Message from Enerplus CEO, Gordon J. Kerr

On June 22, 2007, Bill C-52 Budget Implementation Act, 2007, which contains legislative provisions to implement the proposals to tax publicly traded income trusts in Canada originally announced on October 31, 2006, was passed by Senate and has now received Royal Assent. The new tax is not expected to apply to Enerplus until 2011 as the government has provided a transition period for publicly traded trusts that existed prior to November 1, 2006.  To qualify for the transition period a trust must continue to comply with the “normal growth” parameters regarding equity capital as outlined by the government. 

While we do not support this legislation, we are positioning Enerplus to meet this challenge.  To that end, we are currently pursuing the following key strategic principles:

• We intend to continue our yield-oriented distribution model given our belief that investor demographics, the demand for yield product and our asset base will continue to support such a model with a premium valuation;
• We intend to continue our existing focus on lower risk energy production, long life and low decline assets, and large scalable resource plays as we believe this approach is consistent with a successful oil and gas business and a yield-oriented model;
• We intend to continue our disciplined acquisition strategy as the normal growth parameters outlined in the legislation and the strength of our balance sheet support active involvement in the M&A market in the U.S., Canada, and potentially internationally;
• We see significant value in the four-year tax exemption period and would be hesitant to make major changes to our structure during this period without compelling reasons to do otherwise that we do not currently foresee; and
• We estimate that as of December 2006, we had tax pools of approximately $1.9 billion. We expect to maximize the preservation of and possibly build those pools in the next four years in order to maximize the tax shelter available post-2010.

Additional details of the legislation remain to be clarified and further tactical decisions will be made over time.  However, we intend to maintain our yield-oriented distribution model given our belief that investor demographics and the demand for yield product support such a model with a premium valuation.

As a result of the tax legislation becoming enacted under Canadian accounting guidelines, our year to date future income tax provision includes a future income tax expense of 78.1 million related to this legislation. This is a non-cash expense relating to temporary differences between the accounting and tax basis of Enerplus' assets and liabilities and has no immediate impact on the Fund’s cash flows. 

We are currently evaluating alternatives to determine the optimal structure for our unitholders. However, we see value in the remaining three-yar tax exemption period through 2010 and will look to maintain our current structure during this period unless there are compelling reasons to change.

We also filed a material change report on SEDAR and EDGAR that reflects the changes to the estimated after tax net present value of future revenues from our oil and gas reserves, and related information, in accordance with Canadian National Instrument 51-101.

Further information regarding the Budget Implementation Act can be found at http://www.fin.gc.ca/news06/06-061e.html

For further information, please contact our Investor Relations Department at 1-800-319-6462 or email investorrelations@enerplus.com

Gordon J. Kerr
President & Chief Executive Officer