EX-99.1 2 ex991.htm AIF FOR THE YEAR ENDED DECEMBER 31, 2005 DATED MARCH 7, 2006 AIF for the year ended December 31, 2005 dated March 7, 2006
Exhibit 99.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNUAL INFORMATION FORM
 
 
For the year ended December 31, 2005
 
 
 
 
 
 
 
 
 
 
 
March 7, 2006
 
 

 
 



TABLE OF CONTENTS
 
 
Page
   
Page
         
GLOSSARY OF TERMS
iii
 
Additional Operational Information
45
ABBREVIATIONS AND CONVERSIONS
v
 
INFORMATION RESPECTING ENERPLUS RESOURCES FUND
45
PRESENTATION OF ENERPLUS' OIL AND GAS RESERVES AND PRODUCTION INFORMATION
vi
 
Description of the Trust Units and the Trust Indenture
45
PRESENTATION OF ENERPLUS' FINANCIAL INFORMATION
ix
 
Description of the Royalty Agreements and Subordinated Notes
52
DESCRIPTION OF DISTRIBUTABLE INCOME
ix
 
Management and Corporate Governance
53
FORWARD-LOOKING STATEMENTS
ix
 
Unitholder Rights Plan
53
STRUCTURE OF ENERPLUS RESOURCES FUND
1
 
DEBT OF ENERPLUS
54
GENERAL DEVELOPMENT OF ENERPLUS RESOURCES FUND
3
 
Bank Credit Facility
54
Historical Overview
3
 
Senior Unsecured Notes
55
Developments in the Past Three Years
3
 
DISTRIBUTIONS TO UNITHOLDERS
56
OIL AND NATURAL GAS RESERVES
6
 
Distributable Income
56
Summary of Aggregate Enerplus Reserves
7
 
Distribution History
56
Summary of Conventional Oil and Natural Gas Reserves
9
 
U.S. Tax Reporting Matters
57
Summary of Joslyn Project Bitumen Reserves
18
 
INDUSTRY CONDITIONS
58
Reconciliation of Reserves
21
 
RISK FACTORS
62
Reconciliation of Changes in Net Present Value of Future Net Revenue
25
 
MARKET FOR SECURITIES
74
Undeveloped Reserves
26
 
DIRECTORS AND OFFICERS
75
Proved and Probable Reserves Not on Production
27
 
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
78
OPERATIONAL INFORMATION
27
 
MATERIAL CONTRACTS AND DOCUMENTS AFFECTING THE RIGHTS OF SECURITYHOLDERS
78
Overview
27
 
INTERESTS OF EXPERTS
78
Description of Principal Properties and Operations
27
 
REGISTRAR AND TRANSFER AGENT
78
Summary of Principal Production Locations
37
 
ADDITIONAL INFORMATION
79
Oil and Natural Gas Wells and Unproved Properties
38
 
APPENDIX "A"  - REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR
A-1
Exploration and Development Activities
38
 
APPENDIX "B"  - REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR
B-1
Quarterly Production History
39
 
APPENDIX "C"  - REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR AUDITOR
C-1
Quarterly Netback History
40
 
APPENDIX "D"  - REPORT OF MANAGEMENT AND DIRECTORS ON RESERVES DATA AND OTHER INFORMATION
D-1
Abandonment and Reclamation Costs
42
 
APPENDIX "E"  - AUDIT COMMITTEE DISCLOSURE
E-1
Tax Horizon
42
     
Costs Incurred
42
     
Marketing Arrangements and Forward Contracts
42
     
Environment, Health and Safety
43
     
Impact of Environmental Protection Requirements
44
     



 
GLOSSARY OF TERMS
 
Unless the context otherwise requires, in this Annual Information Form, the following terms and abbreviations have the meanings set forth below. Additional terms relating to oil and natural gas reserves and operations have the meanings set forth under "Presentation of Enerplus' Oil and Gas Reserves and Production Information."
 
"AECO" means the physical storage and trading hub for natural gas on the TransCanada Alberta Transmission System (NOVA) which is the delivery point for the various benchmark Alberta index prices.
 
"bitumen" means a highly viscous crude oil which is too thick to flow in its native state and which cannot be produced without altering its viscosity. The density of bitumen is generally less than 10o API;
 
"D&M" means DeGolyer and MacNaughton, independent petroleum consultants;
 
"D&M Report" means the independent engineering evaluation of Enerplus' U.S. conventional oil, NGLS and natural gas interests prepared by D&M dated January 23, 2006 and effective December 31, 2005, utilizing commodity price forecasts of Sproule (for internal consistency in Enerplus' reserves reporting) dated December 31, 2005;
 
"Deer Creek" means Deer Creek Energy Limited, a wholly owned subsidiary of Total S.A. and the operator of the Joslyn Project;
 
"ECT" means Enerplus Commercial Trust, a trust organized under the laws of Alberta (the trustee of which is Enerplus ECT Resources Ltd., an Alberta corporation) and an indirect wholly owned subsidiary of the Fund;
 
"EGEM" means Enerplus Global Energy Management Company, an indirect wholly owned subsidiary of the Fund which, prior to its acquisition by Enerplus from a third party, provided management and administrative services to Enerplus;
 
"EnerMark" means EnerMark Inc., a corporation organized under the Business Corporations Act (Alberta) and a wholly owned subsidiary of the Fund;
 
"Enerplus" means Enerplus Resources Fund and its subsidiaries, taken as a whole;
 
"Enerplus Oil & Gas" means Enerplus Oil & Gas Ltd., a corporation organized under the Business Corporations Act (Alberta) and a wholly owned subsidiary of ERC;
 
"Enerplus USA" means Enerplus Resources (USA) Corporation, a corporation organized under the laws of Delaware and an indirect wholly-owned subsidiary of EnerMark;
 
"ERC" means Enerplus Resources Corporation, a corporation organized under the Business Corporations Act (Alberta) and a wholly owned subsidiary of EnerMark;
 
"Fund" means Enerplus Resources Fund;
 
"GAAP" means generally accepted accounting principles;
 
"GLJ" means GLJ Petroleum Consultants Ltd., independent petroleum consultants;
 
"GLJ Report" means the independent engineering evaluation of Enerplus' interest in the Joslyn Project prepared by GLJ dated February 28, 2006 and effective December 31, 2005, utilizing commodity price forecasts of Sproule (for internal consistency in Enerplus' reserves reporting) dated December 31, 2005;
 
"Henry Hub" means the physical storage and trading hub in Louisiana which is the delivery point for the NYMEX natural gas contract;
 
"Joslyn Project" or the "Project" means the development of Oil Sands Lease #24 located in the Athabasca oil sands fairway of northeastern Alberta;
 
"Joslyn Lease" means the sections of land contained within Alberta Oil Sands Lease No. 7280060T24 and Alberta Oil Sands Permit No. 7099110070;

iii


 
"Lyco" means Lyco Energy Corporation, a Delaware corporation which merged with Enerplus Newco LLC on February 9, 2006 and continued as Enerplus USA;
 
"NI 51-101" means National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, adopted by the Canadian securities regulatory authorities;
 
