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Harvest Energy Trust Announces Fourth Quarter and Full Year 2004 Financial and Operating Results

Mar 14, 2005 - 07:00 ET

CALGARY, ALBERTA--(CCNMatthews - March 14, 2005) - Harvest Energy Trust
(TSX:HTE.UN) ("Harvest" or the "Trust") announces the release of its 
fourth quarter and year ended December 31, 2004 financial and operating 
results.

Highlights

- Our fourth quarter and full year production increased by 149% and 
109%, respectively, compared to the same periods in 2003. Average daily 
production was 37,024 BOE/d in the fourth quarter, and 23,019 BOE/d for 
the full year 2004. These increases reflect success from our internal 
development projects as well as the two large acquisitions completed 
during the year;

- We declared distributions of $2.40 per unit in 2004, resulting in a 
payout ratio of 46% in the fourth quarter and 50% for the full year 
2004. This compares to 75% and 66% for the same periods in 2003, and 
reflects the continuation of Harvest's strategy to retain cash for 
development purposes;

- Cash flow per unit (basic) in the fourth quarter 2004 totaled $1.31, 
an increase of 54% relative to the same period in 2003. Full year 2004 
cash flow per unit (basic) was $5.13, which represents a 39% increase 
over 2003;

- Harvest has reduced operating costs per BOE to $7.37 in the fourth 
quarter of 2004 from $9.50 in the fourth quarter of 2003;

- F&D costs per BOE of Total Proved reserves and Proved plus Probable 
(P+P) reserves were $5.42 and $4.15, respectively, on $42.7 million in 
development capital. FD&A costs per BOE on Total Proved and P+P reserves 
were $14.51 and $11.08 per BOE, respectively, on total capital 
expenditures of $748.7 million. Recycle ratios achieved for 2004 were 
4.5 times on a Total Proved basis and 5.8 times on a P+P basis. Both F&D 
and FD&A costs include future development capital. We have revised the 
F&D costs for P+P reserves from that previously reported in our press 
release dated February 28, 2005, following further review of our reserve 
reconciliation and finalization of our financial statements;

- Total Proved and P+P reserves increased 176% and 211% from the prior 
year to 75.0 MMBOE and 102.5 MMBOE, respectively, and natural gas 
reserves increased to approximately 14% of total. These increases are 
primarily the result of two successful acquisitions which Harvest 
completed during the year;

- These reserve increases were accretive to unitholders.  P+P reserves 
per fully diluted Trust Unit increased by 25% to 2.27 in 2004 (2003 - 
1.82) and 77% since inception (1.28), while increasing our reserve life 
index to 8. We believe these are strong measures of value added for our 
unitholders;

- Net present value (before taxes, discounted at 10%) per fully diluted 
Trust Unit of our Total Proved and P+P reserves increased 134% and 170%, 
respectively, to $19.96 per Unit on a Total Proved basis and $25.12 per 
Unit on a P+P basis;

- We issued US$250 million, 7-year 7 7/8% senior notes on October 14, 
2004. This transaction created longer term financial flexibility, and 
will facilitate future access to U.S. financial markets if needed.

2004 Financial & Operating Highlights

The table below provides a summary of Harvest's financial and operating 
results for both the three and twelve month periods ended December 31, 
2004 and 2003. Our consolidated financial statements with accompanying 
notes and our Management's Discussion and Analysis (MD&A) are available 
on the "Financial Information - Annual Reports" section of Harvest's 
website (www.harvestenergy.ca) and will be filed shortly on SEDAR 
(www.sedar.com).

/T/

                         Three months ended      Twelve months ended
                                December 31              December 31
($000s except per
 Trust Unit and
 per BOE(1) amounts)
                                          %                        %
FINANCIAL               2004    2003 Change     2004     2003 Change
---------------------------------------------------------------------
                           (Restated)               (Restated)
                                  (6)                      (6)
Revenue, net of
 royalties          $107,446 $33,575   220% $277,095 $102,939   169%
Cash flow from
 operations(5)        53,545  13,699   291%  130,003   46,492   180%
  Per Trust Unit,
    basic(5)            1.31    0.85    54%     5.13     3.69    39%
  Per Trust Unit,
   diluted(5)           1.27    0.82    55%     4.91     3.58    37%
Net income            12,536   5,495   128%   18,231   15,516    17%
 Per Trust Unit,
  basic                 0.29    0.30    (3%)    0.47     1.16   (59%)
 Per Trust Unit,
  diluted               0.28    0.29    (3%)    0.45     1.13   (60%)

