Bonavista Energy Trust
TSX : BNP.UN

Bonavista Energy Trust

November 10, 2005 15:55 ET

Bonavista Energy Trust Announces Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 10, 2005) - Bonavista Energy Trust (TSX:BNP.UN) is pleased to report to unitholders its interim consolidated financial and operating results for the three and nine month periods ended September 30, 2005.



------------------------------------------------------------------------
Highlights
------------------------------------------------------------------------
Three Months Nine Months
ended ended
September 30, % September 30, %
2005 2004 Change 2005 2004 Change
------------------------------------------------------------------------
(unaudited) (restated) (restated)

Financial
($ thousands,
except per unit)

Production
revenue 241,084 154,265 56 623,742 444,368 40
Funds from
operations
(1)(4) 140,249 88,370 59 351,935 254,948 38
Per unit (2)(4) 1.45 1.10 32 3.68 3.20 15

Cash distributions 64,683 47,324 37 191,615 141,703 35
Per unit 0.83 0.75 11 2.48 2.25 10
Percentage of funds
from operations
distributed 46% 54% (8) 54% 56% (2)

Net income (3)(4) 79,242 49,032 62 199,183 147,826 35
Per unit
(2)(3)(4) 0.82 0.61 34 2.08 1.86 12

Total assets 1,870,288 1,253,506 49

Long-term debt,
net of working capital 369,623 258,426 43

Convertible debentures 104,576 85,822 22

Unitholders' equity 1,060,407 871,680 22

Capital expenditures:
Exploitation and
development 53,231 39,366 35 145,769 107,270 36
Acquisitions, net 46,656 21,685 115 58,097 135,970 (57)

Weighted average
outstanding
equivalent trust
units
(thousands) (2)
Basic 96,783 80,152 21 95,640 79,584 20
Diluted 103,418 85,141 21 102,727 84,033 22
------------------------------------------------------------------------

Operating
(boe conversion - 6:1 basis)

Production:
Natural gas
(mmcf/day) 176 143 23 175 145 21
Oil and liquids
(bbls/day) 21,291 19,106 11 21,112 18,201 16
Total oil
equivalent
(boe/day) 50,579 42,875 18 50,211 42,365 19

Product prices: (5)
Natural gas
($/mcf) 8.50 6.48 31 7.61 6.62 15
Oil and liquids
($/bbl) 52.91 39.41 34 45.29 36.41 24

Operating expenses
($/boe) 6.94 5.68 22 6.73 5.47 23

General and
administrative
expenses ($/boe) 0.49 0.36 36 0.46 0.34 35

Cash costs
($/boe) (1) 8.96 6.90 30 8.77 6.58 33

Operating netback
($/boe) (1) 32.16 22.88 41 27.72 22.40 24
------------------------------------------------------------------------



------------------------------------------------------------------------
Trust Unit Three Months Ended
Trading Statistics ------------------------------------------------
September 30, June 30, March 31, December 31,
2005 2005 2005 2004
------------------------------------------------------------------------
($ per unit, except volume)

High 37.55 31.94 32.24 28.88
Low 31.13 28.11 26.30 23.59
Close 37.20 30.85 30.13 27.10
Average Daily Volume 276,274 227,737 400,285 269,429
------------------------------------------------------------------------

NOTES:

(1) Funds from operations, cash costs and operating netback do not have
a standardized measure prescribed by Canadian Generally Accepted
Accounting Principles and therefore may not be comparable with the
calculations with similar measures for other companies. Funds from
operations are determined before changes in non-cash working capital
to analyze operating performance and leverage. See Management's
Discussion and Analysis.
(2) Includes Exchangeable Shares and Exchangeable Units, which are
convertible into Trust Units on certain terms and conditions.
(3) For comparative purposes net income is presented as net income
before non-controlling interest for 2004.
(4) Net income and funds from operations including per unit amounts
have been restated on the adoption of the new accounting standards
for convertible debentures.
(5) Product prices presented are before transportation costs.


MESSAGE TO UNITHOLDERS

Bonavista Energy Trust ("Bonavista" or the "Trust") is pleased to report to its unitholders (the "Unitholders") its consolidated financial and operating results for the three and nine months ended September 30, 2005. The results for the third quarter of 2005 represent nine consecutive quarters of continuous profitable growth for Bonavista since commencing operations as an energy trust. The continued successful execution of Bonavista's proven strategies in the third quarter of 2005 is a testament to the validity and effectiveness of an operationally and technically focused energy trust. The third quarter of 2005 is also highlighted by very strong commodity prices for both oil and natural gas and an increased selection of drilling and acquisition opportunities for Bonavista. This favourable environment creates the opportunity for Bonavista to continue to record robust and profitable results, both operationally and financially, for the remainder of 2005 and beyond.

Other significant accomplishments for Bonavista include:

- Delivered a total return to its Unitholders of 156%, comprised of a 110% increase in unit price and a 46% return from cash distributions, since inception as an energy trust on July 2, 2003 to date. For the first nine months in 2005, the total return to investors was 46%, which is in the top decile of industry performance. With higher commodity prices and stronger operational results, Bonavista also announced effective October 1, 2005 a 20% increase in its monthly cash distribution from $0.275 per unit to $0.33 per unit. This is Bonavista's second increase in its monthly cash distribution to unitholders and currently results in a cash on cash yield of approximately 12%;

- Operationally, production volumes were 50,579 boe per day during the third quarter of 2005, which represents an 18% increase over the 42,875 boe per day reported in the third quarter of 2004 and a 46% increase over the 34,600 boe per day on commencement as an energy trust on July 2, 2003. Our current production rate is approximately 52,500 boe per day;

- Experienced a very productive and successful third quarter, drilling a record level 115 wells with an overall 98% success rate;

- Continued to actively participate at crown land sales investing $8.7 million during the year, further enhancing our undeveloped land position and our future drilling prospect inventory to more than two years;

- Invested $99.9 million of capital during the third quarter of 2005, with $53.2 million in exploitation and development activities and $46.7 million in five synergistic acquisitions within our core regions;

- Generated funds from operations of $140.2 million ($1.45 per unit) and distributed 46% to Unitholders for the three months ended September 30, 2005, with the remaining funds from operations used to reinvest in the business to continue growing our production base;

- Continued to record strong profitable growth in the third quarter of 2005 with average return on equity of 32% and a strong net income to funds from operations ratio of 57%; and

- Expanded our existing loan facility to $600 million, which provides significant financial flexibility to take advantage of future investment opportunities in 2005 and beyond.

