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Harvest Energy Trust to Acquire SE Saskatchewan Oil Properties

Jul 30, 2003 - 11:10 ET

CALGARY, ALBERTA--Harvest Energy Trust ("Harvest") today 
announced that its  wholly owned subsidiary, Harvest Operations 
Corp., has entered into an agreement to acquire producing oil 
properties located in Southeastern Saskatchewan. The adjusted 
purchase price at closing is expected to be approximately $105 
million and it is anticipated that the transaction will close on 
or before September 30, 2003.  

Southeastern Saskatchewan Property Highlights:  


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 - current production of approximately 6,000 BOE per day (favourable 
acquisition parameter of $17,500 per BOE per day based on estimated 
adjusted cash closing amount);

 - established reserves at January 1, 2003, as determined by McDaniel 
& Associates, of 18.1 million BOE (favourable acquisition parameter of 
$5.80 per BOE);

 - reserve life index of 7.7; 

 - light gravity crude oil averaging 33o API;

 - high quality, mature production from large, original-oil-in-place 
(approximately 850 million barrels in 24 major pools) supported by 
active natural water drive;

 - 95% of the acquired production is operated with an average working 
interest of 96%;

 - an inventory of property enhancement projects including infill 
drilling, fluid handling optimization opportunities and operating cost 
reduction projects;

 - included with these properties, Harvest will acquire the following 
complimentary assets:
     - approximately 12,500 kms. of 2D and 2,700 kms.2 of 3D seismic;
     - approximately 260,000 net acres of undeveloped land;
     - 10 central processing batteries, 24 satellites and 1 natural 
       gas processing facility;
     - oil price hedge / collar, locking in the price for 2,500 
       barrels per day of WTI sales within a range defined by:

          Q4 2003                Calendar 2004
          ------------------------------------
          Floor US$24.00              US$22.00
          Ceiling US$30.45            US$28.10

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Benefits to Unitholders: 

Harvest anticipates the Southeastern Saskatchewan property 
acquisition will  provide the following benefits to our 
Unitholders: 

 - increases Harvest's established reserve base to 35 MMBOE; 

 - increases Harvest's reserve life index to 5.7; 

 - increases the light/medium oil component of Harvest's 
production to 66%; 

 - provides an expanded base of production compatible with 
Harvest's proven operating competencies; 

 - adds a new core area for additional low cost growth in the 
form of property enhancement and consolidation of additional 
interests through acquisitions; 

 - accretive to 2004 cash flow; and 

 - greater cash flow certainty from a larger production and 
reserve base. 

Financing: 

The net acquisition price for the Southeastern Saskatchewan 
properties of approximately $105 million will be funded through a 
combination of bank debt, sale of a portion of Harvest's assets 
and interim financing. Although not required, Harvest may 
consider a future offering of trust units to repay the interim 
financing. National Bank Financial acted as the financial advisor 
on the transaction.  

Reserves Summary: 

An evaluation of 100% of the Southeastern Saskatchewan properties 
being acquired has been performed by McDaniel & Associates 
Consultants ("McDaniel"). The following table outlines McDaniel's 
estimate of the reserves to be acquired effective January 1, 
2003: 


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Southeastern Saskatchewan Properties                                  
Reserves Evaluation                                                   
                                                    
                                                                      
                              Oil    Gas     NGL       BOE     PVBT 10%
                             mbbl   mmcf    mbbl    mBOE(2)      ($000)
----------------------------------------------------------------------
Total All Properties(1)                                               
Proved Producing           16,107    425     161    16,343    $107,274
Total Proven               16,566    452     168    16,809    $108,684
Proved Plus Probable       19,043    515     194    19,323    $120,602
Established                17,805    484     181    18,066    $114,643
                                                                      
                                                                      
(1) Effective Dave: January 1, 2003.                                  
(2) Gas converted at 6:1.                                        

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Property Summary: 

The Southeastern Saskatchewan properties are comprised of seven 
major property areas. The majority of the properties are 
comprised of large operated oil pools produced into 
company-operated facilities. The majority of the drilling on 
operated properties has occurred during the 1990's, with 
subsequent modern facilities construction. In addition to the 
stable, predictable base of existing production, Harvest has 
identified 28 additional infill drilling locations and other 
production optimization / cost reduction opportunities. 

Second Quarter Update and 2003 Full Year Guidance:  

Property enhancement and acquisition activities were continued 
through the second quarter with production expected to be 
approximately 9,600 BOE/d, an increase of 17% from the first 
quarter of 2003 and operating expenses are expected to average 
$9.25 per BOE. Harvest's current production rate is approximately 
11,000 BOE/d. Current net debt is approximately $45 million, 
representing 1.1 times cash flow. 

Combining the incremental production from the Southeastern 
Saskatchewan properties for the period from October 1, 2003 to 
December 31, 2003 with Harvest's existing base of production, 
Harvest expects average production, average royalty rate and unit 
operating expenses to be: 


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                          Q4 2003 Average        Calendar 2003 Average
----------------------------------------------------------------------
Total Production             16,300 BOE/d                 11,000 BOE/d
----------------------------------------------------------------------
Average Royalty Rate                   18%                          14%
----------------------------------------------------------------------
Operating Expenses          $9.70 per BOE                $9.50 per BOE
----------------------------------------------------------------------

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Although the Southeastern Saskatchewan acquisition is accretive 
to cash flow per trust unit, Harvest currently forecasts that it 
will maintain its monthly distribution at $0.20 per trust unit. 
Additional cash flow derived from the Southeastern Saskatchewan 
acquisition will be used to fund Harvest's ongoing property 
enhancement program and acquisition strategy and to repay debt. 



Harvest Energy Trust is a Calgary based oil and natural gas trust 
that strives to deliver stable monthly cash distributions to its 
Unitholders through its strategy of acquiring, enhancing and 
producing crude oil, natural gas and natural gas liquids. 
Harvest's assets, comprised of high quality medium and heavy 
gravity crude oil properties in East Central Alberta, and its 
hands-on operating strategy underpin Harvest's objective to 
deliver superior economic returns to Unitholders.   

ADVISORY: Certain information regarding Harvest Energy Trust and 
Harvest Operations Corp. including management's assessment of 
future plans and operations, may constitute forward-looking 
statements under applicable securities law and necessarily 
involve risks associated with oil and gas exploration, 
production, marketing and transportation such as loss of market, 
volatility of prices, currency fluctuations, imprecision of 
reserve estimates, environmental risks, competition from other 
producers and ability to access sufficient capital from internal 
and external sources; as a consequence, actual results may differ 
materially from those anticipated in the forward-looking 
statements.  

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR 
DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH 
THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES 
LAW.  

-30-


FOR FURTHER INFORMATION PLEASE CONTACT:

Harvest Energy Trust
Jacob Roorda
President
(403) 265-1178
(403) 265-3490 (FAX)
Email: information@harvestenergy.ca

or

Harvest Energy Trust
David M. Fisher
Vice President, Finance
(403) 265-1178
(403) 265-3490 (FAX)
Email: information@harvestenergy.ca
Website: www.harvestenergy.ca