DBRS Maintains Stability Rating of Enerplus Resources at STA- 5 (high) Under Review – Developing

DBRS has today maintained the stability rating of Enerplus Resources Fund (Enerplus or the Trust) at STA-5 (high) – Under Review with Developing Implications, following the announcement of the proposed merger between Enerplus and Focus Energy Trust (Focus) through a share exchange resulting in a pro-forma enterprise value of approximately $7.6 billion. The purchase price of approximately $1.68 billion (including assumed debt of approximately $300 million) represents a 3% premium on the 10-day weighted-average trading price of Focus trust units ended November 30, 2007. The proposed purchase, while not expected to be accretive to cash flow in the near term, should be modestly positive from an operational perspective, resulting in slightly better operational metrics. This coupled with economies of scale should better sustain distributions over time, with little impact anticipated on Enerplus’s financial profile. Enerplus is expected to maintain the existing cash distributions of $0.42/unit upon closing of the transaction. The Trust was originally placed Under Review with Developing Implications on November 1, 2006, following the federal government’s proposed taxation of income trusts beginning in 2011.

Under the terms of the proposed merger, each Focus trust unit will be exchanged for 0.425 of an Enerplus trust unit on a tax-deferred rollover basis.

The decision to maintain the stability rating of Enerplus reflects the following considerations:

1) The merger provides a good strategic fit with the existing assets of Enerplus, providing a larger and better diversified production and reserves base with improved capital efficiency based on Focus’s lower cost base. Reductions in operating costs as well as general and administration expenses per barrel of oil equivalent (boe) are expected in 2008. Further, the Focus assets have significant property overlap with existing Enerplus properties (about 50%) and should enhance the technical capabilities for the Trust on a combined basis. Upon closing of the transaction, the Trust will operate about 70% of its properties and have total gross production of about 101,000 boe/d (+26%), weighted 61% to natural gas (compared with 54% for Enerplus standalone). The more gas-weighted operation, while introducing more volatility in the near term, should help to achieve a more balanced portfolio, when the oil sands projects come on stream, expected in the next few years. About half of the pro-forma crude oil production is hedged for 2009 and about one-third for natural gas to March 2008 and declining for the remainder of the year.

2) The transaction is expected to have a modest impact on the credit metrics of Enerplus with debt-to-capital and debt-to-cash flow ratios on a pro-forma basis estimated at about 19% and one times respectively, compared with 19.5% and 0.77 times at September 30, 2007. The payout ratio for Enerplus is also expected to remain about the same at about 73% pro-forma for the transaction and based on the Trust’s 2008 cash flow expectations as compared with 72% for the nine months ended September 30, 2007. The larger size of Enerplus subsequent to the proposed Focus transaction should further add to the Trust’s market presence and access to capital.

3) The proved reserve life index for Enerplus on a combined basis including Focus will decrease slightly to about 9.9 years (versus 10.3 years in 2006 for Enerplus standalone), but remains reasonable compared to the Trust’s peers. The transaction also has relatively high acquisition costs of approximately $80,000 per flowing barrels of gross production and $26.35 per barrel of gross proved reserves, but is in-line with recent transactions in the trust market. Transaction costs on a full cycle basis should be more reasonable, and Focus’s operating costs are relatively low resulting in good netbacks in the current natural gas price environment.

DBRS expects to resolve the Under Review – Developing status upon closing of the transaction expected by mid-to-late February 2008, subject to Focus unitholders approval, regulatory and other approvals. DBRS’s review will focus on the following factors: (1) The impact of Focus’s asset base on the operational risk and growth profile of Enerplus going forward, (2) The sustainability of future distributions for Enerplus after factoring in the Focus asset base and increased volatility, (3) Potential synergies, tax impact, integration issues, transaction accretion over time and full cycle costs for the transaction, and (4) Enerplus business strategies, going forward, in response to the proposed taxation of income trusts starting in 2011.

Note:
All figures are in Canadian dollars unless otherwise noted.