Strengths of Bonavista Energy Trust

Since its restructuring into an energy trust in July 2003, Bonavista has maintained a high level of investment activity on its asset base. This activity stems from the operational and technical nature of our trust and our ability to uncover value from our assets within the Western Canadian Basin. Our long-standing technical teams have a solid understanding of our asset base and possess the necessary discipline to deliver profitable results to our Unitholders for the long-term. We actively participate in undeveloped land acquisitions through either crown land sales, property purchases or farm-in opportunities, which have continued to add to our already extensive low-risk drilling inventory. This has led to low cost reserve additions, lengthening of the reserve life index, and a growing production base. Our production base is weighted 58% towards natural gas, geographically focused within select medium depth, multi-zone regions in Alberta, Saskatchewan and British Columbia and has one of the lowest operating cost structures in the oil and natural gas sector. In addition, these high working interest assets are predominantly operated by the Trust, ensuring that operating and capital cost efficiencies are maintained. All of these attributes combined result in top quartile operating netbacks for Bonavista.

Our team brings a successful track record of executing low to medium risk development programs, including both asset and corporate acquisitions, along with sound financial management. Unitholders benefit from a fully internalized, industry leading cost structure, which results in one of the lowest per unit overhead cost structures in the energy trust industry. The management team, along with a strong Board of Directors possess extensive experience in oil and natural gas operations, corporate governance and financial management. Directors and management also own approximately 17% of the Trust, resulting in an alignment of interests with all Unitholders.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's discussion and analysis ("MD&A") of the financial condition and results of operations should be read in conjunction with Bonavista Energy Trust's ("Bonavista" or the "Trust") consolidated interim financial statements for the nine months ended September 30, 2005 and the audited consolidated financial statements and MD&A for the years ended December 31, 2004 and 2003. Our audited consolidated financial statements, Annual Report, and other disclosure documents are filed on SEDAR at www.sedar.com or can be obtained from Bonavista's website at www.bonavistaenergy.com.

Basis of Presentation - The financial data presented below has been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). The reporting and the measurement currency is the Canadian dollar. For the purpose of calculating unit costs, natural gas is converted to a barrel of oil equivalent ("boe") using six thousand cubic feet of natural gas equal to one barrel of oil unless otherwise stated.

Forward-Looking Statements - Certain information set forth in this document, including management's assessment of Bonavista's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Bonavista's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Bonavista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, or if any of them do so, what benefits that Bonavista will derive there from. Bonavista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Measurements - Within Management's discussion and analysis, references are made to terms commonly used in the oil and gas industry. Funds from operations and funds from operations per unit are not defined by GAAP in Canada and therefore may not be comparable with calculations of similar measures of other entities. These measures are referred to as non-GAAP measures and are used by management for the purposes of analyzing operating performance and leverage. Funds from operations is detailed on the Statement of Cash Flows. Funds from operations per unit is calculated based on the weighted average equivalent number of trust units outstanding consistent with the calculation of net income per unit. Netbacks equal total revenue less royalties and operating costs calculated on a boe basis. Total boe is calculated by multiplying the daily production by the number of days in the reporting period.

Operations - Bonavista's exploitation and development program in the first nine months of 2005 led to the drilling of 256 wells in its four core regions, with an overall success rate of 97%. This program resulted in 157 natural gas wells, 92 oil wells and seven dry holes. Bonavista operated 161 of these wells, with an average working interest of 76% in the operated wells. Operatorship and high working interest ownership remain an integral part of our strategy to ensure control over the pace of our activity and control of spending on any given project. In addition to the exploitation and development program, Bonavista executed 13 complementary acquisitions in its core regions during the first nine months of 2005.

Production - As a direct result of Bonavista's active and successful capital programs, production for the third quarter of 2005 increased 18% to 50,579 boe per day from 42,875 boe per day in 2004. Natural gas production increased 23% in the third quarter of 2005 to 176 mmcf per day from 143 mmcf per day for the same period a year ago, while total oil and liquids production in the third quarter of 2005 increased 11% to 21,291 bbls per day (comprised of 15,276 bbls per day of light and medium oil and 6,015 bbls per day of heavy oil) from 19,106 bbls per day (comprised of 12,668 bbls per day of light and medium oil and 6,438 bbls per day of heavy oil) for the same period a year ago. Similarly, production for the nine months ended September 30, 2005 increased 19% to 50,211 boe per day when compared to 42,365 boe per day for the same period a year ago. More specifically, average natural gas production increased 21% to 175 mmcf per day from 145 mmcf per day in the first nine months of 2004 while total oil and liquids production increased 16% to 21,112 bbls per day (comprised of 15,007 bbls per day of light and medium oil and 6,105 bbls per day of heavy oil) from 18,201 bbls per day (comprised of 11,809 bbls per day of light and medium oil and 6,392 bbls per day of heavy oil) in the first nine months of 2004.

During the second quarter of 2005, Bonavista's production was affected by the previously planned and announced maintenance turnarounds at certain third party natural gas processing facilities. The impact of these turnarounds on Bonavista's third quarter production volumes was approximately 700 boe per day. During these turnarounds, the Trust used this opportunity to complete required maintenance on its own facilities and wells, which produce into these third party facilities. Our current production is approximately 52,500 boe per day consisting of 58% natural gas, 30% light and medium oil and 12% heavy oil. We will continue to focus on a diversified commodity investment approach to minimize our dependence on any one product.

Production revenue - Production revenue for the third quarter of 2005 increased by 56% to $241.1 million from $154.3 million in the third quarter of 2004. This increase is attributable to an 18% increase in production volumes and a 32% increase in commodity prices. In the third quarter of 2005, natural gas prices averaged $8.50 per mcf, up 31% from $6.48 per mcf for the same period in 2004. The average oil and liquids price also increased 34% to $52.91 per bbl (comprised of $55.61 per bbl for light and medium oil and $46.03 per bbl for heavy oil) in the third quarter of 2005 from $39.41 per bbl (comprised of $42.98 per bbl for light and medium oil and $32.39 per bbl for heavy oil) for the same period in 2004. Revenues for the nine months ended September 30, 2005 increased by 40% to $623.7 million when compared to $444.4 million for the same period a year ago due to increased production volumes and commodity prices. For the nine month period ended September 30, 2005, natural gas prices averaged $7.61 per mcf, up 15% from $6.62 per mcf for the same period in 2004. The average oil and liquids price also increased 24% to $45.29 per bbl (comprised of $49.66 per bbl for light and medium oil and $34.57 per bbl for heavy oil) in the nine month period ended September 30, 2005 from $36.41 per bbl (comprised of $39.98 per bbl for light and medium oil and $29.80 per bbl for heavy oil) for the same period in 2004.

