Avenir Diversified Income Trust
TSX : AVF.UN

Avenir Diversified Income Trust

November 14, 2006 19:16 ET

Avenir Diversified Income Trust Posts Third Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2006) - AVENIR DIVERSIFIED INCOME TRUST ("Avenir Trust") (TSX:AVF.UN) is pleased to announce the financial and operational results for the three and six months ended September 30, 2006 and to announce they have filed the complete Management Discussion and Analysis and Unaudited Interim Consolidated Financial Statements for the three and six months ended September 30, 2006 on SEDAR. An electronic copy of these documents may be obtained on Avenir Trust's SEDAR profile at www.sedar.com.



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For the periods ended Three months Ended Sept 30 Change
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2006 2005 %
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FINANCIAL
Gross Revenue $215,092,884 $ 92,290,428 133
Net Revenue $212,835,141 $ 86,942,263 145
Funds From Operations (FFO)(1) $ 14,328,407 $ 16,360,170 (12)
FFO Per Unit(1) - Basic $ 0.35 $ 0.67 (48)
Distributions(2) $ 10,400,739 $ 8,389,202 24
Distributions Per Unit - Basic $ 0.25 $ 0.34 (26)
Distribution Payout Ratio(3) 73% 51% 43
Income from continuing operations $ 7,594,075 $ 5,345,785 42
Income from continuing operations Per
Unit - Basic $ 0.18 $ 0.22 (18)
Income from discontinued operations $ - $ 1,246,427 (100)
Income discontinued operations Per
Unit - Basic $ - $ 0.05 (100)
Net Income (loss) $ 7,594,075 $ 6,592,212 15
Net Income (loss) Per Unit - Basic $ 0.18 $ 0.27 (33)
Total Assets $489,014,128 $401,226,507 22
Working Cap. (Net Debt) including
mortgages(1) $(39,670,466) $(83,944,095) (53)
Wtd. Avg. Units Outstanding - Basic 41,094,054 24,518,236 68
Units Outstanding (incl. escrowed
units) 41,773,367 24,631,254 70
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Nine months Ended Sept 30 Change
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2006 2005 %
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FINANCIAL
Gross Revenue $555,441,317 $165,660,273 235
Net Revenue $548,662,749 $151,043,829 263
Funds From Operations (FFO)(1) $ 50,671,143 $ 32,990,474 54
FFO Per Unit(1) - Basic $ 1.24 $ 1.59 (22)
Distributions(2) $ 38,585,933 $ 20,532,864 88
Distributions Per Unit - Basic $ 0.95 $ 0.99 (4)
Distribution Payout Ratio(3) 76% 62% 23
Income from continuing operations $ 24,492,031 $ 6,209,507 294
Income from continuing operations Per
Unit - Basic $ 0.60 $ 0.30 100
Income from discontinued operations $ 3,517,261 $ 2,523,168 39
Income discontinued operations Per
Unit - Basic $ 0.09 $ 0.12 (25)
Net Income (loss) $ 28,009,292 $ 8,732,675 221
Net Income (loss) Per Unit - Basic $ 0.69 $ 0.42 64
Total Assets $489,014,128 $401,226,507 22
Working Cap. (Net Debt) including
mortgages(1) $(39,670,466) $(83,944,095) (53)
Wtd. Avg. Units Outstanding - Basic 41,094,054 20,737,474 97
Units Outstanding (incl. escrowed
units) 41,773,367 24,631,254 70
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(1) Funds from operations, Funds from operations per unit, net back, and
working capital (net debt) including mortgages are not recognized
measures under Canadian generally accepted accounting principles
(GAAP). Funds from operations is calculated by taking cash provided by
operating activities on the statement of cash flows less the effect of
changes in non-cash working capital and asset retirement costs
incurred. Working capital (net debt) is calculated by taking current
assets less current liabilities including capital lease obligations,
mortgages (upon mortgage maturity it is the Trust's intention to renew
the mortgages on a long term basis at current rates) and long-term
debt. Management believes that these measures are useful supplemental
measures to analyze operating performance as they demonstrate the
Trust's ability to generate the Funds from operations necessary to fund
future distributions and capital investments. The Trust's method of
calculating these measures may differ from other issuers, and
accordingly, they may not be comparable to measures used by other
issuers. Investors should be cautioned that "Funds from operations" and
"Funds from operations per unit" should not be construed as an
alternative to net income, cash flow from operating activities or other
measures of financial performance calculated in accordance with GAAP.
(2) Distributions represents the actual cash distribution paid during the
period. It does not include the special distribution in June 2006 of
the Essential Energy Services Trust Units.
(3) Distribution Payout Ratio is calculated by dividing the Distributions
by the Funds from operations.
(4) Comparative periods have been restated to conform to current period
presentation - specifically relating to the discontinued operations of
the Energy Services Division of the Trust.
(5) The three and nine months ended September 30, 2006 reflects the
spin-off of the Trust's Energy Services division on May 31, 2006.


