EXHIBIT 99.2
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P R E S S R E L E A S E
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[LOGO - HARVEST ENERGY TRUST]
HARVEST ENERGY TRUST - NEWS RELEASE
(HTE.UN - TSX)
HARVEST ENERGY TRUST ANNOUNCES FOURTH QUARTER AND FULL YEAR 2004
FINANCIAL AND OPERATING RESULTS
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CALGARY, MARCH 14, 2005 (TSX: HTE.UN) - Harvest Energy Trust ("Harvest" or the
"Trust") announces the release of its fourth quarter and year ended December 31,
2004 financial and operating results.
HIGHLIGHTS
o Our fourth quarter and full year production increased by 149% and 109%,
respectively, compared to the same periods in 2003. Average daily
production was 37,024 BOE/d in the fourth quarter, and 23,019 BOE/d for
the full year 2004. These increases reflect success from our internal
development projects as well as the two large acquisitions completed
during the year;
o We declared distributions of $2.40 per unit in 2004, resulting in a
payout ratio of 46% in the fourth quarter and 50% for the full year
2004. This compares to 75% and 66% for the same periods in 2003, and
reflects the continuation of Harvest's strategy to retain cash for
development purposes;
o Cash flow per unit (basic) in the fourth quarter 2004 totaled $1.31, an
increase of 54% relative to the same period in 2003. Full year 2004
cash flow per unit (basic) was $5.13, which represents a 39% increase
over 2003;
o Harvest has reduced operating costs per BOE to $7.37 in the fourth
quarter of 2004 from $9.50 in the fourth quarter of 2003;
o F&D costs per BOE of Total Proved reserves and Proved plus Probable
(P+P) reserves were $5.42 and $4.15, respectively, on $42.7 million in
development capital. FD&A costs per BOE on Total Proved and P+P
reserves were $14.51 and $11.08 per BOE, respectively, on total capital
expenditures of $748.7 million. Recycle ratios achieved for 2004 were
4.5 times on a Total Proved basis and 5.8 times on a P+P basis. Both
F&D and FD&A costs include future development capital. We have revised
the F&D costs for P+P reserves from that previously reported in our
press release dated February 28, 2005, following further review of our
reserve reconciliation and finalization of our financial statements;
o Total Proved and P+P reserves increased 176% and 211% from the prior
year, to 75.0 MMBOE and 102.5 MMBOE, respectively, and natural gas
reserves increased to approximately 14% of total. These increases are
primarily the result of two successful acquisitions which Harvest
completed during the year;
o These reserve increases were accretive to unitholders. P+P reserves per
fully diluted Trust Unit increased by 25% to 2.27 in 2004 (2003 - 1.82)
and 77% since inception (1.28), while increasing our reserve life index
to 8. We believe these are strong measures of value added for our
unitholders;
o Net present value (before taxes, discounted at 10%) per fully diluted
Trust Unit of our Total Proved and P+P reserves increased 134% and
170%, respectively, to $19.96 per Unit on a Total Proved basis and
$25.12 per Unit on a P+P basis;
o We issued US$250 million, 7-year 7?% senior notes on October 14, 2004.
This transaction created longer term financial flexibility, and will
facilitate future access to U.S. financial markets if needed.
PRESS RELEASE
HARVEST ENERGY TRUST Page 2 of 4 March 14, 2005
2004 FINANCIAL & OPERATING HIGHLIGHTS
The table below provides a summary of Harvest's financial and operating results
for both the three and twelve month periods ended December 31, 2004 and 2003.
Our consolidated financial statements with accompanying notes and our
Management's Discussion and Analysis (MD&A) are available on the "Financial
Information-Annual Reports" section of Harvest's website (www.harvestenergy.ca)
and will be filed shortly on SEDAR (www.sedar.com).