Commodity hedging - As part of our financial management strategy, the Trust has adopted a disciplined commodity-hedging program. The purpose of the hedging program is to reduce volatility in the financial results, protect acquisition economics and stabilize cash flow and unitholder distributions against the unpredictable commodity price environment. At any given period of time our hedging strategy is restricted to a maximum hedge position of 60% of forecasted production, net of royalties and primarily utilizes costless collars in our hedging portfolio. This strategy limits the Trust's exposure to downturns in commodity prices while allowing for more participation in commodity price increases. In the third quarter of 2005, our hedging program resulted in a net loss of $8.3 million and for the nine months ended September 30, 2005, a net loss of $13.9 million was experienced due to the stronger commodity prices realized over our hedge positions throughout the period. A summary of hedging contracts in place as at September 30, 2005 is outlined in note 7 of the Notes to the Interim Consolidated Financial Statements.

Royalties - Royalties increased 59% from $32.6 million for the three months ended September 30, 2004 to $51.8 million in 2005 primarily as a result of the higher revenues derived from the increases in production volumes and commodity prices realized. Royalties as a percentage of revenue for the third quarter increased slightly from 21.1% in 2004 to 21.5% in 2005, as a result of stronger commodity prices. For the three months ended September 30, 2005, royalties as a percentage of revenues by product were 23.8% for natural gas, 20.3% for light and medium oil and 12.9% for heavy oil. For the nine months ended September 30, 2005, royalties increased 36% to $130.2 million from $95.5 million for the same period a year ago, for the similar reasons discussed above. In addition, royalties as a percentage of revenue for the nine month period decreased slightly from 21.5% in 2004 to 20.9% in 2005, primarily as a result of royalty credits relating to annual gas cost allowance assessment received in the second quarter of 2005. For the nine months ended September 30, 2005, royalties as a percentage of revenues by product were 22.7% for natural gas, 19.9% for light and medium oil and 12.3% for heavy oil.

Transportation costs - For the three months ended September 30, 2005, transportation costs were $7.3 million ($1.57 per boe) compared to $4.2 million ($1.08 per boe) in 2004. Transportation costs for the nine months ended September 30, 2005 were $21.4 million ($1.56 per boe) compared to $12.5 million ($1.07 per boe) for the same period a year ago. The increase in transportation costs in both periods is primarily due to higher production volumes in 2005 versus 2004 and the acquisition of assets in British Columbia in December 2004 that have a higher per unit transportation cost relative to Bonavista's other assets. Transportation costs by product for the third quarter of 2005 were $0.29 per mcf for natural gas, $0.78 per bbl for light and medium oil and $2.62 per bbl for heavy oil and for the nine months ended September 30, 2005 were $0.29 per mcf for natural gas, $0.78 per bbl for light and medium oil and $2.72 per bbl for heavy oil.

Operating expenses - Primarily driven by strong commodity prices and record levels of activity, the industry is experiencing significantly increasing pressure on all costs. These factors, coupled with planned turnarounds at third party production facilities in the third quarter resulted in operating costs increasing to $6.94 per boe for the three months ended September 30, 2005 from $5.68 per boe in the same quarter of 2004. The breakdown of the third quarter 2005 operating costs was $0.99 per mcf for natural gas, $7.98 per bbl for light and medium oil and $9.24 per bbl for heavy oil. Operating costs for the third quarter of 2005 were $32.3 million, an increase of 44% over the $22.4 million incurred for the same period a year ago. For the nine months ended September 30, 2005, operating costs increased to $6.73 per boe from $5.47 per boe in the comparable period of 2004. Operating costs by product for the nine months ended September 30, 2005 were $0.95 per mcf for natural gas, $7.86 per bbl for light and medium oil and $8.95 per bbl for heavy oil. Operating costs for the nine months ended September 30, 2005 were $92.2 million compared to $63.5 million for the same period a year ago, an increase of 45% due to increased production volumes and other reasons noted above. Notwithstanding recent increases, Bonavista continues to place significant emphasis on the control of operating costs and maintains one of the lowest cash cost levels in the industry.

General and administrative expenses - General and administrative expenses, after overhead recoveries, increased to $2.3 million for the three months ended September 30, 2005 from $1.4 million in the same period in 2004 and increased to $6.4 million for the nine months ended September 30, 2005 from $4.0 million in the same period in 2004. On a per boe basis, general and administrative expenses increased 36% for the three months ended September 30, 2005 to $0.49 per boe from $0.36 per boe in the same period in 2004 and increased 35% for the nine months ended September 30, 2005 to $0.46 per boe from $0.34 per boe in the same period in 2004. These increases are largely due to the higher staffing levels required to manage our larger operations and increasing cost pressures, primarily driven by strong commodity prices and record levels of industry activities. Through the Technical Services Agreement with NuVista Energy Ltd., Bonavista provides administrative services and receives a fee determined on a cost recovery basis. The fee charged under this agreement was $513,000 related to general and administrative activities rendered for the three months ended September 30, 2005 and $1.2 million for the nine months ended September 30, 2005. In connection with its Trust Unit Incentive Rights Plan, Bonavista also recorded a unit-based compensation charge of $849,000 and $2.0 million for the three and nine months ended September 30, 2005 respectively, compared to $395,000 and $1.0 million for the same periods of 2004.

Financing expenses - Financing expenses, which include interest expense related to bank debt and convertible debentures, increased to $6.1 million for the three months ended September 30, 2005 from $4.0 million for the same period of 2004, and on a boe basis increased to $1.32 per boe in the third quarter of 2005 from $1.02 per boe in the third quarter of 2004. For the nine months ended September 30, 2005 financing expenses increased to $18.3 million from $10.8 million for the same period in 2004, and on a boe basis increased to $1.33 per boe for the nine month period ending September 30, 2005 from $0.93 per boe in the same period in 2004. These increases are primarily due to the higher average debt levels resulting from our expanded capital programs. Amortization and accretion expenses related to the Trust's convertible debentures for the three months ended September 30, 2005 were $400,000 compared to $260,000 for the three months ended September 30, 2004. For the nine months ended September 30, 2005 amortization and accretion expenses increased to $1.4 million from $714,000 for the same period in 2004. This increase is largely attributable to the amortization of the issue costs and accretion expenses related to the $135 million of convertible debentures issued on December 31, 2004. The amortization component reflects the charge to net income of the debenture issue costs over the term of the debenture. The fair value of the conversion option of the debentures is classified as equity. Over the term of the debentures, the carrying value will accrete to the principal balance at maturity, with the charge to financing expenses. The adoption of the new accounting policy is more fully detailed in note 1 of the Notes to the Interim Consolidated Financial Statements. During the third quarter of 2005, Bonavista paid cash interest of $5.2 million compared to $2.1 million in 2004. For the nine months ended September 30, 2005 Bonavista paid cash interest of $17.9 million compared to $9.7 million for the same period in 2004.