President's Message

With the first half of 2006 focused on the spin-off of the Trust's Energy Services division, the third quarter was characterized by continued solid performance in the remaining business units. The Trust was on forecast, with strong results across all divisions and a healthy 73% payout ratio. The equity markets were softer during the quarter and oil and gas commodity prices had weakened especially on the natural gas front. These factors, and a greater real estate focus, combined to provide new opportunities in the real estate and Oil and Gas divisions in the third quarter and into the fourth quarter, and allowed the Trust to complete acquisitions in the two divisions. We continue to have strong performance in all of our divisions and with our two strongest quarters ahead we expect our distributions to remain solid.

Over a three-and-a-half year period Avenir Trust has grown from a tiny $5.0 million market capitalization, or "micro" Trust, to what was a $450 million market capitalized diversified trust with a $250 million market capitalized sister energy services trust, Essential Energy Services Trust (ESN.un). The growth model we have followed continues to work. Distributions have increased seven times totaling 84% during this time. Unitholders count on diversification across multiple business lines with solid businesses in the areas of Oil and Gas, Real Estate, Natural Gas Liquids Marketing and Financial Services Management. The target payout ratio of 75% to 80% has allowed us to grow our businesses and sustain our distributions.

Then on October 31, 2006 an announcement was made by the Canadian Finance Minister that introduced a tax on trusts in 2011. This news effectively ended income trusts in their current form and caused billions of dollars in lost investment value to millions of Canadian and American investors. The Canadian government went back on an election promise and the result has been to stifle the trust sector as we try and sort out what the impact of these changes will have on Avenir and its Unitholders.

In simplified terms, under the proposed tax plan, income distributions will first be taxed at the trust level at a special rate estimated to be 31.5%. Income distributions to individual unitholders will then be treated as dividends from a Canadian corporation and eligible for the dividend tax credit. Income distributions to corporations resident in Canada will be eligible for full deduction as tax free inter-corporate dividends. Tax-deferred accounts (RRSPs, RRIFs and Pension Plans) will continue to pay no tax on distributions. Non-resident Unitholders will be taxed on distributions at the non-resident withholding tax rate for dividends. The net impact on Canadian taxable investors is expected to be minimal because they can take advantage of the dividend tax credit. However, as a result of the 31.5% Distribution Tax at the trust level, distributions to tax-deferred accounts will be reduced by approximately 31.5%, and distributions to non-residents will be reduced by approximately 26.5%.

During the four year transition period before the tax is in effect, Avenir will be able to continue to pay distributions as it has in the past. The real question surrounds the ability of the Trust to grow in its current form; however, we feel confident that we will be able to re-invent ourselves over the next four years to continue to create value for our Unitholders. While we do not yet know what form Avenir will take over the long-term, we do have until 2011 to plan and implement changes to our business plan to adapt to the new rules. This should give us the time required to reposition ourselves. Our underlying businesses and our staff have been market leaders and will continue to be market leaders regardless of what form the government's legislation takes. The business premise of diversification and sustainable distributions will hold the Trust in good stead in this time of uncertainty across the trust space.

We would like to thank all of our Unitholders for their support and will provide timely updates as we evolve during this four year transition.

William M. Gallacher, President & CEO

REVIEW OF FINANCIAL RESULTS

The Trust had net income for the quarter ended September 30, 2006 of $7,594,075. Net Income is up 15% over the $6,592,212 net income for the quarter ended September 30, 2005. The 2006 quarterly net income was positively affected by the inclusion of the EnerVest division versus the previous year, the 2005 non-cash mark-to-market opportunity loss of $2,504,278 related to risk management contracts versus a gain in 2006 of $2,153,213 and negatively impacted by the lower commodity prices compared to the third quarter in 2005. Net income for the nine months ended September 30, 2006 was $28,009,292 or $0.69 per unit versus $8,732,675 or $0.42 per unit for the first nine months of 2005. The nine month 2006 net income figures were impacted by the inclusion of Elbow River for a full nine month period and the acquisition of EnerVest in October 2005.

