Daylight Energy Trust
TSX : DAY.UN

Daylight Energy Trust

March 22, 2006 02:06 ET

Daylight Energy Trust Announces Excellent 2005 Year-End Reserve Growth and Annual Finding Costs

CALGARY, ALBERTA--(CCNMatthews - March 21, 2006) - Daylight Energy Trust ("Daylight")(TSX:DAY.UN) is pleased to announce excellent 2005 year-end reserve growth, extended reserve life index ("RLI"), increased net asset value ("NAV"), low annual finding, development and acquisition ("FD&A") costs and a high recycle ratio.

HIGHLIGHTS

- Total proved plus probable reserves increased 52% - 47.4 million barrels of oil equivalent ("mmboe") at year-end 2005 compared to 31.1 mmboe at the end of 2004.

-- Per Unit - proved plus probable reserves increased 19% - 717 barrels of oil equivalent ("boe") at the end of 2005 from 600 boe at the end of 2004 per thousand fully diluted units.

- Total proved reserves increased 54% - 33.7 mmboe at year-end 2005 compared to 21.8 mmboe at the end of 2004.

-- Per Unit - proved reserves increased 21% - 510 boe at the end of 2005 from 422 boe at the end of 2004 per thousand fully diluted units.

- RLI increased 19% - 7.6 years for proved plus probable reserves at the end of 2005 based on midpoint of 2006 production guidance of 16,750 - 17,250 boe per day from 6.4 years at the end of 2004.

- Net present value ("NPV") of total proved plus probable reserves increased 94% - $690 million at the end of 2005 from $355 million at the end of 2004, discounted at 10% and before income taxes.

- NAV increased 113% - $613 million at December 31, 2005 from $288 million at December 31, 2004.

-- Per Unit - NAV increased 67% - $9.29 at December 31, 2005 from $5.57 at December 31, 2004 per fully diluted unit.

- Daylight completed three strategic transactions in 2005 - two acquisitions and one disposition/distribution of securities of Open Range Energy Corp. ("Open Range") to net acquire 16.7 mmboe of proved plus probable reserves at an average cost of $9.78 per boe excluding future development capital ("FDC") and $11.86 per boe including FDC.

- Daylight replaced 411% of annual production - at an all-in annual proved plus probable FD&A cost of $10.96 per boe excluding FDC and $12.98 per boe including FDC.

- Daylight generated a 3.0x recycle ratio - during 2005 on proved plus probable basis, excluding FDC, with a $32.61 per boe operating netback and a $10.96 per boe proved plus probable FD&A cost, excluding FDC.

RESERVES

Reserves included herein are stated on a company interest basis (before royalty burdens and including royalty interests) unless noted otherwise. All reserves information has been prepared in accordance with National Instrument ("NI") 51-101. This report contains several cautionary statements that are specifically required by NI 51-101. In addition to the detailed information disclosed in this press release more detailed information on a net interest basis (after royalty burdens and including royalty interests) and on a gross interest basis (before royalty burdens and excluding royalty interests) will be included in Daylight's Annual Information Form ("AIF") which will be available on www.sedar.com.

Based on an independent reserve evaluation conducted by GLJ Petroleum Consultants Ltd. ("GLJ") effective December 31, 2005 and prepared in accordance with NI 51-101, Daylight had proved plus probable reserves of 47.4 mmboe. Proved plus probable reserve additions from exploration and development activities (including revisions) were 4.8 mmboe while 16.7 mmboe were added through acquisitions (net of minor dispositions), bringing the total additions to 21.5 mmboe. This represents 411% of the 5.2 mmboe produced during 2005. As a result, year-end 2005 proved plus probable reserves are 52% higher than the 31.1 mmboe of reserves recorded at year-end 2004.

Proved developed producing reserves represent 58% of proved plus probable reserves while total proved reserves account for 71% of proved plus probable reserves. Approximately 55% of Daylight's proved plus probable reserves are crude oil and natural gas liquids while 45% are natural gas on a boe basis.