Depreciation, depletion and accretion expenses - Depreciation, depletion and accretion expenses increased 32% to $50.2 million for the three months ended September 30, 2005 from $38.1 million in the same period of 2004. For the nine months ended September 30, 2005 depreciation, depletion and accretion expenses increased by 30% to $143.4 million from $110.3 million in the same period of 2004. Both increases were due to higher production levels and a larger asset base in 2005. The average unit cost also increased to $10.80 per boe in the third quarter of 2005 from $9.66 per boe in the same period of 2004 and for the nine months ended September 30, 2005 the average cost increased to $10.46 per boe from $9.50 per boe for the same period a year ago. These increases are due to the overall higher cost of adding new reserves, which is a trend being experienced throughout the industry.

Income and other taxes - For the three months ended September 30, 2005, the provision for income and other taxes was $10.5 million, compared to $1.8 million during the same period of 2004. For the nine months ended September 30, 2005, the provision for income and other taxes was $9.4 million, compared to a reduction of $1.7 million during the same period of 2004. The increases in the tax provisions are primarily attributed to the higher provision for Large Corporations Tax and higher levels of net income. For each of the three and nine month periods ended September 30, 2005, Bonavista paid capital taxes of $1.5 million and $3.4 million respectively, compared to $519,000 and $1.7 million for the same periods a year ago.

Funds from operations and net income - For the three months ended September 30, 2005, Bonavista experienced a 59% increase in funds from operations to $140.2 million ($1.45 per unit, basic) from $88.4 million ($1.10 per unit, basic) recorded in the same period in 2004. This increase was primarily due to increased production levels and higher average commodity prices realized in the third quarter of 2005 when compared to 2004. For similar reasons, in the nine month period ended September 30, 2005 Bonavista experienced a 38% increase in funds from operations to $351.9 million ($3.68 per unit, basic) from $254.9 million ($3.20 per unit, basic) for the same period in 2004. Net income before non-controlling interest for the three months ended September 30, 2005 also increased to $79.2 million ($0.82 per unit, basic), a 62% increase from $49.0 million ($0.61 per unit, basic) in the third quarter of 2004. For the nine months ended September 30, 2005, net income before non-controlling interest increased to $199.2 million ($2.08 per unit, basic) from $147.8 million ($1.86 per unit, basic) for the same period in 2004. The increases in net income in both periods are also largely attributable to increases in production levels and commodity prices realized.

Capital expenditures - Capital expenditures of $99.9 million in the three months ended September 30, 2005 consisted of $46.7 million on property acquisitions and $53.2 million on exploitation and development spending. For the same period in 2004, capital expenditures were $62.6 million, consisting of $23.2 million of net property acquisitions and $39.4 million on exploitation and development activities. The increase in capital expenditures in the third quarter of 2005 over the same period in 2004 is a result of a more active drilling and acquisitions program in Bonavista's existing Core Regions. Capital expenditures for the nine month period ended September 30, 2005 of $203.9 million consisted of $58.1 million of net property acquisitions and $145.8 million on exploitation and development spending. For the same period in 2004, capital expenditures were $255.7 million consisting of $148.4 million of net property acquisitions and $107.3 million of exploitation and development activities.

Liquidity and capital resources - As at September 30, 2005, bank debt, net of working capital was $369.6 million with an attractive debt to annualized funds from operations ratio of 0.7:1 (0.9:1 including convertible debentures). Based on the recent increase in our banking facility to $600 million, Bonavista has $230.4 million of unused bank borrowing capability, leaving us with significant flexibility to finance expanded capital programs or future acquisition opportunities as they arise.

In 2005, Bonavista plans to invest $260 million to expand its Core Regions, which will be financed through a combination of funds from operations and bank debt. The Trust is committed to the fundamental principle of maintaining financial flexibility and the prudent use of debt. As such, the 2005 capital expenditure program is based on using a conservative amount of debt in our financing structure.

Unitholders' equity - As at September 30, 2005, Bonavista had 98,385,857 equivalent Trust Units outstanding. This includes 14,104,627 Exchangeable Shares and 1,000 Exchangeable Units, which combined are exchangeable into 18,753,243 additional Trust Units. The exchange ratio in effect at September 30, 2005 for Exchangeable Shares was 1.32951 to 1. As of November 10, 2005, Bonavista had 98,691,944 equivalent Trust Units outstanding. This includes 14,104,612 Exchangeable Shares which are exchangeable into 18,897,923 additional Trust Units. The exchange ratio in effect at November 10, 2005 for Exchangeable Shares was 1.33984 to 1.

As at September 30, 2005, Unitholders' Equity included $2.2 million, representing the ascribed value of the conversion feature of the debentures, determined at the time of issue, net of amounts attributed to debentures that have been converted into Trust Units. Of the 100,000, 7.5% convertible debentures issued on January 29, 2004, there have been 72,899 debentures converted to Trust Units to the end of the third quarter of 2005, leaving 27,101 debentures with a principal amount of $27.1 million outstanding at September 30, 2005. On December 31, 2004, the Trust also issued 135,000, 6.75% convertible debentures in conjunction with a property acquisition in British Columbia. These debentures have a principal amount of $135 million and from date of issuance to September 30, 2005, there were 52,095 of these debentures converted, leaving 82,905 debentures outstanding with a principal amount of $82.9 million.

Distributions - The Trust declared distributions of $64.7 million ($0.83 per unit) to its unitholders in the third quarter of 2005. These distributions amounted to 46% of cash flow generated during this period. The remaining 54% of cash flow generated in this period was used to fund our active exploitation, development and acquisition programs. For the nine months ended September 30, 2005, the Trust distributed $191.6 million, amounting to 54% of cash flow generated during the period, while the remaining 46% of cash flow was reinvested to fund exploitation, development and acquisition programs.

Bonavista announces its distribution policy on a quarterly basis. The amount of the cash distributions is determined by the Board of Directors and is dependent upon the commodity price environment, production levels, and the amount of capital expenditures to be financed from funds from operations. Our distribution policy incorporates the withholding of funds from operations to finance capital expenditures, which will provide more sustainable distributions in the long term. Bonavista's current monthly distribution rate is $0.33 per unit, which is comprised of a regular base monthly distribution of $0.28 per unit plus a supplementary monthly distribution of $0.05 per unit, due to the current strength of commodity prices.