"NYMEX" means the New York Mercantile Exchange;
 
"NYSE" means the New York Stock Exchange;
 
"Operating Subsidiaries" means the direct and indirect subsidiaries of the Fund that own, acquire and operate oil and natural gas assets for the benefit of the Fund (with the material Operating Subsidiaries being EnerMark, ERC, Enerplus Oil & Gas, ECT and Enerplus USA);
 
"SAGD" means Steam Assisted Gravity Drainage, an in situ production process used to recover bitumen from oil sands;
 
"Sproule" means Sproule Associates Limited, independent petroleum consultants;
 
"Sproule Report" means the independent engineering evaluation of Enerplus' Canadian conventional oil, NGLs and natural gas interests prepared by Sproule dated February 28, 2006 and effective December 31, 2005, utilizing commodity price forecasts of Sproule dated December 31, 2005;
 
"subsidiary" has the meaning assigned thereto in the Securities Act (Alberta);
 
"Tax Act" means the Income Tax Act (Canada);
 
"Trust Indenture" means the Amended and Restated Trust Indenture dated January 1, 2004 among EnerMark, ERC and the Trustee, as may be amended, supplemented or restated from time to time;
 
"Trust Units" means the trust units of the Fund, each representing an equal undivided beneficial interest in the Fund;
 
"Trustee" means CIBC Mellon Trust Company, or its successor as trustee of the Fund;
 
"TSX" means the Toronto Stock Exchange; and
 
"WTI" means West Texas Intermediate crude oil that serves as the benchmark crude oil for the NYMEX crude oil contract delivered in Cushing, Oklahoma.

iv


 
ABBREVIATIONS AND CONVERSIONS
 
In this Annual Information Form, the following abbreviations have the meanings set forth below.
 
API          American Petroleum Institute
bbls          barrels, with each barrel representing 34.972 imperial gallons or 42 U.S. gallons
bbls/d       barrels per day
Bcf            billion cubic feet
Bcf/d         billion cubic feet per day
BOE          barrels of oil equivalent converting 6 Mcf of natural gas to one barrel of oil equivalent and one barrel of natural gas liquids to one barrel of oil equivalent. The factor used to convert natural gas and natural gas liquids to oil equivalent is not based on either energy content or prices but is a commonly used industry benchmark.
 
BOE/d           barrels of oil equivalent per day
Mbbls                 one thousand barrels
MBOE                  one thousand barrels of oil equivalent
Mcf                     one thousand cubic feet
Mcf/d                  one thousand cubic feet per day
MMbbls           one million barrels
MMBOE          one million barrels of oil equivalent
MMBTU          one million British Thermal Units
MMcf            one million cubic feet
MMcf/d           one million cubic feet per day
NGLs            natural gas liquids

In this Annual Information Form, unless otherwise indicated, all dollar amounts are in Canadian dollars and all references to "$" are to Canadian dollars.
 
The following table sets forth certain standard conversions between Standard Imperial Units and the International System of Units (or metric units).

To Convert From
 
To
 
Multiply By
 
Mcf
   
cubic metres
   
28.174
 
cubic metres
   
cubic feet
   
35.494
 
bbls
   
cubic metres
   
0.159
 
cubic metres
   
bbls
   
6.293
 
feet
   
metres
   
0.305
 
metres
   
feet
   
3.281
 
miles
   
kilometres
   
1.609
 
kilometres
   
miles
   
0.621
 
acres
   
hectares
   
0.4047
 
hectares
   
acres
   
2.471
 


v



 
PRESENTATION OF ENERPLUS'
OIL AND GAS RESERVES AND PRODUCTION INFORMATION
 
Disclosure of Information
 
In this Annual Information Form, all estimates of oil and natural gas reserves and production are presented on a "company interest" basis (as defined below), unless expressly indicated that they have been presented on a "gross" or "net" basis. "Company interest" is not a term defined or recognized under NI 51-101 and does not have a standardized meaning under NI 51-101. Therefore, the "company interest" reserves of Enerplus may not be comparable to similar measures presented by other issuers, and investors are cautioned that "company interest" reserves should not be construed as an alternative to "gross" or "net" reserves calculated in accordance with NI 51-101.
 
Enerplus' actual oil and natural gas reserves and future production may be greater than or less than the estimates provided in this Annual Information Form. The estimated future net revenue from the production of Enerplus' oil and natural gas reserves does not represent the fair market value of Enerplus' reserves.
 
The United States Securities and Exchange Commission (the "SEC") generally permits oil and gas issuers, in their filings with the SEC, to disclose only proved reserves net of royalties and interests of others that an issuer has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Canadian securities laws permit oil and gas issuers, in their filings with Canadian securities regulators, to disclose not only Proved Reserves but also Probable Reserves (each as defined in NI 51-101 and described below), and to disclose reserves and production on a "gross" basis before deducting royalties. Probable Reserves are higher risk and are generally believed to be less likely to be accurately estimated or recovered than Proved Reserves. Enerplus has prepared this Annual Information Form in accordance with Canadian disclosure requirements, and as a result, Enerplus has disclosed reserves designated as "Probable Reserves" and "Proved plus Probable Reserves". The SEC's guidelines strictly prohibit reserves in these categories from being included in filings with the SEC that are required to be prepared in accordance with U.S. disclosure requirements. Moreover, Enerplus has determined and disclosed estimated future net revenue from its reserves using both constant and forecast prices and costs, whereas the SEC generally requires that prices and costs be held constant at levels in effect at the date of the reserve report.
 
Enerplus has adopted the standard of 6 Mcf:1 BOE when converting natural gas to BOEs. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
 
Note to Reader Regarding Oil and Gas Information, Definitions and National Instrument 51-101
 
The oil and gas operational and reserves information contained in this Annual Information Form contains the information required to be included in the Statement of Reserves Data and Other Oil and Gas Information pursuant to NI 51-101 adopted by the Canadian securities regulatory authorities and has been prepared and prescribed in accordance with Form 51-101F1. Readers should also refer to the Report on Reserves Data by Sproule attached hereto as Appendix "A", the Report on Reserves Data by GLJ attached hereto as Appendix "B", the Report on Reserves Data by D&M attached as Appendix "C" and the Report of Management and Directors on Oil and Gas Disclosure attached hereto as Appendix "D". The effective date for the Statement of Reserves Data and Other Oil and Gas Information contained in this Annual Information Form is December 31, 2005 and the information contained in the Annual Information Form has been prepared as of March 7, 2006.
 
Certain of the following definitions and guidelines are contained in Section 5.4 of Volume 1 of the Canadian Oil and Gas Evaluation Handbook (First Edition, June 30, 2002) (the "COGE Handbook") prepared jointly by The Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society) (the "CIM (Petroleum Society)") and have been prepared by the Standing Committee on Reserves Definitions of the CIM (Petroleum Society). Readers should consult the COGE Handbook for additional explanation and guidance. Certain other terms used in this Annual Information

vi


 
Form have the meanings assigned to them in NI 51-101 and accompanying Companion Policy 51-101CP, adopted by the Canadian securities regulatory authorities.
 