Distributions,
 declared             24,823  10,209   143%   64,563   30,685   110%
Distributions
 per Trust
 Unit, declared(7)      0.60    0.60     0%     2.40     2.40     0%

Payout ratio(2)(5)       46%     75%   (39%)     50%      66%   (24%)
Capital asset additions
 (excluding
  acquisitions)        8,873   4,334   105%   42,662   27,209    57%

Acquisitions               -  80,271  (100%) 706,000  108,700   549%
Net debt (excluding
 Derivative
 contracts)(3)(5)    429,671  78,555   447%  429,671   78,555   447%
Weighted average
 Trust Units
 outstanding,
 basic (4)            40,937  16,175   153%   25,324   12,591   101%
Trust Units
 outstanding,
 end of period        41,788  17,109   144%   41,788   17,109   144%
Trust Units, fully
 diluted(8),
 end of period        45,088  18,174   148%   45,088   18,174   148%
---------------------------------------------------------------------
---------------------------------------------------------------------
OPERATING
---------------------------------------------------------------------
Daily Sales Volumes(10)
 Light oil
  (bbl/day)           12,228   4,079   200%    7,911    1,028   670%
 Medium oil
  (bbl/day)            3,644   4,662   (22%)   4,324    4,286     1%
 Heavy oil
  (bbl/day)           15,120   5,756   163%    8,495    5,444    56%
 Natural gas
  liquids (bbl/day)    1,309      70  1770%      471       64   636%
 Natural gas (mcf/d)  28,338   1,744  1525%   10,903    1,311   732%
---------------------------------------------------------------------
Total (BOE/d)         37,024  14,858   149%   23,019   11,040   109%
---------------------------------------------------------------------
---------------------------------------------------------------------
REALIZED PRICES
---------------------------------------------------------------------
Average Selling Prices(10)
 Light oil ($/bbl)   $ 53.64 $ 35.56    51%  $ 48.70  $ 35.56    37%
 Medium oil ($/bbl)    35.55   30.13    18%    38.78    32.18    21%
 Heavy oil ($/bbl)     28.73   24.92    15%    31.11    27.34    14%
 Natural gas liquids
  ($/bbl)              33.19   29.18    14%    41.10    29.92    37%
 Natural gas ($/mcf)    5.68    6.01    (5%)    6.30     6.70    (6%)
---------------------------------------------------------------------
Total ($/BOE)        $ 37.77 $ 29.13    30%  $ 39.33  $ 29.62    33%
---------------------------------------------------------------------
---------------------------------------------------------------------
OPERATING NETBACKS(5) ($/BOE)
---------------------------------------------------------------------
Revenues             $ 37.77 $ 29.13    30%  $ 39.33  $ 29.62    33%
Realized loss on
 derivative contracts  (4.91)  (2.18)  125%    (6.47)   (4.67)   39%
Royalites              (6.23)  (4.66)   34%    (6.44)   (4.07)   58%
Operating expense (9)  (7.37)  (9.50)  (22%)   (8.48)   (8.94)   (5%)
---------------------------------------------------------------------
Operating netback(5) $ 19.26 $ 12.79    51%  $ 17.94  $ 11.94    50%
---------------------------------------------------------------------
---------------------------------------------------------------------


(1) All calculations required to convert natural gas to a crude oil
    equivalent (BOE) have been made using a ratio of 6 mcf of natural
    gas to 1 barrel of crude oil. BOEs may be misleading,
    particularly if used in isolation. The BOE conversion ratio is
    based on an energy equivalency conversion method primarily
    applicable at the burner tip and does not represent a value
    equivalency at the wellhead.

(2) Ratio of distributions to cash flow from operations.

(3) Net debt is bank debt, senior notes, equity bridge notes,
    convertible debentures and any working capital deficit excluding
    the current portion of derivative contracts and the accounting
    liability related to our Trust Unit incentive plan. Equity bridge
    notes and convertible debentures are reflected as equity on our
    consolidated balance sheet in accordance with Canadian GAAP. In
    2005, GAAP will require these amounts to be reflected as debt.

(4) Reflects both Trust Units and exchangeable shares.

(5) These are non-GAAP measures; please refer to the "Certain
    Financial Reporting Measures" section included in our MD&A.

(6) Restated to reflect the adoption of new CICA recommendations to
    account for asset retirement obligations. See Note 3 to the 2004
    Consolidated Financial Statements.

(7) As if the Trust Unit is held throughout the period.

(8) Fully diluted units differ from diluted units for accounting
    purposes. Fully diluted includes Trust Units outstanding at
    December 31 plus the impact of the conversion or exercise of
    exchangeable shares, Trust Unit rights and convertible
    debentures, if completed at December 31.

