SHALLOW NATURAL GAS AND COALBED METHANE

Shallow natural gas and coalbed methane are similar resource plays in that the key to success is the ability to execute large, multi-well development programs efficiently and to manage the post-drilling operations of these low pressure wells. The large aerial extent, low geologic risk and the repeatable, predictable, large-scale nature of shallow gas and coalbed methane make them bona-fide resource plays.

Shallow gas and coalbed methane represent 22% of our proved plus probable reserves, with an attractive reserve life index of 17.2 years. Production volumes from these two resource plays represent 16% of our total production, with shallow gas representing the majority in this category. During 2006, we invested $94 million on shallow gas/CBM development, drilling 430 gross (249.5 net) wells and adding 3,200 BOE/day of incremental production at an average on-stream cost of $29,400/BOE/day. Key areas of shallow gas development include Hanna, Bantry and Shackleton, while CBM development efforts were focused at Bashaw, Joffre and Trochu.

Currently, our inventory of shallow gas/CBM future drilling locations represents approximately six years of development at historical investment levels. However, for 2007 we have chosen to highgrade our development program to $43 million, focusing on our most profitable programs given potential risks in near-term gas prices. Should gas price strength continue, the size of this program could increase.

The following historical plot of our operated Medicine Hat shallow gas production is a typical example illustrating the long term success we have achieved through development of this resource. Since acquiring the property in 1997, we have drilled over 350 wells and increased production by 175% and reserves by 340%. Enerplus has also identified over 300 additional future drilling locations.