Paramount Energy Trust Releases Second Quarter 2007 Financial and Operating Results



    
    August Distribution Confirmed

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

    CALGARY, Aug. 8 /CNW/ - Paramount Energy Trust (TSX:PMT.UN) ("PET" or the
"Trust") is pleased to release its financial and operating results for the
second quarter of 2007. Strong production levels and realized hedging gains
provided by the Trust's commodity price management program contributed to a 28
percent increase in funds flow to $72.7 million for the three months ended
June 30, 2007 from $56.6 million in the comparative 2006 period.
    PET is also pleased to confirm that its distribution to be paid on
September 17, 2007 in respect of income received by PET for the month of
August 2007 for Unitholders of record on August 31, 2007 will be $0.10 per
Trust Unit. The ex-distribution date is August 29, 2007. The August
distribution brings cumulative distributions paid since the inception of the
Trust to $11.524 per Trust Unit.
    Natural gas prices weakened late in the second quarter of 2007 as a
result of the combination of increased storage inventories and LNG imports
into the United States and relatively mild early summer weather. The Trust
continues to firmly 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 spending programs. The Trust's recent decision
to adjust its distribution level was to preserve that sustainability and
maintain the strength of its balance sheet in light of recent precipitous
declines in Canadian natural gas prices. With a healthy balance sheet, PET can
position itself to weather the cyclical nature of the natural gas environment
and be able to respond quickly to value adding opportunities at every stage of
the commodity price cycle. PET continues to remain cautious in its outlook
with respect to near term natural gas prices.

    Second Quarter Highlights

    
    -   Strong realized natural gas prices resulting from the Trust's hedging
        program contributed to funds flow per Trust Unit of $0.81 as compared
        to funds flow per Trust Unit of $0.68 for the second quarter of 2006.

    -   The Trust continued to take advantage of short-term weakness in
        natural gas markets to realize early termination gains on its hedging
        and physical forward sales portfolio. PET recorded $19.6 million of
        realized gains on financial instruments during the quarter, of which
        $18.6 million related to the early termination of certain financial
        instruments for the summer 2007, winter 2007-2008 and summer 2008
        terms.

    -   Production averaged 155.0 MMcfe/d for the three months ended June 30,
        2007 as compared to 162.9 MMcfe/d in the second quarter of 2006. As a
        result of disciplined capital spending and strategic acquisitions
        within the Trust's core areas, year over year production declines
        were reduced to less than five percent, despite a premature spring
        break-up which partially limited the new gas production that could be
        tied in from the winter capital program. Including the deemed
        production volume related to the gas over bitumen financial solution,
        average daily production (actual and deemed) decreased five percent
        to 174.8 MMcfe/d from 184.4 MMcfe/d in the second quarter of 2006.

    -   Distributions payable for the second quarter of 2007 totaled $0.42
        per Trust Unit, comprised of $0.14 per Trust Unit paid on May 15,
        June 15 and July 16, 2007.

    -   Exploration and development expenditures totaled $22.3 million for
        the three months ended June 30, 2007, and were concentrated on well
        equipping and facilities construction in Athabasca and east central
        Alberta to tie-in additional natural gas volumes from the Trust's
        winter capital program. Drilling activity continued in the second
        quarter with five wells (5.0 net) drilled in east central Alberta
        with a 100 percent success rate.

    -   PET successfully negotiated and closed the acquisition of natural gas
        properties and related assets located primarily in east central
        Alberta (the "Birchwavy Acquisition") on June 26, 2007 for a net
        purchase price of $391.8 million. Production from the acquired assets
        (the "Birchwavy Assets") is currently approximately 46 MMcfe/d
        comprised of 40 MMcf/d of primarily sweet, shallow natural gas, 500
        bbls/d of crude oil and liquids and 3 MMcfe/d of royalty volumes. The
        assets also include 310,000 net acres of undeveloped land which
        significantly expand the Trust's prospect inventory, comprising both
        conventional natural gas and resource play opportunities. Production
        of 2.5 MMcfe/d and funds flow of $0.9 million were recorded in the
        three months ended June 30, 2007 from the Birchwavy Assets,
        accounting for the five days of post-closing production in the second
        quarter. Including the Birchwavy Acquisition, the Trust's current
        production is approximately 200 MMcfe/d.

    -   In conjunction with the Birchwavy Acquisition, the Trust entered into
        an agreement to sell 20,450,000 subscription receipts at a price of
        $12.25 each and $75 million of 6.5% convertible debentures to a
        syndicate of underwriters. The offering closed as scheduled on June
        20, 2007, resulting in proceeds of $310 million net of underwriting
        fees. The subscription receipts were exchanged for an equivalent
        number of Trust Units on the closing of the Birchwavy Acquisition.
        The convertible debentures (the "6.5% Debentures") have a maturity
        date of June 30, 2012, are convertible into Trust Units at a price of
        $14.20 per Trust Unit and are listed on the Toronto Stock Exchange
        under the symbol "PMT.DB.C".
    

