CNE China Everbright Environment Group Limited

CALGARY, May 9 /PRNewswire-FirstCall/ -- (CNE.UN - TSX; CNE - NYSE) - Canetic Resources Trust ("Canetic" or the "Trust" or "we") is pleased to announce its operating and financial results for the three months ending March 31, 2007. "The first quarter of 2007 marked another quarter of consistent production and operating results for Canetic," noted Paul Charron, President and Chief Executive Officer of Canetic. "We remain focused on executing our capital program and leveraging the extensive inventory of development opportunities available within our sizeable asset portfolio. We exited the first quarter ahead of forecast and remain encouraged by the strong results of our capital program to date." HIGHLIGHTS OF THE FIRST QUARTER INCLUDE: - Canetic posted the second consecutive quarter of average daily production in excess of 80,000 barrels of oil equivalent ("boe") per day, exiting the quarter ahead of forecast due to strong production additions from drilling activity during the fourth quarter of 2006 and positive results from optimization and drilling activity during the first quarter of 2007. Daily production for the quarter averaged 80,027 boe per day, 10 percent higher than the 72,737 boe per day produced in the first quarter of 2006 and essentially unchanged from the average of 80,276 boe per day produced during the fourth quarter of 2006. Canetic currently estimates that at the end of the first quarter approximately 2,500 boe per day of production remains to be tied in. It is expected that these volumes will be brought on stream throughout the remainder of the year. - Canetic completed the largest first quarter operated development program in its history, drilling 45 gross (41.1 net) operated wells with a success rate of 98 percent. Including non-operated activity, Canetic participated in the drilling of 97 gross (58.7 net) wells incurring net development expenditures of $148.1 million. - Funds flow from operations for the first quarter of 2007 totalled $190.4 million ($0.83 per diluted unit), an increase of 12 percent from $170.1 million ($0.75 per diluted unit) in the fourth quarter of 2006 and essentially unchanged from $194.7 million ($0.96 per diluted unit) in the first quarter of 2006. - Distributions declared during the quarter totalled $129.2 million ($0.57 per unit) resulting in a payout ratio of approximately 68 percent, in line with our target payout ratio of 60 to 70 percent. - Subsequent to quarter end, Canetic disposed of certain miscellaneous producing assets in northeast Alberta with approximately 1,000 boe per day of associated production for total proceeds of $46.1 million. The transaction closed April 30, 2007. All unitholders and interested parties are invited to attend our Annual Meeting on May 9, 2007 at 3:00 p.m. local time at the Hyatt Regency Hotel, 700 Centre Street S.E., Calgary, Alberta. FINANCIAL AND OPERATING SUMMARY Three Months Ended March 31 ------------------------------------------------------------------------- ($millions except per share amounts) 2007 2006(1) change ------------------------------------------------------------------------- FINANCIAL Gross revenue 366.2 350.3 5% Funds flow from operations(2) 190.4 194.7 -2% Per unit - basic 0.84 0.97 -13% Per unit - diluted 0.83 0.96 -14% Net earnings (loss) (6.9) 59.2 -112% Per unit - basic (0.03) 0.29 -110% Per unit - diluted (0.03) 0.29 -110% Cash distributions declared 129.2 138.6 -7% Per unit 0.570 0.690 -17% Payout ratio(2) 68% 71% -4% ------------------------------------------------------------------------- Capital expenditures Net development expenditures 148.1 67.0 121% Net capital expenditures 152.0 2,582.6 -94% Total assets 5,784.5 4,937.4 17% Long-term debt 1,348.7 838.1 61% Net debt (excluding financial derivatives)(2) 1,397.0 828.0 69% Unitholders' equity 3,387.4 3,282.2 3% ------------------------------------------------------------------------- Weighted average trust units outstanding (000s)(1) 226,466 200,705 13% Trust units outstanding at period end (000s)(1) 226,938 201,182 13% ------------------------------------------------------------------------- OPERATING Production(2) Natural gas (mmcf/d) 220.1 176.1 25% Crude oil (bbl/d) 36,421 37,625 -3% Natural gas liquids (bbl/d) 6,916 5,763 20% Crude oil and NGLs (bbl/d) 43,337 43,388 - Barrel of oil equivalent (boe/d) @ 6:1 80,027 72,737 10% ------------------------------------------------------------------------- Average prices(2) Natural gas ($/mcf) 7.65 8.94 -14% Natural gas ($/mcf) (including financial instruments) 7.88 9.13 -14% Crude oil ($/bbl) 57.23 54.33 5% Crude oil ($/bbl) (including financial instruments) 56.95 51.08 11% Natural gas liquids ($/bbl) 43.12 46.86 -8% ------------------------------------------------------------------------- Total ($/boe) 50.85 53.52 -5% Total ($/boe) (including financial instruments) 51.36 52.22 -2% ------------------------------------------------------------------------- Drilling activity (gross) Natural gas 46 62 - Oil 45 37 - Other 2 2 - Dry and abandoned 4 2 - ------------------------------------------------------------------------- Total gross wells 97 103 - ------------------------------------------------------------------------- Total net wells 58.7 53.4 - ------------------------------------------------------------------------- Success rate (%) 96% 98% - ------------------------------------------------------------------------- (1) The merger of Acclaim Energy Trust ("Acclaim") and StarPoint Energy Trust ("StarPoint") has been accounted for as a purchase of StarPoint by Acclaim. Accordingly, the financial and operating results of StarPoint have been included from the date of acquisition, January 5, 2006. All disclosures of units and per unit amounts of Acclaim up to the merger on January 5, 2006 have been restated using the exchange ratio of 0.8333 of a Canetic unit for each Acclaim unit. (2) Please refer to the Advisory section regarding forward-looking statements of this news release for definitions of Non-GAAP terms and frequently recurring terms and abbreviations. The payout ratio is calculated as cash distributions divided by funds flow from operations. PRESIDENT'S MESSAGE The first quarter of 2007 marked another solid quarter for Canetic. We continue to focus on the exploitation of our large asset base and the extensive development opportunities it provides. The first quarter of 2007 represented the most significant quarterly operated program in our history. During the quarter Canetic participated in the drilling of 97 gross wells and incurred $148.1 million in development expenditures. Production additions from recent drilling and development activity largely mitigated natural production declines with an estimated 2,500 boe per day awaiting tie in at the end of the first quarter. Although we have not seen a significant decrease to date, we remain optimistic that service sector costs will continue to come down throughout the remainder of the year and that our already strong capital efficiencies will continue to improve. For the remainder of the year, Canetic will remain focused on executing an effective capital program and meeting targeted operational and cost efficiency metrics essential to being a top performer. We are pleased with the outcome of our efforts to date and remain solidly on track to deliver consistent and predictable results in future quarters. FINANCIAL AND OPERATING RESULTS Production volumes averaged 80,027 boe per day for the three months ended March 31, 2007, compared to 72,737 boe per day for the same period in 2006. The 10 percent increase in average production results from the Samson acquisition which closed on August 31, 2006. Relative to the fourth quarter of 2006, production volumes were essentially unchanged due to production additions from our capital programs in the fourth quarter of 2006 and first quarter 2007. Canetic's gross revenue increased five percent for the first quarter of 2007 to $366.2 million from $350.3 million for the same period in 2006. The increase is due to incremental production volumes associated with the Samson acquisition and our capital program, partly offset by lower combined realized commodity prices during the quarter. Funds flow from operations totalled $190.4 million or $0.83 per diluted unit for the three months ended March 31, 2007, representing a 12 percent increase from $170.1 million, or $0.75 per diluted unit during the fourth quarter of 2006. In comparison to the same period in 2006, funds flow from operations decreased two percent from $194.7 million or $0.96 per diluted unit. We expect that funds flow from operations, together with borrowings under our credit facility and proceeds from property dispositions will be sufficient to finance our operations and planned capital activity. Although our debt levels may fluctuate from quarter to quarter based on our capital program, it is our intent to exit 2007 at levels similar to 2006. Canetic recorded a net loss of $6.9 million or ($0.03) per diluted unit for the first quarter of 2007. For the same period in 2006, Canetic recorded net earnings of $59.2 million or $0.29 per diluted unit. The decrease in net earnings is primarily due to accounting for unrealized gains and losses on financial derivatives. Net earnings in the most recent quarter reflects a $45.4 million unrealized hedging loss based on the mark-to-market price of crude oil and natural gas at March 31, 2007. The price of West Texas Intermediate crude averaged US$58.27/bbl during the first quarter of 2007, down eight percent from the average price of US$63.53/bbl for the same period in 2006 and three percent from an average of US$60.22 per bbl in the fourth quarter of 2006. For the three months ended March 31, 2007, we received an average oil price of $57.23/bbl as compared to $54.33/bbl for the comparable period in 2006. Our average oil price during the quarter increased eight percent from an average of $53.23/bbl reported during the fourth quarter of 2006. Our average natural gas price was $7.65/mcf for the three months ended March 31, 2007 as compared to $8.94/mcf during the same period in 2006. The fourth quarter 