Paramount Energy Trust Announces January 2009 Distribution and Revised Capital Budget



    
    TSX: PMT.UN, PMT.DB, PMT.DB.A,
    PMT.DB.B, PMT.DB.C
    

    CALGARY, Jan. 20 /CNW/ - Paramount Energy Trust (TSX:PMT.UN) ("PET" or
the "Trust") herein announces that its distribution to be paid on February 17,
2009 in respect of income received by PET for the month of January 2009, for
Unitholders of record on January 30, 2009, will be $0.07 per Trust Unit. The
ex-distribution date is January 28, 2009. The January 2009 distribution brings
cumulative distributions paid since the inception of the Trust in February
2003 to $13.194 per Trust Unit.
    The Trust also confirms that there will continue to be no Trust Units
available under its Distribution Reinvestment and Optional Trust Unit Purchase
Plan ("DRIP") for the Trust's January distribution payable on February 17,
2009 and until further notice. Unitholders that had elected to participate in
the DRIP in the past and were currently enrolled will receive cash
distributions on the payment date. Should the Trust elect to reinstate the
DRIP, Unitholders that were enrolled at suspension and remain enrolled at
reinstatement will automatically resume participation in the DRIP. PET's
distribution policy remains unchanged.
    Natural gas prices continue to be highly volatile. PET closely monitors
the market drivers with respect to natural gas prices and will continue to
proactively manage the Trust's forward price exposure to meet PET's strategy
of protecting the level of the Trust's monthly distributions and managing the
balance sheet, enhancing or protecting the economics of acquisitions and
capital programs, and capitalizing on perceived market anomalies. Financial
and physical natural gas forward sales positions (net of related financial and
physical fixed-price natural gas purchase contracts) at January 20, 2009 are
as follows:

    
                                               Current
                                               Forward
                 Volumes     % of 2009  Price    Price
    Type of      at AECO      Budgeted  ($/GJ)   ($/GJ)
    Contract       (GJ/d) Production(3)    (1)      (2)                 Term
    -------------------------------------------------------------------------
    Financial     81,000                 7.18           February - March 2009
    Physical       2,500                 8.37           February - March 2009
    -------------------------------------------------------------------------
    Period Total  83,500            43   7.96     5.27  February - March 2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial     82,500                 7.87            April - October 2009
    -------------------------------------------------------------------------
    Period Total  82,500            43   7.87     5.33   April - October 2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              November 2009 -
    Financial     85,000                 8.41                      March 2010
    -------------------------------------------------------------------------
                                                              November 2009 -
    Period Total  85,000            44   8.41     6.98             March 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial     87,500                 7.46            April - October 2010
    -------------------------------------------------------------------------
    Period Total  87,500            45   7.46     6.94   April - October 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              November 2010 -
    Financial     52,500                 8.13                      March 2011
    -------------------------------------------------------------------------
                                                              November 2010 -
    Period Total  52,500            27   8.13     7.85             March 2011
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Weighted average prices are calculated by netting the volumes of the
        lowest-priced financial and physical sold/bought contracts together
        and measuring the net volume at the weighted average "sold" price for
        the remaining financial and physical contracts.
        Included in the February -- March 2009 volume summaries is a collar
        to sell forward 5,000 GJ/d at a floor price of $7.00 per GJ at AECO
        and a ceiling price of $8.00 per GJ. As the current AECO forward
        price is below the floor of the collar, the floor price is used in
        the weighted average price calculation.


    (2) Average AECO forward price for January through December 2009 as at
        January 20, 2008 is $5.59 per GJ.


    (3) Calculated using 194 MMcf/d and includes actual and gas over bitumen
        deemed projected production volumes.


                                                Current
                                       Strike-  Forward
                 Volumes     % of 2009  Price     Price
    Type of      at AECO      Budgeted  ($/GJ)    ($/GJ)
    Contract       (GJ/d) Production(3)    (1)      (2)                 Term
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              November 2009 -
    Sold Call      5,000                 8.50                      March 2010
    -------------------------------------------------------------------------
                                                              November 2009 -
    Period Total   5,000             3%  8.50     6.98             March 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Sold Call      5,000                 7.75            April - October 2010
    -------------------------------------------------------------------------
    Period Total   5,000             3%  7.75     6.94   April - October 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              November 2010 -
    Sold Call     12,500                 9.00                      March 2011
    -------------------------------------------------------------------------
                                                              November 2010 -
    Period Total  12,500             6%  9.00     7.85             March 2011
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Incorporating PET's current hedging portfolio and forward natural gas
prices into the Trust's production, operations and cash flow projections for
2009, the revised level of distribution represents a payout ratio of
approximately 50 percent for 2009. PET reviews distributions on a monthly
basis. Future distributions are subject to change as dictated by commodity
price markets, operations, capital considerations and future business
development opportunities. The Trust continues to focus on what we believe is
a sustainable distribution model that balances short term cash returns to our
Unitholders and long term value creation through capital reinvestment.
    The Board of Directors of the Trust has revised downward its operating
and capital budget for 2009. PET is now budgeting for a base capital
expenditure program of $87 million for 2009, down from its previous budget of
$113 million and expects to spend approximately $40 million in the first
quarter. The remaining $47 million is planned to begin after break-up and
continue through the second half of the year. PET plans to review capital
expenditure on a regular basis as gas prices and the current economic climate
remain highly volatile. PET has pre-planning work in place to scale back up to
the original $113 million budget should natural gas prices and other factors
support an expanded capital program or scale back further as dictated by
commodity prices.
    Incorporating the anticipated results from the revised capital budget
program, PET expects natural gas production of 170 to 175 MMcfe/d. Based on
the current forecast for natural gas prices incorporating the Trust's forward
sales contracts, PET forecasts that the 2009 capital program and distributions
will be funded entirely through 2009 funds flow.

