Paramount Energy Trust Releases 2008 Year End Reserves, Confirms February 2009 Distribution and Updates Hedging



    
    TSX: PMT.UN, PMT.DB, PMT.DB.A,
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    PINK SHEETS: PMGYF
    

    CALGARY, Feb. 10 /CNW/ - Paramount Energy Trust ("PET" or the "Trust")
(TSX:PMT.UN)is pleased to release its 2008 year end reserves, confirm its
February 2009 distribution and update its natural gas price management
positions.

    FEBRUARY 2009 DISTRIBUTION

    PET herein confirms that its distribution to be paid on March 16, 2009 in
respect of income received by PET for the month of February 2009, for
Unitholders of record on February 27, 2009, will be $0.07 per Trust Unit. The
ex-distribution date is February 25, 2009. The February 2009 distribution
brings cumulative distributions paid since the inception of the Trust in
February 2003 to $13.264 per Trust Unit.

    HEDGING UPDATE

    Natural gas prices continue to be highly volatile. 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. 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
February 10, 2009 are as follows:


    
                                                   Current
                 Volumes     % of 2009             Forward
    Type of      at AECO      Budgeted     Price     Price
    Contract       (GJ/d) Production(3) ($/GJ)(1) ($/GJ)(2)             Term
    -------------------------------------------------------------------------
    Financial     81,000                    7.18                   March 2009
    Physical       2,500                    8.37                   March 2009
    -------------------------------------------------------------------------
    Period Total  83,500            41      7.96     4.95          March 2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial     92,500                    7.58           April-October 2009
    -------------------------------------------------------------------------
    Period Total  92,500            45      7.58     5.14  April-October 2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial     95,000                    8.24              November 2009 -
                                                                   March 2010
    -------------------------------------------------------------------------
    Period Total  95,000            46      8.24     6.60     November 2009 -
                                                                   March 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial     95,000                    7.39           April-October 2010
    -------------------------------------------------------------------------
    Period Total  95,000            46      7.39     6.59  April-October 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Physical      10,000                    7.75              November 2010 -
                                                                   March 2011
    Financial     80,000                    8.00              November 2010 -
                                                                   March 2011
    -------------------------------------------------------------------------
    Period Total  90,000            44      7.97     7.71     November 2010 -
                                                                   March 2011
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                 Current
               Volumes     % of 2009    Strike   Forward
    Type of    at AECO      Budgeted     Price     Price
    Contract     (GJ/d) Production(3) ($/GJ)(1) ($/GJ)(2)               Term
    -------------------------------------------------------------------------
    Sold Call    5,000             3%     8.50     6.60       November 2009 -
                                                                   March 2010
    Sold Call    5,000             3%     7.75     6.59  April - October 2010
    Sold Call   12,500             6%     9.00     7.71       November 2010 -
                                                                   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 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 March through December 2009 as at
        February 10, 2009 is $5.35 per GJ.
    (3) Calculated using 194 MMcf/d and includes actual and gas over bitumen
        deemed projected production volumes.
    


    At current AECO forward prices of $5.35 per GJ for 2009, the Trust's
current monthly distribution level and capital expenditure program can be
funded completely through funds flow. Incorporating PET's current hedging
portfolio and forward natural gas prices into the Trust's production,
operations and funds flow projections, the current level of distribution
represents a payout ratio of approximately 46 percent for 2009. PET reviews
distributions on a monthly basis. 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 commodity price markets,
operations and future business development opportunities.

    YEAR END 2008 RESERVES

    PET is also pleased to release a summary of the Trust's year end 2008
reserves information, as evaluated by the independent engineering firm
McDaniel and Associates Consultants Ltd. ("McDaniel").

    
    Year End Reserve Highlights

    - In 2008, the Trust added 35.5 Bcfe of proved reserves and 8.3 Bcfe of
    probable reserves for total reserve additions of 43.8 Bcfe of proved and
    probable reserves, excluding production.

