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In management's opinion, the accompanying consolidated financial statements of Enerplus Resources Fund (the 'Fund') have been prepared within reasonable limits of materiality and in accordance with Canadian generally accepted accounting principles. Since a precise determination of many assets and liabilities is dependent on future events, the preparation of financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgment and with all information available up to February 18, 2006. Management is responsible for all information in the annual report and for the consistency, therewith, of all other financial and operating data presented in this report.
To meet its responsibility for reliable and accurate financial statements, management has established and monitors systems of internal control which are designed to provide reasonable assurance that financial information is relevant, reliable and accurate, and that assets are safeguarded and transactions are executed in accordance with management's authorization.
The consolidated financial statements have been examined by Deloitte & Touche LLP, independent Chartered Accountants. Their responsibility is to express a professional opinion on the fair presentation of the consolidated financial statements in accordance with Canadian generally accepted accounting principles. The Auditors' Report outlines the scope of their examination and sets forth their opinion.
The Audit Committee, consisting exclusively of independent directors, has reviewed these statements with management and the external auditors and has recommended their approval to the Board of Directors. The Board of Directors has approved the consolidated financial statements of the Fund.
| 'signed' | 'signed' |
| Gordon J. Kerr | Robert J. Waters |
| President and | Senior Vice President and |
| Chief Executive Officer | Chief Financial Officer |
Calgary, Alberta
February 18, 2006
REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
To the Unitholders of Enerplus Resources Fund:
We have audited the consolidated balance sheets of Enerplus Resources Fund (the 'Fund') as at December 31, 2005 and 2004 and the consolidated statements of income, accumulated income, accumulated cash distributions and cash flows for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2005 and 2004 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.
The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly we express no such opinion.
DELOITTE & TOUCHE LLP
Independent Registered Chartered Accountants 'signed'
Calgary, Alberta
February 18, 2006
CONSOLIDATED BALANCE SHEETS
| As at December 31
(CDN$ thousands) |
2005 |
2004 |
| Assets |
|
|
| Current assets |
|
|
| Cash |
$ 10,093 |
$ - |
| Accounts receivable |
170,623 |
107,996 |
| Deferred financial assets
(Note 3) |
49,874 |
- |
| Other current |
26,751 |
9,602 |
| |
257,341 |
117,598 |
| Property, plant and equipment
(Note 5) |
3,650,327 |
3,029,007 |
| Goodwill (Note 7) |
221,234 |
29,082 |
| Deferred charges (Note 8) |
1,721 |
5,061 |
| |
$ 4,130,623 |
$ 3,180,748 |
| Liabilities |
|
|
| Current liabilities |
|
|
| Accounts payable |
$ 316,875 |
$ 179,568 |
| Distributions payable to
unitholders |
49,367 |
36,443 |
| Deferred credits (Note 3) |
57,368 |
42,303 |
| |
423,610 |
258,314 |
| Long-term debt (Note 8) |
659,918 |
584,991 |
| Future income taxes (Note
11) |
442,970 |
235,551 |
| Asset retirement obligations
(Note 4) |
110,606 |
105,978 |
| |
1,213,494 |
926,520 |
| Equity |
|
|
| Unitholders' capital (Note
10) |
3,410,614 |
2,831,277 |
| Accumulated income |
1,408,178 |
976,137 |
| Accumulated cash distributions |
(2,309,705) |
(1,811,500) |
| Cumulative translation adjustment
