Production Increases and Development Continues
Pembina was ARC’s first operated core area and remains an excellent Trust asset due to its low decline rate and long economic reserve life. This area produces high quality light, sweet oil and has an economic reserve life in excess of 50 years. Since 1996, ARC has drilled 48 wells in Pembina. Most of the properties are under waterflood with resulting long-term, stable production rates and high reserves recovery. In 2005, ARC further strengthened its position in the Pembina area with the acquisition of a 45.57 per cent working interest in the North Pembina Cardium Unit # 1 (NPCU) and a principal interest in the Redwater field. As a result of increased drilling activity in Pembina and the activity in Redwater 2006 production in Pembina and Redwater increased significantly to 13,950 boe/d compared with 7,953 boe/d in 2005.

Since inception in 1996, Pembina has been a key area for ARC, with its long-life, low decline oil fields. Although operating costs tend to be high they are more than offset by the above average netbacks that ARC receives on the high-quality oil produced from these fields. Pembina assets are also widely recognized as being some of the most suitable assets for CO2 EOR recovery in Canada. With the late 2005 acquisition of NPCU, ARC has significantly increased its asset base in this area. Since taking over operatorship of NPCU, ARC has reactivated 65 oil wells, increasing field production by 400 boe per day (180 boe net to ARC's working interest). ARC also initiated a five well drilling program at NPCU in 2006 with production expected to be on stream at the end of the first quarter of 2007. Elsewhere in Pembina, ARC drilled 21 wells, which along with the acquisition of NPCU, helped increase production by 30 per cent to 10,179 boe per day in 2006 (not including production from Redwater). In 2007 ARC plans to spend $44 million in Pembina and expects to drill up to 46 gross wells and undertake numerous waterflood optimization activities.

Superintendent: Reo Van Maarion
Box 6330, Drayton Valley, Alberta T7A 1R8
Tel: (780) 542-5552-----Fax: (780) 542-7552