2006 natural gas price averaged $6.90/mcf. The AECO Daily Index gas price averaged $7.39/mcf during the quarter, down 2 percent from the average price of $7.52/mcf for the same period in 2006. Canetic's first quarter operating costs, net of processing fees and unit-based compensation, increased to $68.8 million in 2007 compared to $55.6 million during the same period in 2006. On a unit-of-production basis, operating costs averaged $9.55 per boe compared to $8.49 per boe a year earlier, an increase of 12 percent. During the fourth quarter of 2006, operating costs before unit-based compensation totalled $71.4 million or $9.67 per boe. In general, the industry has been impacted by higher field service costs including higher energy and fuel costs, labour, trucking and other related mechanical services. Canetic's operating netback for the first quarter of 2007 was $31.04 per boe, a nine percent decrease from $34.10 per boe in the first quarter of 2006. Canetic's netback was impacted by a 14 percent decrease in the average realized price of natural gas on a year-over-year basis. REVIEW OF OPERATIONS The first quarter of 2007 was marked by the largest and most aggressive first quarter operated drilling and optimization program in the Trust's history. During the quarter Canetic drilled 45 gross operated (41.1 net) wells, comprised of 31 gross (28.8 net) oil wells, 13 gross (11.3 net) gas wells and one D&A well. In addition, we participated in the drilling of an additional 14 gross (2.6 net) oil wells and 33 gross (14.0 net) gas wells operated by third parties, including 15 gross (11.6 net) coalbed methane wells. Highlights of the first quarter capital program include: - Continuation of our successful infill drilling, re-completion and optimization program in Acheson including completion of a 10 well drilling program, targeting primarily Detrital oil, with better than anticipated results. The majority of related production was on-stream by early April. The success of this program has led to identification of new prospects to be included in follow-up drilling programs. - Canetic commissioned its new 20 million cubic feet ("mmcf") per day gas plant at Willesden Green late in the first quarter. Wells on production in the new plant include a six well program from the first quarter in addition to Nordegg and Rock Creek wells that were drilled late in the fourth quarter of 2006 and completed in the new year. We plan to continue development in the Willesden Green area through 2007 with a target to maintain the facility at capacity. - Completion of a successful three well program in the Hoadley area, including two oil wells and one gas well targeting the Glauconite formation. The gas well was the first well drilled by Canetic on the recently acquired Samson assets and has production tested at approximately 1.6 mmcf per day. Due to the success of this program, Canetic has elected to proceed with immediate development of additional prospects on these lands that will be drilled throughout the remainder of the year. - Conclusion of a successful drilling program at Clarke Lake targeting higher risk natural gas in the Slave Point formation. Given the success of the first well drilled in early February, Canetic elected to pursue drilling of an additional two well locations resulting in a total of two successful wells. Canetic anticipates initial production rates, on a combined basis, of 900 boe per day when related facilities and infrastructure are put in place at the end of the second quarter. Canetic expects these wells will provide stable, very low decline production rates with long-life reserves. As part of the larger Clarke Lake Slave Point pool that has produced over 1.8 trillion cubic feet of gas to date, these wells have significant potential for meaningful reserves capture. - An efficient seven well heavy oil program in the Lloydminster area. All wells were on production at the end of the quarter with an average of only eight days from rig release to production. The program targeted multi-zone horizons in the GP, Sparky and McLaren formations which resulted in stable initial production of 50 to 55 boe per day per well with additional up-hole opportunities in many of the wells. Canetic has identified an additional 10 to 15-well program which will be pursued in the latter part of 2007 or early in 2008. - Successful completion of Canetic's second horizontal well in the Tracy Mountain/Davis Creek area of North Dakota. Results of the well met expectations with initial rates of 200 boe per day and should result in low decline, long-life reserves capture. Canetic has identified further opportunities which will be pursued in coming months. CAPITAL EXPENDITURES In 2007, we have continued to increase our focus on exploiting our reserve base, drilling new wells and optimizing existing production. Capital expenditures for the quarter were as follows: Three Months Ended March 31 ------------------------------------------------------------------------- Capital Expenditures ($000s) 2007 2006 ------------------------------------------------------------------------- Land 