    - After production of 66.7 Bcfe in 2008, proved and probable reserves
    decreased 4 percent from 509.9 Bcfe at year end 2007 to 487.1 Bcfe and
    proved reserves decreased 11 percent to 263.6 Bcfe at year end 2008.
    Reserve additions largely offsetting production were due to the
    successful reinvestment of $125.3 million in capital spending programs,
    representing approximately 45 percent of the Trust's 2008 funds flow. In
    addition, a small net reserve disposition of 0.1 Bcfe was also recorded
    as minor consolidating acquisitions effectively offset the disposition of
    several non-core assets.

    - Including changes in future development capital, PET realized finding,
    development and acquisition costs of $2.50 per Mcfe ($15.00 per BOE) on a
    proved and probable reserves basis in 2008 and $2.59 per Mcfe ($15.54 per
    BOE) on a proved reserves basis in 2008.

    - Excluding changes in future development capital, PET realized finding,
    development and acquisition costs of $2.59 per Mcfe ($15.54 per BOE) on a
    proved and probable reserves basis and $3.20 per Mcfe ($19.20 per BOE) on
    a proved reserves basis in 2008.

    - Excluding $19.1 million of capital expenditures for pure exploration
    crown land expenditures in West Central Alberta where no reserve-adding
    activities were conducted in 2008 and including changes in future
    development capital, PET realized finding, development and acquisition
    costs of $2.06 per Mcfe ($12.36 per BOE) on a proved and probable
    reserves basis and $2.06 per Mcfe ($12.36 per BOE) on a proved reserves
    basis in 2008.

    - The Trust's reserve to production ratio ("reserve life index")
    decreased slightly to 7.5 years on a proved and probable reserves basis
    (4.5 years on a proved reserves basis) at year end 2008, as compared to
    7.6 years (4.7 years on a proved basis) in 2007.

    - PET's net asset value at year end 2008 was $10.64 per Trust Unit
    discounted at 5% compared to $11.41 per Trust Unit at December 31, 2007,
    while the Trust distributed $1.20 per Trust Unit to Unitholders in 2008.
    

    Reserves Disclosure

    Company interest reserves included herein are before royalty burdens and
including royalty interests. Reserves information is based on an independent
reserves evaluation report prepared by McDaniel dated January 31, 2009 with an
effective date of December 31, 2008, and has been prepared in accordance with
National Instrument 51-101 ("NI 51-101") using McDaniel's forecast prices and
costs. Complete NI 51-101 reserves disclosure including after-tax reserve
values, reserves by major property and abandonment costs will be included in
PET's Annual Information Form ("AIF"), which will be filed in March 2009.

    PET reports the results of the Trust's 93 percent-owned subsidiary Severo
Energy Corp. ("Severo") using consolidated accounting practices, and therefore
the amounts shown include 100 percent of the volumes and values related to the
natural gas reserves of Severo.

    Approximately 98 percent of PET's proved and proved and probable reserves
are natural gas and as such the Trust reports reserves in Mcf equivalent
(Mcfe). Mcfe may be misleading, particularly if used in isolation. In
accordance with NI 51-101 a Mcfe conversion ratio for oil of 1 Bbl: 6 Mcf has
been used, which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent a value
equivalency at the wellhead.


