EXHIBIT 3
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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 FIRST QUARTER 2005
FINANCIAL AND OPERATING RESULTS
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CALGARY, MAY 12, 2005 (TSX: HTE.UN) - Harvest Energy Trust ("Harvest") today
announced its unaudited operating and financial results for the three month
period ended March 31, 2005.
HIGHLIGHTS:
o Achieved average production volumes of 35,386 BOE/d, 139% higher than the
same period the previous year and within our target range for the full year
of 34,000 to 36,000 BOE/d;
o Generated funds flow from operations (previously called cash flow from
operations) of $52.7 million or $1.25 per Trust Unit (basic), representing
a 56% increase over the $0.80 per Trust Unit (basic) recorded in the same
quarter of the previous year;
o Declared cash distributions per Trust Unit of $0.60 during the quarter,
consistent with the level maintained for the preceding 27 months and
resulting in a first quarter payout ratio of 48%;
o Invested approximately $23.2 million in our capital development program,
with approximately $13.7 million (59%) allocated to drilling. During the
quarter, Harvest drilled 15 net wells in our core areas and achieved an 88%
success rate;
o Upgraded our capital program for the balance of 2005 as our technical teams
continued to evaluate and better understand our recently acquired assets,
resulting in additional development and optimization opportunities.
PRESS RELEASE MAY 12, 2005
HARVEST ENERGY TRUST PAGE 2 OF 3
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FIRST QUARTER FINANCIAL AND OPERATIONAL SUMMARY
The table below provides a summary of Harvest's financial and operating results
for the three month period ended March 31, 2005 and 2004. Our complete
consolidated financial statements with accompanying notes and our Management's
Discussion and Analysis (MD&A) are available on the "Financial Information -
Quarterly Reports" section of Harvest's website (www.harvestenergy.ca) and will
be filed shortly on SEDAR (www.sedar.com).
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($000'S, EXCEPT WHERE NOTED) Three months ended March 31
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FINANCIAL 2005 2004 Change
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Revenue, net of royalties 109,931 39,298 180%
Net loss(5) (43,070) (2,250) (1,814%)
Per Trust Unit, basic(5) $ (1.02) $ (0.13) (685%)
Per Trust Unit, diluted(5) $ (1.02) $ (0.13) (685%)
Funds flow from operations(4,5) 52,687 13,734 284%
Per Trust Unit, basic(4,5) $ 1.25 $ 0.80 56%
Per Trust Unit, diluted(4,5) $ 1.19 $ 0.67 78%
Distributions per Trust Unit, declared(6) $ 0.60 $ 0.60 0%
Distributions declared 36,126 10,325 250%
Payout ratio(2,4) 48% 75% (36%)
Capital asset additions (excluding acquisitions) 23,223 10,157 129%
Acquisitions 4,659 1,854 151%
Net debt (excluding derivative contracts) (3,4) 421,612 87,640 381%
Weighted average Trust Units outstanding, basic 42,134,156 17,130,519 146%
Weighted average Trust Units outstanding, diluted 42,531,735 17,560,713 142%
Trust Units outstanding, end of period 43,114,827 17,281,528 149%
Trust Units fully diluted(7), end of period 46,172,372 22,559,539 105%
OPERATING
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Daily sales volumes(9)
Light oil (bbl/d) 9,943 5,053 97%
Medium oil (bbl/d) 5,671 4,150 37%
Heavy oil (bbl/d) 14,473 5,423 167%
Natural gas liquids (bbl/d) 780 50 1460%
Natural gas (mcf/d) 27,114 915 2863%
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Total (BOE/d)(1) 35,386 14,829 139%
OPERATING NETBACK(4) ($/BOE)
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Revenues 40.76 35.19 16%
Realized loss on derivative contracts (5.93) (6.71) (12%)
Royalties (6.25) (6.07) 3%
As a percent of revenue (%) 15.3% 17.3% (11%)
Operating expense(8) (8.54) (10.13) (16%)
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Operating netback(4) 20.04 12.28 63%
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NOTE 1 NATURAL GAS CONVERTED TO BARREL OF OIL EQUIVALENT (BOE) ON A 6:1 BASIS.
NOTE 2 RATIO OF DISTRIBUTIONS, EXCLUDING SPECIAL DISTRIBUTION, TO FUNDS FLOW
FROM OPERATIONS.
NOTE 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.
NOTE 4 THESE ARE NON-GAAP MEASURES; PLEASE REFER TO "CERTAIN FINANCIAL
REPORTING MEASURES" INCLUDED IN OUR MD&A.
NOTE 5 PRIOR YEAR RESTATED TO REFLECT ADOPTION OF NEW ACCOUNTING STANDARDS
WITH RESPECT TO EXCHANGEABLE SHARES AND FINANCIAL INSTRUMENTS. SEE NOTE
2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.
NOTE 6 AS IF THE TRUST UNIT WAS HELD THROUGHOUT THE PERIOD.