1,759 2,782 Geological and geophysical 140 1,133 Drilling and completion 103,679 47,868 Production equipment and facilities 42,495 15,231 ------------------------------------------------------------------------- Net development expenditures 148,073 67,014 StarPoint acquisition - 2,511,746 Minor property acquisitions 919 - Minor property dispositions (2,957) - ------------------------------------------------------------------------- Net capital expenditures 146,035 2,578,760 Office 3,099 352 Asset retirement obligation change in estimate 1,270 925 Capitalized compensation 1,562 2,559 ------------------------------------------------------------------------- Total capital expenditures 151,966 2,582,596 ------------------------------------------------------------------------- COMMODITY PRICE RISK MANAGEMENT During the first quarter of 2007, Canetic recorded a realized financial derivative gain of $3.7 million as compared to a loss of $8.0 million for the same period in 2006. Commodity commitments have been put in place for 2007 and beyond as noted below: Commodity Contracts ------------------------------------------------------------------------- ------------------------------------------------------------------------- Natural Gas Q1 Summer Winter 2007 2007 2007-2008 (Apr 1 - (Nov 1 - Oct 31) Mar 31) ------------------------------------------------------------------------- Fixed Price Volume (Gj/d) 5,000 50,000 2,000 Fixed Price Average ($/Gj) $ 8.47 $ 7.32 $ 8.47 Collars Volume (Gj/d) 100,000 80,000 90,000 Collar Floors ($/Gj) $ 7.70 $ 6.74 $ 7.00 Collar Caps ($/Gj) $ 13.08 $ 9.62 $ 11.23 ------------------------------------------------------------------------- Total Volume Hedged (Gj/d) 105,000 130,000 92,000 ------------------------------------------------------------------------- Crude Oil 2007 2008 ------------------------------------------------------------------------- CDN Denominated Fixed Price Volumes 8,000 250 CDN Denominated Fixed Price Average $ 67.26 $ 72.20 U.S. Denominated Fixed Price Volume 1,500 - U.S. Denominated Fixed Price Average $ 48.11 - Collars Volume (bbl/d) 6,000 5,000 Collar Floors ($US/bbl) $ 58.00 $ 63.00 Collar Caps ($US/bbl) $ 80.76 $ 83.23 ------------------------------------------------------------------------- Total Volume Hedged (bbl/d) 15,500 5,250 ------------------------------------------------------------------------- UPDATE ON PROPOSED TAX LEGISLATION AFFECTING INCOME TRUSTS On October 31, 2006, the Federal Government announced a proposal to introduce a new tax on publicly traded income trusts beginning in 2011. Despite recommendations from the Standing Committee on Finance which sought to reduce the impact of this proposal, the Government has elected to proceed with this initiative in a form essentially unchanged from their original proposal. The 2007 federal budget was tabled in the House of Commons on March 19, 2007. Certain provisions of this budget, along with the tax proposal, have now been introduced as Bill C-52 into the House of Commons. The bill is currently at the second reading stage and is anticipated to move to the Standing Committee on Finance for review in the upcoming weeks. Should the legislation be enacted as currently proposed, the Trust will effectively become subject to tax in 2011 on earnings in excess of available tax pools ($1.8 billion as at December 31, 2006), in a similar manner as a corporation. Canetic continues to review our business and the potential alternatives available to the Trust in context of the proposed legislation, however, it remains premature at this time to determine what Canetic's course of action will be as 2011 approaches. We encourage unitholders to continue to voice their concerns to the Canadian Government in respect of this proposal. OUTLOOK During the first quarter, Canetic remained focused on the continued exploitation of our broad inventory of development opportunities while continuing to tie-in volumes related to our successful 2006 fourth quarter drilling program. We were able to achieve our objective of mitigating production declines during the quarter and believe the production volatility that resulted from the loss of Leduc D3a pool production at Acheson and start-up issues at Mitsue during 2006 are largely behind us. We are continuing our track record of strong results from our drilling and optimization programs and continue to add production, including volumes awaiting tie-in, in-line with our targeted efficiency rate of $22,000 to $24,000 per flowing boe. Although Canetic continues to experience increasing operating costs on a unit-of-production basis, we maintain our commitment to managing operational efficiencies and optimizing field netbacks in all areas where we do business. Our original estimate of $8.50 to $9.50 per boe operating costs for 2007 was negatively impacted by cold weather and associated repairs and maintenance during the first quarter of 2007. As we continue to experience higher field costs throughout our asset base reflecting the historically high levels of industry activity, considerable