    
    Reserves Summary At Year End 2008
    Company Interest (Working Interest + Royalty Interest)
    -------------------------------------------------------------------------
                               Light and                 Natural     Natural
                                  Medium     Natural         Gas         Gas
                               Crude Oil         Gas     Liquids  Equivalent
                                   (MBbl)      (MMcf)      (MBbl)     (MMcfe)
    -------------------------------------------------------------------------
    Proved Producing                 565     207,374          15     210,855
    Proved Non-Producing              15      13,531           1      13,621
    Proved Undeveloped                20      39,018           -      39,138
    -------------------------------------------------------------------------
    Total Proved                     600     259,922          16     263,615
    -------------------------------------------------------------------------
    Total Probable                   335     221,397           6     223,441
    -------------------------------------------------------------------------
    Total Proved and Probable        935     481,319          21     487,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Gross Interest (Working Interest)
    -------------------------------------------------------------------------
                               Light and                 Natural     Natural
                                  Medium     Natural         Gas         Gas
                               Crude Oil         Gas     Liquids  Equivalent
                                   (MBbl)      (MMcf)      (MBbl)     (MMcfe)
    -------------------------------------------------------------------------
    Proved Producing                 535     205,007          15     208,309
    Proved Non-Producing              15      13,509           1      13,599
    Proved Undeveloped                20      39,018           -      39,138
    -------------------------------------------------------------------------
    Total Proved                     570     257,534          16     261,046
    -------------------------------------------------------------------------
    Total Probable                   325     220,711           6     222,696
    -------------------------------------------------------------------------
    Total Proved and Probable        895     478,244          21     483,742
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net Interest (Company Interest - Royalties Payable)
    -------------------------------------------------------------------------
                               Light and                 Natural     Natural
                                  Medium     Natural         Gas         Gas
                               Crude Oil         Gas     Liquids  Equivalent
                                   (MBbl)      (MMcf)      (MBbl)     (MMcfe)
    -------------------------------------------------------------------------
    Proved Producing                 499     172,571          11     175,627
    Proved Non-Producing              14      11,249           -      11,336
    Proved Undeveloped                18      34,400           -      34,509
    -------------------------------------------------------------------------
    Total Proved                     531     218,220          11     221,473
    -------------------------------------------------------------------------
    Total Probable                   284     179,637           4     181,361
    -------------------------------------------------------------------------
    Total Proved and Probable        815     397,857          15     402,834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Reserves Reconciliation
    Company Interest (Working Interest + Royalty Interest)
    -------------------------------------------------------------------------
                                                                 Natural Gas
                                                           Equivalent (MMcfe)
    -------------------------------------------------------------------------
    PROVED
    Opening Balance                                                  294,780
    Discoveries and Extensions                                        21,861
    Technical Revisions                                               11,029
    Acquisitions, net of Dispositions                                    260
    Production                                                       (66,695)
    Economic Factors                                                   2,379
    -------------------------------------------------------------------------
    Closing Balance                                                  263,615
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    PROBABLE                                                     Natural Gas
                                                           Equivalent (MMcfe)
    -------------------------------------------------------------------------
    Opening Balance                                                  215,126
    Discoveries and Extensions                                        17,976
    Technical Revisions                                              (11,353)
    Acquisitions, net of Dispositions                                   (407)
    Production                                                             -
    Economic Factors                                                   2,097
    -------------------------------------------------------------------------
    Closing Balance                                                  223,440
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    PROVED AND PROBABLE                                          Natural Gas
                                                           Equivalent (MMcfe)
    -------------------------------------------------------------------------
    Opening Balance                                                  509,907
    Discoveries and Extensions                                        39,837
    Technical Revisions                                                 (323)
    Acquisitions, net of Dispositions                                   (146)
    Production                                                       (66,695)
    Economic Factors                                                   4,477
    -------------------------------------------------------------------------
    Closing Balance                                                  487,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RESERVE LIFE INDEX

    PET's proved and probable reserves to production ratio, also referred to
as reserve life index ("RLI") was 7.5 years at year end 2008 while the proved
RLI was 4.5 years, based upon the 2009 production estimates in the McDaniel
Report. The following table summarizes PET's historical calculated RLI.


    Reserve Life Index(1)
    -------------------------------------------------------------------------
                                    2008     2007     2006     2005     2004
    -------------------------------------------------------------------------
    Total Proved                     4.5      4.7      3.6      4.0      4.5
    Proved and Probable              7.5      7.6      4.9      5.4      5.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Calculated as year end reserves divided by year one production
        estimate from McDaniel Report.
    

