OIL SANDS

Our oil sands business continues to be a significant part of our future growth. In addition to our activities on the non-operated Joslyn lease which includes both SAGD and mining potential, we made these additional advancements:

• Enerplus has built up an internal oil sands team with significant industry experience in SAGD development. We are actively pursuing an operated SAGD project in which to deploy this team.
• Our joint venture arrangement with Laricina Energy Ltd. ("Laricina") has been advanced. We invested approximately $3 million in 2006 to acquire a non-operated working interest in several land positions with SAGD development potential which will be operated by Laricina.

Joslyn Project

Enerplus and Total E&P Canada ("Total"), the operator of the Joslyn project, are continuing to review the lease development plans given the flexibility which exists for both SAGD and mining operations. Although meaningful progress was made in 2006, the complexities of determining the optimal development plan have extended the expected timeline. An extensive lease development plan is anticipated in 2007 and is not expected to impact current SAGD operations or the startup timing of the initial phase of the mine. The development plan will also provide an update of estimates relating to the future development capital associated with the mine development.

A summary of the expected production and timing for the various projects on the Joslyn lease are included in the table below. Not all dates are available given the uncertainty around the final full lease development plan.

Joslyn Project Development

⁽¹⁾ All production estimates are those of the Operator
⁽²⁾ Future development capital for SAGD based on independent third party reserve report dated December 31, 2006. Future development capital for mining is currently under full review by the Operator as the project definition advances and new investment estimates are anticipated toward the end of 2007.
⁽³⁾ Start up for SAGD refers to first steam. Start up for mining refers to initial extraction
⁽⁴⁾ Full production refers to full project production throughput

Reserves

Independent reserves evaluation of the Joslyn lease indicates total proved reserves of 8.7 million BOE, and total proved plus probable reserves of 56.7 million BOE net to Enerplus in the SAGD area for Phases I - III. Independent contingent resource estimates for the North Mine indicate approximately 140 million BOE net to Enerplus, or over 900 million BOE gross. This is consistent with numbers filed in the North Mine regulatory application by the Operator. In addition, third party assessments estimate significant additional mining resources outside the North Mine area.

If current development plans are modified and a decision is made to mine some of the currently identified SAGD areas, existing SAGD Phase III probable reserve bookings could be impacted. Although mining typically provides about twice the recovery of the original bitumen in place versus SAGD projects, there could be timing differences between reserves bookings associated with the existing SAGD Phase III development plans versus possible expansion of mine development plans. Although timing of the expected booking may extend through 2007, depending on the progress made over the next year, we may be in a position to book probable reserves associated with the North Mine at year-end.

2006 Capital Investment

In regard to the Joslyn lease, spending in 2006 reached $36 million to advance both the SAGD ($33 million) and the mining options ($3 million). In addition, $3 million was spent to acquire lands in conjunction with Laricina, resulting in a total oil sands investment of $39 million in 2006. This capital included the drilling of close to 280 gross additional delineation wells over both SAGD and mining areas and the 4.5 gross sections of land acquired in late 2005. Capital investment to progress the SAGD development included the completion of central plant facilities, the commissioning and start-up of the water treatment system, the initiation of steam injection into SAGD well pairs, and the completion of a 40 kilometre pipeline from Joslyn to the Athabasca Terminal. Total continues to expect Phase II to reach peak production of 10,000 bbls/day gross (1,500 bbls/day net to Enerplus) in 2008, however due to reduced operating pressures, this may require additional wells and capital in 2007 and 2008. We currently do not have any production volumes associated with this project included in our 2007 production estimates as commercial volumes are not expected until 2008. Investment on the mining side supported the application for regulatory approval of the North Mine, representing 100,000 bbls/day of potential gross bitumen production.

2007 Capital Spending Outlook

Capital spending on oil sands is expected to increase to approximately $40 million including:

• Joslyn SAGD development of $21 million, which includes the continued start-up and ramp-up of Phase II well pairs, and the possible addition of 10 new well pairs late in the year. The regulatory approval process continues for SAGD Phase III with approvals expected in the first quarter of 2007 assuming no change in the base development plan. Currently Phase III represents a 15,000 bbl/day expansion of the existing facilities to a potential of 25,000 bbls/day of gross SAGD production (3,750 bbls/day net to Enerplus).
• Mining investment of $13 million to advance the regulatory approval process and engineering, and to further delineate the mine.
• Investment of $6 million to further delineate the new Laricina lands in the first quarter of 2007.

These investments will enhance the value of our portfolio of oil sands assets. Our capital spending may increase further should we identify and execute on other attractive oil sands opportunities.