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• A total return of 38.2% for our Canadian unitholders and a 42.1% return for our U.S. unitholders.
• An increase in our monthly distribution per unit from 35 cents to 42 cents while reducing our payout ratio to 64% and funding 77% of our capital development program from retained funds flow.
• A new high in our annual average production of 79,727 BOE per day representing a 6% increase over 2004's average. We exited the year at 85,000 BOE per day with 3,800 BOE per day expected to come on in early 2006.
• Executed our most significant development capital program in our history of $369 million including the participation in drilling 859 wells (393.3 net) with almost a 100% success rate.
• Record funds flow from operations of $794 million, a 47% increase over 2004, a 67% increase in net income to $432 million and increases per trust unit of 34% and 52%, respectively.
• An 11% increase in our proved plus probable reserves to 449.1 million barrels of oil equivalent which reflects over 100% reserve replacement excluding acquisitions and a 247% replacement of 2005 production including acquisitions.
• A reserve life index on our proved plus probable reserves of 13.5 years, a 4% reduction from 14 years due to higher 2006 production forecasted in the independent engineering reports.
• Completed a record year of acquisitions and established a new core area in the United States, with $704 million of oil and gas acquisitions including $614 million associated with the acquisitions of Lyco Energy Corporation and Sleeping Giant LLC, two U.S. private companies with established production in Montana and undeveloped acreage in Montana and North Dakota.
• The validation of our investment in the Joslyn lease in the Alberta oil sands by virtue of the purchase of Deer Creek Energy Ltd. (our operating partner at Joslyn) by a wholly-owned subsidiary of Total S.A., the fourth largest oil and gas company in the world.
• Finding, development and acquisition costs for the year of $13.98 per BOE (based upon proved plus probable reserves) before future development capital and $17.18 per BOE including future development capital and three-year averages of $10.09 and $13.46 per BOE, respectively.
• An increase of 28% in our realized average sales price per BOE, 39% in net funds flow per BOE and 58% in net income per BOE.
• Maintained a strong balance sheet as reflected in the reduction of our debt to trailing funds flow ratio to 0.8 times from 1.1 times at year end 2004.
• Achieved a recycle ratio for the year of 1.7 times and 1.8 times on a three-year basis.
• Essentially maintained reserves and production per unit on a debt adjusted basis.

Through our record 2005 capital operating program we furthered the development of our shallow natural gas, crude oil waterfloods, oil sands, coalbed methane and Bakken oil plays. For the first time, we more than replaced our 2005 production through conventional reserve additions from our development program on our existing assets excluding any volumes added through acquisitions. Our ability to bring on significant new production volumes organically speaks to the rich opportunity set that exists within our asset base and our technical skills in maximizing on these opportunities.

Development of the Joslyn lease is advancing on both the SAGD resource and the mineable resource. Initial steaming of the SAGD Phase II commercial project is commencing in the first quarter of 2006 and we expect commercial production by year-end. The operator has also recently filed the application for the first 100,000 bbl/day (gross) phase of mining development and we expect to commission an interim reserve report and book significant probable reserves associated with this project in the first half of 2006. Total S.A. has stated publicly that it is their intention to seek a 'made in Alberta' upgrader solution for their expected Alberta bitumen production. We will be working with them to investigate this opportunity further as it relates to the Joslyn lease and the capture of upgraded oil prices.

These accomplishments are noteworthy but are also reflective of the evolution of Enerplus over time. Over our 20-year history, we have continuously worked to expand and improve our approach to capturing and maximizing the value out of oil and gas assets under our distributing business model. Over this timeline we have moved from a largely acquisition focused fund manager approach to a more technically focused oil and gas company. We have achieved value growth through the acquisition and enhancement of acquired assets as well as seeking organic growth through resource play types. We have also transitioned to funding more of our capital program from funds flow.

