Our growth has been achieved through acquisitions and the continuous replenishment of lower risk development opportunities within our asset base.

Acquisition Cost per BOE
Despite rising acquisition costs, strong commodity prices have supported attractive economics.

Acquisition & Divestment Activity
2004 was one of the most successful acquisition years in our history.

In 2004, we successfully completed the largest acquisition in Enerplus history, the $467.2 million purchase of conventional oil and gas assets from ChevronTexaco Corporation ("ChevronTexaco").

This transaction, combined with other acquisitions including the $130.5 million purchase of Ice Energy Limited ("Ice Energy"), resulted in Enerplus investing a total of $636.3 million in oil and gas properties. We expanded our interests in our Bantry and Weyburn properties and added several new core areas including Chinchaga, Mitsue, Shackleton and Virden. In total, 50.3 MMBOE of proved plus probable reserves and approximately 14,600 BOE/day of production was added.

We continued our active portfolio management strategy and monetized smaller non-core assets with limited upside, low netbacks and potential reserves risk. In 2004, we sold several non-core properties for total proceeds of $31.7 million representing 1.2 MMBOE of proved plus probable reserves and 673 BOE/day of production. Transactions included the disposition of certain deep mineral rights and scattered production in Bantry for $16.4 million cash while retaining an ongoing royalty interest in the properties.

We are currently marketing an offering of non-core properties with closings expected in the first quarter of 2005. We anticipate selling approximately 2,500 BOE/day for net proceeds in the order of $60 million. These divestments would represent approximately two percent of our year-end reserves by volume. The properties are in non-core areas with higher operating costs, have limited upside potential and a high percentage of heavy oil. We expect these divestments will have a minor positive impact on our 2005 operating costs.

2004 Acquisition and Divestment Summary

(1) Based on initial cost excluding future development capital if any

(2) Ice Energy reserves evaluated internally at time of acquisition applying NI 51-101 guidelines

Ice Energy Limited

In 2003, Enerplus made a common equity investment into Ice Energy Limited, a junior Canadian oil and gas exploration company, establishing a 13% ownership position and securing a seat on the Board of Directors. In early 2004, we completed the corporate acquisition of the remaining shares and debt for a total purchase price of $130.5 million. The proved plus probable reserves acquired totaled 13.7 MMBOE with production of 2,300 BOE/day at closing. The acquired assets are highly concentrated with shallow gas and coalbed methane development potential. The main development areas include:

• Shackleton, Saskatchewan: Shallow natural gas field optimization and infill drilling potential.

• Joffre, Alberta: Non-operated coalbed methane development project.

• Trochu, Alberta: Operated coalbed methane development project.

At the time of the acquisition, we identified over 250 net drilling locations on these properties with additional upside potential. We drilled 120 gross wells (58.3 net) during 2004 and plan to spend $25 million in development capital in 2005 drilling approximately 90 net wells.

ChevronTexaco assets

On June 30, 2004, a consortium including Enerplus closed the acquisition of ChevronTexaco's western Canadian conventional oil and gas interests for $1.1 billion, of which our investment was $467.2 million. The consortium of three parties was formed to facilitate the acquisition based on the strategic fit of the assets with the parties' respective risk profiles. The acquisition added approximately 33.4 MMBOE of proved plus probable reserves and 11,500 BOE/day of production to us.

The ChevronTexaco assets are highly concentrated properties that fit our technical focus areas of waterflood development and shallow gas drilling. The properties also include a high component of royalty interests. Royalty interests provide us with a high netback revenue stream with significant low risk upside through third party drilling. As royalty owners, we are not required to pay either operating costs or any future capital costs. Overall, the properties were undercapitalized in recent years providing us with numerous opportunities. Planned upside
development includes:

• Bantry, Alberta: Waterflood optimization and infill drilling, shallow gas development and a material royalty position with upside exposure to over 700 potential future royalty drilling locations;

• Chinchaga, Alberta: Infill oil drilling and additional gas compression;

• Virden, Manitoba: Waterflood optimization and infill drilling opportunities;

• Mitsue, Alberta: Waterflood optimization, well reactivations, infill drilling and zone recompletions.

Since our initial evaluation of the acquired properties, we have identified further development opportunities on the assets and have increased our planned capital expenditure accordingly. In 2005, we plan on drilling a minimum of 15 gross wells with capital expenditures of over $23 million, up from the $12.9 million we originally estimated. In addition, third-party drilling activity has also accelerated on our royalty interest lands. By the end of 2005, we anticipate approximately 300 locations will have been drilled on royalty lands since the acquisition, almost double the drilling activity originally estimated over this period.

ChevronTexaco Properties

2005 Outlook

We expect the 2005 acquisition market to continue to be robust both in terms of supply of opportunities and the acquisition prices paid. We plan to maintain our disciplined approach to acquisitions by focusing on opportunities that fit within our strategic development areas providing attractive economics, accretion and growth over time. Although we will continue to seek acquisition opportunities in Canada, given the increasing competition, we will also examine opportunities beyond the conventional oil and gas industry and outside the Canadian border.

Equity Investment Strategy

Our equity investment strategy, implemented in 2003, focuses on creating a limited number of meaningful relationships with experienced management teams of junior exploration companies whose strategies provide opportunities for us. Generally, these relationships are expected to provide a strategic underpinning for:

• partnering opportunities;

• acquisition opportunities;

• monetization of underutilized assets and infrastructure; or

• development of higher risk, undeveloped properties.

In addition to the strategic drivers, our equity investment strategy also provides value creation opportunities through the equity investment itself. Currently we have $4.5 million invested in four junior oil and gas exploration companies, including an equity investment of $2.2 million completed in 2005. Enerplus will remain active in seeking opportunistic investments in select junior oil and gas companies with a view towards having no more than six portfolio companies and $10 million invested at any one time.