Funds from operations for the third quarter 2006 were $14,328,406 or $0.35 per unit versus $16,360,170 or $0.67 per unit for the third quarter 2005. For the nine months ended September 30, 2006, funds from operations were $50,671,144 compared to $32,990,474 for the same period in 2005, a 54% increase. The increase in the funds from operations were primarily the result of the increase in the energy services business unit, the inclusion of Elbow River for a full nine month period in 2006 (versus six months in 2005) and the addition of the EnerVest management contract in October 2005.

The Trust distributed $10,400,739 or $0.25 per unit for the quarter ended September 30, 2006 versus $8,389,202 or $0.34 per unit distributed for the quarter ended September 30, 2005. The per unit distribution was reduced pro-rata in June 2006 in conjunction with the spin-off of the Energy Services division as Essential Energy Services Trust. For the quarter ended September 30, 2006 the payout ratio was 73% of funds from operations. For the nine months ended September 30, 2006 the payout ratio was 76% versus 62% for the first nine months of 2005 and a target payout ratio of 75% to 80%.

REVIEW OF BUSINESS UNIT OPERATIONS

1. OIL AND GAS

For the third quarter of 2006, the Oil and Gas division continued to deliver consistent production volumes through a combination of optimization and development programs. Oil and gas sales averaged 3,350 BOE per day in the third quarter compared to an average rate of 3,353 BOE per day for the first two quarters of 2006. In comparison to the first half of 2006, oil and natural gas liquid sales for the third quarter averaged 1,643 bbls per day down 2% while natural gas sales were up 2% to 10,240 Mcf per day. This provides a product mix split of 51% natural gas and 49% oil and natural gas liquids (based on a 6:1 conversion factor).

Total gross revenue from petroleum and natural gas sales in the third quarter was $13,764,245 down 8% from $15,016,412 in the second quarter 2006 mainly due to lower oil and liquids pricing. The average price received for crude oil and natural gas liquids during the third quarter was $51.98 per barrel after hedging representing a 15% decrease over second quarter pricing. Natural gas pricing for the third quarter of 2006 was $6.27 per mcf versus $6.15 per mcf in the second quarter, an increase of 2% mainly due to the affects of hedging. Royalties in the third quarter were consistent with the first half of the year at 14%.

Oil and Gas operating expenses increased in the third quarter due to prior period adjustments on previously divested properties and abnormally high power costs in July 2006. The prior period adjustment resulted in an overall increase of $187,000 while power costs added $270,000 to the operating expense for the month of July. The one month spike in power prices represents a 100% increase over the monthly baseline power costs for the Trust. The total operating expense for the third quarter including the adjustment and additional power costs was $4,766,851 resulting in a unit operating expense of $15.47 per BOE. Excluding these two events, the unit operating expense for the third quarter production period was $14.00 per BOE. The average year to date unit operating expense excluding the prior year adjustments was $14.03 per BOE, and it is expected to remain higher than historical levels in the range of $14.00 to $14.25 per BOE for the remainder of the year due to another spike in power costs in the month of October. The Trust has taken steps in the fourth quarter to hedge power costs for 2007 and 2008 to minimize the impact of further power price anomalies in the Alberta power pool.

The total third quarter net capital expenditure by the Trust was $3.8 million bringing the total year to date net capital expenditure to $10.1 million. Activity in the third and fourth quarters continues to focus on optimization and re-completions with a total of $2.0 million spent on these operated and non-operated opportunities. The completion and tie-in of three gross (two net) operated gas wells from the second quarter drilling program were completed in South and East Central Alberta. Two standing gas wells in the Grand Forks area were also tied in resulting in a total net production add of 135 BOE per day at the end of the third quarter. A 100% Banff/Nordigg oil well is scheduled to be drilled in Cherhill in the fourth quarter. Total capital spending is estimated to come in at $12.0 million for the 2006 budget year including all operated and non-operated activity.

