Enterra Energy Trust

Enterra Energy Trust

November 15, 2005 08:45 ET

Enterra Energy Reports Results for Q3, 2005; Cash Distributions 71% of Funds From Operations

CALGARY, Alberta--(CCNMatthews - Nov 15, 2005) -

Enterra Energy Trust (NASDAQ: EENC, TSX: ENT.UN) today reported its financial results for the three and nine months ended September 30, 2005.

2005 year-to-date has been the most productive period ever for Enterra.

-- The most notable event of the period was the completion of the previously announced acquisition of High Point Resources Inc., ("High Point") on August 17, 2005. The arrangement was approved by over 99.9% of the votes cast by shareholders of High Point at the special meeting held on August 16, 2005. The full impact of the acquisition will be felt in the upcoming quarter since the results of the High Point operations included in Q3 2005 cover only a portion of the quarter from August 17 to September 30.

-- The High Point acquisition provides Enterra with sales volumes of over 3,000 boe/day, bringing our current sales volumes to approximately 10,000 boe/day. In addition, the acquisition provides Enterra with more than 135,000 net acres of undeveloped land with over 120 drilling locations. These programs will be developed by farm out arrangements with JED Oil Inc. Enterra looks forward to accelerated development of these new properties. Drilling has already commenced, and to date, eight gas wells have been drilled, and all eight have been cased for production.

-- Efforts to balance the asset portfolio between oil and natural gas moved forward with the High Point acquisition, as well as the previously announced Rocky Mountain Gas acquisition. Natural gas currently represents 40% of sales volumes, up from 17% compared to the same period in 2004.

-- A significant factor in the Trust's strong financial performance has been strong commodity pricing. The current pricing cannot be taken for granted and consequently represents an element of uncertainty for the future. In an effort to minimize pricing disruption as we move forward, the Board of Directors authorized a limited program of commodity contracts which fix the floor price, while maintaining upside potential.

-- During Q3 2005, Enterra increased the monthly cash distribution to its unitholders to US$0.17 per Trust Unit. This represents a 70% increase from the initial US$0.10 per Trust Unit that the Trust established as its initial distribution when it converted to a Trust in December 2003, and a 21% increase from the US$0.14 per Trust Unit that the Trust paid out at the start of 2005. This also represents the 7th consecutive quarter where the cash distribution has been increased. Cash distributions in Q3 2005 represented 71% of "funds from operations" (previously referred to as "cash flow from operations").

-- Enterra continues to strengthen its management team to facilitate optimization of the recently acquired assets and to enable the Trust to move forward on its business plan including pursuing additional growth opportunities. During the quarter, John Reader was appointed as Vice President, Operations and Engineering.

-- The Trust entered into an arrangement with Kingsbridge Capital Limited to raise up to US$100 million. Enterra has now filed the prospectus, which enables the Trust to commence drawing on this equity facility. This provides the Trust with a stronger balance sheet, and the ability to pursue additional acquisitions.

"There has been a considerable amount of time and effort deployed through the first part of 2005 to provide a solid foundation from which to execute our business plan during the remainder of 2005 and into the future," stated Reg Greenslade, Chairman of Enterra.

Summarized financial and operational data
Three Nine
months months
Three ended Nine ended
months September months September
ended 30, 2004 ended 30, 2004
September Restated September Restated
30, 2005 (1) Change 30, 2005 (1) Change
(in CDN$ 000's
except for per
unit amounts)

Revenues before
royalties $ 47,638 $ 25,467 87% $107,495 $ 74,700 44%
Net earnings $ 7,089 $ 3,921 81% $ 13,907 $ 10,771 29%
Net earnings per
unit $ 0.23 $ 0.17 35% $ 0.50 $ 0.50 1%
Cash provided by
activities $ 16,622 $ 13,083 27% $ 47,545 $ 28,153 69%
Funds from
operations (3) $ 23,940 $ 13,110 83% $ 51,026 $ 36,139 41%
paid to
unitholders $ 16,918 $ 10,924 55% $ 45,128 $ 28,338 59%
distributions as
a percentage of
funds from
operations 71% 83% -15% 88% 78% 13%
Average exchange
rate: US$1.00 to
$CDN = $ 1.20 $ 1.31 -8% $ 1.22 $ 1.33 -8%