TOTAL COMPANY INTEREST



Light and Heavy Total Natural
Medium Crude Crude Gas Natural Oil
Crude Oil Oil Oil Liquids Gas Equivalent
---------------------------------------------------------

(mbbl) (mbbl) (mbbl) (mbbl) (mmcf) (mboe)

Proved
Developed
Producing 3,296 9,309 12,605 1,200 82,632 27,577
Developed
Non-Producing 297 79 376 121 8,354 1,889
Undeveloped 1,052 2,318 3,370 119 4,305 4,206
---------------------------------------------------------
Total Proved 4,644 11,706 16,350 1,439 95,291 33,671
Probable 4,245 3,421 7,666 562 32,782 13,691
---------------------------------------------------------
Proved plus
Probable 8,889 15,127 24,016 2,001 128,073 47,363
---------------------------------------------------------
---------------------------------------------------------

NET INTEREST

Light and Heavy Total Natural
Medium Crude Crude Gas Natural Oil
Crude Oil Oil Oil Liquids Gas Equivalent
---------------------------------------------------------

(mbbl) (mbbl) (mbbl) (mbbl) (mmcf) (mboe)

Proved
Producing 2,844 8,311 11,155 790 64,953 22,771
Developed
Non-Producing 284 58 342 80 6,297 1,472
Undeveloped 911 1,840 2,751 80 3,351 3,390
---------------------------------------------------------
Total Proved 4,039 10,210 14,249 951 74,601 27,632
Probable 3,640 2,942 6,582 372 25,664 11,232
---------------------------------------------------------
Proved plus
Probable 7,679 13,152 20,831 1,323 100,266 38,864
---------------------------------------------------------
---------------------------------------------------------

Notes:
1. Boe's may be misleading, particularly if used in isolation. In
accordance with NI 51-101, a boe conversion ratio for natural gas
of 6 Mcf: 1 bbl has been used which is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
2. Numbers may not add due to rounding.

RESERVES RECONCILIATION

Total Natural
Crude Gas Natural Oil
Oil Liquids Gas Equivalent
----------------------------------------------

(mbbl) (mbbl) (mmcf) (mboe)

Proved Producing
December 31, 2004 2,343 1,503 85,433 18,085
Exploration
Discoveries 117 - - 117
Drilling Extensions 402 73 3,124 996
Improved Recovery 209 37 1,891 562
Infill Drilling 1,044 32 1,598 1,343
Technical Revisions 638 (87) 8,595 1,984
Acquisitions 9,378 1 5,971 10,373
Dispositions (27) (62) (3,430) (661)
Production (1,499) (298) (20,552) (5,222)
----------------------------------------------
December 31, 2005 12,605 1,200 82,632 27,577
----------------------------------------------
----------------------------------------------


Total Natural
Crude Gas Natural Oil
Oil Liquids Gas Equivalent
----------------------------------------------

(mbbl) (mbbl) (mmcf) (mboe)

Total Proved
December 31, 2004 3,178 1,735 101,601 21,847
Exploration
Discoveries 148 - - 148
Drilling Extensions 1,202 136 4,824 2,143
Improved Recovery 65 1 698 183
Infill Drilling 638 37 871 820
Technical Revisions 326 (112) 5,012 1,050
Acquisitions 12,329 1 6,266 13,374
Dispositions (36) (62) (3,430) (670)
Production (1,499) (298) (20,552) (5,222)
----------------------------------------------
December 31, 2005 16,351 1,439 95,291 33,672
----------------------------------------------
----------------------------------------------


Total Natural
Crude Gas Natural Oil
Oil Liquids Gas Equivalent
----------------------------------------------

(mbbl) (mbbl) (mmcf) (mboe)

