Bonterra has an excellent asset base consisting of concentrated, stable and under-developed properties with large amounts of remaining oil in place, a long reserve life, with low risk and predictable reserves. Management feels that it’s stable asset base with its predictable production profile represents the most suitable reserve base for a trust. The high wellhead prices received and the low royalty rates paid equates to Bonterra having among the highest netbacks in the industry. Management has continually proven it can manage these high quality assets to generate long-term value.

 

                The Trust’s major producing properties are located in the Pembina area of Alberta, the Shaunavon area in southwest Saskatchewan, and the southeast area of Saskatchewan.  Bonterra’s reserves and production growth will come from exploiting it’s high remaining oil in place properties primarily from it’s large inventory of low risk internally generated exploitation and drilling programs that have predictable results. The Trust will continue to maintain its financial flexibility so it can continue to acquire exploration and development lands in the Pembina area of Alberta, and pursue other drilling opportunities in Alberta and Saskatchewan. The Trust will be reviewing and assessing strategic producing and non-producing properties for acquisitions on an ongoing basis in various areas in Western Canada.

 

Pembina Area, West Central Alberta

The Pembina field is the largest conventional oil field in Canada and contains the Trust’s most significant producing property. Pembina is Bonterra’s largest core area representing 89.9% of the Trust’s total reserves. The high concentration of interest in a single area allows for better focused management of it’s assets including an improved ability to manage cost and efficiently invest capital.  This production is predominately predictable, long life, low decline, and high quality light oil and associated liquid rich solution gas from the Cardium formation that is located at an average depth of approximately 1,550 meters.

 

                Bonterra operates approximately 83 percent of its Pembina production which allows for significant operating efficiencies. The property contains approximately 456 gross (394 net) operated producing wells with an 86 percent average working interest and 167 gross (29 net) non-operated producing wells with an approximate 17 percent average working interest.

 

                This large land holding, large amount of remaining oil in place and strong infrastructure position provides a strong base to exploit a range of low risk development and exploration opportunities. Even though the Pembina area is considered a mature field it is proving to be a significant area for multi-zone oil and natural gas exploration with predictable results. The Trust has managed to increase reserves and maximize income in the area through drilling, through low-cost optimization opportunities, and through key acquisitions. As a result, Bonterra has one of the longest Reserve Life Index’s and a proven record of production and reserves replacement through drilling and improved recovery.

 

                On October 30, 2007, (with an effective date of May 1, 2007), Bonterra swapped it’s interest in the Dodsland Area of Saskatchewan for producing properties in the Pembina Area.  This swap further consolidated Bonterra’s land position in the area, increasing operated volumes in the area by approximately 256 BOE/d.  The Trust also realized significant benefits in operating cost reductions and added additional drilling opportunities as a result of the transaction.

 

                The Trust’s large drilling inventory has enabled it to increase production volumes.  A Cardium infill drilling program was initiated on Bonterra’s operated and non-operated properties in 2003 and has continued successfully through 2007 and will continue into 2008 and beyond.  The continuation of the Cardium drilling program will allow the Trust to maintain and increase its production rates and reserves.

 

                Bonterra has significant potential upside in the Pembina Cardium field with the implementation of a miscible CO₂ enhanced oil recovery scheme.  There is significant uncertainty over the economic feasibility of enhanced oil recovery using CO₂ however an industry operator is currently running a miscible CO₂ flood pilot offsetting Bonterra lands. Details of the pilot are confidential; however, public information released by the operator is encouraging stating that a comprehensive EOR program could increase the ultimate recovery factor by approximately 15%. Increasing environmental concern over CO₂ emissions and the current high price environment are improving the viability of CO₂ flooding however a long term low cost source of CO2 and supportive environmental regulations will be key to its implementation. The Trust has a large land base that may be suitable for CO₂ enhanced oil recovery and will continue to investigate its potential development.

 

                Bonterra is also producing from the Belly River formation.  The Belly River produces high quality light sweet oil from a depth of approximately 1,100 meters.  There is potential to increase production from the Belly River formations through drilling in select areas of the field.   Bonterra is currently evaluating Belly River re-completion potential in several suspended Cardium well bores.

