Paramount Energy Trust Releases First Quarter 2009 Financial and Operating Results and Confirms May Distribution


    CALGARY, May 7 /CNW/ - Paramount Energy Trust ("PET" or the "Trust")
(TSX:PMT.UN) is pleased to release its financial and operating results for the
first quarter of 2009. Gains from the Trust's natural gas price hedging
program contributed to solid funds flows despite lower AECO natural gas prices
as compared to the first quarter of 2008.
    PET is also pleased to confirm that its distribution to be paid on June
15, 2009 in respect of income received by PET for the month of May 2009, for
Unitholders of record on May 29, 2009, will be $0.05 per Trust Unit. The
ex-distribution date is May 27, 2009. The May distribution brings cumulative
distributions paid since the inception of the Trust to $13.414 per Trust Unit.

    First Quarter Summary

    -   Production measured 167.1 MMcfe/d as compared to 183.8 MMcfe/d in the
        first quarter of 2008. The decrease is due to non-core asset
        dispositions, cold-weather related downtime in January, 2009 and
        production outages required for maintenance programs in Northeast
        Alberta. The Trust also withheld production from new wells until
        April to benefit from the royalty reduction on new production
        announced by the provincial government in March 2009.

    -   PET's realized natural gas price decreased by 11 percent for the
        three months ended March 31, 2009 to $6.46 per Mcfe from $7.29 per
        Mcfe in 2008, as compared to a 21 percent decrease in AECO Monthly
        Index prices from quarter to quarter. The decrease in realized gas
        prices was mitigated by the Trust's commodity price risk management
        strategy, which contributed $14.4 million in realized hedging gains
        for the period.

    -   The Trust recorded net earnings of $78.6 million for the first
        quarter due primarily to an unrealized gain on financial instruments
        of $95.1 million, as a result of the significant decrease in AECO and
        NYMEX forward prices from December 31, 2008 to March 31, 2009. PET's
        financial instrument asset at March 31, 2009 totaled $153.8 million,
        a reflection of the substantial value inherent in the Trust's hedging
        portfolio. As of May 5, 2009, PET has an average of 107,380 GJ/d
        hedged from April 2009 to March 2011 at an average of $7.44 per GJ.
        The current forward natural gas price at AECO for the same period is
        $5.05 per GJ, resulting in a current mark-to-market value of $189.7

    -   Funds flow decreased to $41.2 million ($0.36 per Trust Unit) for the
        three months ended March 31, 2009 from $56.2 million ($0.51 per Trust
        Unit) in the 2008 period, primarily due to lower realized prices and
        production levels, partially offset by reduced royalty and interest

    -   Distributions payable for the first quarter of 2009 totaled $0.19 per
        Trust Unit, comprised of $0.07 per Trust Unit paid on February 17 and
        March 16, and $0.05 per Trust Unit on April 15, representing a payout
        ratio of 52.2 percent of funds flow.

    -   PET successfully completed the execution of a $40 million winter
        capital program during the first quarter of 2009 which included the
        drilling of 38 wells (31.4 net) and over 160 recompletion and
        workover operations, primarily focused in the Trust's three core
        areas in the Northern district. Production additions from the winter
        program totaled approximately 16 MMcfe/d, the majority of which were
        onstream as of April 1, 2009. Current production is in excess of 175

    -   PET has budgeted an additional $25 million for capital expenditures
        over the final three quarters of 2009, targeting land purchases and
        other strategic expenditures including evaluation of the Trust's
        exploration acreage in west central Alberta.

    -   On March 31, 2009, the Trust announced an offer to acquire all of the
        issued and outstanding common shares of Profound Energy Inc.
        ("Profound") by way of a take-over bid, for a combination of cash and
        PET Trust Units (the "Profound Offer"). The Profound Offer values the
        Profound shares at $1.34 per common share, for a total purchase price
        including assumed debt of approximately $112.9 million prior to
        closing costs. The Profound properties are located in a year-round
        access area within the Trust's New Venture area in west central
        Alberta. The acquisition is another step in the strategic expansion
        of PET's asset base, complementing the Trust's existing shallow gas
        prospect inventory with a significant number of higher impact, deep
        basin style resource play opportunities. The Profound assets are
        currently producing approximately 18 MMcfe/d weighted 75 percent to
        natural gas, with proved plus probable reserves of 74 Bcfe at
        December 31, 2008 based on Profound's year-end external reserve

    -   PET has also purchased 9,224,310 special warrants of Profound on a
        private placement basis, at a price of $0.75 per special warrant for
        total subscription proceeds of approximately $6.9 million. The
        special warrants are convertible into common shares of Profound on a
        one-for-one basis. Conversion is automatic on certain events and
        otherwise at the option of PET. The private placement was closed on
        April 14, 2009.