Total Proved Plus
Probable
December 31, 2004 6,485 2,359 133,540 31,100
Exploration
Discoveries 186 - - 186
Drilling Extensions 1,933 201 7,992 3,466
Improved Recovery 85 2 953 246
Infill Drilling 705 44 1,084 930
Technical Revisions 189 (235) 285 2
Acquisitions 15,983 1 9,319 17,537
Dispositions (49) (74) (4,547) (881)
Production (1,499) (298) (20,552) (5,222)
----------------------------------------------
December 31, 2005 24,017 2,001 128,073 47,363
----------------------------------------------
----------------------------------------------


RESERVE LIFE INDEX ("RLI")

Daylight's proved plus probable RLI was 7.6 years at the end of 2005 based upon GLJ reserves and Daylight's midpoint of 2006 production guidance of 16,750 - 17,250 boe per day.

NET PRESENT VALUE ("NPV") SUMMARY

Daylight's crude oil, natural gas and natural gas liquids reserves were evaluated using GLJ's product price forecasts effective January 1, 2006 prior to provision for income taxes, interest, debt service charges and general and administrative expenses. It should not be assumed that the discounted future net production revenues estimated by GLJ represent the fair market value of the reserves.

NPV of Cash Flow Using GLJ January 1, 2006 Forecast Prices and Costs



NI 51-101 Net Interest 0% 5% 10% 15% 20%
---------------------------------------------------------------------
($,000)
Proved
Developed Producing 675,585 565,882 493,546 441,738 402,430
Developed
Non-Producing 43,934 34,634 28,478 24,084 20,799
Undeveloped 54,785 38,580 27,742 20,177 14,699
-------------------------------------------------
Total Proved 774,304 639,096 549,766 486,000 437,928
Probable 312,764 198,223 140,380 106,373 84,272
-------------------------------------------------
Proved plus
Probable 1,087,068 837,319 690,145 592,373 522,200
-------------------------------------------------
-------------------------------------------------


At a 10% discount factor, the proved producing reserves make up 72% of the proved plus probable value while total proved reserves account for 80% of the proved plus probable value. GLJ's price forecast utilized in the evaluation is summarized below.



GLJ January 1, 2006 Price Forecast

West Texas Edmonton
Intermediate Light Natural Gas Foreign
Year Crude Oil Crude Oil at AECO Exchange
---------------------------------------------------------------------
($US/bbl) ($Cdn/bbl) ($Cdn/mmbtu) ($US/$Cdn)

2006 57.00 66.25 10.60 0.85
2007 55.00 64.00 9.25 0.85
2008 51.00 59.25 8.00 0.85
2009 48.00 55.75 7.50 0.85
2010 46.50 54.00 7.20 0.85
2011 45.00 52.25 6.90 0.85
2012 45.00 52.25 6.90 0.85
2013 46.00 53.25 7.05 0.85
2014 46.75 54.25 7.20 0.85
2015 47.75 55.50 7.40 0.85
2016 48.75 56.50 7.55 0.85
Escalate
thereafter at +2.0%/yr +2.0%/yr +2.0%/yr 0%/yr
---------------------------------------------------------------------


The reserves have also been evaluated using constant prices and costs effective December 31, 2005. Following are the values determined using this constant price analysis.



NPV of Cash Flow Using December 31, 2005 Constant Prices and Costs

NI 51-101 Net Interest 0% 5% 10% 15% 20%
---------------------------------------------------------------------
($,000)
Proved
Developed Producing 808,943 659,010 561,384 492,561 441,232
Developed
Non-Producing 61,538 47,511 38,247 31,704 26,877
Undeveloped 75,695 52,779 37,972 27,846 20,615
-------------------------------------------------
Total Proved 946,176 759,301 637,603 552,110 488,724
Total Probable 409,244 262,418 186,445 141,052 111,295
-------------------------------------------------
Proved plus
Probable 1,355,421 1,021,719 824,048 693,162 600,019
-------------------------------------------------
-------------------------------------------------


At a 10% discount factor, the proved producing reserves make up 68% of the proved plus probable value while total proved reserves account for 77% of the proved plus probable value. The prices utilized in the constant price evaluation are summarized below.