effort and focus is being given to operational efficiencies which will help to control operating costs on a unit-of-production basis. We currently estimate operating costs to average $9.00 to $10.00 per boe for the remainder of 2007. Despite the disposition, effective April 30, 2007, of approximately 1,000 boe per day of production, which was not originally included in our previous production guidance, we believe the strength of our development program will enable us to increase the lower end of our previous production guidance of 75,500 to 80,000 boe per day by 1,000 boe per day to reflect revised guidance of 76,500 to 80,000 boe per day for the full year 2007. Given current commodity prices, this production target should result in a payout ratio of 65 to 70 percent at current distribution levels of $0.19 per unit per month. The balance of funds flow from operations will be utilized to fund a significant portion of our 2007 capital expenditure program. Canetic currently expects that average production volumes for the second quarter of 2007 will decline by approximately two to three percent over the quarter as a result temporary production outages related to turnarounds and maintenance activities anticipated to be undertaken by Canetic and other third party operators of Canetic utilized facilities during the quarter. We remain excited about the future prospects of Canetic. Our continuing strategy has always been to build a significant asset base and a team of people that could generate long-term value for our unitholders. We believe that we have created an entity that is well positioned for the long-term, with significant asset depth and diversity, extensive development opportunities and a quality team of people to exploit those opportunities. Our current focus is to develop our assets and extract the promised value for our unitholders, however, we will continue to look for new and innovative ways to bring new value and opportunity to the portfolio and position our Trust to excel in today's continually changing environment. Canetic's complete first quarter 2007 unaudited Financial Statements and Notes and Management's Discussion and Analysis ("MD&A") are available on Canetic's website at http://www.canetictrust.com/ or on SEDAR at http://www.sedar.com/ or on EDGAR at http://www.edgar.com/. All references are to Canadian dollars unless otherwise indicated. Natural gas volumes recorded in thousand cubic feet ("mcf") are converted to barrels of oil equivalent ("boe") using the ratio of six (6) thousand cubic feet to one (1) barrel of oil ("bbl"). BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: one (1) bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead. ADVISORY Certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities laws. All statements other than statements of historical fact may be forward looking statements. Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "could", "should", "believe", "intend", "propose", "budget" and similar expressions are intended to identify forward-looking statements. These statements 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. We believe the expectations reflected in the forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements are not guarantees of future performance and should not be unduly relied upon. These statements speak only as of the date of this news release. In particular, this news release contains forward-looking statements pertaining, directly or indirectly, to the following: business strategies; production volumes; reserves volumes; operating and other costs and expenses; commodity prices; future cash distribution levels and taxability; payout ratios; capital spending including timing, allocation and amounts of capital expenditures and the sources of funding thereof; sources of funding operations and distributions; debt levels; estimates of cash flow and funds flow from operations; the timing for bringing wells on stream; and future tax treatment of income trusts such as the Trust and unitholders. The forward-looking statements contained in this news release are based on a number of expectations and assumptions that may prove to be incorrect. In addition to other assumptions identified in this news release, assumptions have been made regarding, among other things: that the Trust will continue to conduct its operations in a manner consistent with past operations; the continuance of existing (and in certain circumstances, proposed) tax and royalty regimes; the general continuance of current industry conditions; the accuracy of the estimates of the Trust's reserve volumes; the ability of Canetic to obtain equipment, services and supplies in a timely manner to carry out its activities; the ability of Canetic to market oil and natural gas successfully; the timely receipt of required regulatory approvals; the ability of Canetic to obtain financing on acceptable terms; currency, exchange and interest rates; future oil and gas prices and future cost assumptions. No assurance can be given that these factors, expectations and assumptions will prove