In October 2006, the Trust successfully completed two acquisitions in the core areas of East Central and Southern Alberta consisting of approximately 275 BOE per day of both working interest and royalty interest production. Approximately 35% of the production is operated in the areas of Chard (78-06W4) and Turin (11-18W4). The total acquisition cost was $11.4 million including fees, normal industry closing adjustments and undeveloped land valued at $545,000. On a reserve BOE basis, the combined acquisition cost for both working interest and royalty reserves is $18.27 per BOE based on approximately 596 Mboe of proved plus probable reserves. On a production basis, the transaction equates to $39,593 per producing BOE. Combined, the 275 BOE per day consists of 27% oil and 73% natural gas and brings the projected November 2006 production to 3,625 BOE per day for the Trust.

2. FINANCIAL SERVICES

At September 30, 2006 the Trust's financial services business unit consisted of:

i. ENERVEST LIMITED PARTNERSHIP ("EnerVest") - MANAGEMENT CONTRACT

In general terms, the Income Trust market declined by approximately 2% in the third quarter 2006 and EnerVest's assets under management declined in line with the market from $1.97 billion to $1.93 billion. EnerVest revenues and cash flows are directly correlated with the assets under management and were off by the market change. During the quarter, the EnerVest Diversified Income Trust announced an exchange offering which was marketed during September and October. The offering closed subsequent to the quarter, on October 24, 2006 and raised $260 million in new assets.

The manager of the Trust, EnerVest Diversified Management Inc., a holding of Avenir has agreed to reimburse all expenses related to the exchange offering incurred by EnerVest Diversified Income Trust. This will result in a delay in receiving the new cashflow from the closed offering but does immediately increase the value of the management agreement.

The announcement subsequent to the quarter on October 31, 2006 by the Finance Minister regarding the taxation of the trust sector impacted the market value of the trust units and will correspondingly reduce the value of EnerVest Diversified Income Trust, which will in turn impact Avenir's cash flow from the EnerVest contract by approximately $2.5 million annually or about 12% to 15%.

ii. ELBOW RIVER RESOURCES MARKETING LP ("Elbow")

The third quarter of 2006 was well ahead of budget and substantially ahead of the third quarter of 2005. Propane and butane were both ahead of previous years as Elbow was able to take advantage of market volatility which allowed for some favorable pricing spreads. In addition, butane spot sales were strong during the typical seasonal refinery excess period. Ethanol presales allowed for a strong quarter although spot sales were slow as blenders held-off once the perceived supply crunch was abated and prices started to collapse. Elbow's emerging bio-diesel group continued to add new customers to its portfolio and proceeds to grow in concert with the market.

Looking ahead, propane is entering the season where 'mother nature' will determine the extent of winter demand. Butane presales are strong, however spot sales may be reduced from previous gasoline blending seasons as the major refiners stored more product than they typically do and increased ethanol blending seems to be reducing butane blending demand as well. Ethanol also has strong presales and Elbow anticipate increased spot sales as the blenders who held off in the third quarter appear to be re-entering the market to cover their needs. In the bio-diesel division, Elbow has hired an additional marketer to allow the company to grow and capture the increased demand as this market continues to gain acceptance in the United States.

iii. FINANCIAL SERVICE CONTRACTS

In January 2003 the Trust entered into the financial services contracts business and had investments totaling $20.4 million in July 2005. Although the Trust continues to be comfortable with this investment and its returns based on results to date, the Trust has not entered into any new contracts and has since redeemed a large portion of the contracts with RentCash Inc. RentCash provides cash advance, cheque cashing and payday loan services. At the quarter ended September 30, 2006 the Trust held $13.265 million in contracts with Rentcash. Subsequent to the quarter an additional $7.0 has been redeemed. Currently the Trust holds $6.765 million in outstanding contracts.

As the Trust identifies other opportunities, it continues to reallocate investments within its portfolio into other areas providing greater long term impact.

3. REAL ESTATE

The Trust completed the purchase of two portfolios consisting of 26 buildings and 186,740 leasable square feet. The aggregate purchase price of the two portfolios totals approximately $29.2 million with mortgage financing of $18.4 million provided by two financial institutions with the balance of the funds provided through existing facilities. These transactions provide a levered annual return of approximately 12% to the Trust based on an annual cash flow stream of approximately $1.3 million in the initial five year terms.