Quarterly financial information -The following table highlights Bonavista's performance for the eight quarterly periods extending from December 31, 2003 to September 30, 2005. For the quarterly periods ending December 31, 2003 to December 31, 2004, net income has been restated and reduced by the reclassification of debenture interest and net income attributable to exchangeable shares. Up to December 31, 2004, the exchangeable shares did not meet the conditions for equity treatment for these periods under the accounting abstract "Exchangeable Shares Issued by Subsidiaries of Income Trusts". Subsequent to December 31, 2004, the terms of the exchangeable shares were amended and the exchangeable shares are classified as equity of the Trust:



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2005
---------------------------------------
September 30 June 30 March 31
---------------------------------------
($ thousands, except per unit amounts)

Production revenue 241,084 194,961 187,697
Net income before
non-controlling interest 79,242 62,461 57,480
Net income 79,242 62,461 57,480

Net income per unit:
Basic 0.82 0.65 0.61
Diluted 0.79 0.64 0.60
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2004 (restated)
---------------------------------------
December 31 September 30 June 30
---------------------------------------
($ thousands, except per unit amounts)

Production revenue 155,077 154,265 148,867
Net income before
non-controlling interest 51,199 49,032 48,458
Net income 41,780 39,613 39,038

Net income per unit:
Basic 0.62 0.61 0.61
Diluted 0.61 0.60 0.60
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2003 (restated)
----------------------
March 31 December 31
----------------------
($ thousands, except per unit amounts)

Production revenue 141,236 109,800
Net income before
non-controlling interest 50,336 32,474
Net income 40,917 25,060

Net income per unit:
Basic 0.64 0.45
Diluted 0.63 0.45
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Since the reorganization into an energy trust on July 2, 2003, Bonavista has experienced growth in production volumes and production revenue in each quarter. Production revenue has increased over the past eight quarters due to the impact of increased production levels and the trend of increasing oil and natural gas commodity prices. Over this period, production revenue has increased 120% and net income before non-controlling interest related to exchangeable shares has increased 144%.

New accounting policies:

a) Exchangeable shares - On March 8, 2005, the Emerging Issues Committee of the CICA amended EIC Abstract 151, Exchangeable Securities Issued by Subsidiaries of Income Trusts. EIC 151 requires that exchangeable shares issued by the subsidiaries of an income trust be classified as non-controlling interest unless each of two conditions is met. The first condition is that the holders of the exchangeable shares are entitled to receive distributions of earnings economically equivalent to distributions received by unitholders. The second condition is that the exchangeable shares are ultimately required, by a specified date, to be exchanged for units of the trust and are non-transferable to third parties. Effective for the first quarter of 2005, the terms of the exchangeable shares were amended to satisfy both conditions and therefore are classified as equity and not required to be classified as a non-controlling interest. Prior periods before January 1, 2005 have been restated because both conditions were not met to classify the Exchangeable Shares as equity.

b) Convertible debentures - Effective January 1, 2005, Bonavista retroactively adopted and implemented the new accounting policy relating to convertible debentures pursuant to requirements of the Canadian Institute of Chartered Accountants ("CICA") Handbook. The convertible debentures have been classified as debt net of the fair value of the conversion feature, and net of issue costs. The fair value of the conversion feature has been classified as part of Unitholders' Equity. Issue costs will be amortized over the term of the debenture, and the debt portion will accrete to the principal balance on maturity. The accretion, amortization of issue costs and interest on the convertible debentures is expensed in the consolidated statement of earnings.

Industry developments:

Bonavista has been advised that it will be added to the S&P/TSX Composite Index in the upcoming months. Bonavista was selected because it is among the largest and most actively traded income trusts on the Toronto Stock Exchange. Bonavista has a current market capitalization of approximately of $3.2 billion.

In September 2005, the federal government issued a discussion paper on the tax status and structure of income trusts seeking submissions by December 31, 2005. The federal government has indicated that it is studying the income fund sector and is concerned about what it sees as significant tax loss as a result of corporations converting to the income fund structure. The government also expressed concern that a slow down of economic activity and reduced productivity could result when corporations convert to a structure focused on maintaining stable distributions. The possibility that the government may impose additional taxes or restrictions on income trusts has created considerable uncertainty in the market which has resulted in increased volatility in the price of our units with large daily fluctuations in the unit price becoming the norm. The imposition of new taxes on income trusts would likely lead to a reduction in distributions and hence a reduction in unit value. Bonavista will be providing its own comments on the government discussion paper in addition to participating in a submission through an industry association. Bonavista also encourages all of its unitholders to participate in this process by writing or contacting the Minister of Finance or your Member of Parliament.

OUTLOOK

The Trust continues to benefit from all the same qualities that drove the success of Bonavista Petroleum Ltd. as a public corporation prior to conversion. Today, we continue to apply the same proven principles and execute that strategy in a disciplined and cost-effective manner. The foundation of this strategy is to actively pursue low to medium risk drilling opportunities on the extensive undeveloped land base within our geographically concentrated areas of operations. We will also continue to search for strategic acquisition opportunities where we can add value utilizing our own technical expertise. To accomplish these goals, we rely upon the many talents of the Bonavista team, who possess a successful track record and a thorough understanding of our asset base within the Western Canadian Sedimentary Basin. This prudent approach to our capital investment program has been very effective in the past, and together with our steadfast commitment and attention to detail, will provide the foundation for the future success of the Trust. Today, our efficiency, productivity, activity and profitability remain at the highest levels in our eight year history.

On October 19, 2005, Bonavista announced an increase in its 2005 capital programs, which will result in drilling approximately 325 wells on existing lands. These locations generally consist of low to medium risk prospects drilled within close proximity of company owned and operated infrastructure and a smaller percent of deeper, higher impact drilling within our Southern and Northwestern Alberta Core Regions. As a result of recent industry forecasts expecting a very tight winter drilling season, Bonavista may accelerate the drilling of an additional 20 wells of our winter program into December 2005, pending availability of drilling rigs. For 2006, Bonavista's preliminary capital budget includes drilling approximately 340 to 360 wells on existing lands in Bonavista's four Core Regions. Similar to 2005, these locations generally consist of low to medium risk prospects drilled within close proximity of company owned and operated infrastructures. Assuming a forecasted 15% increase in industry service costs in 2006, the capital required to complete this drilling program and our complementary acquisition program would be in the $275 to $300 million range and should result in modest growth in average daily production levels between 53,000 and 54,000 boe per day in 2006.