Over our 20-year history we have moved through four distinct phases as outlined below:

Financial Manager (1986 - 1995). The initial concept was to provide an opportunity for retail investors to gain more direct exposure to oil and gas investment through a tax efficient, lower risk product than the typical higher risk exploration focused oil and gas companies. The focus was primarily on non-operated positions and growth through accretive acquisitions. Production Manager (1996 - 2000). With the reorganization of Mark Resources into EnerMark Income Fund in 1996, the Enerplus Management Group grew substantially, adding significant operating capabilities that allowed us to expand our efforts on both operated and non-operated properties.

Asset Manager (2001 - 2004). Enerplus transitioned to a more sophisticated asset manager with the acquisition of almost $1 billion in assets in 2000, the sale of the management company to the Fund and subsequent restructuring of the management contract from an activity driven contract to a performance oriented contract, and the consolidation of multiple publicly traded entities into a single entity. We adopted a multi-disciplined technical approach to our business and expanded our technical staff to focus on understanding the reservoir in the development of long-term depletion plans.

Area Manager (2005). In 2005 we advanced the organization of our operations further by introducing geographic area teams focused on identifying value creation opportunities through development, optimization, land deals, or acquisitions on either operated or non-operated production. This has led to a significant increase in opportunity generation as we are leveraging our knowledge of existing lands and our corporate strength into new areas with a concentration on resource oriented plays which are scalable and can have significant impact on the Fund.

Commodity Prices
This past year we experienced continued volatility in oil and gas prices, mostly to the upside. Numerous factors were at play impacting price volatility.

In the arena of natural gas, natural disasters and weather worked in opposite directions with different timing to increase the band width of natural gas prices. In mid-2005 tropical storms Katrina and Rita in the Gulf Coast wreaked havoc and knocked out 10 billion cubic feet per day of supply. The effect was to drive spot gas prices above CDN$12/Mcf. However, as winter failed to show up in force, as Gulf Coast production started to come back on and the 5-year average storage levels were surpassed, concerns over shortfalls abated. The result was a retreat in natural gas prices toward CDN$10/Mcf at year-end and a forward curve pointing toward CDN$8/Mcf on average for 2006.

On the oil front, continuing hostilities and unrest in major producing regions of the world such as the Middle East, Venezuela and Nigeria combined with continued demand growth out of China, India and North America caused the continued climb in world oil prices. The WTI oil price started the year in the US$42 range, peaked close to US$70 in the third quarter and ended the year at US$61. Currently the forwarded market for 2006 is expecting WTI to average in the range of US$64.

Currently we have a small amount of both our crude oil and natural gas production subject to financial hedge contracts, substantially all of which will expire by mid-year 2006. As such, the majority of our 2006 production is subject to current market-based prices. We remain cautiously bullish with respect to both commodity prices given supply/demand fundamentals globally and in North America coupled with the seemingly continuous unplanned disruptions in supply, however, short-term downward price movements may occur. We will continue to monitor commodity price developments both near-term and long-term and in conjunction with our strategic plans and may adjust our hedge positions accordingly.

Industry Developments
In September of 2005, the Canadian Federal Department of Finance, under the direction of the Minister of Finance, launched a discussion paper and requested submissions regarding the impact of trusts and other flow through entities on the Canadian economy and federal tax revenues. In the face of a looming federal election and based upon information collected, the government determined it appropriate to make no changes to the income tax regulations dealing with trusts and other flow through entities.

Post the January 2006 Canadian federal election, the previous minority Liberal government has been replaced with a Conservative minority government. The Conservative party had previously advised that they would not propose nor support changes to the existing income tax regulation applicable to trusts and other flow through entities.

Even before the greater clarity resulted around the taxation of trusts, Standard and Poors announced they would continue with their plans to include qualifying trusts in the S&P/TSX Composite Index. The initial inclusion on a half-weighted basis occurred post trading on December 16, 2005 and the full inclusion is scheduled to occur post-trading on March 17, 2006. Enerplus qualifies and is now included in the S&P/TSX Composite Index.