The first portfolio consists of eleven (11) Kentucky Fried Chicken ("KFC") franchise locations situated in Alberta and British Columbia ("BC") and the second portfolio consists of fifteen (15) Landmark Theatre locations throughout Western Canada, primarily in Alberta and BC. The purchase represents a long-term, stable cash flow for the Trust as the KFC leases are 10 year terms (leases are also cross-collateralized across locations) and the Landmark Theatre leases are for 20 year terms (also cross-collateralized across locations). The Trust has a further option on three additional locations currently under development within the portfolios. The KFC acquisition closed in the third quarter and is reflected in the third quarter financial statements while the Landmark acquisition was completed subsequent to the quarter in mid October.

Avenir will continue to focus on unique opportunities with respect to real estate acquisitions. The Trust portfolio now consists of 31 separate properties with a total area of approximately 625,000 square feet located primarily throughout Western Canada.

4. DISCONTINUED OPERATIONS - ENERGY SERVICES

The third quarter 2006 does not include results from energy services as the division was spun-out on May 31, 2006. For 2006, the energy services division is included in the Trust's operations for the period from January 1 through May 31 only and is accounted for as a discontinued operation in the financial statements.

OUTLOOK

Results for the third quarter were at or ahead of forecast with particular strength in Elbow River offsetting lower shoulder season commodity prices in oil and gas. With the fourth quarter and first quarter being the Trust's traditionally strong quarters due to seasonal strengths in natural gas liquids marketing and oil and gas, the Trust is positioned operationally for a very robust six months. Record cashflow, target pay-out ratio and balance sheet strength affords Avenir the ability to continue to take advantage of opportunities. It is the current uncertainty surrounding government review of the income trust sector and potential taxation impacts, however, that make it very difficult to make prudent business decisions when we do not know all of the rules at this time. The trust sector has seen market values severely reduced and access to capital has dried up pending a better understanding of the new landscape.

Avenir is very fortunate to have four very solid business groups in Oil and Gas, Elbow River Marketing, EnerVest Management and Real Estate. This will allow Avenir to continue to maintain its distributions for the foreseeable future and take advantage of opportunities once they become clearer.

We would like to thank all of our Unitholders for their support and will provide timely updates as we evolve during this four year transition.

For additional information, please refer to the complete Management Discussion and Analysis and Unaudited Interim Consolidated Financial Statements for the three months ended March 31, 2006 on the company's profile on SEDAR at www.sedar.com or the Trust's website at www.avenirtrust.com.

Forward Looking Statements

Except for historical financial and operating information contained herein, the matters discussed in this document may be considered forward-looking statements. Such statements include declarations regarding management's intent, belief or current expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) that the information is of a preliminary nature and may be subject to further adjustment, (ii) the possible unavailability of financing, (iii) risks related to the exploration and development of oil and gas properties, (iv) the impact of price fluctuations and the demand and pricing for oil and natural gas, (v) the seasonal nature of the business, (vi) start-up risks, (vii) general operating risks, (viii) dependence on third parties, (ix) changes in government regulation, (x) the effects of competition, (xi) dependence on senior management, (xii) financial condition of real estate tenants and financial services counterparts, (xiii) impact of the Canadian economic conditions or the demand for real estate leasing opportunities, (xiv) fluctuations in currency exchange rates and interest rates.



CONSOLIDATED BALANCE SHEETS
(unaudited)

For the
September 30, December 31,
2006 2005
$ $
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ASSETS
Current
Cash 1,235,188 6,767,724
Restricted cash - 366,057
Accounts receivable and prepaid expenses 69,027,436 95,663,009
Inventory 36,269,461 31,786,855
Marketable securities 12,500 12,500
Notes receivable - 1,050,000
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106,544,585 135,646,145
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Property and equipment 173,058,827 204,615,394
Investment in financial services contracts 13,765,000 20,440,209
Intangibles and other assets 143,104,394 146,572,446
Goodwill 52,541,322 76,352,738
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489,014,128 583,626,932
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LIABILITIES AND UNITHOLDERS' EQUITY
Current
Bank indebtedness 51,850,022 58,881,771
Accounts payable and accrued liabilities 57,157,919 68,922,316
Distributions payable 3,467,189 4,883,041
Deferred revenue 242,791 200,439
Due to non-controlling interest owner - 43,674
Risk management liability 1,104,819 5,256,170
Notes payable 10,000,000 7,500,000
Current portion of capital lease obligations - 155,127
Current portion of long-term debt - 1,159,521
Current portion of mortgages 6,100,810 7,684,571
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129,923,550 154,686,630
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Capital lease obligations - 325,521
Mortgages 16,291,501 6,203,933
Long-term debt - 1,124,424
Asset retirement obligation 11,968,892 11,479,561
Future income taxes 17,937,319 20,123,076
Non-controlling interest - 1,004,965