    NET PRESENT VALUE OF RESERVES SUMMARY

    PET's light and medium oil, natural gas and natural gas liquids reserves
were evaluated by McDaniel using McDaniel's product price forecasts effective
January 1, 2009 prior to provision for financial natural gas price hedges,
income taxes, interest, debt service charges and general and administrative
expenses. The following table summarizes the net present value ("NPV") of cash
flow from recognized reserves at January 1, 2009, assuming various discount
rates. It should not be assumed that the discounted future net cash flows
estimated by McDaniel represent the fair market value of the potential future
production revenue of the Trust.


    
    NPV of Cash Flow Using McDaniel January 1, 2009 Forecast Prices and Costs
    -------------------------------------------------------------------------
    NI 51-101 Net Interest                                        Discounted
    ($thousands)            Undiscounted         5%          10%      at 15%
    -------------------------------------------------------------------------
    Proved Producing          $1,088,315    $916,202    $802,404    $719,047
    Proved Non-Producing           9,779      14,169      14,786      14,283
    Proved Undeveloped           112,471      80,991      58,821      42,995
    -------------------------------------------------------------------------
    Total Proved               1,210,566   1,011,361     876,011     776,325
    -------------------------------------------------------------------------
    Total Probable               920,494     630,845     457,595     346,202
    -------------------------------------------------------------------------
    Total Proved and
     Probable                 $2,131,059  $1,642,206  $1,333,606  $1,122,527
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At a 10 percent discount factor, the proved producing reserves comprise 60
percent of the proved and probable value while total proved reserves account
for 66 percent of the proved and probable value. McDaniel's price forecast
utilized in the evaluation is summarized below.


    McDaniel January 1, 2009 Price Forecast
    -------------------------------------------------------------------------
                              West Texas    Edmonton      Natural
                            Intermediate       Light       Gas at    Foreign
                               Crude Oil   Crude Oil         AECO   Exchange
    Year                        ($US/Bbl)  ($Cdn/Bbl) ($Cdn/MMBtu) ($US/$Cdn)
    -------------------------------------------------------------------------
    2009                           60.00       69.60        7.40        0.85
    2010                           71.40       83.00        8.00        0.85
    2011                           83.20       91.40        8.45        0.90
    2012                           90.20       93.90        8.80        0.95
    2013                           97.40       96.30        9.05        1.00
    2014                           99.40       98.30        9.25        1.00
    2015                          101.40      100.30        9.45        1.00
    2016                          103.40      102.30        9.60        1.00
    2017                          105.40      104.20        9.80        1.00
    2018                          107.60      106.40       10.00        1.00
    2019                          109.70      108.50       10.20        1.00
    2020                          111.90      110.70       10.40        1.00
    2021                          114.10      112.80       10.60        1.00
    2022                          116.40      115.10       10.80        1.00
    2023                          118.80      117.50       11.05        1.00
    Escalate thereafter at             2%          2%          2%       1.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    EFFECT OF NEW ALBERTA ROYALTY REGIME

    On October 25, 2007, the Government of Alberta announced a "New Royalty
Framework" for oil and natural gas royalties in the Province of Alberta. New
royalty rates will apply to all production effective January 1, 2009. At the
McDaniel price forecast of $7.00 per GJ at AECO in 2009 and assuming
production of the recognized reserves only, the royalty rate for PET's
production in 2009 is expected to be virtually equal to what it would have
been under the previous royalty regime. PET's assessment is that, based on the
Trust's current profile of well productivity and at various natural gas
prices, the effect of the new royalty framework on cash flow will be
approximately as shown below. Royalty rates will rise relative to their
pre-2009 levels at higher gas prices, and decrease relative to their pre-2009
levels at lower gas prices.