2006 Outlook
In 2006 we expect to replace reserves and grow production through our existing assets before the benefit of any acquisitions through a robust opportunity set and significant development capital spending. We are planning a capital development program of $485 million on our existing properties and expect production to average 84,000 BOE per day with an exit rate of 89,000 BOE per day, an increase of 5% from our 2005 rates.

Our inventory of internally generated prospects is focused on resource-oriented plays including shallow gas, waterfloods, Bakken oil, coalbed methane and oil sands in addition to a large compliment of other conventional plays. Our current assessment of future development potential includes approximately 1,500 net interest conventional drilling locations plus the SAGD and mineable resource potential on our Joslyn oil sands property. This inventory of internal opportunities combined with our financial strength helps to ensure the ongoing sustainability of our operations.

We have recently established an office in Denver, Colorado. This will position us to both realize on the tremendous development opportunity we see through our acquisitions of Lyco Energy and Sleeping Giant LLC and also provide us with a base from which to expand our opportunities in the U.S.

A principal challenge continues to be the competition for acquisitions, people resources and services. We have continued to evolve our business processes, organizational structures and human resource practices to remain competitive with respect to people, services and acquisitions. We expect competition will continue to exert upward pressure on various cost components of our business, however, we are confident in our capability and capacity to execute on our various strategic plans.

We will continue to look for oil and natural gas related opportunities both in western Canada and in the United States seeking to expand our interests in both conventional and non-conventional plays that can impact on the value of our Fund. I encourage our unitholders and interested investors to read the Operations Review and Management's Discussion and Analysis sections of this annual report for a more fulsome discussion of our plans and forward guidance.

Tribute While 2005 was a highly successful year for Enerplus it also brought significant sadness to our organization. This past year we experienced the passing of three long time friends and contributors to the success of Enerplus - Mr. Joseph Slavik, Mr. Wayne Foch and our founder, Mr. Marcel Tremblay.

Joe Slavik was a senior area foreman in our northern business unit. He is fondly remembered for the direct manner in which he dealt with the numerous challenges we face in the conduct of field operations. Not only did he mentor many junior and seasoned operators over the course of his career, he was also always looking for ways to improve on a business and a personal basis. Before he passed away, Joe had completed our leadership development course and I'm sure he shared as many learnings as he gained.

Wayne Foch served close to twenty years in various financial positions with Enerplus and our predecessors, the last as our Vice President, Finance. His dedication, commitment and work ethic was unparalleled. Wayne never failed to put in that extra effort to ensure our financial statements were published on time, with the i's dotted and t's crossed or stopped to spend time to mentor staff around him. His sense of humour always helped us through tough times and enhanced the good times. He was a true leader in our organization.

Marcel Tremblay, the founder of Enerplus, passed away just before the new year. He was a true visionary in an arena of skeptics. Marcel is widely recognized as the father of the income trust industry in Canada. In 1986 he pursued his vision of creating an oil and gas trust in Canada. He had presented the idea previously to his former employer but they could not see the potential of the proposed structure. Marcel's belief was so strong he risked his personal financial resources to get Enerplus off and running. Today Enerplus is an organization with a $7 billion market capitalization and businesses operating under the trust structure in Canada aggregate to almost $200 billion of market capitalization.

These gentlemen are sorely missed by their families and friends here at Enerplus and will never be forgotten.

Finally, I want to once again thank all of our stakeholders for investing with us and contributing to our success. To our employees and contractors, not only do I thank you for contributing to our success but for also ensuring we do it in a safe and reliable manner. In 2005 we once again achieved the highest level of recognition under CAPP's Environment, Health and Safety Stewardship program. In addition, we received a 'Best Safety Performer' award from Work Safe Alberta, an award given to less than 1% of the 128,000 employers in Alberta.

In addition to responsible work practices, strong corporate governance is also paramount to the success of an organization. On this point I extend my thanks to our Board of Directors and welcome our newest director, Mr. Mike Seth to our board.

As we celebrate our 20th anniversary, 2006 promises to be another exciting and rewarding year for Enerplus. We will continue to build on our past to carry us into the future.

Gordon J. Kerr
President & Chief Executive Officer