Unitholders' equity
Unitholder capital 413,533,527 401,918,365
Contributed surplus 4,358,925 2,136,030
Accumulated earnings 55,632,818 27,623,526
Accumulated distributions (160,632,404) (42,999,099)
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312,892,866 388,678,822
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489,014,128 583,626,932
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CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED EARNINGS
(unaudited)

Three months ended Nine months ended
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
$ $ $ $
(restated) (restated)
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REVENUE
Oil and gas revenue 13,764,245 17,905,399 42,117,838 41,164,686
Oil and gas
transportation costs (254,192) (276,103) (694,160) (585,132)
Royalties, net of
ARTC (2,003,551) (2,567,784) (6,084,408) (6,332,979)
Unrealized gain
(loss) on financial
instruments 2,153,213 (2,504,278) 4,151,351 (7,698,333)
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13,659,715 12,557,234 39,490,621 26,548,242
Real estate revenue 1,050,761 820,405 2,779,658 2,206,063
Financial services
revenue 198,124,665 73,490,609 506,324,244 121,925,387
Interest and other
revenue - 74,015 68,226 141,777
Gain on sale of
property and
equipment - - - 222,360
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212,835,141 86,942,263 548,662,749 151,043,829
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EXPENSES
Oil and gas
operating 4,766,851 3,881,114 13,279,827 10,283,458
Real estate
operating 410,266 274,790 972,732 681,970
Financial services
operating 186,265,083 68,870,773 474,911,397 114,161,078
General and
administrative 4,470,512 2,314,478 12,832,301 4,845,274
Foreign exchange 560,235 554,600 (310,161) 524,968
Interest and bank
fees 1,169,541 913,077 2,326,730 1,629,626
Interest on
long-term debt and
capital leases 222,860 194,793 591,210 602,935
Capital taxes 203,352 190,389 370,521 443,938
Depletion,
depreciation and
amortization 6,963,206 6,223,829 20,390,452 14,977,194
Asset retirement
obligation accretion 239,004 202,186 692,466 572,232
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205,270,910 83,620,029 526,057,475 148,722,673
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Income from
continuing
operations before
income tax 7,564,231 3,322,234 22,605,274 2,321,156
Future income tax
recovery (expense) 29,844 2,023,551 1,886,757 3,888,351
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Net income from
continuing
operations 7,594,075 5,345,785 24,492,031 6,209,507
Net income from
discontinued
operations - 1,246,427 3,517,261 2,523,168
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Net income for the
period 7,594,075 6,592,212 28,009,292 8,732,675
Accumulated
earnings, beginning
of the period 48,038,743 6,824,651 27,623,526 4,684,188
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Accumulated
earnings, end of the
period 55,632,818 13,416,863 55,632,818 13,416,863
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Net income from
continuing
operations per unit
Basic 0.18 0.22 0.60 0.30
Diluted 0.18 0.22 0.59 0.30
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Net income from
discontinued
operations per unit
Basic - 0.05 0.09 0.12
Diluted - 0.05 0.09 0.12
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Net income per unit
Basic 0.18 0.27 0.69 0.42
Diluted 0.18 0.27 0.68 0.42
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Nine months ended
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
$ $ $ $
(restated) (restated)
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OPERATING ACTIVITIES
Net income from
continuing
operations 7,594,075 5,345,785 24,492,031 6,209,507
Add (deduct)
non-cash items:
(Gain) on sale of
property and
equipment - - - (222,360)
Non-cash general
and administrative 239,181 356,239 3,342,316 764,662
Depletion,
depreciation and
amortization 6,963,206 6,223,829 20,390,452 14,977,194
Asset retirement
obligation
accretion 239,004 202,186 692,466 572,232
Unrealized foreign
exchange 475,997 288,181 (1,302,187) 288,181
