Important Links

News Releases

Press Release Navigation
<<< Previous Headlines Next >>>
Harvest SE Saskatchewan Property Acquisition Update

Oct 2, 2003 - 11:21 ET


CALGARY, ALBERTA-- 

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. 

Harvest Energy Trust (the "Trust" or "Harvest") announces that it 
has revised its previously planned acquisition of light oil 
properties in the Carlyle area of Southeastern Saskatchewan. 
Harvest will now acquire certain of these assets for total 
consideration of approximately $80 million. The acquisition is 
expected to be completed on or about October 14, 2003. 


/T/

Revised Carlyle Property Acquisition Highlights:

  - current production of approximately 5,200 BOE (favourable
    acquisition parameter of $15,400 per BOE per day);
  - established reserves at January 1, 2003, as determined by
    McDaniel & Associates, of 16.5 million BOE (favourable acquisition
    parameter of $4.85 per BOE);
  - reserve life index of 8.3;
  - light gravity crude averaging 33 degrees API;
  - high quality, mature production from large, original-oil-in-place   
    (approximately 750 million barrels) supported by active natural
    water drive;
  - 98% of the acquired production is operated with an average working
    interest of 93%;
  - 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:
    - 2D and 3D seismic data on the acquired properties;
    - a gross overriding royalty on over 200,000 acres of undeveloped
      lands;
    - 9 central processing batteries, 21 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

Benefits to Unitholders:

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

  - increases Harvest's established reserve base to 33.5 MM BOE;
  - increases Harvest's reserve life index to 5.8;
  - increases the light/medium oil component of Harvest's production
    to 64%;
  - 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;
  - greater cash flow certainty from a larger production and reserve
    base; and
  - acquisition of royalty interests which provide the potential for
    reserve addition without capital expenditures.

/T/ 

Financing: 

Harvest also announces that it has arranged a new Canadian based 
lender credit facility and has repaid all of its indebtedness 
under its previous credit facility with proceeds from the new 
credit facility and amounts available under equity bridge notes 
(the "Equity Bridge") and non-equity bridge notes (the 
"Short-Term Bridge") (collectively, the "Bridge Notes") with the 
Chairman of Harvest and Caribou Capital Corp., a company 
controlled by the Chairman (the "Bridge Lender"). The 
above-mentioned acquisition is subject to finalizing these 
arrangements. 

The Bridge Notes provide for advances of up to $70 million to the 
Trust. No commitment or arrangement fee has or will be earned by 
the Bridge Lender through the provision of the Bridge Notes. As 
of the date hereof, Harvest has received $47.5 million in 
advances pursuant to the Bridge Notes. All of the outstanding 
principal portion and all accrued and unpaid interest under the 
Bridge Notes is due and payable in full on January 1, 2005. The 
terms of the Bridge Notes agreements call for quarterly interest 
payments calculated daily at a fixed rate of 10% per annum. Under 
the Equity Bridge, the Trust also has the option to settle the 
quarterly interest payments with cash or, subject to receipt of 
applicable regulatory approval, the issue of that number of trust 
units equal to the quarterly payment amount divided by 90% of the 
ten-day weighted average trading price of the Harvest trust 
units. 

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. 

-30-


FOR FURTHER INFORMATION PLEASE CONTACT:

Harvest Energy Trust
Jacob Roorda
President
(403) 265-1178

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