Provident Energy Trust
TSX : PVE.UN
NYSE : PVX

Provident Energy Trust

September 12, 2007 07:06 ET

Provident's U.S. MLP Subsidiary Announces Major Acquisition

CALGARY, ALBERTA--(Marketwire - Sept. 12, 2007) - Provident Energy Trust (Provident) (TSX:PVE.UN)(NYSE:PVX) is pleased to support today's announcement by BreitBurn Energy Partners L.P. (NASDAQ:BBEP) of a significant planned acquisition of long-life energy assets. BreitBurn has signed a definitive agreement to acquire all of the natural gas, oil and midstream assets in Michigan, Indiana and Kentucky of Quicksilver Resources Inc., for US$750 million in cash and 21.348 million BreitBurn common units.

"This latest acquisition by BreitBurn further validates Provident's strategy of increasing the value of our U.S. energy business by establishing BBEP as a publicly-traded master limited partnership," said Provident President and Chief Executive Officer Tom Buchanan. "Provident unitholders benefit from this deal through the projected increase in cash flow from BreitBurn's distributions, as well as through the value of our direct equity ownership position in a growing U.S. oil and gas business of significant size and scale."

BreitBurn is acquiring gas-weighted producing assets located primarily in the Michigan Antrim Shale. Current daily production of approximately 95 million cubic feet of gas equivalent (76 mmcfe per day net of royalties) comes from over 5,400 gross producing wells. Proved reserves are estimated to be approximately 660 billion cubic feet of gas equivalent (530 bcfe net of royalties), reflecting the very long proved reserve life of approximately 19 years. The acquisition is well aligned with BreitBurn's growth strategy, adding mature, predictable, long-life assets with low decline rates. These assets add a substantial gas-weighted component to BreitBurn's existing oil-weighted production, producing a more balanced overall portfolio. Full details of the assets to be acquired are presented in BreitBurn's press release, available at www.breitburn.com.

This is a key strategic acquisition for BreitBurn with positive impact on Provident as a whole. The transaction is highly accretive to BreitBurn on cash flow, reserves and production, and modestly accretive to Provident on a consolidated basis. BreitBurn's intended distribution increase to US$2.30 per year will increase cash flow to Provident.

BreitBurn is financing this acquisition with a combination of a private placement of new equity, bank debt, and a vendor take-back by Quicksilver of 21.348 million common units of BBEP. The vendor take-back of BBEP equity reflects confidence in BreitBurn's existing assets, management and strategy as well as in the assets being sold and their development potential. Provident is not participating in the equity offering given that the transaction is accretive by virtue of BreitBurn's low cost of capital. The BreitBurn transaction therefore reduces Provident's ownership in BBEP from approximately 51 percent to approximately 23 percent. However, Provident continues to control the entire entity through its ownership of the General Partner. Provident is also required by Generally Accepted Accounting Principles to continue to consolidate all BreitBurn production, financial and reserves results in its financial statements.

Mr. Buchanan added, "We support BreitBurn's accretive growth strategy. We believe that our ownership of three distinct, strong, relatively independent energy businesses of size and scale will continue to give Provident valuable diversification and optionality in today's challenging business environment."

Provident Energy Trust is a Calgary-based, open-ended energy income trust that owns and manages an oil and gas production business and a natural gas liquids midstream services and marketing business. Provident's energy portfolio is located in some of the most stable and predictable producing regions in Western Canada and the United States. Provident provides monthly cash distributions to its unitholders and trades on the Toronto Stock Exchange and the New York Stock Exchange under the symbols PVE.UN and PVX, respectively.

This document contains certain forward-looking statements concerning Provident, as well as other expectations, plans, goals, objectives, information or statements about future events, conditions, results of operations or performance that may constitute "forward-looking statements" or "forward-looking information" under applicable securities legislation. Such statements or information involve substantial known and unknown risks and uncertainties, certain of which are beyond Provident's control, including the impact of general economic conditions in Canada and the United States, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, pipeline design and construction, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities.

Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. In addition to other assumptions identified in this news release, assumptions have been made regarding, among other things, commodity prices, operating conditions, capital and other expenditures, and project development activities.

Although Provident believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Provident can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Provident and described in the forward-looking statements or information.

The forward-looking statements or information contained in this news release are made as of the date hereof and Provident undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise unless so required by applicable securities laws. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.

Contact Information

  • Investor and Media Contact:
    Provident Energy Trust
    Laurie Stretch
    Senior Manager, Investor Relations and Communications
    (403) 231-6710
    Email: info@providentenergy.com
    or
    Corporate Head Office:
    800, 112 - 4th Avenue S.W.
    Calgary, Alberta T2P 0H3
    (403) 296-2233 or Toll Free: 1-800-587-6299
    (403) 294-0111 (FAX)
    Website: www.providentenergy.com