 

                Bonterra has been able to increase natural gas production and reserves by drilling multi-zone shallow gas wells into the Edmonton and Paskapoo formations. The Trust is targeting several productive sands that range in depth from 275 to 850 meters.  Bonterra continued to drill wells on its expanded shallow gas land base in 2007 and plans to continue shallow gas drilling in 2008.   Bonterra is targeting low-cost optimization opportunities in existing producing wells, and anticipates further re-completions in the shallow gas zones, taking advantage of the new commingling regulations for gas wells.  The Trust is also in the preliminary stages of assessing its shallow gas land base for the potential to increase well densities in order to maximize recoveries.

 

                Bonterra has been assessing production of coal bed methane (CBM) in the Pembina area with encouraging initial results. Based on these results, Bonterra had hoped to proceed with a program of re-entering existing wells and drilling new wells to further assess the CBM potential. Due to regulatory delays, uncertainty by regulators, lower gas prices, and high costs of services, Bonterra has delayed this project until all regulatory concerns are rectified and project economics improve.  Bonterra has extensive prospective land holdings near existing operated infrastructure in the area. CBM has the potential to add significant low risk production and reserves and the Trust will continue to pursue this opportunity.

Dodsland Area, Southwest Saskatchewan

On October 30, 2007 (with an effective date of May 1, 2007), Bonterra swapped its interest in the Dodsland Area for producing properties in the Pembina Area.

Shaunavon Area, Southwest Saskatchewan

Bonterra operates this major producing property which consists of approximately 50 producing wells in the Shaunavon area of southwest Saskatchewan where the Trust’s working interest averages approximately 92 percent. The properties are located in the Whitemud and Chambery fields and produce 22 degree API crude oil from the upper Shaunavon formation located at a depth of approximately 1,500 meters. A portion of the property is being produced under waterflood with the majority of the properties still on primary production. The primary production areas are being monitored on an ongoing basis to determine if water flood programs should be initiated.  The wells in the Shaunavon area generally have a very long life and stable low decline production profile after a short period of higher decline when a new well initially commences production. Bonterra continues to evaluate this area to determine if further optimization programs may increase overall profitability from the properties and it is expected that several identified low-cost optimization activities will commence in 2008.

The Trust is continuing to assess its undeveloped acreage to determine if there is potential exploration or development prospects in the area.  The Trust has reached a farm-out agreement, with favorable terms, on one section of land in the Shaunavon Area.  It is expected that drilling will commence in 2008.

Southeast Saskatchewan

The southeast properties produce slightly sour high gravity oil and solution gas primarily from the Midale formation. The Trust has an average working interest of approximately 98 percent in its properties in the area..  Some of these properties are located close to fields that have extensive CO₂ flood programs; and therefore, in the future may be conducive to reserve and production increases from a CO₂ flood program.

Other

Bonterra has varying interests in other producing and non-producing properties in various other areas of Alberta and Saskatchewan.  Most of these properties are long term producers and may provide opportunities for increased interests in the future.

Reserves

The Trust engaged the services of Sproule Associates Limited to prepare a reserve evaluation with an effective date of December 31, 2007.  The reserves are located in the Provinces of Alberta and Saskatchewan.  The Trust’s main oil producing areas are located in the Pembina area of Alberta and Shaunavon area of Saskatchewan.  The gross reserve figure for the following charts represents the Trust’s ownership interest before royalties and the net figure is after deductions for royalties.

 

