ARC Energy Trust (TSX: AET.UN, ARX) said it will spend $585 million next year in part to accelerate development plans for its B.C. natural gas assets.
The Calgary-based royalty trust said "stellar" results from a drilling program at its Dawson and Sunrise projects on its northeast B.C. Montney lands has created significant economic value and "set the stage for a defined period of profitable growth for ARC."
After announcing an increase of 254 billion cubic feet in proved and probable reserves for the Dawson field on Thursday, the trust said it would accelerate the construction of a Dawson-area gas plant capable of producing 60 million cubic feet a day. The plant is scheduled to be operating in 2010, six months earlier than previously projected.
ARC's 2009 $585 million capital expenditure budget includes $140 million dedicated to the Dawson property and $104 million for development and exploratory drilling on its West Montney lands, with an emphasis on the development of Sunrise.
The trust plans to use a combination of cash flow, credit facilities, potential asset dispositions and new borrowings or equity if necessary to finance its 2009 capital program.
ARC, one of Canada's largest conventional oil and gas royalty trusts, has an enterprise value of approximately $4.4 billion. It produces approximately 64,000 barrels of oil equivalent per day from five core areas in Western Canada.
It has added significantly to its asset base over the past 18 months by acquiring additional prospective Montney lands west of its Dawson core.
As of September 30, the value of the trust's undeveloped acreage was estimated to be $480 million, including $345 million at Montney.