We are proud of our achievements since converting to an energy trust in mid-2003 and are very excited about the opportunities that exist for Bonavista in the future. We sincerely appreciate the support of all our Unitholders who endorsed our decision to reorganize into the Trust. We would also like to thank our employees for their significant effort and their continued enthusiasm and excitement as we continue this new phase as an energy trust. Our experienced team remains committed to applying the same proven strategies within our efficient trust structure, to continue adding unitholder value in the oil and natural gas business for many years to come.



Consolidated Balance Sheets September 30, December 31,
(thousands) 2005 2004
------------------------------------------------------------------------
(unaudited) (restated)
Assets:

Accounts receivable $ 102,901 $ 76,821
Oil and natural gas properties
and equipment 1,726,066 1,659,194
Goodwill 41,321 27,521
------------------------------------------------------------------------
$ 1,870,288 $ 1,763,536
------------------------------------------------------------------------
Liabilities and Unitholders' Equity:

Accounts payable and accrued liabilities $ 98,608 $ 92,286
Long-term debt 373,916 309,094
Other long-term obligations 5,948 9,102
Convertible debentures 104,576 185,533
Asset retirement obligations 62,931 58,531
Future income taxes 163,902 144,119
Exchangeable shares -
non-controlling interest - 93,191
Unitholders' equity:
Unitholders' capital 750,912 660,163
Contributed surplus 2,260 2,475
Exchangeable shares 92,380 -
Convertible debentures 2,239 3,994
Accumulated earnings 679,932 480,749
Accumulated cash distributions (467,316) (275,701)
------------------------------------------------------------------------
1,060,407 871,680
------------------------------------------------------------------------
$ 1,870,288 $ 1,763,536
------------------------------------------------------------------------
Consolidated Statements of Operations and Retained Earnings
(thousands, except per
unit amounts) Three Months Nine Months
ended ended
September 30, September 30,
2005 2004 2005 2004
------------------------------------------------------------------------
(unaudited) (restated) (restated)
Revenues:
Production $ 241,084 $ 154,265 $ 623,742 $ 444,368
Royalties (51,843) (32,569) (130,165) (95,533)
Transportation costs (7,312) (4,243) (21,363) (12,460)
------------------------------------------------------------------------
181,929 117,453 472,214 336,375
------------------------------------------------------------------------
Expenses:
Operating 32,301 22,395 92,240 63,462
General and
administrative 2,270 1,433 6,362 3,976
Financing 6,123 4,004 18,291 10,813
Amortization and
accretion of convertible
debentures 400 260 1,359 714
Unit-based compensation 849 395 2,038 1,026
Depreciation, depletion
and accretion 50,234 38,122 143,372 110,306
------------------------------------------------------------------------
92,177 66,609 263,662 190,297
------------------------------------------------------------------------
Income before taxes and
non-controlling interest 89,752 50,844 208,552 146,078
Income and other
taxes (reduction) 10,510 1,812 9,369 (1,748)
------------------------------------------------------------------------
Net income before
non-controlling interest 79,242 49,032 199,183 147,826
Non-controlling interest -
exchangeable shares - (9,419) - (28,258)
------------------------------------------------------------------------
Net Income 79,242 39,613 199,183 119,568
Accumulated earnings,
beginning of period
as previously reported 600,690 433,478 534,153 325,924
Retroactive application
of changes in
accounting policies - (34,121) (53,404) (6,522)
------------------------------------------------------------------------
Accumulated earnings,
end of period $ 679,932 $ 438,970 $ 679,932 $ 438,970
------------------------------------------------------------------------
------------------------------------------------------------------------
Net income per unit -
basic $ 0.82 $ 0.61 $ 2.08 $ 1.86
------------------------------------------------------------------------
------------------------------------------------------------------------
Net income per unit -
diluted $ 0.79 $ 0.60 $ 2.03 $ 1.82
------------------------------------------------------------------------
------------------------------------------------------------------------


Consolidated Statements of Cash Flows

(thousands) Three Months Nine Months
ended ended
September 30, September 30,
2005 2004 2005 2004
------------------------------------------------------------------------
(unaudited) (restated) (restated)
Cash provided by (used in):

Operating Activities:
Net income $ 79,242 $ 39,613 $ 199,183 $ 119,568
Items not requiring cash
from operations:
Depreciation,
depletion and accretion 50,234 38,122 143,372 110,306
Non-controlling interest -
exchangeable shares - 9,419 - 28,258
Amortization and
accretion of convertible
debentures 400 260 1,359 714
Unit-based compensation 849 395 2,038 1,026
Future income taxes
(reduction) 9,524 561 5,983 (4,924)
------------------------------------------------------------------------

Funds from operations 140,249 88,370 351,935 254,948
Asset retirement
expenditures (567) (36) (1,978) (557)
Decrease (Increase) in
non-cash working
capital items (17,669) (11,940) (26,966) (10,823)
------------------------------------------------------------------------

122,013 76,394 322,991 243,568
------------------------------------------------------------------------

Financing Activities:
Issuance of equity,
net of issue costs 1,396 356 3,620 326
Issuance of convertible
debentures, net of
issue costs - - (5) 95,771
Cash distributions (64,683) (47,324) (191,615) (141,703)
Increase (Decrease) in
long-term debt 39,691 35,112 64,822 56,495
Decrease (Increase) in
non-cash working
capital items 1,470 (1,916) 4,053 1,278
------------------------------------------------------------------------

(22,126) (13,772) (119,125) 12,167
------------------------------------------------------------------------

Investing Activities:
Business acquisition (44,800) - (44,800) (69,924)
Exploitation and
development (53,231) (39,366) (145,769) (107,270)
Property acquisitions (1,856) (23,261) (13,859) (78,738)
Property dispositions - 5 562 197
------------------------------------------------------------------------

(99,887) (62,622) (203,866) (255,735)
------------------------------------------------------------------------

Decrease in cash - - - -
Cash, beginning of period - - - -
------------------------------------------------------------------------

Cash, end of period $ - $ - $ - $ -
------------------------------------------------------------------------
------------------------------------------------------------------------


Notes to Interim Consolidated Financial Statements

Nine months ended September 30, 2005

The unaudited interim consolidated financial statements include the accounts of the Trust, its subsidiaries, and its partnerships, and have been prepared by management in accordance with Canadian Generally Accepted Accounting Principles using the same accounting policies as those set out in note 1 to the audited Consolidated Financial Statements for the year ended December 31, 2004, except as outlined below. The interim consolidated financial statements and notes should be read in conjunction with the consolidated financial statements for the year ended December 31, 2004. Certain amounts have been reclassified to conform to the current year's presentation.