    Outlook and Sensitivities

    Natural gas prices at both AECO and NYMEX trading hubs have continued to
trend lower as the North American gas market is balancing its oversupply
situation coupled with demand destruction related to the weakness in the U.S.,
Canadian and other global economies. The recent strength of the US dollar
relative to the Canadian dollar has leveled off this trend for Canadian gas
prices at AECO.
    At current AECO forward prices of $5.59 per GJ for 2009, the Trust's
revised monthly distribution level and its revised capital expenditure program
can be funded completely through funds flow. The following table reflects
PET's projected realized gas price, monthly funds flow and payout ratio at the
revised monthly distribution of $0.07 per Trust Unit for 2009 at certain AECO
natural gas price levels and incorporating the Trust's current financial
hedges and physical forward sales contracts as well as production additions
forecast from PET's $87 million adjusted capital budget.

    
                           Average AECO Monthly Index Gas Price - 2009 ($/GJ)
    Funds flow sensitivity analysis  $  5.00 $  6.00 $  7.00 $  8.00 $  9.00
    -------------------------------------------------------------------------
    Realized gas price (1) ($/Mcfe)     6.56    7.21    7.85    8.50    9.15
    Funds flow (2) ($million)            175     202     222     244     271
    Funds flow (2) ($million/month)     14.6    16.8    18.5    20.4    22.6
    Per Trust Unit ($/Unit/month)      0.129   0.148   0.164   0.180   0.200
    Payout ratio (2) (%)                  54      47      43      39      35
    Ending net bank debt ($million)      294     268     248     226     199
    Ending net total debt ($million)     523     497     477     455     428
    Ending net total debt to funds
     flow ratio (3) (times)              3.0     2.5     2.1     1.9     1.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) PET's weighted average forward price on an average of 80,800 GJ/d for
        2009 is $7.85 per GJ.


    (2) These are non-GAAP measures; see "Significant accounting policies and
        non-GAAP measures" in management's discussion and analysis.


    (3) Calculated as ending net total debt (including convertible
        debentures) divided by estimated 2009 annual funds flow.
    

    The Trust continues to focus on what we believe is a sustainable
distribution model that balances short term cash returns to our Unitholders
and long term value creation through capital reinvestment. PET reviews
distributions on a monthly basis. Future distributions are subject to change
as dictated by changes in commodity price markets, operations and future
business development opportunities.

    Forward-Looking Information

    Certain information regarding PET in this news release including
management's assessment of production levels, operations, cash flows, capital
spending plans and payout ratios, and future plans and operations may
constitute forward-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
gas exploration, development, exploitation, production, marketing and
transportation, changes to the proposed royalty regime prior to implementation
and thereafter, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, capital expenditure costs, including drilling, completion and
facilities costs, unexpected decline rates in wells, delays in projects and/or
operations resulting from surface conditions, wells not performing as
expected, delays resulting from or inability to obtain required regulatory
approvals 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. Readers are cautioned that the
forgoing list of factors is not exhaustive. Additional information on these
and other factors that could affect PET's operations and financial results are
included in reports on file with Canadian securities regulatory authorities
and may be accessed through the SEDAR website (www.sedar.com) and at PET's
website (www.paramountenergy.com). Furthermore, the forward-looking statements
contained in this news release are made as at the date of this news release
and PET does not undertake any obligation to update publicly or to revise any
of the forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable securities
laws.

    Non-GAAP Measures

    This news release contains financial measures that may not be calculated
in accordance with generally accepted accounting principles in Canada
("GAAP"). Readers are referred to advisories and further discussion on
non-GAAP measures contained in the "Significant Accounting Policies and
non-GAAP Measures" section of management's discussion and analysis.

    PET is a natural gas-focused Canadian energy trust. PET's Trust Units and
convertible debentures are listed on the Toronto Stock Exchange under the
symbol "PMT.UN" and "PMT.DB", "PMT.DB.A", "PMT.DB.B" and "PMT.DB.C",
respectively. Further information with respect to PET can be found at its
website at www.paramountenergy.com.

    
    The Toronto Stock Exchange has neither approved nor disapproved the
    information contained herein.
    




For further information:

For further information: Paramount Energy Trust, Sue Riddell Rose,
President and Chief Executive Officer, (403) 269-4400 or Paramount Energy
Trust, Cam Sebastian, Vice President, Finance and Chief Financial Officer,
(403) 269-4400 or Paramount Energy Trust, Sue Showers, Investor Relations and
Communications Advisor, (403) 269-4400, (403) 269-4444 (FAX) or Paramount
Energy Operating Corp, Administrator of Paramount Energy Trust, Suite 3200,
605 - 5 Avenue SW Calgary, Alberta, Canada T2P 3H5, Email:
info@paramountenergy.com, Website: www.paramountenergy.com


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