Paramount Energy Trust Releases Third Quarter 2007 Financial and Operating Results

    November 2007 Distribution Confirmed


    CALGARY, Nov. 8 /CNW/ - Paramount Energy Trust (TSX:PMT.UN)("PET" or the
"Trust") is pleased to release its financial and operating results for the
third quarter of 2007. Record production levels and hedging gains provided by
the Trust's commodity price management program were offset by very weak
natural gas prices, resulting in a 32 percent decrease in funds flow to $41.2
million for the three months ended September 30, 2007 from $60.8 million in
the comparative 2006 period.
    PET's third quarter activities were focused on integrating the natural
gas assets acquired in June 2007 ("Birchwavy Assets") into the Trust's
existing operational structure, and initiating exploitation of the extensive
low-risk drilling opportunities identified as part of the acquisition
("Birchwavy Acquisition").
    The Trust is also pleased to confirm that its distribution to be paid on
December 17, 2007 in respect of income received by PET for the month of
November 2007 for Unitholders of record on November 30, 2007 will be $0.10 per
Trust Unit. The ex-distribution date is November 28, 2007. The November
distribution brings cumulative distributions paid since the inception of the
Trust in February 2003 to $11.824 per Trust Unit.
    In the first nine months of 2007, PET distributed $113 million to
Unitholders, representing a 63 percent payout ratio, and invested $98 million
in its capital program, excluding acquisitions and dispositions, despite the
weakness of natural gas pricing late in the second quarter and into the third
quarter of 2007. PET continues to focus on a sustainable distribution model
that balances short-term cash in the hands of our Unitholders and long-term
value creation through capital reinvestment.
    PET's unaudited interim consolidated financial statements and related
notes and management's discussion and analysis ("MD&A") for the three and nine
months ended September 30, 2007 and 2006 is available at the Trust's website
at and
through SEDAR at

    Third Quarter Summary

    -   Average production increased 25 percent to a record 193.1 MMcfe/d for
        the three months ended September 30, 2007 as compared to
        154.6 MMcfe/d in the third quarter of 2006 primarily as a result of
        the Birchwavy Acquisition, which added production volumes of
        43 MMcfe/d for the quarter. Including the deemed production volume
        related to the gas over bitumen financial solution, average daily
        production (actual and deemed) increased 22 percent to 213.3 MMcfe/d
        from 175.1 MMcfe/d in the third quarter of 2006.

    -   Realized natural gas prices decreased by 23 percent for the three
        months ended September 30, 2007 to $5.66 per Mcf from $7.36 per Mcf
        in 2006. The Trust's realized gas price exceeded the Alberta Gas
        Reference Price by nine percent for the period as PET had a portion
        of its production volumes hedged at fixed prices in the quarter. The
        Trust realized $27.1 million in gains on early termination of hedging
        contracts during the first six months of 2007. Natural gas prices
        weakened dramatically late in the second quarter and into the third
        quarter of 2007 as a result of the combination of increased storage
        inventories resulting from high liquefied natural gas ("LNG") imports
        into the United States, strong deliveries of natural gas from US
        production and relatively mild early summer weather. In Canada the
        increase in the value of the Canadian dollar has further amplified
        the decrease in gas prices.

    -   Funds flow per Trust Unit measured $0.38 as compared to funds flow
        per Trust Unit of $0.72 for the third quarter of 2006. The lower
        funds flow was a function of the 23 percent decrease in realized
        natural gas prices from quarter to quarter, as well as higher
        operating and interest costs.- Distributions payable for the third
        quarter of 2007 totaled $0.30 per Trust Unit, comprised of $0.10 per
        Trust Unit paid on August 15, September 17 and October 15, 2007.

    -   Exploration, development and land expenditures totaled $12.1 million
        for the three months ended September 30, 2007, and were concentrated
        on drilling, completion and tie-in activities in the Southern core
        area as well as seismic program acquisition for delineation and
        refinement of prospects in that area and Crown and freehold land
        purchases to replenish the prospect inventory.PET drilled 24 wells
        (19.5 net) with a 100% success rate in the quarter, primarily in east
        central Alberta, including 11 (11.0 net) on the Birchwavy Assets
        acquired at the end of the second quarter of 2007.

