Paramount Energy Trust (PET) purchased 104 Bcf of proved and probable gas reserves and 48 MMcf/d of northeastern Alberta natural gas production for $290 million, boosting its own supply output by 40%. The deal is expected to close in May.

The properties are located in near Paramount’s northeast Alberta core areas but outside the defined bitumen producing boundaries as designated by the Alberta Energy and Utilities Boards. Paramount lost production under the AEUB’s decision to preserve futures production of bitumen by curbing gas development to retain underground pressures (see Daily GPI, Jan. 5).

Paramount said the new assets will be managed from its Athabasca field office. The Trust’s current daily production of 122 MMcf/d will increase to 170 MMcf/d and PET’s proved plus probable reserves will increase by 44% to 337 Bcf.

The company said the deal would result in an increase of 19% to its estimated cash flow per trust unit on a pro forma basis for the second half of 2005 and 24% for 2006. In addition, it is expected to be 21% accretive to current production per unit and 25% accretive to reserves per unit.

This transaction will reduce Paramount’s projected 2005 payout ratio to 75% of estimated cash flow which significantly enhances the sustainability of its current level of monthly distributions of $0.22 per trust unit.

“It is not often that we able to crystallize on an opportunity as synergistic with our existing operations and business plan as today’s major acquisition,” said COO Sue Riddell Rose.

The deal also includes 412,160 net acres of undeveloped land at an average 80% working interest, and working interests in 17 gas plants. Paramount said the average 2004 operating costs of the purchased operations were $0.85/Mcf, which is expected to enhance Paramount’s high field netbacks and reduce the trust’s overall operating costs per Mcf by 3%.

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