Constant Prices at December 31, 2005

West Texas Edmonton
Intermediate Light Natural Gas Foreign
Year Crude Oil Crude Oil at AECO Exchange
---------------------------------------------------------------------
($US/bbl) ($Cdn/bbl) ($Cdn/mmbtu) ($US/$Cdn)

2006 and thereafter 61.04 68.27 9.71 0.8577


NET ASSET VALUE ("NAV") SUMMARY

The following NAV table shows what is normally referred to as a "produced-out" NAV calculation under which the current value of the Trust's reserves would be produced at forecast future prices and costs. The value is a snapshot in time and is based on various assumptions including commodity prices and foreign exchange rates that vary over time.



Net Asset Value 2005 2004
---------------------------------------------------------------------
($,000)

Proved plus Probable NI 51 - 101 discounted
at 10% 690,145 355,033
Undeveloped Land, Seismic and Other Assets
(internal estimate) 72,948 43,492
Bank Debt (123,455) (89,220)
Working Capital Deficiency (26,575) (20,820)
------------------------
Net Asset Value - Diluted 613,063 288,485
------------------------
------------------------
Diluted Units Outstanding (,000) 66,025 51,806
------------------------
------------------------
Net Asset Value - per Diluted Unit $9.29 $5.57
------------------------
------------------------


FD&A Costs - Company Interest Reserves(1)

Proved Proved plus
Probable
---------------------------------------------------------------------

FD&A Costs Excluding Future Development
Capital
---------------------------------------
Exploration and Development Capital
Expenditures - $,000 72,539 72,539
Exploration and Development Reserve
Additions including Revisions - mboe 4,344 4,830
---------------------------------------------------------------------
Finding and Development Cost - $ per boe 16.70 15.02

Net Acquisition Capital - $,000 162,873 162,873
Net Acquisition Reserve Additions - mboe 12,704 16,656
---------------------------------------------------------------------
Net Acquisition Cost - $ per boe 12.82 9.78

Total Capital Expenditures including
Net Acquisitions - $,000 235,412 235,412
Reserve Additions including Net
Acquisitions - mboe 17,048 21,486
---------------------------------------------------------------------
Finding Development and Acquisition
Cost - $ per boe 13.81 10.96

FD&A Costs Including Future Development
Capital
---------------------------------------
Exploration and Development Capital
Expenditures - $,000 72,539 72,539
Exploration and Development Change
in FDC - $,000 (3,838) 8,806
------------------------
Exploration and Development Capital
including Change in FDC - $,000 68,701 81,345
Exploration and Development Reserve
Additions including Revisions - mboe 4,344 4,830
---------------------------------------------------------------------
Finding and Development Cost - $ per boe 15.82 16.84

Net Acquisition Capital - $,000 162,873 162,873
Net Acquisition Change in FDC - $,000 27,956 34,592
------------------------
Net Acquisition Capital
including Change in FDC - $,000 190,829 197,465
Net Acquisition Reserve Additions - mboe 12,704 16,656
---------------------------------------------------------------------
Net Acquisition Cost - $ per boe 15.02 11.86

Total Capital Expenditures including
Net Acquisitions - $,000 235,412 235,412
Total Change in FDC - $,000 24,118 43,398
------------------------
Total Capital including Change
in FDC - $,000 259,530 278,810
Reserve Additions including Net
Acquisitions - mboe 17,048 21,486
---------------------------------------------------------------------
Finding Development and Acquisition
Cost - $ per boe 15.22 12.98
---------------------------------------------------------------------

FDC ($,000) Proved Proved plus
Probable
---------------------------------------------------------------------

December 31, 2004 23,925 49,480
Exploration & Development Changes in period (3,838) 8,806
Increase from Acquisitions 27,956 34,592
---------------------------------------------------------------------
December 31, 2005 48,043 92,878
---------------------------------------------------------------------
(1) In all cases, the F&D, or FD&A number is calculated by dividing
the identified capital expenditures by the applicable reserves
additions. Boe's may be misleading, particularly if used in
isolation. In accordance with NI 51-101, a boe conversion ratio for
natural gas of 6 Mcf: 1 bbl has been used which is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.