    Subsequent Events

    -   On October 23, 2007 PET entered into an agreement to sell the office
        building the Trust occupies in downtown Calgary for gross proceeds of
        $35.75 million and has received a deposit of $2.0 million from the
        purchaser. The transaction is expected to close in early December and
        will result in the Trust recording a gain of approximately
        $23 million.

    -   The Trust has requested that the borrowing base on its credit
        facility be increased to $420 million with a reduction to
        $400 million on the earlier of December 31, 2007 and the closing date
        of the sale of PET's office building. The majority of the Trust's
        lenders have finalized their review and approved this request and PET
        expects full approval in the near future. The Trust's lenders have
        also completed their semi-annual borrowing base redetermination and
        the review of the Trust's natural gas reserves is expected to result
        in confirmation of PET's borrowing base at $400 million through
        May 26, 2008.

    -   In keeping with PET's commitment to provide information to
        Unitholders with respect to the federal government's changes in
        respect of the tax treatment of Trusts proposed to begin in
        January 2011, PET has become aware that a Notice of Intent to submit
        an international arbitration claim against the Government of Canada
        was recently filed by a U.S. citizen. The Notice challenges the
        actions of the Government with respect to its elimination of Canadian
        Energy Trusts and seeks monetary compensation for losses related to
        those actions. The arbitration Notice has been submitted under the
        provisions of the North American Free Trade Agreement (NAFTA). A copy
        of the Notice of Intent can be found at We
        understand that all U.S. and Mexican citizens who held units in a
        Canadian Energy Trust on October 31, 2006 may also be eligible to
        file a similar Notice of Intent with the Government of Canada,
        regardless of whether these units were held directly by those
        citizens or indirectly through a business enterprise, such as a
        mutual fund.

    Outlook and Sensitivities

    Late summer heating demand served to stabilize NYMEX gas prices in
September as the risk of storage injection curtailments related to lack of
storage capacity abated. However, the persisting increase in the value of the
Canadian dollar relative to the U.S. dollar continues to further amplify the
decrease in Canadian gas prices, hindering AECO prices despite a recent
increase in gas prices at the NYMEX hub resulting from recent near-term cold
weather forecasts. The Trust remains cautious in its outlook with respect to
near term natural gas prices, and has a significant portion of its natural gas
production hedged at fixed prices for the fourth quarter of 2007. Full
disclosure of PET's current outstanding risk management transactions is
provided in the Trust's MD&A.
    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 three 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
                                           October to December 2007 ($/GJ)(2)
    Funds flow sensitivity analysis             $   5.00  $   6.00  $   7.00
    Natural gas production (MMcfe/d)(1)            193.1     193.1     193.1
    Realized gas price ($/Mcfe)                     6.14      6.76      7.39
    Funds flow(3) ($million/month)                  16.1      19.0      21.8
    Per Trust Unit ($/Unit/month)                  0.149     0.175     0.201
    Payout ratio(3)(%)                                67        57        50
    Ending total net debt ($million)                 597       589       580
    Ending total net debt to funds flow ratio(4)
     (times)                                         2.6       2.5       2.4
    (1) Includes working interest and royalty interest production.
    (2) Average AECO Monthly Index price for October-December based on
        settled prices for October and November and AECO forward strip at
        November 1, 2007 was approximately $5.97/GJ.
    (3) These are non-GAAP measures; see "Significant Accounting Policies and
        Non-GAAP measures" in Management's Discussion and Analysis.
    (4) Calculated as ending total net debt (including convertible
        debentures) divided by annualized funds flow.

