CRUDE OIL WATERFLOODS

Crude oil waterfloods are a significant part of the Enerplus portfolio representing 20% of our production and 24% of our proved plus probable reserves. Waterfloods are an attractive asset because they typically have known accumulations of hydrocarbons with minimal geologic risk. Infill drilling and well/injector optimization are effective methods of enhancing recovery and creating value through the addition of production and reserves.

Enerplus has 12 major waterflood properties and numerous small waterflood properties with over 1.4 billion barrels of original oil in place. This represents a considerable resource for us as modest improvements in recovery factor can result in significant increases in reserves. During 2006 we invested approximately $66 million on waterflood development including drilling 40 gross (29.7 net) wells. Pembina and Joarcam were our most active waterflood development areas in 2006.

During 2007, we expect to maintain our investment activity in this area at approximately $65 million. This will include drilling 76 gross wells (41 net). Key development areas include Pembina, Joarcam, Virden as well as the Medicine Hat Glauconitic "C" East Unit. Although capital efficiency measures based on initial waterflood production may be higher, the low decline rates and long-life nature of these projects provide attractive full-cycle returns.

One of our major waterflood properties is our operated Medicine Hat Glauconitic "C" East Unit located in southeastern Alberta where we hold a high working interest. We purchased this property in 1999 when many in the industry did not believe it could be effectively waterflooded. We unitized the field, bought additional working interest, and successfully planned and implemented a waterflood which has significantly increased production and reserves. The field has 260 million BOE of OOIP and we have booked an expected recovery of 8% which leaves significant remaining oil in place. We continue to expand the waterflood area and look for further ways to enhance recovery.