FUTURE DEVELOPMENT CAPITAL ("FDC")

NI 51-101 requires that FD&A costs be calculated including changes in FDC. Changes in forecast FDC occur annually as a result of development activities, acquisition and disposition activities and capital cost estimates that reflect the independent evaluator's best estimate of what it will cost to bring the proved undeveloped and probable reserves on production. The current high level of activity has resulted in increased capital costs throughout the industry that are now reflected in the estimates of future development costs effective December 31, 2005.

FINDING AND DEVELOPMENT COSTS ("F&D")

During 2005 Daylight spent $72.5 million of capital on exploration and development activities, which added 4.3 mmboe of proved and 4.8 mmboe of proved plus probable reserves, including revisions. The proved plus probable reserve additions replaced 92% of Daylight's 2005 production. In total, Daylight drilled 71 gross (40.6 net) wells with a 100% drilling success rate.

Daylight's proved plus probable F&D costs for 2005 were $15.02 per boe excluding FDC and $16.84 including FDC. On a proved basis, Daylight's F&D costs were $16.70 per boe excluding FDC and $15.82 including FDC.

FINDING, DEVELOPMENT AND ACQUISITION COSTS ("FD&A")

Daylight completed two strategic acquisitions during 2005 spending $162.9 million to purchase 16.7 mmboe of proved plus probable reserves. Daylight's acquisitions were primarily focused on adding to our Peace River Arch and East 5 core areas.

Incorporating net acquisitions during the 2005, Daylight's proved plus probable FD&A costs were $10.96 per boe excluding FDC and $12.98 including FDC. Daylight's proved FD&A costs were $13.81 per boe excluding FDC and $15.22 per boe including FDC.

RESERVE REPLACEMENT

Daylight's 2005 FD&A activities replaced 411% of production on a proved plus probable basis, 326% on a proved basis and 282% on a proved producing basis.



2005
---------------------------------------------------------------------
Production - mboe 5,222
---------------------------------------------------------------------
Proved plus probable reserve additions - mboe 21,486
Proved plus probable reserve replacement - % 411
---------------------------------------------------------------------
Proved reserve additions - mboe 17,048
Proved reserve replacement - % 326
---------------------------------------------------------------------
Proved producing reserve additions - mboe 14,714
Proved producing reserve replacement - % 282
---------------------------------------------------------------------


RECYCLE RATIO

The recycle ratio is a measure for evaluating the effectiveness of an organizations reinvestment program. This ratio measures the efficiency of Daylight's capital investment program by comparing the operating netback per boe to the current year FD&A per boe.



2005
---------------------------------------------------------------------
Operating netback - $ per boe 32.61
---------------------------------------------------------------------
Proved plus probable reserve FD&A cost
(excluding FDC) - $ per boe 10.96
Proved plus probable recycle ratio (excluding FDC) 3.0x
---------------------------------------------------------------------
Proved plus probable reserve FD&A cost
(including FDC) - $ per boe 12.98
Proved plus probable recycle ratio (including FDC) 2.5x
---------------------------------------------------------------------
Proved reserve FD&A cost (excluding FDC) - $ per boe 13.81
Proved recycle ratio (excluding FDC) 2.4x
---------------------------------------------------------------------
Proved reserve FD&A cost (including FDC) - $ per boe 15.22
Proved recycle ratio (including FDC) 2.1x
---------------------------------------------------------------------


Daylight Energy Trust is a Calgary-based open-ended unincorporated investment trust with a high quality natural gas weighted property base, extensive prospect inventory and a large undeveloped land base. Daylight's properties are focused in the high potential areas of the Peace River Arch and West Central Alberta and expanding into our new East 5 area. Daylight has approximately 62.9 million trust units and 0.9 million exchangeable shares currently outstanding.

ADVISORY: Certain information regarding Daylight Energy Trust including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

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