    
    Estimated Change in Royalty Rate(1)
    -------------------------------------------------------------------------
                                                        AECO Gas Price ($/GJ)
                                       $5.00   $6.00   $7.00   $8.00  $10.00
    -------------------------------------------------------------------------
    Estimated Crown Royalty Rate in
     2009 under pre-2009 Royalties     17.0%   17.0%   17.0%   17.0%   17.0%
    Estimated Crown Royalty Rate in
     2009 under Current Royalties       5.8%   10.3%   14.8%   17.8%   23.8%
    Increase (Decrease) in Royalty
     Rate (percentage points)         -11.2%   -6.7%   -2.2%    0.8%    6.8%
    Percentage Increase (Decrease)
     in Royalty Rate (%)              -65.8%  -39.3%  -12.9%    4.8%   40.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) PET estimated average 2009 well productivity based on McDaniel Report
        is 167 Mcf/d.

    With respect to the future cash flow related to the reserves booked in the
McDaniel Report, the declining productivity profile assumed from the
"produce-out" assumption of the McDaniel Report will result in lower royalty
rates in future years and increases in the future net revenue from PET's
proved and probable reserves at various gas prices, discounted at 5 percent as
shown below:


    Estimated Change in NPV of Future Net Revenue Resulting From Change in
     Alberta Royalty Framework
    -------------------------------------------------------------------------
                                                        AECO Gas Price ($/GJ)
    ($MM) Discounted at 5%       $6.00(2) McDaniel(1)    $8.00(2)   $10.00(2)
    -------------------------------------------------------------------------
    Increase (Decrease) in Net
     Present Value Due to Price
     Change from McDaniel
     Prices(3)                   $(551.2)          -       $15.5      $512.8
    Increase (Decrease) in Net
     Present Value Due to New
     Royalty Regime(4)             $83.4       $(7.6)       $8.5     $(138.3)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) McDaniel price forecast at January 1, 2009. See "NET PRESENT VALUE
        SUMMARY - NPV of Cash Flow Using McDaniel January 1, 2009 Forecast
        Prices and Costs".
    (2) AECO Spot price held constant with zero inflation.
    (3) Increase (Decrease) in net present value of future revenue assuming
        pre-2009 royalty framework and forecast gas price indicated as
        compared to the McDaniel forecast.
    (4) Increase (Decrease) in net present value of future revenue related to
        the current royalty framework assuming the forecast gas price
        indicated.
    

    NET ASSET VALUE

    The following net asset value ("NAV") table shows what is normally
referred to as a "produce-out" NAV calculation under which 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. It should not be
assumed that the NAV represents the fair market value of PET Units. The
calculations below do not reflect the Trust's current gas price hedges or the
value of the Trust's extensive prospect inventory to the extent that the
prospects are not recognized within the NI-51-101 compliant reserve
assessment. The value of PET's prospect inventory is captured only through the
assessment of the fair market value of undeveloped land based on current land
sale valuation parameters which declined $9.6 million year over year with the
general reduction in land sale prices in Alberta in 2008. PET runs its
business on a going-concern basis, investing in opportunities to add value,
improve profitability and increase reserves which enhance the Trust's NAV
beyond the amounts shown in its annual reserve evaluation.


    
    Pre-tax Net Asset Value at December 31, 2008(1)
    -------------------------------------------------------------------------
                                                                  Discounted
    ($MM except as noted)   Undiscounted          5%          8%      at 10%
    -------------------------------------------------------------------------
    Total Proved and
     Probable Reserves(2)       $2,131.1    $1,642.2    $1,442.2    $1,333.6
    Fair Market Value of
     Undeveloped Land(3)           141.1       141.1       141.1       141.1
    Net Bank Debt (unaudited)     (283.9)     (283.9)     (283.9)     (283.9)
    Convertible Debentures
     (unaudited)                  (236.0)     (236.0)     (236.0)     (236.0)
    Estimate of Additional
     Future Abandonment and
     Reclamation Costs(4)          (80.7)      (61.6)      (52.5)      (47.5)
    -------------------------------------------------------------------------
    Net Asset Value             $1,671.6    $1,202.8    $1,010.9      $907.3
    -------------------------------------------------------------------------
    Trust Units Outstanding
     (MM) - basic                  113.0       113.0       113.0       113.0
    -------------------------------------------------------------------------
    Net Asset Value per Trust
     Unit ($/Unit)                $14.80      $10.64       $8.95       $8.03
    -------------------------------------------------------------------------
    (1) Financial information is per PET's 2008 unaudited consolidated
        financial statements.
    (2) Reserve values per McDaniel Report as at December 31, 2008.
    (3) Internal estimate.
    (4) Amounts are net of salvage value and in addition to amounts in the
        McDaniel Report for future well abandonment costs related to
        developed reserves. See "ABANDONMENT AND RECLAMATION COSTS".
    