Interests in Reserves, Production, Wells and Properties
 
"company interest" means, in relation to Enerplus' interest in production or reserves, its working interest (operating or non-operating) share before deduction of royalties and including any royalty interests of Enerplus.
 
"gross" means:
 
 
(i)
in relation to Enerplus' interest in production or reserves, its working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of Enerplus;
 
 
(ii)
in relation to wells, the total number of wells in which Enerplus has an interest; and
 
 
(iii)
in relation to properties, the total area of properties in which Enerplus has an interest.
 
"net" means:
 
 
(i)
in relation to Enerplus' interest in production or reserves, its working interest (operating or non-operating) share after deduction of royalty obligations, plus Enerplus' royalty interests in production or reserves;
 
 
(ii)
in relation to Enerplus' interest in wells, the number of wells obtained by aggregating Enerplus' working interest in each of its gross wells; and
 
 
(iii)
in relation to Enerplus' interest in a property, the total area in which Enerplus has an interest multiplied by the working interest owned by Enerplus.
 
"working interest" means the percentage of undivided interest held by Enerplus in the oil and/or natural gas or mineral lease granted by the mineral owner, Crown or freehold, which interest gives Enerplus the right to "work" the property (lease) to explore for, develop, produce and market the leased substances.
 
Reserves Categories
 
"Proved Reserves" are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved Reserves.
 
"Probable Reserves" are those additional reserves that are less certain to be recovered than Proved Reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable Reserves.
 
"Possible Reserves" are those additional reserves that are less certain to be recovered than Probable Reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible Reserves.
 
Development and Production Status
 
Each of the reserves categories (Proved, Probable and Possible) may be divided into developed and undeveloped categories:
 
"Developed Reserves" are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into Producing and Non-Producing.
 
 
"Developed Producing Reserves" are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

vii


 
 
"Developed Non-Producing Reserves" are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.
 
"Undeveloped Reserves" are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (Proved, Probable, Possible) to which they are assigned.
 
Levels of Certainty for Reported Reserves
 
The qualitative certainty levels referred to in the definitions above are applicable to individual reserves entities (which refers to the lowest level at which reserves calculations are performed) and to reported reserves (which refers to the highest-level sum of individual entity estimates for which reserves estimates are presented). Reported reserves should target the following levels of certainty under a specific set of economic conditions:
 
 
at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated Proved Reserves;
 
 
at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated Proved plus Probable Reserves; and
 
 
at least a 10 percent probability that the quantities actually recovered will equal the sum of the estimated Proved plus Probable plus Possible Reserves.
 
Description of Price and Cost Assumptions
 
"Constant prices and costs" means, unless expressly noted otherwise, prices and costs used in an estimate that are:
 
 
(i)
Enerplus' prices and costs as at December 31, 2005, held constant throughout the estimated lives of the properties to which the estimate applies; and
 
 
(ii)
if, and only to the extent that, there are fixed or presently determinable future prices or costs to which Enerplus is legally bound by a contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices or costs referred to in paragraph (i).
 
"Forecast prices and costs" means future prices and costs that are:
 
 
(i)
generally accepted as being a reasonable outlook of the future; and
 
 
(ii)
if, and only to the extent that, there are fixed or presently determinable future prices or costs to which Enerplus is legally bound by a contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices or costs referred to in paragraph (i).

viii


 
PRESENTATION OF ENERPLUS' FINANCIAL INFORMATION
 
The financial information included and incorporated by reference in this Annual Information Form has been prepared in accordance with Canadian GAAP. Canadian GAAP differs in some significant respects from U.S. GAAP and therefore this financial information may not be comparable to the financial information of U.S. companies. The principal differences as they apply to the Fund are summarized in Note 15 to the Fund's audited consolidated financial statements for the year ended December 31, 2005.
 
In this Annual Information Form, unless otherwise indicated, all dollar amounts are in Canadian dollars and all references to "$" are to Canadian dollars.
 
DESCRIPTION OF DISTRIBUTABLE INCOME
 
Throughout this Annual Information Form, Enerplus uses the term "distributable income" to refer to the amount of cash that has been or is to be available for distribution to the Fund's unitholders. "Distributable income" is not a measure recognized by Canadian GAAP and does not have a standardized meaning prescribed by GAAP, but is an amount calculated in accordance with the terms of the Fund's Trust Indenture. Therefore, distributable income of the Fund may not be comparable to similar measures presented by other issuers, and investors are cautioned that distributable income should not be construed as an alternative to net earnings, cash flow from operating activities or other measures of financial performance calculated in accordance with GAAP.
 
FORWARD-LOOKING STATEMENTS
 
This Annual Information Form contains certain forward-looking statements and forward-looking information which are based on Enerplus' current internal expectations, estimates, projections, assumptions and beliefs. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe" and similar expressions are intended to identify forward-looking statements and forward-looking information. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements or information. Enerplus believes the expectations reflected in those forward-looking statements and information are reasonable but no assurance can be given that these expectations will prove to be correct, and such forward-looking statements and information included in this Annual Information Form should not be unduly relied upon. Such forward-looking statements and information speak only as of the date of this Annual Information Form and Enerplus does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws.
 
In particular, this Annual Information Form contains forward-looking statements and information pertaining to the following:
 
 
the quantity of and future net revenues from Enerplus' reserves;
 
 
oil, NGLs and natural gas production levels;
 
 
commodity prices, foreign currency exchange rates and interest rates;
 
 
capital expenditure programs and other expenditures;
 
 
supply and demand for oil, NGLs and natural gas;
 
 
expectations regarding Enerplus' ability to raise capital and to continually add to reserves through acquisitions and development;
 
 
schedules and timing of certain projects and Enerplus' strategy for growth;
 
 
Enerplus' future operating and financial results; and
 
 
treatment under governmental and other regulatory regimes and tax, environmental and other laws.

ix


 
Enerplus' actual results could differ materially from those anticipated in these forward-looking statements and information as a result of both known and unknown risks, including the risk factors set forth under "Risk Factors" in this Annual Information Form and those set forth below:
 
 
volatility in market prices for oil, NGLs and natural gas;
 
 
changes or fluctuations in oil, NGLs and natural gas production levels;
 
 
changes in foreign currency exchange rates and interest rates;
 
 
changes in capital and other expenditure requirements and debt service requirements;
 
 
liabilities and unexpected events inherent in oil and gas operations, including geological, technical, drilling and processing problems;
 
 
uncertainties associated with estimating reserves;
 
 
competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
 
 
incorrect assessments of the value of acquisitions;
 
 
Enerplus' success at acquisition, exploitation and development of reserves;
 
 
changes in general economic, market and business conditions in Canada, North America and worldwide;
 
 
actions by governmental or regulatory authorities including changes in income tax laws (including those relating to mutual fund trusts or investment eligibility) or changes in tax laws and incentive programs relating to the oil and gas industry and income trusts; and
 
 
changes in environmental or other legislation applicable to Enerplus' operations, and Enerplus' ability to comply with current and future environmental and other laws.
 