    -   In order to facilitate the bank approval process for the Profound
        transaction the Trust has entered into an interim credit facility
        agreement, which includes only the lending value of PET's base assets
        at December 31, 2008, adjusted for production for the first three
        months of 2009, but excluding any reserve additions attributed to the
        Trust's winter capital expenditure program. This lending value is
        currently $350 million. Should PET be successful in acquiring all the
        outstanding common shares of Profound, the Trust's lenders will then
        reassess the lending value of all of PET's assets, including the
        Profound properties and the results of the Trust's 2009 winter
        capital program. Should PET be unsuccessful in its takeover offer for
        Profound the Trust's lenders will complete their borrowing base
        redetermination incorporating the results of PET's 2009 winter
        capital program. The initial expiry time for the Profound Offer is
        June 1, 2009.

    2009 Outlook and Sensitivities

    PET's financial hedging and physical forward sales portfolio has provided
a level of stability to projected funds flows, despite a significant decrease
in AECO natural gas prices during the first quarter of 2009. As at May 5,
2009, the current actual and forward market for natural gas for April through
December 2009 is $3.89 per GJ at AECO. The following table reflects PET's
projected realized gas price, monthly funds flow and payout ratio at the
current monthly distribution of $0.05 per Trust Unit for all of 2009 at
certain AECO natural gas price levels, incorporating the Trust's current
financial hedges and physical forward sales contracts, but excluding the
proposed acquisition of Profound.

                                                Average AECO Monthly
                                                   Index Gas Price
                                             April to December 2009 ($/GJ)
    Funds flow outlook - full year 2009  $  3.00 $  4.00 $    5.00 $    6.00
    Oil and natural gas production
     (MMcfe/d)                               166     166       166       166
    Realized gas price (1) ($/Mcfe)         6.14    6.44      6.74      7.04
    Funds flow, excluding 2009 hedging
     (2) ($millions)                          37      78       114       148
     Per Trust Unit ($/Unit/month)         0.027   0.058     0.084     0.109
    Funds flow, including 2009 hedging
     (2) ($millions)                         178     190       197       201
     Per Trust Unit ($/Unit/month)         0.131   0.140     0.145     0.148
    Payout ratio (2) (%)                      41      38        37        36
    Ending net bank debt (2)
     ($millions)                             250     238       230       227
    Ending net debt (2) ($millions)          480     468       460       457
    Ending net debt, less post-2009
     financial instrument assets (5)
     ($millions)                             415     403       395       392
    Ending net bank debt to funds flow
     ratio (times) (3)                       1.4     1.3       1.2       1.1
    Ending net debt to funds flow ratio
     (4) (times)                             2.7     2.5       2.3       2.3
    Ending net debt less post-2009
     financial instrument assets to
     funds flow (times) (5)                  2.3     2.1       2.0       2.0
    (1) PET's weighted average forward price on an average of 110,000 GJ/d
        for the period from April 1 to December 31, 2009 is $7.16 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 bank debt divided by estimated annual funds
    (4) Calculated as ending net debt (including convertible debentures,
        whose maturity extends out to 2012) divided by estimated annual
        funds flow.
    (5) Calculated as ending net debt, less the Trust's current financial
        instrument assets with settlement dates occurring after December 31,
        2009, divided by estimated annual funds flow including realized gains
        on financial instruments settling in 2009. Financial instrument
        assets and liabilities are not included in the Trust's definition of
        working capital, but may be terminated by the Trust prior to the
        settlement dates in exchange for discounted cash payments from
        counterparties and used to reduce PET's outstanding bank debt. At May
        5, 2009, the mark-to-market value of the Trust's post-2009 financial
        instruments was $65.1 million. Post-2009 financial instruments have
        settlement dates ranging from January 2010 through March 2011 and can
        be settled without impacting funds flows from monthly hedging
        settlements in 2009.

    Conference Call and Webcast

    PET will be hosting a conference call and webcast at 8:30 a.m., Mountain
Time, Friday, May 8, 2009 to review this information. Interested parties are
invited to take part in the conference call by dialing one of the following
telephone numbers 10 minutes before the start time: Toronto and area
1-416-695-6616; Outside Toronto 1-800-766-6630. To participate in the live
webcast please visit: or

    The webcast will also be archived shortly following the presentation at
the websites listed above. For a replay of this call please dial: Toronto and
area 1-416-695-5800; Outside Toronto 1-800-408-3053, passcode 4006180No. until
May 15, 2009.