    In the absence of adding reserves to the Trust, the NAV per Trust Unit
will decline as the reserves are produced out. The cash flow generated by the
production relates directly to the cash distributions paid to Unitholders. The
above evaluation includes future capital expenditure expectations required to
bring undeveloped reserves recognized by McDaniel that meet the criteria for
booking under NI 51-101 on production. The above evaluation does not consider
those opportunities in the Trust's extensive prospect inventory that are not
captured in the NI 51-101 evaluation.
    In order to independently assess the "going concern" value of the Trust,
a more detailed independent assessment would be required of the upside
potential of specific properties and the ability of the PET team to continue
to make value-adding capital expenditures. At inception of the Trust in
February 2003, based on year end 2002 reserves the NAV was determined to be
$8.91 per Trust Unit based on a 5 percent discount rate. Since that time,
including the December 2008 distribution which was paid on January 15, 2009,
the Trust distributed $13.12 per Trust Unit. Despite having distributed $4.21
per Trust Unit more in cash distributions than the initial NAV, the NAV as at
December 31, 2008 increased to $10.64 per Trust Unit using a 5 percent
discount rate.

    ABANDONMENT AND RECLAMATION COSTS

    PET engages Prevent Technologies Ltd. ("Prevent"), an independent
evaluator, to estimate the Trust's total future asset retirement obligation
based on net ownership interest in all wells, facilities and pipelines,
including estimated costs to abandon the wells, facilities and pipelines and
reclaim the sites and the estimated timing of the costs to be incurred in
future periods. Pursuant to this evaluation, the estimated undiscounted total
value of PET's future asset retirement obligations is $363.2 million as at
December 31, 2008. As at December 31, 2008, the undiscounted net salvage value
of the Trust's gas plants, compressors and facilities was estimated at $163.0
million. The McDaniel Report includes an undiscounted amount of $151.0 million
with respect to expected future well abandonment costs related specifically to
proved and probable reserves and such amount is included in the values
captioned "Total Proved and Probable Reserves" above. Of the total future well
abandonment costs included in the McDaniel Report an undiscounted amount of
$119.5 million relates to PET's developed reserves. The following table
presents the estimated future asset retirement obligations and estimated net
salvage values at various discount rates:


    
    Abandonment and Reclamation Costs
    -------------------------------------------------------------------------
                                                                  Discounted
    ($MM, net to PET)       Undiscounted          5%          8%      at 10%
    -------------------------------------------------------------------------
    Well abandonment costs
     for developed reserves
     included in McDaniel
     Report                       $119.5       $77.1       $62.9       $55.9
    Well abandonment costs
     for undeveloped reserves
     included in McDaniel
     Report                         31.5        15.1         9.9         7.6
    -------------------------------------------------------------------------
    Well abandonment costs for
     Total Proved and Probable
     reserves included in
     McDaniel Report               151.0        92.2        72.8        63.5
    Estimate of other
     abandonment and reclamation
     costs not included in
     McDaniel Report               212.2       159.5       136.6       124.1
    -------------------------------------------------------------------------
    Total estimated future
     abandonment and
     reclamation costs             363.2       251.7       209.4       187.6
    Salvage value                 (163.0)     (113.0)      (94.0)      (84.2)
    -------------------------------------------------------------------------
    Abandonment and reclamation
     costs, net of salvage         200.2       138.7       115.4       103.4
    Well abandonment costs for
     developed reserves included
     in McDaniel Report(1)        (119.5)      (77.1)      (62.9)      (55.9)
    -------------------------------------------------------------------------
    Estimate of additional
     future abandonment and
     reclamation costs, net
     of salvage(1)                 $80.7       $61.6       $52.5       $47.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Future abandonment and reclamation costs not included in the McDaniel
        Report, net of salvage value.
    