Many of these risk factors and other specific risks and uncertainties are discussed in further detail throughout this Annual Information Form and in Enerplus' management's discussion and analysis for the year ended December 31, 2005, which is available through the internet on Enerplus' SEDAR profile at www.sedar.com. Readers are also referred to the risk factors described in this Annual Information Form under "Risk Factors" and in other documents Enerplus files from time to time with securities regulatory authorities. Copies of these documents are available without charge from Enerplus or electronically on the internet on Enerplus' SEDAR profile at www.sedar.com or Enerplus' website at www.enerplus.com.

x


 
ENERPLUS RESOURCES FUND
 
Annual Information Form
For the year ended December 31, 2005
 
STRUCTURE OF ENERPLUS RESOURCES FUND
 
Enerplus Resources Fund
 
Enerplus Resources Fund is an energy investment trust created in 1986 under the laws of the Province of Alberta pursuant to the Trust Indenture. The Fund's assets currently consist of the securities of several direct and indirect Operating Subsidiaries, unsecured debt issued by EnerMark to the Fund and 95%, 99% and 99% royalties on the crude oil and natural gas property interests of EnerMark, ERC and Enerplus Oil & Gas, respectively. The head, principal and registered office of Enerplus is located at The Dome Tower, Suite 3000, 333 - 7th Avenue S.W., Calgary, Alberta, T2P 2Z1. Enerplus also has a U.S. office located at Wells Fargo Center, Suite 1300, 1700 Lincoln Street, Denver, Colorado, 80203. The Trustee of the Fund is CIBC Mellon Trust Company located at The Dome Tower, Suite 600, 333 - 7th Avenue S.W., Calgary, Alberta T2P 2Z1. The board of directors of EnerMark is responsible for the governance of Enerplus.
 
The Fund's primary focus is to maintain and enhance monthly cash distributions to its unitholders from the net cash flow generated by the operation and development of its Operating Subsidiaries' existing crude oil and natural gas properties and the strategic acquisition and rationalization of properties and assets. See "Operational Information  - Overview".
 
Operating Subsidiaries
 
The Fund's direct and indirect Operating Subsidiaries acquire, exploit and operate crude oil and natural gas assets for the benefit of the Fund. See "Operational Information" and "Oil and Natural Gas Reserves" for information regarding the operations and oil and natural gas reserves of Enerplus. The Fund's material Operating Subsidiaries are EnerMark, ERC, Enerplus Oil & Gas, ECT and Enerplus USA.
 
Each of EnerMark, ERC and Enerplus Oil & Gas are corporations organized under the Business Corporations Act (Alberta). ECT is a trust organized under the laws of Alberta, and Enerplus USA is a corporation organized under the laws of Delaware. All of the issued and outstanding common shares of EnerMark are directly owned by the Fund and all of the trust units of ECT are indirectly owned by the Fund through its wholly owned subsidiary, Enerplus Limited Partnership II (an Alberta limited partnership). All of the issued and outstanding common shares of ERC are owned by EnerMark and all of the issued and outstanding common shares of Enerplus Oil & Gas are owned by ERC. All of the shares of Enerplus USA are indirectly owned by EnerMark.

1


Organization Chart
 
The simplified organizational structure of Enerplus, including the material Operating Subsidiaries of the Fund and the flow of funds from those Operating Subsidiaries to the Fund and from the Fund to its unitholders, is set forth below:
 

2


GENERAL DEVELOPMENT OF ENERPLUS RESOURCES FUND
 
Historical Overview
 
Enerplus Resources Fund was formed in 1986. The Fund's Trust Units are currently traded on the TSX under the symbol "ERF.UN" and on the NYSE under the symbol "ERF". The Fund was historically one of a group of royalty trusts, income funds and other entities managed by companies within the Enerplus organization.
 
Developments in the Past Three Years
 
Acquisition of PCC Energy Inc. and PCC Energy Corp.
 
On March 5, 2003, Enerplus acquired all of the outstanding shares of PCC Energy Inc. and PCC Energy Corp. (collectively, "PCC"), which were wholly owned Canadian subsidiaries of U.S. based PetroCorp Incorporated, for total cash consideration of $165.8 million. Enerplus also assumed a working capital deficiency of $1.1 million. A portion of the PCC properties acquired are subject to a royalty arrangement structured as a net profits interest ("NPI") with a private U.S. company. The NPI is accounted for as a working interest of the U.S. company in these properties and as a result is not included in Enerplus' reserves, production, or financial information.
 
Management Internalization Transaction
 
On April 23, 2003, following receipt of unitholder approval, Enerplus acquired all of the outstanding shares of EGEM from an indirect wholly owned subsidiary of El Paso and incurred associated costs for a total cash consideration of $55.1 million. Prior to the acquisition, EGEM received management fees from Enerplus for providing administrative and management services to the Fund and its operating subsidiaries pursuant to a management agreement. As part of this transaction, EGEM agreed to fix the total fees payable under the management agreement from January 1, 2003 to April 23, 2003 at $3.0 million. Immediately following completion of the transaction, EGEM assigned and transferred all of its rights and obligations under the management agreement to EnerMark (a wholly owned subsidiary of the Fund), and the management agreement was effectively terminated.
 
Acquisition of Ice Energy Limited
 
On January 7, 2004, Enerplus completed the acquisition of all of the issued and outstanding shares of Ice Energy Limited. Enerplus previously owned approximately 12.7% of the shares of Ice Energy Limited which were acquired in a prior transaction. Total consideration for all of the Ice Energy Limited shares, including those previously owned by Enerplus, was $121.2 million. Enerplus also assumed a working capital deficiency of $9.3 million. As a result of this acquisition, Enerplus acquired an interest in the Shackleton area of western Saskatchewan. The acquired interests also include a 50% working interest in a joint venture to develop a commercial coal bed methane (also known as natural gas from coal) project in central Alberta.
 
Participation in Joslyn Project and Other Oil Sands Projects
 
In 2002, Enerplus acquired a 16% working interest in the Joslyn Project. The remaining 84% working interest is owned by Deer Creek, which was acquired by Total S.A., a major international oil and gas company, in 2005. Deer Creek is the operator of the Joslyn Project. For a description of the status and operations of the Joslyn Project, see "Operational Information  - Description of Principal Properties and Operations  - Oil Sands".
 
In early 2006, Enerplus sold a 1% working interest in the Joslyn Project in exchange for equity in Laricina Energy Ltd., a new private oil sands focused company led by the former Chief Executive Officer of Deer Creek prior to its acquisition by Total S.A. Included in the sale is an area of mutual interest agreement which has been designed to jointly pursue additional in-situ oil sands ventures.

3


 
Acquisition of Properties from ChevronTexaco Corporation
 
On June 30, 2004, Enerplus completed the acquisition of conventional oil and natural gas interests located in western Canada from ChevronTexaco Corporation for total consideration of approximately $467.2 million. The acquired production was weighted approximately 46% to natural gas and 54% to crude oil and NGLs and the acquisition also provided Enerplus with approximately 99,200 gross (45,400 net) acres of undeveloped land. The acquired properties were located in the Brooks area of southern Alberta, the Chinchaga area of northwestern Alberta, the Mitsue area of north central Alberta as well as in southeastern Saskatchewan and southwestern Manitoba.
 