    PET has budgeted an additional $25 to $30 million in capital expenditures
for the fourth quarter of 2007, including preparatory work for the 2008 winter
capital program.
    The Board of Directors of the Administrator of PET has also approved a
capital expenditure budget of $108 million for 2008, of which approximately
$48 million will be spent in the first quarter. The program is designed to
maintain the Trust's natural gas production. The actual magnitude of the
Trust's capital spending program for the final three quarters of 2008 will be
in part dictated by commodity prices and other market considerations.

    Conference Call and Webcast

    PET will be hosting a conference call and webcast at 9:30 a.m., Mountain
Time, Friday November 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 - 1-800-595-8550. For a replay of this call
please dial: Toronto and area - 1-416-640-1917; outside Toronto -
1-877-289-8525, passcode 21251001No. until Friday November 16, 2007. To
participate in the live webcast please visit or 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.

    Additional Information

    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

    HIGHLIGHTS              Three Months Ended             Nine Months Ended
    ($Cdn thousands               September 30                  September 30
    except as noted)  2007      2006  % change      2007      2006  % change

     (1)           100,617   104,725        (4)  338,662   316,680         7
     Funds flow(1)  41,212    60,770       (32)  179,478   178,487         1
      Per Trust
       Unit(2)        0.38      0.72       (47)     1.90      2.13       (11)
     Net earnings
      (loss)         5,246    19,619       (73)  (27,889)   49,404      (156)
      Per Trust
       Unit(2)        0.05      0.23       (78)    (0.30)     0.59      (151)
     Distributions  32,448    50,583       (36)  113,073   170,821       (34)
      Per Trust
       Unit(3)        0.30      0.60       (50)     1.04      2.04       (49)
    Payout ratio
     (%)(1)           78.7      83.2        (5)     63.0      95.7       (34)
    Total assets 1,266,380   891,089        42 1,266,380   891,089        42
    Net bank and
     other debt
     (4)           382,378   234,014        63   382,378   234,014        63

     amount        236,109   157,265        50   236,109   157,265        50
    Total net
     debt(4)       618,487   391,279        58   618,487   391,279        58
     equity        364,259   311,195        17   364,259   311,195        17
      and land      12,101    23,388       (48)   97,688   114,155       (14)
      net of
      dispositions    (789)     (322)     (145)  451,908    77,224       485
     Other             275       289        (5)      865       811         7
     Net capital
      expenditures  11,587    23,355       (50)  550,461   192,190       186

    Trust Units

    End of period  108,473    84,507        28   108,473    84,507        28

     average       108,008    84,198        28    94,431    83,648        13

    Incentive and
     Bonus Rights
     outstanding     4,203     1,948       116     4,203     1,948       116

    Trust Units
     at November
     7, 2007       108,779                       108,779



    Total oil and
     natural gas
     (Bcfe)(5)        17.8      14.2        25      44.6      42.7         4

    Daily average
     oil and
     natural gas
     (MMcfe/d)(5)    193.1     154.6        25     163.5     156.4         5

    Gas over
     (MMcfe/d)(6)     20.2      20.5        (1)     19.9      21.1        (6)

    Average daily
     (actual and
     deemed -
     MMcfe/d)(6)     213.3     175.1        22     183.4     177.5         3

    Per Trust Unit
     (cubic feet
     (2)              1.97      2.08        (5)     1.69      2.12       (20)

    Average natural
     gas prices

    Before financial
     hedging and
     forward sales(7) 5.41      6.04       (10)     6.53      6.62        (1)

     hedging and
     forward sales(7) 5.66      7.36       (23)     7.59      7.42         2

    Land (thousands
     of net acres)

    Undeveloped land
     holdings        1,843     1,145        61     1,843     1,145        61

    Drilling (gross
     / net)
     Gas           24/19.5   16/11.7     50/67  106/84.9  129/98.7  (18)/(14)
     Dry               -/-       -/-       0/0     7/6.2     4/1.9    75/226
     Total         24/19.5   16/11.7     50/67  113/91.1 133/100.6   (15)/(9)

    Success rate
     (% gross
     / % net)      100/100   100/100       -/-     94/93     97/98    (3)/(5)
    (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
    (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, Susan 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 and
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:, Website:

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