to be correct. The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this news release: volatility in market prices for oil and natural gas; risks and liabilities inherent in oil and natural gas including operations, exploration, development, exploitation, production, marketing and transportation risks; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; geological, technical, drilling and processing problems; risks and uncertainties involving geology of oil and gas deposits; unanticipated operating results or production declines; fluctuations in foreign exchange, currency or interest rates and stock market volatility; changes in laws and regulations changes including but not limited to those pertaining to income tax, environmental and regulatory matters; failure to realize the anticipated benefits of acquisitions; health, safety and environmental risks; and the other factors described in Canetic's public filings from time to time (including under "Risk Management" in the MD&A dated May 9, 2007 and under "Risk Factors" in its Annual Information Form) available in Canada at http://www.sedar.com/ and in the United States at http://www.sec.gov/. Readers are cautioned that this list of risk factors should not be construed as exhaustive. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Canetic undertakes no obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities law. NON-GAAP MEASURES This news release refers to certain financial measures that are not determined in accordance with GAAP. These measures as presented do not have any standardized meaning prescribed by GAAP and therefore they may not be comparable with calculations of similar measures for other companies or trusts. Management uses funds flow from operations, which we define as net earnings plus non-cash items before deducting non-cash working capital and asset retirement costs incurred to analyze operating performance and leverage. Readers should refer to the "Funds Flow From Operations" section of the MD&A for a reconciliation of funds flow from operations. We use the term net debt, which we define as long-term debt and working capital, to analyze liquidity and capital resources. Readers should refer to the "Liquidity and Capital Resources" section of the MD&A for a reconciliation of net debt. We use the term payout ratio, which we define as cash distributions to unitholders divided by funds flow from operations, to analyze financial and operating performance. Readers should refer to the "Cash Distributions" section of the MD&A for the calculation of payout ratio. We use the terms operating and cash netbacks to analyze margin and cash flow on each boe of production. Operating and cash netbacks should not be viewed as an alternative to cash flow from operating activities, net earnings per trust unit or other measures of financial performance calculated in accordance with GAAP. Readers should refer to the "Netbacks" section of the MD&A for a reconciliation of operating and cash netbacks. We use the term total capitalization, which we define as net debt including convertible debentures plus unitholders' equity, to analyze leverage. Total capitalization is not intended to represent the total funds from equity and debt received by the Trust. Readers should refer to the "Liquidity and Capital Resources" section of the MD&A for a reconciliation of total capitalization. Management believes that, in conjunction with results presented in accordance with GAAP, these measures assist in providing a more complete understanding of certain aspects of the Trust's results of operations and financial performance. Investors are cautioned however, that these measures should not be construed as an alternative to measures determined in accordance with GAAP as an indication of our performance. ADDITIONAL INFORMATION Additional information regarding the Trust and its business operations, including the Trust's annual information form for the year ended December 31, 2006, is available on the Trust's SEDAR company profile at http://www.sedar.com/ or the EDGAR company profile at http://www.edgar.com/. Canetic is one of Canada's largest oil and gas royalty trusts. Canetic trust units and debentures are listed on the Toronto Stock Exchange under the symbols CNE.UN, CNE.DB.A, CNE.DB.B, CNE.DB.C, CNE.DB.D, and CNE.DB.E and the trust units are listed on the New York Stock Exchange under the symbol CNE. CONSOLIDATED BALANCE SHEETS March 31, December 31, ($CDN thousands) 2007 2006 ------------------------------------------------------------------------- (unaudited) ASSETS Current Assets Accounts receivable $ 251,405 $ 261,498 Prepaid expenses and deposits 30,189 34,647 Financial derivative asset 4,493 - ------------------------------------------------------------------------- 286,087 296,145 Property, plant and equipment, net of amortization 4,573,181 4,597,654 Goodwill 922,024 922,024 Deferred financing charges, net of amortization - 8,996 Financial derivative asset 3,161 6,157 ------------------------------------------------------------------------- Total assets $5,784,453 $5,830,976 ------------------------------------------------------------------------- LIABILITIES AND UNITHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 273,659 $ 260,206 Income taxes payable 11,632 10,979 Distributions payable 43,117 51,933 Convertible debentures 1,490 1,697 Financial derivative liability 42,236 1,124 ------------------------------------------------------------------------- 372,134 325,939 Bank debt 1,348,711 1,289,678 Convertible debentures, net of deferred transaction costs 250,403 258,959 Other long-term liabilities 4,846 7,272 Financial derivative liability 5,797 - Future income taxes 221,572 250,339 Asset retirement obligations 193,620 191,874 ------------------------------------------------------------------------- 2,397,083 2,324,061 Commitments and guarantees UNITHOLDERS' EQUITY Capital 4,240,983 4,224,470 Convertible debentures 6,584 6,584 Deficit (860,197) (724,139) ------------------------------------------------------------------------- 3,387,370 3,506,915 ------------------------------------------------------------------------- Total liabilities and unitholders' equity $5,784,453 $5,830,976 ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND DEFICIT Three Months Ended March 31 ------------------------------------------------------------------------- ($CDN thousands except per unit amounts) unaudited 2007 2006 ------------------------------------------------------------------------- REVENUE Petroleum and natural gas sales $ 366,209 $ 350,346 Royalty expense (66,783) (67,124) ------------------------------------------------------------------------- 299,426 283,222 ------------------------------------------------------------------------- EXPENSES Operating 69,052 56,611 Transportation 7,158 4,444 General and administrative 11,970 13,798 Interest on bank debt 15,889 9,186 Interest on convertible debentures 4,898 660 Depletion, depreciation and amortization 176,440 150,518 Accretion of asset retirement obligations 3,863 2,451 Loss on financial derivatives 41,705 3,095 ------------------------------------------------------------------------- 330,975 240,763 ------------------------------------------------------------------------- (Loss) earnings before taxes (31,549) 42,459 Current income taxes 1,888 12 Capital taxes 2,201 2,714 Future income tax recovery (28,768) (19,462) ------------------------------------------------------------------------- NET (LOSS) EARNINGS AND COMPREHENSIVE (LOSS) INCOME (6,870) 59,195 Deficit, beginning of period (724,139) (363,712) Distributions declared (129,188) (138,634) ------------------------------------------------------------------------- Deficit, end of period $ (860,197) $ (443,151) ------------------------------------------------------------------------- Net (loss) earnings per unit Basic $ (0.03) $ 0.29 Diluted $ (0.03) $ 0.29 Weighted average units outstanding Basic 226,466 200,705 Diluted 228,475 203,016 ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31 ------------------------------------------------------------------------- ($CDN thousands) unaudited 2007 2006 ------------------------------------------------------------------------- OPERATING ACTIVITIES Net (loss) earnings $ (6,870) $ 59,195 Adjustments for: Unit-based compensation (153) 6,973 Depletion, depreciation and amortization 176,440 150,518 Accretion of asset retirement obligations 3,863 2,451 Unrealized (gain) loss on financial derivatives 45,416 (4,934) Future income tax recovery (28,768) (19,462) Accretion of deferred transaction costs 440 - Asset retirement costs incurred (3,387) (3,456) Changes in non-cash operating working capital 4,488 (83,773) ------------------------------------------------------------------------- 191,469 107,512 ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from bank debt 59,033 90,548 Proceeds from issuance of units, net of issue costs - 4,339 Distributions to unitholders (117,886) (132,879) ------------------------------------------------------------------------- (58,853) (37,992) ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of petroleum and natural gas properties (919) - Disposition of petroleum and natural gas properties 2,957 - Capital expenditures (134,654) (69,520) ------------------------------------------------------------------------- (132,616) (69,520) ------------------------------------------------------------------------- Cash beginning and end of period $ - $ - ------------------------------------------------------------------------- The Trust paid the following cash amounts: Interest paid $ 22,730 $ 13,442 Capital taxes paid $ 7,402 $ 6,446 ------------------------------------------------------------------------- DATASOURCE: Canetic Resources Trust CONTACT: For further information or to receive a complete copy of Canetic's first quarter operating and financial results, including the MD&A and Financial Statements free of charge, please visit our website at http://www.canetictrust.com/ or contact Canetic investor relations by email at: or toll free telephone at 1-877-539-6300.

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