Unitholder Limited Liability Legislation
 
Effective July 1, 2004 the Income Trusts Liability Act (Alberta) was proclaimed in force. The Act creates a statutory limitation on the liability of unitholders of income trusts organized under the laws of Alberta, such as the Fund. The legislation provides that a unitholder will not be, as a beneficiary, liable for any act, default, obligation or liability of the trustee that arises after the legislation comes into effect. The legislation does not affect the liability of unitholders with respect to any act, default, obligation or liability that arose before July 1, 2004. Additionally, in December 2004 Ontario adopted unitholder limited liability legislation similar to that implemented in Alberta. The Province of Québec historically had codified limited liability for trust unitholders. For additional information, see "Risk Factors  - Risks Related to Enerplus' Structure and the Ownership of the Trust Units  - The limited liability of the Fund's unitholders is uncertain".
 
Acquisition of TriLoch Resources Inc.
 
On July 1, 2005, Enerplus completed the acquisition of TriLoch Resources Inc. ("TriLoch"). Pursuant to a plan of arrangement, Enerplus issued 1,632,516 Trust Units in exchange for all of the shares of TriLoch. The Trust Unit value of $42.32 was based upon the weighted average price of the Fund's Trust Units on the TSX during the five day trading period surrounding the announcement of the transaction on May 17, 2005. Total consideration was approximately $77.4 million consisting of Trust Units, transaction costs and the retirement of TriLoch's bank indebtedness. Enerplus also assumed a working capital deficiency of $0.4 million. The TriLoch acquisition complemented Enerplus' existing asset base in the Enchant area of southern Alberta. Production from the area was weighted approximately 68% to natural gas and 32% to crude oil and NGLs at the time of the acquisition.
 
Acquisition of Lyco Energy Corporation and Sleeping Giant LLC
 
On August 30, 2005, Enerplus acquired all of the outstanding shares, and retired the debt (including mandatory redeemable preferred shares) of Lyco Energy Corporation ("Lyco"), a private Delaware corporation operating in the states of Montana and North Dakota. The total consideration paid for Lyco was approximately $501.9 million and Enerplus also assumed a working capital deficiency of $4.4 million. In connection with the acquisition, the Fund issued 10,637,500 Trust Units (issued upon the automatic conversion of subscription receipts upon the closing of the Lyco transaction) at a price of $46.25 for gross proceeds of $492.0 million (net proceeds of $466.9 million). Production from the Lyco properties was weighted approximately 92% light oil and 8% natural gas at the time of the acquisition. These properties predominantly produce high quality Middle Bakken light oil from the Sleeping Giant project area. The acquisition also provided Enerplus with approximately 120,000 net acres of undeveloped land in both Montana and North Dakota.
 
On October 4, 2005, Enerplus completed the acquisition of Sleeping Giant LLC, a private U.S. company. Total consideration paid for Sleeping Giant LLC was approximately $111.9 million and was financed through existing credit facilities. Enerplus also assumed positive working capital of $4.4 million. The assets of Sleeping Giant LLC consisted of additional working interests in the Sleeping Giant light crude oil project in Montana that formed part of the earlier Lyco acquisition. This acquisition increased Enerplus' working interest in certain producing wells in the Sleeping Giant project to an approximate 70% working interest.
 
Sleeping Giant LLC was subsequently merged with Lyco, and on February 9, 2006 Lyco merged with Enerplus Newco LLC and continued as Enerplus Resources (USA) Corporation.

4


 
The Lyco and Sleeping Giant LLC acquisitions were Enerplus' first acquisitions of U.S. assets. On February 21, 2006 Enerplus opened an office in Denver, Colorado to support the ongoing operation of its assets in Montana and North Dakota and to facilitate future growth in the United States.
 
Federal Government Pronouncements on Income Trusts and Mutual Fund Trust Status
 
Throughout 2004 and much of 2005, the Canadian federal government expressed concerns about a potential reduction in future tax revenues due to the increased presence of income trusts in the Canadian economy and the increased ownership of income trusts and other flow-through entities by non-residents of Canada. The former Canadian Minister of Finance indicated in the February 23, 2005 federal budget that further consultations would be pursued with stakeholders on taxation issues related to income trusts and other flow-through entities. On September 8, 2005, the Canadian Department of Finance released a discussion paper on these matters and invited interested parties to make submissions to the Department of Finance. On November 23, 2005, the former Canadian Minister of Finance issued a news release announcing that no change would be made to the tax treatment of income trusts in Canada and calling an end to the consultation process initiated in September 2005. In the January 2006 federal election, the Canadian federal Liberal government was replaced by a Conservative government. Both the Liberal and Conservative parties have stated they do not intend to change the current tax treatment of income trusts. In connection with the November 23, 2005 announcement, the former Liberal government also announced a reduction in the personal tax rate on corporate dividends received by Canadians in order to "level the playing field" between corporations and income trusts. The new Conservative government has not made any statement in respect of the proposed personal tax rate reduction.
 
Enerplus believes the November 23, 2005 announcement should help to remove some of  the uncertainty surrounding the taxation of the income trust sector. However, the Fund continues to rely on an exception contained in the Tax Act in order to ensure that it maintains its "mutual fund trust" status under the Tax Act. Absent such exception, the high percentage of Trust Unit ownership by non-residents of Canada (approximately 73% in February 2006) may cause the Fund to be considered to be "established or maintained primarily for the benefit of non-residents of Canada", and as a result the Fund would lose its mutual fund trust status. See "Risk Factors  - Risks Related to Enerplus' Structure and the Ownership of the Trust Units".
 
S&P/TSX Index Inclusion
 
The increased presence and importance of the income trust sector in Canadian financial markets, together with the removal of the legislative uncertainty regarding unitholder limited liability in certain provinces described above under "--  Unitholder Limited Liability Legislation", led Standard and Poor's to include income trusts, including Enerplus, in the S&P/TSX Composite Index. Income trusts were given one-half of their respective weightings in the S&P/TSX Composite Index in December 2005 with the remaining one-half weighting to occur in mid-March 2006.

5

 
OIL AND NATURAL GAS RESERVES
 
Overview
 
All of Enerplus' reserves, including its U.S. reserves, have been evaluated in accordance with NI 51-101. Sproule Associates Limited, a firm of independent petroleum engineers based in Calgary, Alberta, has evaluated properties which comprise approximately 89% of the net present value (discounted at 10%, using forecast prices and costs) of Enerplus' Proved plus Probable Canadian conventional oil and natural gas reserves. Enerplus has evaluated the balance of the Canadian conventional properties using similar evaluation parameters, including the same forecast price, inflation and exchange rates assumptions utilized by Sproule. Sproule has reviewed Enerplus' evaluation of these properties.
 
DeGolyer and MacNaughton, independent petroleum consultants based in Dallas, Texas, has evaluated all of Enerplus' conventional oil and natural gas reserves located in the United States. For internal consistency in Enerplus' reserves reporting, D&M has used Sproule's forecast prices, inflation and exchange rates.
 
