120.7 93.2
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TOTAL PROVED PLUS
PROBABLE 792.7 606.0 494.0 419.8
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/T/
The comparable Net Present Value estimates discounted at ten percent using
McDaniels' price forecast of January 1, 2005 would be $368.8 million for total
proved, and $486.1 million for total proved plus probable reserves. The actual
reserves estimates are essentially unchanged by using either the McDaniels price
forecasts or the forward sales prices.
The Net Present Values shown include ARTC, and are reported before income taxes.
It should not be assumed that the estimated future net revenue is representative
of the fair market value of the properties of the Trust. There is no assurance
that such price and cost assumptions will be attained and variances could be
material.
/T/
SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS
as of December 31, 2004
FORECAST PRICES AND COSTS
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OIL
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Cromer NATURAL NATURAL
Edmonton Medium GAS AECO GAS INFLATION EXCHANGE
WTI Par Price 29.3 Spot LIQUIDS RATES RATE
Year Cushing 40 degrees degrees Price EDMONTON
Oklahoma API API ($Cdn/ MIX Percent/
($US/bbl) ($Cdn/bbl) ($Cdn/bbl) MMBtu) ($Cdn/bbl) Year ($US/Cdn)
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2005 42.59 50.20 44.00 6.49 37.30 2.0 0.832
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2006 40.42 47.40 41.60 6.46 35.50 2.0 0.835
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2007 39.10 45.70 40.10 6.06 34.10 2.0 0.837
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2008 38.03 44.40 38.90 5.75 33.00 2.0 0.837
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2009 37.32 43.60 38.20 5.44 32.20 2.0 0.836
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2010 36.89 43.10 37.80 5.26 31.70 2.0 0.835
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There-
after +2%/year +2%/year +2%/year +2%/year +2%/year 2.0 0.835
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RECONCILIATION OF
COMPANY GROSS RESERVES
BY PRINCIPAL PRODUCT TYPE
FORECAST PRICES AND COSTS
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LIGHT AND ASSOCIATED AND NATURAL GAS
MEDIUM OIL NON-ASSOCIATED GAS LIQUIDS TOTAL BOE
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Proved Proved Proved Proved
Plus Plus Plus Plus
Prob- Prob- Prob- Prob-
Proved able Proved able Proved able Proved able
FACTORS (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl) (Mboe) (Mboe)
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December
31, 2003 19,500 27,531 56,877 71,028 1,160 1,598 30,139 40,967
Improved
Recovery 178 277 6,202 9,682 0 0 1,212 1,891
Technical
Revisions 706 439 (977) (2,585) (39) (132) 504 (124)
Acquisitions 0 0 0 0 0 0 0 0
Dispositions (242) (357) (11) (13) (1) (1) (245) (360)
Production (3,013) (3,013) (9,409) (9,409) (228) (228) (4,809) (4,809)
December
31, 2004 17,129 24,877 52,682 68,703 892 1,237 26,801 37,565
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/T/
Based on our production estimate for 2005 of 12,789 boe per day, NAL's reserve
life index ("RLI") at December 31, 2004 was 8.0 years for proved plus probable.
Following NAL's February 2005 acquisition of Addison Energy Inc., gross company
working interest P+P reserves at February 1, 2005 amount to approximately 66.2
MMboe. Using the Trust's production estimate for the next 12 months, this
represents an RLI of 8.9 years.
NAL Oil & Gas Trust has a reserves committee, composed entirely of independent
directors, which is responsible for appointing the Trust's independent
engineering consultants and determining the scope of the annual reserves review.
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 statements that involve
substantial known and unknown risks and uncertainties, many of which are beyond
NAL's control, including: the impact of general economic conditions in Canada
and in 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 foreign
exchange or interest rates, stock market volatility and market valuations of
companies with respect to announced transactions and the final valuations
thereof, and obtaining required approval of regulatory authorities. NAL's actual
results, performance or achievement could differ materially from those expressed
in, or implied by, these forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the forward-
looking statements will transpire or occur, or if any of them do so, what
benefits, including the amount of proceeds, that NAL will derive therefrom.
Anne-Marie Buchmuller Investor Relations (403) 294-3620 or Toll Free: 1-888-223-8792 (403) 294-3699 (FAX) Email: Investor.Relations@nal.ca Website: www.nal.ca