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

    Under NI 51-101, the methodology to be used to calculate FD&A costs
includes incorporating changes in future development capital ("FDC") required
to bring the proved undeveloped and probable reserves to production. For
continuity, PET has presented herein FD&A costs calculated both excluding and
including FDC. Changes in forecast FDC occur annually as a result of
development activities, acquisitions 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.


    
    FD&A Costs - Company Interest Reserves
    -------------------------------------------------------------------------
                                                                  Proved and
                                           Proved      Proved       Probable
    ($MM (unaudited),                   excluding         and      excluding
     except as noted)       Proved  Exploration(2)   Probable  Exploration(2)
    -------------------------------------------------------------------------
                                            Lands                      Lands
    FD&A Costs Excluding
     Future Development
     Capital
    Exploration and
     Development Capital
     Expenditures           $125.3        $106.2        $125.3        $106.2
    Net Dispositions         (18.5)        (18.5)        (18.5)        (18.5)
    -------------------------------------------------------------------------
    FD&A Capital
     Expenditures
     Including Net
     Dispositions           $106.8         $87.7        $106.8         $87.7
    Acquisition Closed
     in 2009(1)                6.8           6.8           6.8           6.8
    -------------------------------------------------------------------------
    FD&A Capital
     Expenditures
     Including Net
     Dispositions           $113.6         $94.5        $113.6         $94.5
    Reserve Additions
     Including Net
     Acquisitions - Bcfe      35.5          35.5          43.8          43.8
    Finding Development
     and Acquisition
     Cost - $/Mcfe           $3.20         $2.66         $2.59         $2.16

    FD&A Costs Including
     Future Development
     Capital
    FD&A Capital
     Expenditures
     Including Net
     Dispositions           $113.6         $94.5        $113.6         $94.5
    Total Change in FDC      (21.4)        (21.4)         (4.1)         (4.1)
    -------------------------------------------------------------------------
    Total FD&A Capital
     Including Change
     in FDC                  $92.2         $73.1        $109.5         $90.4
    Reserve Additions
     Including Net
     Acquisitions - Bcfe      35.5          35.5          43.8          43.8
    Finding Development
     and Acquisition
     Cost Including FDC
     - $/Mcfe                $2.59         $2.06         $2.50         $2.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The McDaniel Report includes the reserves related to an acquisition
        which closed in January 2009. As the related capital expenditures
        will not be recorded for accounting purposes until 2009, they have
        been added to FD&A Capital Expenditures.
    (2) Capital expenditures for pure exploration crown land expenditures in
        West Central Alberta where no reserve-adding activities were
        conducted in 2008 of $19.1 million have been excluded.
    

    Forward-looking Information

    Certain information regarding PET in this news release including
management's assessment of 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, abandonment and reclamation 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 the Trust's Management's Discussion and
Analysis.

    Paramount Energy Trust is a natural gas-focused Canadian energy trust.
PET's Trust Units and Convertible Debentures are listed on the Toronto Stock
Exchange under the symbols "PMT.UN", "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, Susan L. Riddell Rose,
President and Chief Executive Officer, (403) 269-4400; or Paramount Energy
Trust, Cameron R. Sebastian, Vice President, Finance and Chief Financial
Officer, (403) 269-4400; or Paramount Energy Trust, Sue M. 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, T2P 3H5, Email:
info@paramountenergy.com, Website: www.paramountenergy.com


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