1. Change in accounting policies:

a) Exchangeable securities - Non-controlling interest

On March 8, 2005 the accounting abstract "Exchangeable Securities Issued by Subsidiaries of Income Trusts" was amended effective for financial statements issued on or after September 30, 2005. Under the amended abstract, exchangeable shares are presented as equity of the Trust only if the exchangeable shares are entitled to receive distributions of earnings economically equivalent to distributions received by units of the trust and the holders of the exchangeable shares can only dispose of their shares by exchanging them for trust units. As the exchangeable shares of the Trust's subsidiary do not meet the transferability condition at December 31, 2004, they have been classified as a non-controlling interest outside of Unitholders' Equity.

Subsequent to December 31, 2004, the terms of the exchangeable shares were amended imposing the condition that holders of exchangeable shares can only dispose of their shares by exchanging them for trust units. The Exchangeable Shares have been reclassified as equity of the Trust and are included as Unitholders' Equity subsequent to December 31, 2004.

In accordance with the transitional provisions of the abstract, the Trust has retroactively restated prior periods. As a result of this change in accounting policy, the Trust has reflected a non-controlling interest on the consolidated balance sheet of $93.2 million as at December 31, 2004 as outlined in note 6 b). Each redemption of exchangeable shares held by previous Bonavista Petroleum Ltd. shareholders are accounted for as a step-purchase, which for the year ended December 31, 2004 resulted in an increase in property, plant and equipment of $23.3 million, an increase of unitholders' capital of $15.3 million and an increase in future income tax liability of $8.0 million. Funds from operations was not impacted by this change.

b) Convertible debenture

Effective January 1, 2005, the Trust retroactively adopted the new accounting policy on convertible debentures. The convertible debentures have been classified as debt net of the fair value of the conversion feature at the date of issue and net of issue costs. The fair value of the conversion feature has been classified as part of Unitholders' Equity. The details of the changes are outlined in note 5. Issue costs are amortized over the term of the debentures and the debt portion will accrete up to the principal balance at maturity. The accretion and amortization of issue costs and interest on the convertible debentures is expensed on the consolidated statement of operations. Previously, the Trust included its obligation relating to Convertible Debentures in Unitholders' Equity and interest on the Convertible Debentures was charged to accumulated earnings, as the obligations could be settled with the issuance of equity.

The effect of this change in accounting policy has been recorded retroactively with restatement of prior periods.



The effect of the adoption is presented below as increases (decreases):

------------------------------------------------------------------------
Consolidated Balance Sheet December 31, 2004
------------------------------------------------------------------------
(thousands)
Convertible debentures - debt component $ 185,533
Unitholders' equity:
Convertible debentures $ (184,094)
Unitholders' capital $ (540)
Accumulated earnings $ (899)
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
Nine Months
ended Year ended
Consolidated Statements of September 30, December 31,
Operations 2004 2004
------------------------------------------------------------------------
(thousands, except per unit amounts)
Interest on convertible debentures $ 5,042 $ 6,400
Amortization and accretion of convertible
debentures 714 899
------------------------------------------------------------------------
Net income $ (5,756) $ (7,299)
------------------------------------------------------------------------
Net income per unit - basic $ (0.01) $ (0.01)
Net income per unit - diluted $ (0.01) $ (0.01)
------------------------------------------------------------------------
------------------------------------------------------------------------


2. Acquisition:

On August 4, 2005, Bonavista acquired oil and natural gas properties through a partnership for cash consideration of $44.8 million, with results of operations included from the date of acquisition. In conjunction with this acquisition Bonavista, recognized $13.8 million of goodwill, $706,000 of asset retirement obligations and $13.8 million of future income taxes.

3. Asset retirement obligations:

The Trust's asset retirement obligations result from net ownership interests in petroleum and natural gas assets including well sites, gathering systems and processing facilities. The Trust estimates the total undiscounted amount of expenditures required to settle its asset retirement obligations is approximately $300.5 million which will be incurred over the next 51 years. The majority of the costs will be incurred between 2018 and 2034. A credit-adjusted risk-free rate of 7.5% was used to calculate the fair value of the asset retirement obligations.



A reconciliation of the asset retirement obligations is provided below:

------------------------------------------------------------------------
Nine Months
ended
September 30,
2005 2004
------------------------------------------------------------------------
(thousands)
Balance, beginning of period $ 58,531 $ 38,654

Accretion expense 3,205 2,214
Liabilities incurred 1,836 817
Liabilities acquired 1,337 3,552
Liabilities settled (1,978) (557)

------------------------------------------------------------------------
Balance, end of period $ 62,931 $ 44,680
------------------------------------------------------------------------
------------------------------------------------------------------------


4. Long-term debt:

In June 2005, Bonavista and its lenders agreed to amend the Trust's bank loan facility to increase the maximum borrowing to $600 million. All other terms of the facility have remained unchanged.

5. Convertible debentures:

The debt component of the debentures has been recorded net of the fair value of the conversion feature and net of issue costs as described in note 1. The fair value of the conversion feature of the debentures in Unitholders' Equity at the date of issue was $4.7 million. The issue costs are amortized to earnings over the term of the obligation and the debt component of the obligation is adjusted for the amortization as well as for the portion of issue costs relating to conversions. The debt portion is accreted over the term of the obligation to the principal value on maturity with a corresponding charge to net income. The following table sets out the convertible debenture activities to September 30, 2005:



------------------------------------------------------------------------
Debt Equity
Component Component
------------------------------------------------------------------------
(thousands)
Balance, December 31, 2004 before restatement $ - $ 188,088
Adjustment for debt and equity components of
debentures 183,388 (183,388)
Accretion 230 -
Issue expenses related to conversions to
trust units 1,246 -
Amortization of issue expenses 669 -
Conversion to trust units - (706)
------------------------------------------------------------------------
Balance, December 31, 2004 after restatement 185,533 3,994
Accretion 376 -
Issue expenses related to conversions 3,048 -
Amortization of issue expenses 983 -
Conversion to trust units (85,359) (1,755)
Issue expenses (5) -
------------------------------------------------------------------------
Balance, September 30, 2005 $ 104,576 $ 2,239
------------------------------------------------------------------------
------------------------------------------------------------------------


6. Unitholders' equity:

a) Trust units:

------------------------------------------------------------------------
Unitholders' capital Number of Units Amount
(restated)
------------------------------------------------------------------------
(thousands)
Trust units:
Balance, December 31, 2004 75,558,633 $ 660,163
Issued on conversion of exchangeable
shares 371,314 811
Issued on conversion of debentures 3,349,592 85,359
Issued upon exercise of trust unit
incentive plan 354,075 3,620
Adjustment to equity component of
debenture on conversion - 1,755
Issue expenses related to debenture
conversions - (3,048)
Unit-based compensation - 2,252
------------------------------------------------------------------------
Balance, September 30, 2005 79,633,614 $ 750,912
------------------------------------------------------------------------
------------------------------------------------------------------------


b) Exchangeable shares:

The Trust retroactively applied the amended accounting abstract "Exchangeable Securities issued by a Subsidiary of an Income Trust" whereby the exchangeable shares issued by the Trust's subsidiary are reflected as a non-controlling interest on the consolidated balance sheet, as the conditions required to treat exchangeable shares as equity were not met at the time the exchangeable shares were issued. Net earnings were reduced by the amount of net earnings attributed to the non-controlling interest.