(Note 1(j)) |
(15,568) |
- |
| |
2,493,519 |
1,995,914 |
| |
$ 4,130,623 |
$ 3,180,748 |
CONSOLIDATED STATEMENTS OF INCOME
| For the year ended
December 31 (CDN$ thousands except per trust unit amounts) |
2005 |
2004 |
| Revenues |
|
|
| Oil and gas sales |
$1,550,569 |
$1,149,765 |
| Royalties |
(296,983) |
(230,954) |
| Derivative instruments (Notes
3 and 12) |
|
|
| Financial contracts - qualified
hedges |
(27,256) |
(18,167) |
| Other financial contracts |
(82,664) |
(117,213) |
| Interest and other income |
11,064 |
2,095 |
| |
1,154,730 |
785,526 |
| Expenses |
|
|
| Operating |
216,808 |
196,451 |
| General and administrative
(Note 10(b)) |
40,375 |
33,863 |
| Transportation |
26,915 |
25,119 |
| Interest on long-term debt
(Note 8) |
25,791 |
20,737 |
| Foreign exchange loss/(gain)
(Note 9) |
1,677 |
(5,018) |
| Depletion, depreciation,
amortization and accretion |
386,545 |
326,269 |
| |
698,111 |
597,421 |
| Income before taxes |
456,619 |
188,105 |
| Capital taxes |
6,486 |
6,612 |
| Current taxes |
2,764 |
- |
| Future income tax expense/(recovery)
(Note 11) |
15,328 |
(76,823) |
| Net Income |
$432,041 |
$258,316 |
| Net income per trust unit |
|
|
| Basic |
$3.96 |
$2.60 |
| Diluted |
$3.95 |
$2.60 |
| Weighted average number of
trust units outstanding (thousands) |
|
|
| Basic |
109,083 |
99,273 |
| Diluted |
109,371 |
99,416 |
CONSOLIDATED STATEMENTS OF ACCUMULATED INCOME
| For the year ended
December 31 (CDN$ thousands) |
2005 |
2004 |
| |
|
|
| Accumulated income, beginning
of year |
$976,137 |
$717,821 |
| Net income |
432,041
258,316 |
| Accumulated income, end of
year |
$1,408,178 |
$976,137 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the year ended
December 31 (CDN$ thousands) |
2005 |
2004 |
| Operating Activities |
|
|
| Net income |
$432,041 |
$258,316 |
| Non-cash items add/(deduct): |
|
|
| Depletion, depreciation,
amortization and accretion |
386,545 |
326,269 |
| Non-cash financial contracts |
(32,679) |
39,160 |
| Non-cash foreign exchange
gain (Note 9) |
(2,036) |
(4,795) |
| Unit based compensation (Notes
2 and 10) |
3,040 |
4,668 |
| Future income tax expense/(recovery)
(Note 11) |
15,328 |
(76,823) |
| Asset retirement costs settled
(Note 4) |
(7,829) |
(6,826) |
| |
794,410 |
539,969 |
| Decrease / (Increase) in
non-cash working capital |
(19,777) |
15,091 |
| |
774,633 |
555,060 |
| Financing Activities |
|
|
| Issue of trust units, net
of issue costs (Note 10) |
507,209 |
314,309 |
| Cash distributions to unitholders |
(498,205) |
(423,311) |
| Increase in bank credit facilities
(Note 8) |
76,963 |
251,669 |
| Decrease in non-cash financing
working capital |
12,924 |
3,421 |
| |
98,891 |
146,088 |
| Investing Activities |
|
|
| Capital expenditures |
(373,032) |
(209,052) |
| Property acquisitions (Note
6) |
(123,896) |
(504,857) |
| Property dispositions |
66,511 |
31,742 |
| Corporate acquisitions, net
of cash acquired (Note 7) |
(483,014) |
(121,171) |
| Decrease in non-cash investing
working capital |
51,045 |
21,774 |
| |
(862,386) |
(781,564) |
| Effect of exchange rate changes
on cash |
(1,045) |
- |
| Change in cash |
10,093 |
(80,416) |
| Cash, beginning of year |
- |
80,416 |
| Cash, end of year |
$ 10,093 |
$ - |
| |
|
|
| SUPPLEMENTARY CASH FLOW INFORMATION |
|
|
| Cash income taxes paid |
$ 2,669 |
$ - |
| Cash interest paid |
$ 24,220 |
$ 19,196 |
CONSOLIDATED STATEMENTS OF ACCUMULATED CASH DISTRIBUTIONS
| For the year ended
December 31 (CDN$ thousands) |
2005 |
2004 |
| Accumulated cash distributions,
beginning of year |
$1,811,500 |
$1,388,189 |
| Cash distributions |
498,205 |
423,311 |
| Accumulated cash distributions,
end of year |
$2,309,705 |
$1,811,500 |
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