GLJ Petroleum Consultants Ltd., a private independent petroleum consulting firm based in Calgary, Alberta, has evaluated all of Enerplus' interests in the SAGD-recoverable bitumen reserves of the Joslyn Project, again using the same forecast price, inflation and exchange rates assumptions utilized by Sproule.
 
Enerplus follows the Canadian practice of reporting company interest and gross production and reserve volumes, which are presented prior to the deduction of royalties and similar payments, as well as net production and reserve volumes. In the United States, production and reserve volumes are reported on a net basis, after deducting these amounts. The Canadian practice of using forecast prices and costs when estimating the quantities of reserves is also followed by Enerplus. In the United States, reserve estimates are calculated using prices and costs held constant at amounts in effect at the date of the reserve report. Enerplus also follows the Canadian practice of reporting the aggregate of Proved plus Probable reserves portion. As a consequence, Enerplus' production volumes and reserve estimates may not be comparable to those made by companies utilizing United States disclosure standards.
 
The following tables summarize, as at December 31, 2005, Enerplus' oil, NGLs and natural gas reserves and the estimated net present values of future net cash revenues associated with such reserves, together with certain information, estimates and assumptions associated with such reserve estimates. The data contained in the tables is a summary of the evaluations, and as a result the tables may contain slightly different numbers than the evaluations themselves due to rounding. Additionally, the numbers in the tables may not add due to rounding.
 
All future net revenues are stated prior to provision for interest and general and administrative expenses and after deduction of royalties and estimated future capital expenditures, and both before and after income taxes. The future net revenues have been prepared on the basis that no cash income taxes will be paid by Enerplus in the future in Canada. Enerplus' U.S. operations are subject to cash income taxes, and as a result Enerplus' U.S. reserves are shown net of the taxes Enerplus estimates will be payable after taking into account inter-company debt within Enerplus' structure. See "Operational Information  - Tax Horizon". The estimated net present value of future net revenue does not include the Alberta Royalty Tax Credit. With respect to pricing information in the following reserves information, the wellhead oil prices were adjusted for quality and transportation based on historical actual prices. The natural gas prices were adjusted, where necessary, based on historical pricing based on heating values and the differing costs of service applied by various purchasers. The natural gas liquids prices were adjusted to reflect historical average prices received.
 
It should not be assumed that the present worth of estimated future cash flows shown below is representative of the fair market value of the reserves. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of Enerplus' crude oil, NGLs and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein. Readers should review the definitions and information contained in "Presentation of Enerplus' Oil and Gas Reserves and Production Information" in conjunction with the following tables and notes.

6


Summary of Aggregate Enerplus Reserves
 
The following tables summarize the aggregate company interest reserves volumes and net present value of future net revenue contained in the Sproule Report relating to Enerplus' Canadian conventional crude oil and natural gas reserves, the D&M Report relating to Enerplus' U.S. conventional crude oil and natural gas reserves and the GLJ Report relating to Enerplus' interest in the SAGD-recoverable bitumen reserves of the Joslyn Project, all based on Sproule's forecast price and cost assumptions. Detailed separate summaries of the Sproule Report, the D&M Report and the GLJ Report, including certain assumptions incorporated into those reports, and presentation of Enerplus' oil and gas reserves in accordance with NI 51-101 are contained in the tables following the summary report below.
 
Summary of Aggregate Oil and Gas Reserves
As of December 31, 2005
 
Company Interest Reserves,
Forecast Prices and Costs

   
OIL AND NATURAL GAS RESERVES
 
RESERVES CATEGORY
 
Light &
Medium Oil
 
Heavy
Oil
 
 
Bitumen
 
 
Total Oil
 
Natural Gas Liquids
 
 
Natural Gas
 
 
Total
 
   
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mmcf)
 
(MBOE)
 
Proved Developed Producing
                                           
    Canada
   
69,768
   
30,583
   
-
   
100,351
   
11,644
   
771,428
   
240,566
 
    United States
   
15,773
   
-
   
-
   
15,773
   
-
   
8,794
   
17,239
 
    Total
   
85,541
   
30,583
   
-
   
116,124
   
11,644
   
780,222
   
257,805
 
                                             
Proved Developed Non-Producing
                                           
    Canada
   
163
   
-
   
-
   
163
   
475
   
19,468
   
3,884
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
163
   
-
   
-
   
163
   
475
   
19,468
   
3,884
 
                                             
Proved Undeveloped
                                           
    Canada
   
3,318
   
2,318
   
9,453
   
15,089
   
965
   
161,728
   
43,008
 
    United States
   
7,822
   
-
   
-
   
7,822
   
-
   
4,358
   
8,548
 
    Total
   
11,140
   
2,318
   
9,453
   
22,911
   
965
   
166,086
   
51,556
 
                                             
Total Proved
                                           
    Canada
   
73,249
   
32,901
   
9,453
   
115,603
   
13,084
   
952,624
   
287,458
 
    United States
   
23,595
   
-
   
-
   
23,595
   
-
   
13,152
   
25,787
 
    Total
   
96,844
   
32,901
   
9,453
   
139,198
   
13,084
   
965,776
   
313,245
 
                                             
Probable
                                           
    Canada
   
17,498
   
8,495
   
43,700
   
69,693
   
3,539
   
309,572
   
124,827
 
    United States
   
5,574
   
-
   
-
   
5,574
   
-
   
32,946
   
11,065
 
    Total
   
23,072
   
8,495
   
43,700
   
75,267
   
3,539
   
342,518
   
135,892
 
                                             
Total Proved plus Probable
                                           
    Canada
   
90,747
   
41,396
   
53,153
   
185,296
   
16,623
   
1,262,196
   
412,285
 
    United States
   
29,169
   
-
   
-
   
29,169
   
-
   
46,098
   
36,852
 
    Total
   
119,916
   
41,396
   
53,153
   
214,465
   
16,623
   
1,308,294
   
449,137
 


7


 
Summary of Aggregate Net Present Value
of Future Net Revenue Attributable to Oil and Gas Reserves
As of December 31, 2005
 
Company Interest Reserves,
Forecast Prices and Costs

   
NET PRESENT VALUE OF FUTURE NET REVENUE DISCOUNTED AT (%/YEAR)
 
   
Before Deducting Income Taxes
 
After Deducting Income Taxes
 
RESERVES CATEGORY
 
0%
 
5%
 
10%
 
15%
 
20%
 
0%
 
5%
 
10%
 
15%
 
20%
 
   
(in $ millions)
 