    Outlook and Sensitivities

    During the second quarter of 2007 the Trust crystallized a number of
financial and physical forward natural gas contracts in order to realize cash
gains. As of August 7, 2007, PET has hedged 3 percent of its current
production for August - October 2007 at a price of $6.04/GJ, 20 percent of
current production for November 2007 - March 2008 at $7.50/GJ, 25 percent of
current production for April - October 2008 at $7.51/GJ and 20 percent of
current production for November 2008 - March 2009 at $7.93/GJ.
    The following table reflects PET's projected realized gas price, monthly
funds flow and payout ratio at the current monthly distribution of $0.10 per
Trust Unit, for the remaining six months of 2007 at certain AECO natural gas
price levels and incorporating all of the Trust's current financial hedges and
physical forward sales contracts.

    
                                        Average AECO Monthly Index Gas Price
                                                 July to December 2007 ($/GJ)
    Funds flow sensitivity analysis            $5.00   $6.00   $7.00   $8.00
    -------------------------------------------------------------------------
    Natural gas production (MMcfe/d)           198.3   198.3   198.3   198.3
    Realized gas price ($/Mcfe)                 5.63    6.55    7.46    8.37
    Funds flow (2) ($million/month)             14.1    18.8    23.5    28.2
    Per Trust Unit ($/Unit/month)              0.130   0.174   0.217   0.261
    Payout ratio (2) (%)                          77      58      46      38
    Ending total net debt ($million)             616     587     559     531
    Ending total net debt to funds flow
     ratio (3) (times)                           2.8     2.3     2.0     1.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Average AECO price for July-December based on settled prices for July
        and August and AECO forward strip at August 7, 2007 was approximately
        $5.70/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 total net debt (including convertible
        debentures) divided by annualized funds flow.
    

    Additional Information

    A copy of PET's unaudited interim consolidated financial statements and
related notes and management's discussion and analysis for the three and six
months ended June 30, 2007 and 2006 can be obtained at the Trust's website at
www.paramountenergy.com/ir/quarterly_reports.html. This report will also be
made available through SEDAR at www.sedar.com.

    Conference Call and Webcast

    PET will be hosting a conference call and webcast at 9:00 a.m., Mountain
Time, Thursday August 9, 2007 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
- 1-416-644-3422; outside Toronto - 1-800-590-1508. For a replay of this call
please dial: Toronto and area - 1-416-640-1917; outside Toronto -
1-877-289-8525, passcode 21240891No. until Thursday August 16, 2007. To
participate in the live webcast please visit www.paramountenergy.com or
www.newswire.ca/en/webcast/index.cgi. The webcast will also be archived
shortly following the presentation.

    Forward-Looking Information

    This news release contains forward-looking information. Implicit in this
information, particularly in respect of cash distributions, are assumptions
regarding natural gas prices, production, royalties and expenses which,
although considered reasonable by PET at the time of preparation, may prove to
be incorrect. These forward-looking statements are based on certain
assumptions that involve a number of risks and uncertainties and are not
guarantees of future performance. Actual results could differ materially as a
result of changes in PET's plans, changes in commodity prices, general
economic, market, regulatory and business conditions as well as production,
development and operating performance and other risks associated with oil and
gas operations. There is no guarantee by PET that actual results achieved will
be the same as those forecast herein.

    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.
    Mcf equivalent (Mcfe) may be misleading, particularly if used in
isolation. In accordance with National Instrument 51-101 ("NI 51-101"), an
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.

    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.

    
    FINANCIAL AND OPERATING HIGHLIGHTS            Three Months Ended June 30
    ($Cdn thousands except volume and
     per Trust Unit amounts)                       2007     2006     %change
    -------------------------------------------------------------------------
    Financial
    Revenue, including realized gains (losses)
     on financial instruments (1)               124,061  101,580          22
    Funds flow (1)                               72,669   56,605          28
     Per Trust Unit (2)                            0.81     0.68          19
    Net earnings (loss)                           6,126   21,816         (72)
     Per Trust Unit (2)                            0.07     0.26         (73)
    Distributions                                39,350   60,284         (35)
     Per Trust Unit (3)                            0.42     0.72         (42)
    Payout ratio (%) (1)                           54.1    106.5         (49)
    Total assets                              1,301,516  896,611          45
    Net bank and other debt outstanding (4)     400,408  231,210          73
    Convertible debentures, at principal
     amount                                     236,109  157,572          50
    Total net debt (4)                          636,517  388,782          64
    Unitholders' equity                         383,600  330,590          16
    -------------------------------------------------------------------------
    Capital expenditures
     Exploration and development                 22,303   10,466         113
     Acquisitions, net of dispositions          449,857  (11,866)      3,891
     Other                                          219      412         (47)
     Net capital expenditures                   472,379     (988)     47,911
    -------------------------------------------------------------------------
    Trust Units outstanding (thousands)
    End of period                               107,568   83,857          28
    Weighted average                             89,227   83,663           7
    Incentive and Bonus Rights outstanding        4,038    1,944         107
    Trust Units outstanding at August 8, 2007   107,885
    -------------------------------------------------------------------------
    Operating
    Production
     Total oil and natural gas (Bcfe) (5)          14.1     14.8          (5)
     Daily average oil and natural gas
      (MMcfe/d) (5)                               155.0    162.9          (5)
     Gas over bitumen deemed production
      (MMcfe/d) (6)                                19.8     21.5          (8)
     Average daily (actual and deemed -
      MMcfe/d) (6)                                174.8    184.4          (5)
     Per Trust Unit (cubic feet
      equivalent/d/Unit) (2)                       1.96     2.20         (11)
    Average natural gas prices ($/Mcfe)
     Before financial hedging and physical
      forward sales (7)                            7.25     6.16          18
     Including financial hedging and physical
      forward sales (7)                            8.80     6.85          28
    -------------------------------------------------------------------------
    Land (thousands of net acres)
    Undeveloped land holdings                     1,338    1,084          23
    -------------------------------------------------------------------------
    Drilling (gross / net)
     Gas                                          5/5.0  29/13.7    (83)/(64)
     Dry                                            -/-    1/0.2  (100)/(100)
     Total                                        5/5.0  30/13.9    (83)/(64)
    Success rate (% gross / % net)              100/100    97/99         3/1
    -------------------------------------------------------------------------