Sales volume
Oil sales (bbls
per day) 5,293 5,146 3% 5,348 5,406 -1%
Natural gas sales
(mcf per day) 17,945 6,343 183% 10,022 6,768 48%
Total sales (boe
per day) (2) 8,284 6,203 34% 7,019 6,534 7%
Exit rate (boe
per day) 9,887 7,659 29% 9,887 7,659 29%

Average price
received per bbl
of oil $ 69.60 $ 46.24 51% $ 59.07 $ 40.60 45%
Average price
received per mcf
of natural gas $ 8.78 $ 6.09 44% $ 8.02 $ 6.62 21%
Average price
received per boe $ 62.50 $ 44.63 40% $ 56.10 $ 41.72 34%
expenses per boe $ 10.10 $ 10.42 -3% $ 11.28 $ 8.65 30%
Royalties expense
per boe $ 13.76 $ 8.63 59% $ 12.09 $ 9.25 31%
G&A expenses per
boe $ 3.19 $ 2.08 53% $ 3.83 $ 1.75 118%

(1) The summarized financial and operating data has been extracted
from the complete Q3 2005 quarterly financial report which is
available on Enterra's website at www.enterraenergy.com, as well
as on the financial databases of SEDAR at www.sedar.com, and EDGAR
at http://www.sec.gov/edgar.shtml. The prior year figures have
been restated to reflect adoption of the new accounting standard
with respect to exchangeable shares. See note 2 to the Q3 2005
interim consolidated financial statements for additional

(2) "Boe's" may be misleading, particularly if used in isolation. A
boe conversion ratio of six mcf: one bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.

(3) Management uses funds from operations to analyze operating
performance and leverage. Funds from operations as presented does
not have any standardized meaning prescribed by Canadian generally
accepted accounting principles, ("GAAP") and therefore it may not
be comparable with the calculation of similar measures for other
entities. Funds from operations as presented is not intended to
represent cash provided by operating activities nor should it be
viewed as an alternative to net earnings or other measures of
financial performance calculated in accordance with Canadian GAAP.
All references to funds from operations throughout this MD&A are
based on cash provided by operating activities before changes in
non-cash working capital. This measure is the same as the measure
previously referred to as non-GAAP "cash flow from operations" .
It is management's view, based on its communications with
investors during events like conference calls, webcasts or road
shows, that funds from operations is relevant to investors,
especially since the Trust's conversion to an oil and natural gas
income trust. Funds from operations is relevant to investors
because it is the starting point for setting the monthly
unitholder cash distribution amount. Funds from operations is
reconciled to the most comparable GAAP measure of cash provided by
operating activities in a table included in the MD&A.

Conference Call

Enterra Energy Trust will host a conference call on November 15, 2005 at 9:00 am Mountain Time/11:00 am Eastern Time, to discuss the third quarter results, recent corporate news and the outlook for the Company. Interested parties may participate in the call by dialing 706-679-3057. Please call in 10 minutes before the conference call is scheduled to begin and ask for the Enterra Energy conference call. After opening remarks, there will be a question and answer period.

This conference call will be webcast live over the Internet on the Company's website at www.enterraenergy.com. To listen to the live call, please go to Enterra Energy's website at least 15 minutes early to register, and if necessary, download and install any audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days. We suggest listeners use Microsoft Explorer as their browser.

Headquartered in Calgary, Enterra Energy Trust is a Canadian oil and gas income trust. The Trust acquires, operates, and exploits crude oil and natural gas wells, focusing on low risk and low cost development. The Trust pays out a monthly distribution, which is currently US$0.17 per Trust Unit.

Statements regarding anticipated oil and gas production and other oil and gas operating activities, including the costs and timing of those activities, are "forward-looking statements". These statements involve risks that could significantly impact the Company. These risks include, but are not limited to, adverse general economic conditions, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geologic data, competition, reduced availability of drilling and other well services, fluctuations in oil and gas prices and prices for drilling and other well services and government regulation and foreign political risks, as well as other risks commonly associated with the exploration and development of oil and gas properties.

Contact Information

  • Enterra Energy Trust
    Reg Greenslade
    Enterra Energy Trust
    John Kalman
    Enterra Energy Trust
    E. Keith Conrad
    Website: www.enterraenergy.com
    Investor Relations:
    The Equity Group Inc.
    Linda Latman
    Investor Relations:
    The Equity Group Inc.
    Andreas Marathovouniotis
    Website: www.theequitygroup.com