CONVENTIONAL OIL AND GAS RESERVES
                                                             
Proved Developed Producing
                                                             
    Canada
   
6,991
   
4,800
   
3,789
   
3,199
   
2,807
   
6,991
   
4,800
   
3,789
   
3,199
   
2,807
 
    United States
   
745
   
605
   
510
   
442
   
391
   
620
   
500
   
419
   
360
   
316
 
    Total
   
7,736
   
5,405
   
4,299
   
3,641
   
3,198
   
7,611
   
5,300
   
4,208
   
3,559
   
3,123
 
                                                               
Proved Developed Non-Producing
                                                             
    Canada
   
107
   
81
   
65
   
57
   
48
   
107
   
81
   
65
   
57
   
48
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
107
   
81
   
65
   
57
   
48
   
107
   
81
   
65
   
57
   
48
 
                                                               
Proved Undeveloped
                                                             
    Canada
   
687
   
501
   
380
   
296
   
236
   
687
   
501
   
380
   
296
   
236
 
    United States
   
299
   
225
   
175
   
140
   
114
   
180
   
133
   
102
   
82
   
67
 
    Total
   
986
   
726
   
555
   
436
   
350
   
867
   
634
   
482
   
378
   
303
 
                                                               
Total Proved
                                                             
    Canada
   
7,785
   
5,382
   
4,234
   
3,552
   
3,091
   
7,785
   
5,382
   
4,234
   
3,552
   
3,091
 
    United States
   
1,044
   
830
   
685
   
582
   
505
   
800
   
633
   
521
   
442
   
383
 
    Total Proved Conventional Reserves
   
8,829
   
6,212
   
4,919
   
4,134
   
3,596
   
8,585
   
6,015
   
4,755
   
3,994
   
3,474
 
                                                               
Probable
                                                             
    Canada
   
2,376
   
1,121
   
695
   
495
   
384
   
2,376
   
1,121
   
695
   
495
   
384
 
    United States
   
453
   
257
   
162
   
111
   
80
   
308
   
174
   
108
   
72
   
51
 
    Total Probable Conventional Reserves
   
2,829
   
1,378
   
857
   
606
   
464
   
2,684
   
1,295
   
803
   
567
   
435
 
    Total Proved Plus Probable Conventional Reserves
   
11,658
   
7,590
   
5,776
   
4,740
   
4,060
   
11,269
   
7,310
   
5,558
   
4,561
   
3,909
 
                                                               
BITUMEN RESERVES
                                                             
    Proved Undeveloped
   
38
   
19
   
9
   
3
   
-
   
38
   
19
   
9
   
3
   
-
 
    Probable
   
299
   
88
   
27
   
6
   
(4
)
 
299
   
88
   
27
   
6
   
(4
)
    Total Proved Plus Probable Bitumen Reserves
   
337
   
107
   
36
   
9
   
(4
)
 
337
   
107
   
36
   
9
   
(4
)
TOTAL CONVENTIONAL AND BITUMEN RESERVES
   
11,995
   
7,697
   
5,812
   
4,749
   
4,056
   
11,606
   
7,417
   
5,594
   
4,570
   
3,905
 


8

 
Summary of Conventional Oil and Natural Gas Reserves
 
The following tables and notes summarize the reserves volumes and net present value of future net revenue attributable to Enerplus' conventional oil and gas reserves, including certain assumptions relating to the determination of those reserves and values. All information relating to Canadian conventional reserves is contained in the Sproule Report and all information relating to United States conventional reserves is contained in the D&M Report.
 
Summary of Conventional Oil and Gas Reserves
As of December 31, 2005
 
Forecast Prices and Costs

   
OIL AND NATURAL GAS RESERVES
 
   
LIGHT AND MEDIUM OIL
 
HEAVY OIL
 
NATURAL GAS
 
RESERVES CATEGORY
 
Company Interest
 
Gross
 
Net
 
Company Interest
 
Gross
 
Net
 
Company Interest
 
Gross
 
Net
 
   
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mmcf)
 
(Mmcf)
 
(Mmcf)
 
Proved Developed Producing
                                                       
    Canada
   
69,768
   
69,076
   
63,384
   
30,583
   
30,556
   
27,399
   
771,428
   
746,984
   
618,640
 
    United States
   
15,773
   
15,773
   
13,261
   
-
   
-
   
-
   
8,794
   
8,794
   
7,393
 
    Total
   
85,541
   
84,849
   
76,645
   
30,583
   
30,556
   
27,399
   
780,222
   
755,778
   
626,033
 
                                                         
Proved Developed Non-Producing
                                                       
    Canada
   
163
   
164
   
142
   
-
   
-
   
-
   
19,468
   
19,258
   
15,466
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
163
   
164
   
142
                     
19,468
   
19,258
   
15,466
 
                                                         
Proved Undeveloped
                                                       
    Canada
   
3,318
   
3,281
   
2,901
   
2,318
   
2,318
   
1,966
   
161,728
   
156,197
   
132,094
 
    United States
   
7,822
   
7,822
   
6,554
   
-
   
-
   
-
   
4,358
   
4,358
   
3,651
 
    Total
   
11,140
   
11,103
   
9,455
   
2,318
   
2,318
   
1,966
   
166,086
   
160,555
   
135,745
 
                                                         
Total Proved Reserves
                                                       
    Canada
   
73,249
   
72,521
   
66,427
   
32,901
   
32,874
   
29,365
   
952,624
   
922,439
   
766,200
 
    United States
   
23,595
   
23,595
   
19,815
   
-
   
-
   
-
   
13,152
   
13,152
   
11,044
 
    Total
   
96,844
   
96,116
   
86,242
   
32,901
   
32,874
   
29,365
   
965,776
   
935,591
   
777,244
 
                                                         
Probable Reserves
                                                       
    Canada
   
17,498
   
17,272
   
14,967
   
8,495
   
8,487
   
6,131
   
309,572
   
301,586
   
252,478
 
    United States
   
5,574
   
5,574
   
4,673
   
-
   
-
   
-
   
32,946
   
32,946
   
27,655
 
    Total
   
23,072
   
22,846
   
19,640
   
8,495
   
8,487
   
6,131
   
342,518
   
334,532
   
280,133
 
                                                         
Total Proved Plus Probable Reserves
                                                       
    Canada
   
90,747
   
89,793
   
81,394
   
41,396
   
41,361
   
35,496
   
1,262,196
   
1,224,025
   
1,018,678
 
    United States
   
29,169
   
29,169
   
24,488
   
-
   
-
   
-
   
46,098
   
46,098
   
38,699
 
    Total
   
119,916
   
118,962
   
105,882
   
41,396
   
41,361
   
35,496
   
1,308,294
   
1,270,123
   
1,057,377
 

(continues on next page)

9


 

(continued)

   
OIL AND NATURAL GAS RESERVES
 
   
NATURAL GAS LIQUIDS
 
TOTAL
 
RESERVES CATEGORY
 
Company
Interest
 
Gross
 
Net
 
Company
Interest
 
Gross
 
Net
 
   
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(MBOE)
 
(MBOE)
 
(MBOE)
 