THREE MONTHS ENDED DECEMBER 31 TWELVE MONTHS ENDED DECEMBER 31
($000S EXCEPT PER TRUST UNIT AND PER BOE(1) AMOUNTS)
FINANCIAL 2004 2003 % Change 2004 2003 % Change
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(RESTATED)(6) (RESTATED)(6)
Revenue, net of royalties $107,446 $ 33,575 220% $ 277,095 $ 102,939 169%
Cash flow from operations(5) 53,545 13,699 291% 130,003 46,492 180%
Per Trust Unit, basic(5) 1.31 0.85 54% 5.13 3.69 39%
Per Trust Unit, diluted(5) 1.27 0.82 55% 4.91 3.58 37%
Net income 12,536 5,495 128% 18,231 15,516 17%
Per Trust Unit, basic 0.29 0.30 (3%) 0.47 1.16 (59%)
Per Trust Unit, diluted 0.28 0.29 (3%) 0.45 1.13 (60%)
Distributions, declared 24,823 10,209 143% 64,563 30,685 110%
Distributions per Trust Unit, declared(7) 0.60 0.60 0% 2.40 2.40 0%
Payout ratio(2)(5) 46% 75% (39%) 50% 66% (24%)
Capital asset additions (excluding acquisitions) 8,873 4,334 105% 42,662 27,209 57%
Acquisitions - 80,271 (100%) 706,000 108,700 549%
Net debt (excluding derivative contracts)(3)(5) 429,671 78,555 447% 429,671 78,555 447%
Weighted average Trust Units
outstanding, basic(4) 40,937 16,175 153% 25,324 12,591 101%
Trust Units outstanding, end of period 41,788 17,109 144% 41,788 17,109 144%
Trust Units, fully diluted(8), end of period 45,088 18,174 148% 45,088 18,174 148%
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OPERATING
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Daily Sales Volumes(10)
Light oil (bbl/day) 12,228 4,079 200% 7,911 1,028 670%
Medium oil (bbl/day) 3,644 4,662 (22%) 4,324 4,286 1%
Heavy oil (bbl/day) 15,120 5,756 163% 8,495 5,444 56%
Natural gas liquids (bbl/day) 1,309 70 1770% 471 64 636%
Natural gas (mcf/d) 28,338 1,744 1525% 10,903 1,311 732%
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Total (BOE/d) 37,024 14,858 149% 23,019 11,040 109%
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REALIZED PRICES
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Average Selling Prices(10)
Light oil ($/bbl) $ 53.64 $ 35.56 51% $ 48.70 $ 35.56 37%
Medium oil ($/bbl) 35.55 30.13 18% 38.78 32.18 21%
Heavy oil ($/bbl) 28.73 24.92 15% 31.11 27.34 14%
Natural gas liquids ($/bbl) 33.19 29.18 14% 41.10 29.92 37%
Natural gas ($/mcf) 5.68 6.01 (5%) 6.30 6.70 (6%)
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Total ($/BOE) $ 37.77 $ 29.13 30% $ 39.33 $ 29.62 33%
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OPERATING NETBACKS(5) ($/BOE)
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Revenues $ 37.77 $ 29.13 30% $ 39.33 $ 29.62 33%
Realized loss on derivative contracts (4.91) (2.18) 125% (6.47) (4.67) 39%
Royalites (6.23) (4.66) 34% (6.44) (4.07) 58%
Operating expense(9) (7.37) (9.50) (22%) (8.48) (8.94) (5%)
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Operating netback(5) $ 19.26 $ 12.79 51% $ 17.94 $ 11.94 50%
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(1) All calculations required to convert natural gas to a crude oil
equivalent (BOE) have been made using a ratio of 6 mcf of natural gas
to 1 barrel of crude oil. BOEs may be misleading, particularly if used
in isolation. The BOE conversion ratio is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.
(2) Ratio of distributions to cash flow from operations.
(3) Net debt is bank debt, senior notes, equity bridge notes, convertible
debentures and any working capital deficit excluding the current
portion of derivative contracts and the accounting liability related to
our Trust Unit incentive plan. Equity bridge notes and convertible
debentures are reflected as equity on our consolidated balance sheet in
accordance with Canadian GAAP. In 2005, GAAP will require these amounts
to be reflected as debt.
PRESS RELEASE
HARVEST ENERGY TRUST Page 3 of 4 March 14, 2005
(4) Reflects both Trust Units and exchangeable shares.
(5) These are non-GAAP measures; please refer to the "Certain Financial
Reporting Measures" section included in our MD&A.
(6) Restated to reflect the adoption of new CICA recommendations to account
for asset retirement obligations. See Note 3 to the 2004 Consolidated
Financial Statements.
(7) As if the Trust Unit is held throughout the period.
(8) Fully diluted units differ from diluted units for accounting purposes.
Fully diluted includes Trust Units outstanding at December 31 plus the
impact of the conversion or exercise of exchangeable shares, Trust Unit
rights and convertible debentures, if completed at December 31.
(9) Includes realized gain on electricity derivative contracts of $0.18 and
$0.24 for fourth quarter and full year 2004, respectively, and $0.26
and $0.39 for the same periods in 2003.