Unrealized (gain)
loss on financial
instruments (2,153,213) 2,504,278 (4,151,351) 7,698,333
Future income tax
expense (recovery) (29,844) (2,023,551) (1,886,757) (3,888,351)
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Funds from
continuing
operations 14,328,406 12,896,947 41,576,970 26,399,398
Funds from
discontinued
operations - 3,463,223 9,094,174 6,591,076
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Funds from
operations 14,328,406 16,360,170 50,671,144 32,990,474
Asset retirement
costs incurred
during period (63,588) (462,888) (200,444) (462,888)
Change in non-cash
working capital (8,012,584) (16,077,500) 3,306,387 (33,465,291)
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Cash provided by
(used in) operating
activities 6,252,234 (180,218) 53,777,087 (937,705)
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FINANCING ACTIVITIES
Issue of trust
units, net of
issue costs (24,492) - 1,125,331 118,286,432
Distributions to
unitholders (10,399,908) (8,237,671) (40,001,785) (18,967,322)
Increase (decrease)
in bank
indebtedness (2,098,734) 42,257,051 20,368,251 42,882,268
Increase in notes
payable 10,000,000 7,500,000 2,500,000 7,500,000
Repayment of
subordinated debt - (192,271) - (192,271)
Decrease in note
receivable - - 1,050,000 -
Increase in
mortgages - 203,411 - 4,118,411
Repayment of
mortgages (122,868) (110,758) (386,479) (2,244,029)
Repayments of
capital lease
obligations - - (51,174) (32,459)
Increase in
long-term debt - 35,914 - 232,979
Repayment of
long-term debt - (400,477) (2,993,521) (806,654)
Change in non-cash
working capital (18,400) (43,009) (59,476) 283
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Cash provided by
(used in) financing
activities (2,664,402) 41,012,190 (18,448,853) 150,777,638
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INVESTING ACTIVITIES
Purchase of Val
Vista Energy Ltd. - (258,406) - (13,027,076)
Purchase of Elbow
River - (12,765) - (52,629,213)
Energy Services
Division
acquisitions - (6,445,593) (30,994,706) (39,214,965)
Disposition of
Energy Services
Division - - (2,383,243) -
Purchase of Makah
Energy - (28,170,348) - (28,170,348)
Oil and gas
property
acquisitions - (248,370) - (248,370)
Oil and gas
property disposals (138,719) 1,301,089 1,499,477 1,441,319
Oil and gas
development
expenditures (3,782,151) (3,118,248) (10,129,769) (5,630,120)
Financial services
expenditures (26,753) (5,047,105) (52,114) (5,102,435)
Purchase of other
assets (38,019) (67,650) (79,168) (218,168)
Purchase of
financial services
contracts - (1,505,550) - (11,018,930)
Redemption of
financial services
contracts 5,605,000 3,000,000 6,635,000 3,000,000
Purchase of real
estate properties (4,290,292) - (5,515,586) (2,915,290)
Real estate
development
expenditures - - - (162,355)
Proceeds on sale of
real estate
properties - - - 3,718,794
Change in
restricted cash 203,000 (202,974) 366,057 (204,312)
Change in
non-controlling
interest - (88,889) (524,318) 313,465
Changes in non-cash
working capital 115,290 160,503 317,600 28,520
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Cash used in
investing
activities (2,352,644) (40,704,306) (40,860,770) (150,039,484)
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Increase (decrease)
in cash during the
period 1,235,188 127,666 (5,532,536) (199,551)
Cash, beginning of
period - - 6,767,724 327,217
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Cash, end of period 1,235,188 127,666 1,235,188 127,666
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Cash interest paid 1,096,305 722,865 3,166,569 1,857,350
Cash taxes paid 1,899 - 340,278 -
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Contact Information

  • Avenir Diversified Income Trust
    William M. Gallacher
    President & CEO
    (403) 237-9949
    or
    Avenir Diversified Income Trust
    Gary Dundas
    Vice President Finance & CFO
    (403) 237-9949
    (403) 237-0903 (FAX)
    or
    Avenir Diversified Income Trust
    300, 808 - First Street S.W.,
    Calgary, Alberta
    T2P 1M9
    Website: www.avenirtrust.com