    FINANCIAL AND OPERATING HIGHLIGHTS              Six Months Ended June 30
    ($Cdn thousands except volume and
     per Trust Unit amounts)                       2007      2006    %change
    -------------------------------------------------------------------------
    Financial
    Revenue, including realized gains (losses)
     on financial instruments (1)               238,045   211,955         12
    Funds flow (1)                              138,266   117,717         17
     Per Trust Unit (2)                            1.58      1.41         12
    Net earnings (loss)                         (33,135)   29,785       (211)
     Per Trust Unit (2)                           (0.38)     0.36       (205)
    Distributions                                80,625   120,238        (33)
     Per Trust Unit (3)                            0.90      1.44        (38)
    Payout ratio (%) (1)                           58.3     102.1        (43)
    Total assets                              1,301,516   896,611         45
    Net bank and other debt outstanding (4)     400,408   231,210         73
    Convertible debentures, at principal
     amount                                     236,109   157,572         50
    Total net debt (4)                          636,517   388,782         64
    Unitholders' equity                         383,600   330,590         16
    -------------------------------------------------------------------------
    Capital expenditures
     Exploration and development                 85,587    90,767         (6)
     Acquisitions, net of dispositions          452,697    77,546        484
     Other                                          590       522         13
     Net capital expenditures                   538,874   168,835        219
    -------------------------------------------------------------------------
    Trust Units outstanding (thousands)
    End of period                               107,568    83,857         28
    Weighted average                             87,531    83,387          5
    Incentive and Bonus Rights outstanding        4,038     1,944        107
    Trust Units outstanding at August 8, 2007   107,885
    -------------------------------------------------------------------------
    Operating
    Production
     Total oil and natural gas (Bcfe) (5)          26.9      28.5         (6)
     Daily average oil and natural gas
      (MMcfe/d) (5)                               148.4     157.2         (6)
     Gas over bitumen deemed production
      (MMcfe/d) (6)                                19.8      21.5         (8)
     Average daily (actual and deemed -
      MMcfe/d) (6)                                168.2     178.7         (6)
     Per Trust Unit (cubic feet
      equivalent/d/Unit) (2)                       1.92      2.14        (10)
    Average natural gas prices ($/Mcfe)
     Before financial hedging and physical
      forward sales (7)                            7.28      6.91          5
     Including financial hedging and physical
      forward sales (7)                            8.86      7.45         19
    -------------------------------------------------------------------------
    Land (thousands of net acres)
    Undeveloped land holdings                     1,338     1,084         23
    -------------------------------------------------------------------------
    Drilling (gross / net)
     Gas                                        82/65.4  113/87.0   (27)/(25)
     Dry                                          7/6.2     4/1.9     75/226
     Total                                      89/71.6  117/88.9   (24)/(19)
    Success rate (% gross / % net)                92/91     97/98     (5)/(7)
    -------------------------------------------------------------------------
    (1) These are non-GAAP measures. Please refer to "Significant Accounting
        Policies and Non-GAAP Measures" included in Management's Discussion
        and Analysis.
    (2) Based on weighted average Trust Units outstanding for the period.
    (3) Based on Trust Units outstanding at each distribution date.
    (4) Net debt includes net working capital (deficiency) before short-term
        financial instrument assets and liabilities. Total net debt includes
        convertible debentures measured at principal amount.
    (5) Production amounts are based on the Trust's interest before
        royalties.
    (6) 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.
    (7) 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.

    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, Cameron Sebastian, Vice President, Finance and Chief Financial Officer,
(403) 269-4400 or Paramount Energy Trust, Sue Showers, Investor Relations &
Communications Advisor, (403) 269-4400, (403) 269-6336 (FAX) or Paramount
Energy Operating Corp, administrator of Paramount Energy Trust, Suite 500, 630
- 4 Avenue SW, Calgary, AB T2P 0J9, Email: info@paramountenergy.com, Website:
www.paramountenergy.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890