(9) Includes realized gain on electricity derivative contracts of
    $0.18 and $0.24 for fourth quarter and full year 2004,
    respectively, and $0.26 and $0.39 for the same periods in 2003.

(10) Harvest classifies its oil production as light, medium and heavy
     according to NI 51-101 guidance.


                                            Year ended December 31
--------------------------------------------------------------------
                                           2004      2003  % Change
--------------------------------------------------------------------
Reserves Summary (MMBOE)
Proved Developed Producing                 67.2      25.9       159%
Total Proved                               75.0      27.2       176%
Probable                                   27.5       5.8       374%
Proved plus Probable                      102.5      33.0       211%

Total Proved
F&D Costs ($/BOE)                       $  5.42   $ 11.92       (55%)
 Recycle Ratio                              4.5       1.4       221%
FD&A Costs ($/BOE)                      $ 14.51   $  7.23       101%
 Recycle Ratio                              1.7       2.2       (23%)

Proved plus Probable
F&D Costs ($/BOE)                       $  4.15   $ 11.46       (64%)
 Recycle Ratio                              5.8       1.4       314%
FD&A Costs ($/BOE)                      $ 11.08   $  6.62        67%
 Recycle Ratio                              2.2       2.5       (12%)

Total Proved Reserve Life Index               6         5        20%
Proved plus Probable Reserve Life Index       8         6        33%
---------------------------------------------------------------------
---------------------------------------------------------------------
Note: 2004 recycle ratios were calculated using the average annual
      netback which does not fully reflect the higher netback
      production acquired during the year.

/T/

Message to Unitholders

2004 was a year of continued growth and evolution for Harvest. After 
closing two significant acquisitions in the year, we achieved record 
levels of production and cash flow since Harvest was formed. More 
importantly, this growth was achieved on an accretive basis, in the form 
of cash flow per unit and reserves per unit, while increasing our 
reserve life index (RLI). Our year end reserve report showed significant 
growth in all categories, accretive reserve additions at low cost, an 
increase to our RLI and substantial increases to net present values.

As we move forward into 2005, we anticipate Harvest's capital 
development budget to be approximately $75 million, focused on our four 
core areas of Southern Alberta, North Central Alberta, East Central 
Alberta and Southeast Saskatchewan. We expect to drill up to 70 wells 
and will continue to focus our efforts on production increases, reserve 
recovery optimization and cost reduction initiatives.

Production volumes in 2005 are expected to average between 34,000 and 
36,000 BOE/d, with royalty rates as a percentage of revenue expected to 
average between 15 and 17%. As a result of ongoing cost reduction 
activities and lower operating cost property acquisitions in 2004, 
operating expenses are expected to average lower in 2005, between $7.75 
and $8.50 per BOE. Approximately 75% of our net crude oil production 
volumes are hedged for 2005, with approximately 80% of our hedge 
contracts structured to allow participation in a strengthening commodity 
price environment.

Harvest will be conducting a conference call and Webcast to discuss its 
fourth quarter and full year 2004 results at 9:00 a.m. Mountain time 
(11:00 a.m. Eastern time) on March 14th, 2005. Callers may dial 
1-877-888-3490 (international callers or Toronto local dial 
416-695-5261) a few minutes prior to start and request the Harvest 
conference call. The call also will be available for replay by dialing 
1-888-509-0082 (international callers or Toronto local dial 
416-695-5275). No passcode is required.

Webcast listeners are invited to go to the Financial Information - 
Annual Reports page of the Harvest Energy website at 
www.harvestenergy.ca for the live Webcast and/or a replay of the Webcast.

Harvest Energy Trust is a Calgary-based energy trust actively managed 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 Trust Units are traded on the Toronto 
Stock Exchange (TSX) under the symbol "HTE.UN". Please visit Harvest's 
website at www.harvestenergy.ca for additional corporate information and 
a recent corporate presentation.

-30-


FOR FURTHER INFORMATION PLEASE CONTACT:

 Harvest Energy Trust
Jacob Roorda
President
(403) 265-1178 or Toll Free: (866) 666-1178

or

Harvest Energy Trust
David Rain
Vice President & CFO
(403) 265-1178 or Toll Free: (866) 666-1178

or

Harvest Energy Trust
Cindy Gray
Investor Relations & Communications Advis
or

(403) 265-1178 or Toll Free: (866) 666-1178
Email: gray@harvestenergy.ca

or

Harvest Energy Trust
2100, 330 - 5th Avenue S.W.
Calgary, AB Canada T2P 0L4
(403) 265-3490 (FAX)
Email: information@harvestenergy.ca
Website: www.harvestenergy.ca