The non-controlling interest on the consolidated balance sheet consists of the book value of exchangeable shares issued to Bonavista Petroleum Ltd. shareholders at the time of the Arrangement, plus net earnings attributable to the exchangeable shares based on the trust units issuable for exchangeable shares in proportion to total trust units issued and issuable each period end, less exchangeable shares redeemed.

Subsequent to December 31, 2004 the terms of the exchangeable shares were amended whereby the holders of exchangeable shares can only dispose of their shares by exchanging them for trust units. As a result the exchangeable shares meet the conditions for presentation as equity of the Trust and are included as Unitholders' Equity subsequent to December 31, 2004.



------------------------------------------------------------------------
Nine Months ended September 30,
2005 2004
Number Amount Number Amount
------------------------------------------------------------------------
(thousands) (thousands)

Balance, December 31
before restatement 14,391,286 $ 40,686 14,535,251 $ 41,092
Net income attributable
to non-controlling
interest - 52,505 - 14,828
------------------------------------------------------------------------
Balance, December 31
after restatement 14,391,286 93,191 14,535,251 55,920
Net income attributable
to non-controlling
interest - - - 28,258
Exchanged for trust
units (286,659) (811) (111,820) (316)
------------------------------------------------------------------------
Balance, September 30 14,104,627 $ 92,380 14,423,431 $ 83,862
------------------------------------------------------------------------
------------------------------------------------------------------------


c) Per unit amounts:

The following table summarizes the weighted average trust units, exchangeable units, exchangeable shares and convertible debentures used in calculating net income per unit:



------------------------------------------------------------------------
Three Months
ended,
September 30, 2005
------------------------------------------------------------------------
Trust units 77,910,187
Exchangeable units 1,000
Exchangeable shares converted at period end
exchange ratio 18,871,407
------------------------------------------------------------------------
Basic equivalent trust units 96,782,594
Convertible debentures 5,607,223
Trust unit incentive rights 1,027,846
------------------------------------------------------------------------
Diluted equivalent trust units 103,417,663
------------------------------------------------------------------------
------------------------------------------------------------------------


For the purposes of calculating diluted net income per unit, interest on convertible debentures for the particular period has been added back to net income as reported.

d) Trust unit incentive rights plan:

For the nine months ended September 30, 2005, there were 1,282,700 trust unit rights issued with an average exercise price of $28.20 per unit and an estimated fair value of $6.28 per unit. In addition, there were 2,549,725 trust unit rights outstanding with an average exercise price of $20.04 per unit as at September 30, 2005.

The fair value of each incentive right granted was estimated on the date of the grant using the Black-Scholes option-pricing model. In the pricing model, the risk free interest rate was 3.5%; volatility of 18%; a forfeiture rate of 10%; and an expected life of 4.5 years.

7. Financial instruments:

a) Hedge instruments:

As at September 30, 2005, the Trust has hedged by way of costless collars to sell crude oil and natural gas as follows:



------------------------------------------------------------------------
Volume Average Price Term
------------------------------------------------------------------------

7,000 bbls/d US$ 35.71 - US$ 55.75 - WTI October 1, 2005 -
December 31, 2005
1,000 bbls/d CDN$ 33.00 - CDN$ 41.70 - Bow River October 1, 2005 -
December 31, 2005
6,000 bbls/d US$ 39.17 - US$ 55.67 - WTI January 1, 2006 -
March 31, 2006
5,000 bbls/d US$ 44.40 - US$ 57.57 - WTI April 1, 2006 -
June 30, 2006
1,000 bbls/d CDN$ 61.00 - CDN$ 75.00 - WTI April 1, 2006 -
June 30, 2006
4,000 bbls/d US$ 51.00 - US$ 61.06 - WTI July 1, 2006 -
September 30, 2006
2,000 bbls/d US$ 53.00 - US$ 65.13 - WTI October 1, 2006 -
December 31, 2006
15,000 gjs/d CDN$ 7.17 - CDN$ 11.38 - AECO November 1, 2005 -
March 31, 2006
5,000 gjs/d CDN$ 8.00 - CDN$ 12.00 - AECO April 1, 2006 -
October 31, 2006
------------------------------------------------------------------------
------------------------------------------------------------------------


As at September 30, 2005, the market deficiency of these financial instruments was approximately $35.4 million.

b) Physical purchase contracts:

As at September 30, 2005, the Trust has entered into direct sale costless collars to sell natural gas as follows:



------------------------------------------------------------------------
Average Price
Volume (CDN$/GJ) Term
------------------------------------------------------------------------
57,500 gjs/d $ 5.82 - $ 8.51 April 1, 2005 - October 31, 2005
45,000 gjs/d $ 7.56 - $ 12.45 November 1, 2005 - March 31, 2006
30,000 gjs/d $ 7.13 - $ 10.50 April 1, 2006 - October 31, 2006
------------------------------------------------------------------------
------------------------------------------------------------------------


INVESTOR INFORMATION

Bonavista Energy Trust is a natural gas weighted energy trust which is committed to maintaining its emphasis on operating high quality oil and natural gas properties, delivering consistent distributions to unitholders and ensuring financial strength and sustainability.

Corporate information provided herein contains forward-looking information. The reader is cautioned that assumptions used in the preparation of such information, particularly those pertaining to cash distributions, production volumes, commodity prices, operating costs and drilling results, which are considered reasonable by Bonavista at the time of preparation, may be proven to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. There is no representation by Bonavista that actual results achieved during the forecast period will be the same in whole or in part as those forecast.

Contact Information

  • Bonavista Energy Trust
    Keith A. MacPhail
    President & CEO
    (403) 213-4315
    or
    Ronald J. Poelzer
    Executive Vice President & CFO
    (403) 213-4308
    or
    Greg R. Warner
    Vice President, Finance
    (403) 514-7307
    Website: www.bonavistaenergy.com
    or
    Bonavista Petroleum Ltd.
    700, 311 - 6th Avenue SW
    Calgary, AB T2P 3H2
    (403) 213-4300