NOTE 7 FULLY DILUTED UNITS DIFFER FROM DILUTED UNITS FOR ACCOUNTING PURPOSES.
FULLY DILUTED INCLUDES TRUST UNITS OUTSTANDING AS AT MARCH 31 PLUS THE
IMPACT OF THE CONVERSION OR EXERCISE OF EXCHANGEABLE SHARES, TRUST UNIT
RIGHTS AND CONVERTIBLE DEBENTURES IF CONVERTED AT MARCH 31.
NOTE 8 INCLUDES REALIZED GAIN ON ELECTRICITY DERIVATIVE CONTRACTS OF $0.05 AND
$0.15 FOR THE FIRST QUARTER OF 2005 AND 2004, RESPECTIVELY.
NOTE 9 HARVEST CLASSIFIES ITS OIL PRODUCTION AS LIGHT, MEDIUM AND HEAVY
ACCORDING TO NI 51-101 GUIDANCE.
FIRST QUARTER MESSAGE TO UNITHOLDERS
During the first quarter of 2005, we focused on the continued development and
exploitation of our properties, including drilling and optimization efforts in
our four core areas. Specific attention was placed on those assets acquired in
the North Central and Southern Alberta areas in 2004.
PRESS RELEASE MAY 12, 2005
HARVEST ENERGY TRUST PAGE 3 OF 3
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Funds flow from operations totaled $52.7 million in the first quarter, and
distributions declared represent a payout ratio of 48%. Throughout 2005, we
expect our payout ratio to average between 40% and 50%, with the retained funds
flow being deployed to finance our capital program and repay debt.
We anticipate that the remainder of our 2005 capital program will be deployed
relatively equally throughout the last three quarters of 2005. Our budget
includes drilling approximately 83 gross wells (70 net) during the year, with 19
planned in East Central, 19 in North Central, 27 in Southern Alberta and 18 in
Southeast Saskatchewan.
In the first quarter, development capital expenditures totaled $23.2 million, of
which drilling represented $13.7 million (59%). Although the availability of
equipment and drilling services was somewhat limited during the first quarter of
2005, Harvest remained active and drilled 15 net wells; 2 in East Central
Alberta, 3 in North Central Alberta, 4 in Southern Alberta and 6 in Southeast
Saskatchewan with an overall success rate of 88%.
Harvest remains active in the review and analysis of acquisition opportunities.
We successfully concluded a few minor asset transactions during the quarter,
resulting in acquisition expenditures of approximately $4.7 million. These minor
acquisitions have contributed to higher working interests, as well as increased
ownership and control in existing properties to facilitate future development
opportunities. We will continue to evaluate acquisition opportunities based on
their potential to create value for our Unitholders, and will only pursue
transactions that contribute to achieving this goal. We are well positioned both
financially and operationally to take advantage of opportunities as they arise.
For 2005, we continue to anticipate that the results from our capital program,
offset by natural production declines, will result in average daily production
volumes between 34,000 and 36,000 BOE/d for the year. We anticipate royalties as
a percentage of revenue before hedging to be between 15% and 17%. Operating
expenses per BOE should average between $7.75 and $8.50, despite a slightly
elevated amount in the first quarter due to workover activity.
FIRST QUARTER 2005 CONFERENCE CALL
Harvest will be conducting a conference call for interested analysts, brokers
and investors regarding our first quarter 2005 results at 9:00 a.m. Mountain
time (11:00 a.m. Eastern time) on May 13th, 2005.
Callers may dial 1-877-667-7774 (international callers or Toronto local dial
416-695-5259) a few minutes prior to start and request the Harvest conference
call. The call will also be available for replay by dialing 1-866-518-1010
(international callers or Toronto local dial 416-695-5275). No passcode is
required.
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 recent corporate
presentations.
INVESTOR & MEDIA CONTACTS:
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JACOB ROORDA |
President | CORPORATE HEAD OFFICE:
- ------------------------------------| Harvest Energy Trust
| 2100, 330 - 5th Avenue S.W.
DAVID RAIN | Calgary, AB Canada T2P 0L4
Vice President & CFO |
- ------------------------------------| PHONE: (403) 265-1178
| TOLL FREE: (866) 666-1178
CINDY GRAY | Fax: (403) 265-3490
Investor Relations & | Email: information@harvestenergy.ca
Communications Advisor | Website: www.harvestenergy.ca
gray@harvestenergy.ca |
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ADVISORY: Certain information regarding Harvest Energy Trust and its
subsidiaries including management's assessment of future plans and operations,
may constitute forward-looking statements under applicable securities law and
necessarily involve risks associated with oil and natural gas exploration,
production, marketing and transportation such as loss of market, volatility of
prices, currency fluctuations, imprecision of reserve estimates, environmental
risks, competition from other producers and ability to access sufficient capital
from internal and external sources; as a consequence, actual results may differ
materially from those anticipated in the forward-looking statements.