PrimeWest Energy Trust announces third quarter 2004 results CALGARY, Nov. 2 /PRNewswire-FirstCall/ -- (TSX: PWI.UN; PWX; PWI.DB.A-T; PWI.DB.B-T; NYSE: PWI) - PrimeWest Energy Trust (PrimeWest or the Trust) today announced interim operating and financial results for the third quarter ended September 30, 2004. Unless otherwise noted, all figures contained in this report are in Canadian dollars. Third Quarter Highlights: - On September 2, 2004, PrimeWest completed the acquisition of Calpine Canada assets at a cost of $806 million acquiring approximately 14,500 BOE per day of production and a 25% interest in Calpine Natural Gas Trust. Transaction costs associated with the acquisition were $8.7 million. PrimeWest entered into a series of transactions that hedged up to 90% of the volumes acquired from Calpine. This was achieved through the use of wide costless collar instruments that continue through to the first quarter of 2006. - In the third quarter, PrimeWest increased the monthly cash distributions by approximately 20% or $0.05 per month to $0.30 per unit effective with the October 15, 2004 distribution. - During the quarter, PrimeWest concluded a financing of $550 million comprised of a $300 million equity issuance and $250 million of convertible unsecured subordinated debentures. These funds, together with additional bank borrowings, were used to acquire the Calpine assets. - Debt to annualized third quarter 2004 cash flow is 1.7 times. - Third quarter production averaged 35,460 barrels of oil equivalent (BOE) per day, compared to the second quarter 2004 rate of 31,185 BOE per day. - Distributions of $0.83 per unit represent a payout ratio of approximately 74%, compared to second quarter 2004 distributions of $0.75 per unit, representing a payout ratio of 72%. - Cash flow from operations of $68.3 million ($1.06 per unit) compared to $58.2 million ($1.05 per unit) in the second quarter of 2004, primarily due to a continued strong commodity price environment and increased production volumes for the month of September from the Calpine asset acquisition. - Following the completion of the Calpine transaction where the assets were acquired with full tax pools, PrimeWest has re-evaluated its taxability of the 2004 distributions. For unitholders resident in Canada, PrimeWest anticipates that approximately 55% of 2004 distributions will be taxable and 45% will be deemed a return of capital. Subsequent Events - On October 4, 2004, PrimeWest commenced an asset divestiture program targeting to sell approximately $100 million of non-core assets. Bids are due on November 4, 2004 and the targeted closure of successful asset sales is December 31, 2004. Management's Discussion and Analysis The following is management's discussion and analysis (MD&A) of PrimeWest's operating and financial results for the quarter ended September 30, 2004, compared with the preceding quarter and the corresponding period in the prior year as well as information and opinions concerning the Trust's future outlook based on currently available information. This discussion should be read in conjunction with the Trust's audited consolidated financial statements for the years ended December 31, 2003 and 2002, together with accompanying notes, as contained in the Trust's 2003 Annual Report.