Proved Developed Producing
                                     
    Canada
   
11,644
   
11,465
   
8,095
   
240,566
   
235,595
   
201,985
 
    United States
   
-
   
-
   
-
   
17,239
   
17,239
   
14,493
 
    Total
   
11,644
   
11,465
   
8,095
   
257,805
   
252,834
   
216,478
 
                                       
Proved Developed Non-Producing
                                     
    Canada
   
475
   
473
   
331
   
3,884
   
3,846
   
3,050
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
475
   
473
   
331
   
3,884
   
3,846
   
3,050
 
                                       
Proved Undeveloped
                                     
    Canada
   
965
   
963
   
681
   
33,555
   
32,595
   
27,564
 
    United States
   
-
   
-
   
-
   
8,548
   
8,548
   
7,163
 
    Total
   
965
   
963
   
681
   
42,103
   
41,143
   
34,727
 
                                       
Total Proved Reserves
                                     
    Canada
   
13,084
   
12,901
   
9,107
   
278,005
   
272,036
   
232,599
 
    United States
   
-
   
-
   
-
   
25,787
   
25,787
   
21,656
 
    Total
   
13,084
   
12,901
   
9,107
   
303,792
   
297,823
   
254,255
 
                                       
Probable Reserves
                                     
    Canada
   
3,539
   
3,480
   
2,470
   
81,127
   
79,503
   
65,648
 
    United States
   
-
   
-
   
-
   
11,065
   
11,065
   
9,282
 
    Total
   
3,539
   
3,480
   
2,470
   
92,192
   
90,568
   
74,930
 
                                       
Total Proved Plus Probable Reserves
                                     
    Canada
   
16,623
   
16,381
   
11,577
   
359,132
   
351,539
   
298,247
 
    United States
   
-
   
-
   
-
   
36,852
   
36,852
   
30,938
 
    Total
   
16,623
   
16,381
   
11,577
   
395,984
   
388,391
   
329,185
 


10

 
Summary of Net Present Value of Future Net Revenue
Attributable to Conventional Oil and Gas Reserves
As of December 31, 2005
 
Forecast Prices and Costs

   
NET PRESENT VALUE OF FUTURE NET REVENUE DISCOUNTED AT (%/YEAR)
 
   
Before Deducting Income Taxes
 
After Deducting Income Taxes
 
RESERVES CATEGORY
 
0%
 
5%
 
10%
 
15%
 
20%
 
0%
 
5%
 
10%
 
15%
 
20%
 
   
(in $ millions)
 
Proved Developed Producing
                                                             
    Canada
   
6,991
   
4,800
   
3,789
   
3,199
   
2,807
   
6,991
   
4,800
   
3,789
   
3,199
   
2,807
 
    United States
   
745
   
605
   
510
   
442
   
391
   
620
   
500
   
419
   
360
   
316
 
    Total
   
7,736
   
5,405
   
4,299
   
3,641
   
3,198
   
7,611
   
5,300
   
4,208
   
3,559
   
3,123
 
                                                               
Proved Developed Non-Producing
                                                             
    Canada
   
107
   
81
   
65
   
57
   
48
   
107
   
81
   
65
   
57
   
48
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
107
   
81
   
65
   
57
   
48
   
107
   
81
   
65
   
57
   
48
 
                                                               
Proved Undeveloped
                                                             
    Canada
   
687
   
501
   
380
   
296
   
236
   
687
   
501
   
380
   
296
   
236
 
    United States
   
299
   
225
   
175
   
140
   
114
   
180
   
133
   
102
   
82
   
67
 
    Total
   
986
   
726
   
555
   
436
   
350
   
867
   
634
   
482
   
378
   
303
 
                                                               
Total Proved
                                                             
    Canada
   
7,785
   
5,382
   
4,234
   
3,552
   
3,091
   
7,785
   
5,382
   
4,234
   
3,552
   
3,091
 
    United States
   
1,044
   
830
   
685
   
582
   
505
   
800
   
633
   
521
   
442
   
383
 
    Total
   
8,829
   
6,212
   
4,919
   
4,134
   
3,596
   
8,585
   
6,015
   
4,755
   
3,994
   
3,474
 
                                                               
Probable
                                                             
    Canada
   
2,376
   
1,121
   
695
   
495
   
384
   
2,376
   
1,121
   
695
   
495
   
384
 
    United States
   
453
   
257
   
162
   
111
   
80
   
308
   
174
   
108
   
72
   
51
 
    Total
   
2,829
   
1,378
   
857
   
606
   
464
   
2,684
   
1,295
   
803
   
567
   
435
 
                                                               
Total Proved plus Probable
                                                             
    Canada
   
10,161
   
6,503
   
4,929
   
4,047
   
3,475
   
10,161
   
6,503
   
4,929
   
4,047
   
3,475
 
    United States
   
1,497
   
1,087
   
847
   
693
   
585
   
1,108
   
807
   
629
   
514
   
434
 
    Total
   
11,658
   
7,590
   
5,776
   
4,740
   
4,060
   
11,269
   
7,310
   
5,558
   
4,561
   
3,909
 


11


 
Summary of Conventional Oil and Gas Reserves
As of December 31, 2005
 
Constant Prices and Costs

   
OIL AND NATURAL GAS RESERVES
 
   
LIGHT AND MEDIUM OIL
 
HEAVY OIL
 
NATURAL GAS
 
RESERVES CATEGORY
 
Company Interest
 
Gross
 
Net
 
Company Interest
 
Gross
 
Net
 
Company Interest
 
Gross
 
Net
 
   
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mbbls)
 
(Mmcf)
 
(Mmcf)
 
(Mmcf)
 
Proved Developed Producing
                                                       
    Canada
   
71,318
   
70,626
   
64,862
   
30,634
   
30,608
   
27,452
   
794,051
   
769,331
   
637,078
 
    United States
   
15,883
   
15,883
   
13,354
   
-
   
-
   
-
   
8,852
   
8,852
   
7,442
 
    Total
   
87,201
   
86,509
   
78,216
   
30,634
   
30,608
   
27,452
   
802,903
   
778,183
   
644,520
 
                                                         
Proved Developed Non-Producing
                                                       
    Canada
   
169
   
168
   
146
   
-
   
-
   
-
   
19,772
   
19,562
   
15,747
 
    United States
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
    Total
   
169
   
168
   
146
   
-
   
-
   
-
   
19,772
   
19,562
   
15,747
 
                                                         
Proved Undeveloped
                                                       
    Canada
   
3,355
   
3,319
   
2,935
   
2,364
   
2,363
   
2,004
   
164,320
   
158,738
   
133,899
 
    United States
   
7,858
   
7,858
   
6,583
   
-
   
-
   
-
   
4,378
   
4,378
   
3,667
 
    Total
   
11,213
   
11,177
   
9,518
   
2,364
   
2,363
   
2,004
   
168,698
   
163,116
   
137,566
 
                                                         
Total Proved Reserves
                                                       
    Canada
   
74,842
   
74,113
   
67,943
   
32,998
   
32,971
   
29,456
   
978,143
   
947,631
   
786,724
 
    United States
   
23,741
   
23,741
   
19,937
   
-
   
-
   
-
   
13,230
   
13,230
   
11,109
 
    Total
   
98,583
   
97,854
   
87,880
   
32,998
   
32,971
   
29,456
   
991,373
   
960,861
   
797,833
 
                                                         
Probable Reserves
                                                       
    Canada
   
17,649
   
17,422
   
15,111
   
8,570
   
8,562
   
6,197
   
316,239
   
308,162
   
257,853
 
    United States
   
5,501
   
5,501
   
4,613
   
-
   
-
   
-
   
33,042
   
33,042