(10) Harvest classifies its oil production as light, medium and heavy
according to NI 51-101 guidance.
YEAR ENDED DECEMBER 31
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2004 2003 % Change
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RESERVES SUMMARY (MMBOE)
Proved Developed Producing 67.2 25.9 159%
Total Proved 75.0 27.2 176%
Probable 27.5 5.8 374%
Proved plus Probable 102.5 33.0 211%
TOTAL PROVED
F&D Costs ($/BOE) $ 5.42 $ 11.92 (55%)
Recycle Ratio 4.5 1.4 221%
FD&A Costs ($/BOE) $ 14.51 $ 7.23 101%
Recycle Ratio 1.7 2.2 (23%)
PROVED PLUS PROBABLE
F&D Costs ($/BOE) $ 4.15 $ 11.46 (64%)
Recycle Ratio 5.8 1.4 314%
FD&A Costs ($/BOE) $ 11.08 $ 6.62 67%
Recycle Ratio 2.2 2.5 (12%)
Total Proved Reserve Life Index 6 5 20%
Proved plus Probable Reserve Life Index 8 6 33%
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Note: 2004 recycle ratios were calculated using the average annual netback,
which does not fully reflect the higher netback production acquired during the
year.
MESSAGE TO UNITHOLDERS
2004 was a year of continued growth and evolution for Harvest. After closing two
significant acquisitions in the year, we achieved record levels of production
and cash flow since Harvest was formed. More importantly, this growth was
achieved on an accretive basis, in the form of cash flow per unit and reserves
per unit, while increasing our reserve life index (RLI). Our year end reserve
report showed significant growth in all categories, accretive reserve additions
at low cost, an increase to our RLI and substantial increases to net present
values.
As we move forward into 2005, we anticipate Harvest's capital development budget
to be approximately $75 million, focused on our four core areas of Southern
Alberta, North Central Alberta, East Central Alberta and Southeast Saskatchewan.
We expect to drill up to 70 wells and will continue to focus our efforts on
production increases, reserve recovery optimization and cost reduction
initiatives.
Production volumes in 2005 are expected to average between 34,000 and 36,000
BOE/d, with royalty rates as a percentage of revenue expected to average between
15 and 17%. As a result of ongoing cost reduction activities and lower operating
cost property acquisitions in 2004, operating expenses are expected to average
lower in 2005, between $7.75 and $8.50 per BOE. Approximately 75% of our net
crude oil production volumes are hedged for 2005, with approximately 80% of our
hedge contracts structured to allow participation in a strengthening commodity
price environment.
PRESS RELEASE
HARVEST ENERGY TRUST Page 4 of 4 March 14, 2005
Harvest will be conducting a conference call and Webcast to discuss its fourth
quarter and full year 2004 results at 9:00 a.m. Mountain time (11:00 a.m.
Eastern time) on March 14th, 2005. Callers may dial 1-877-888-3490
(international callers, or Toronto local dial 416-695-5261) a few minutes prior
to start and request the Harvest conference call. The call also will be
available for replay by dialing 1-888-509-0082 (international callers, or
Toronto local dial 416-695-5275). No passcode is required.
Webcast listeners are invited to go to the Financial Information - Annual
Reports page of the Harvest Energy website at www.harvestenergy.ca for the live
Webcast and/or a replay of the Webcast.
Harvest Energy Trust is a Calgary-based energy trust actively managed to deliver
stable monthly cash distributions to its Unitholders through its strategy of
acquiring, enhancing and producing crude oil, natural gas and natural gas
liquids. Harvest Trust Units are traded on the Toronto Stock Exchange (TSX)
under the symbol "HTE.UN". Please visit Harvest's website at
www.harvestenergy.ca for additional corporate information and a recent corporate
presentation.
INVESTOR & MEDIA CONTACTS:
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| CORPORATE HEAD OFFICE:
JACOB ROORDA | Harvest Energy Trust
President | 2100, 330 - 5th Avenue S.W.
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|
DAVID RAIN | PHONE: (403) 265-1178
Vice President & CFO | TOLL FREE: (866) 666-1178
- ----------------------------------------| Fax: (403) 265-3490
|
CINDY GRAY | EMAIL: information@harvestenergy.ca
Investor Relations & | WEBSITE: www.harvestenergy.ca
Communications Advisor |
gray@harvestenergy.ca |
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