    Additional Information

    A copy of PET's unaudited interim consolidated financial statements and
related notes and management's discussion and analysis for the three months
ended March 31, 2009 and 2008 can be obtained through the Trust's website at and SEDAR at

    Forward-Looking Information

    Certain information regarding PET in this news release including
management's assessment of future plans and operations and the information
contained under the heading "2009 Outlook and Sensitivities" above 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 ( and at PET's
website ( 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

    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

    FINANCIAL AND OPERATING HIGHLIGHTS           Three Months Ended March 31
    ($Cdn thousands except volume and
     per Trust Unit amounts)                  2009         2008     % Change
    Revenue (1)                             97,103      121,878          (20)
    Funds flow (2)                          41,154       56,191          (27)
     Per Trust Unit (3)                       0.36         0.51          (29)
    Cash flow provided by operating
     activities                             49,075       52,901           (7)
     Per Trust Unit (3)                       0.43         0.48          (10)
    Net earnings (loss)                     78,559      (85,660)         189
     Per Trust Unit (3)                       0.70        (0.78)         187
    Distributions                           21,464       33,109          (35)
     Per Trust Unit (4)                       0.19         0.30          (37)
    Payout ratio (%) (2)                      52.2         58.9          (11)
    Total assets                         1,174,093    1,185,784           (1)
    Net bank and other debt
     outstanding (2)                       312,913      346,314          (10)
    Convertible debentures, at
     principal amount                      236,034      236,109           (3)
    Total net debt (2)                     548,947      582,423           (6)
    Unitholders' equity                    315,787      221,376           43
    Capital expenditures
     Exploration and development            39,649       46,444          (15)
     Acquisitions, net of dispositions       6,626       (6,346)         204
     Other                                     105          426          (75)
     Net capital expenditures               46,380       40,524           14
    Trust Units outstanding (thousands)
    End of period                          112,968      110,760            2
    Weighted average                       112,968      110,169            3
    Incentive Rights outstanding             9,849        6,898           43
    Trust Units outstanding at May 5,
     2009                                  112,968
     Total natural gas (Bcfe) (7)             15.0         16.7          (10)
     Daily average natural gas
      (MMcfe/d) (7)                          167.1        183.8           (9)
     Gas over bitumen deemed production
      (MMcf/d) (5)                            18.9         20.0           (6)
     Average daily (actual and
      deemed - MMcfe/d) (5)                  186.0        203.8           (9)
      Per Trust Unit (cubic feet
       equivalent/d/Unit) (2)                 1.65         1.85          (11)
    Average natural gas prices ($/Mcfe)
     Before financial hedging and
      physical forward sales (6)              5.44         7.05          (23)
     Including financial hedging and
      physical forward sales (6)              6.46         7.29          (11)
    Land (thousands of net acres)
    Undeveloped land holdings                2,009        1,932            4
    Drilling (wells drilled gross/net)
     Gas                                   38/31.4      35/28.6         9/10
     Dry                                       -/-        2/1.6          -/-
     Total                                 38/31.4      37/30.2          3/4
     Success rate (%)                      100/100        95/95          5/5
    (1) Revenue includes realized gains (losses) on financial instruments
        and call option premiums received.
    (2) These are non-GAAP measures. Please refer to "Significant Accounting
        Policies and Non-GAAP Measures" included in management's discussion
        and analysis.
    (3) Based on weighted average Trust Units outstanding for the period.
    (4) Based on Trust Units outstanding at each distribution date.
    (5) The deemed production volume describes all gas shut-in or denied
        production pursuant to a decision report, corresponding order or
        general bulletin of the Alberta Energy and Utilities Board ("AEUB"),
        or through correspondence in relation to an AEUB ID 99-1 application.
        This deemed production volume is not actual gas sales but represents
        shut-in gas that is the basis of the gas over bitumen financial
        solution which is received monthly from the Alberta Crown as a
        reduction against other royalties payable.
    (6) PET's commodity hedging strategy employs both financial forward
        contracts and physical natural gas delivery contracts at fixed prices
        or price collars. In calculating the Trust's natural gas price before
        financial and physical hedging, PET assumes all natural gas sales
        based on physical delivery fixed-price or price collar contracts
        during the period were instead sold at AECO daily index.
    (7) Production amounts are based on the Trust's interest before

    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:, Website:

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