SUMMARY OF OIL AND GAS RESERVES AS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)
	RESERVES
	Light and Medium Oil		Natural Gas		Natural Gas Liquids
	Gross	Net	Gross	Net	Gross	Net
RESERVE CATEGORY	(Mbbl)	(Mbbl)	(MMcf)	(MMcf)	(Mbbl)	(Mbbl)
_____________________________________________________________________________
PROVED
Developed Producing	13,624	12,909	19,863	15,281	844	627
Developed Non-Producing	9	9	907	731	1	1
Undeveloped	2,808	2,425	3,355	2,215	186	123
_____________________________________________________________________________
TOTAL PROVED	16,442	15,343	24,125	18,228	1,030	750
PROBABLE	4,160	3,890	8,340	6,213	278	194
_____________________________________________________________________________
TOTAL PROVED PLUS PROBABLE	20,602	19,233	32,465	24,441	1,308	944
RECONCILIATION OF TRUST GROSS RESERVES BY PRINCIPAL PRODUCT TYPE (FORECAST PRICES AND COSTS)
	Light and Medium Oil and NGL's			Natural Gas
	Gross Proved (Mbbl)	Gross Probable (Mbbl)	Gross Proved Plus Probable (Mbbl)	Gross Proved (MMcf)	Gross Probable (MMcf)	Gross Proved Plus Probable (MMcf)
_____________________________________________________________________________
December 31, 2006	16,758	4,768	21,526	22,562	7,138	29,700
Extension	719	180	899	1,350	(375)	975
Improved recovery	147	57	204	295	168	463
Technical revisions	1,473	(411)	1,062	1,066	1,363	2,429
Discoveries	-	-	-	-	-	-
Acquisitions	771	260	1,031	1,372	418	1,790
Dispositions	(1,288)	(357)	(1,645)	(448)	(185)	(633)
Economic Factors	(27)	(59)	(86)	103	(187)	(84)
Production	(1,081)	-	(1,081)	(2,175)	-	(2,175)
_____________________________________________________________________________
December 31, 2007	17,472	4,438	21,910	24,125	8,340	32,465
_____________________________________________________________________________

SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE AS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)
	NET PRESENT VALUE OF FUTURE NET REVENUE
	Before Income Taxes                                      Discounted at (%/year)
	0	5	10	15	20
(M$)
RESERVE CATEGORY
_____________________________________________________________________________
PROVED
Developed Producing	834,718	489,936	351,815	279,759	235,358
Developed Non-Producing	4,009	3,167	2,570	2,131	1,799
Undeveloped	111,055	88,159	70,872	57,584	47,202
_____________________________________________________________________________
TOTAL PROVED	949,782	581,262	425,257	339,474	284,358
PROBABLE	323,791	131,693	74,507	49,747	36,262
_____________________________________________________________________________
TOTAL PROVED PLUS PROBABLE	1,273,573	712,955	499,764	389,222	320,620
_____________________________________________________________________________
SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE AS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)
	NET PRESENT VALUE OF FUTURE NET REVENUE
	After Income Taxes                                      Discounted at (%/year)
	0	5	10	15	20
(M$)
RESERVE CATEGORY
_____________________________________________________________________________
PROVED
Developed Producing	687,026	422,853	313,885	255,463	260,016
Developed Non-Producing	3,375	2,690	2,204	1,846	1,573
Undeveloped	94,416	74,799	60,043	48,718	39,870
_____________________________________________________________________________
TOTAL PROVED	784,817	500,341	376,132	306,026	260,016
PROBABLE	244,341	100,548	57,632	38,976	28,768
_____________________________________________________________________________
TOTAL PROVED PLUS PROBABLE	1,029,159	600,889	433,763	345,003	288,784
_____________________________________________________________________________
Commodity prices used in the above calculations of reserves are as follows:
Year	Edmonton Par Price	Alberta Gas Reference Price Plantgate	Propane	Butane	Pentane
	(Cdn $ per barrel)	(Cdn $ per MCF)	(Cdn $ per barrel)	(Cdn $ per barrel)	(Cdn $ per barrel)
___________________________________________________________________________________________________________________
2008	88.17	6.19	52.29	65.72	90.30
2009	84.54	6.94	50.14	63.01	86.58
2010	83.16	7.46	49.32	61.98	85.17
2011	81.26	7.50	48.20	60.57	83.23
2012	80.73	7.41	47.88	60.17	82.68
2013	81.25	7.58	48.19	60.56	83.21
2014	82.88	7.76	49.16	61.78	84.88
2015	84.55	7.94	50.14	63.02	86.59
2016	86.25	8.12	50.15	64.28	88.33
2017	87.98	8.31	52.18	64.58	90.10
Crude oil, natural gas and liquid prices escalate at 2% per year thereafter.
The following cautionary statements are specifically required by NI 51-101 It should not be assumed that the estimates of future net revenue presented in the above tables represent the fair market value of the reserves.  There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. Disclosure provided herein in respect of BOE’s may be misleading, particularly if used in isolation.  In accordance with NI 51-101, a BOE conversion ratio of 6mcf:1bbl has been used in all cases in this disclosure.  This 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. Estimates of reserves and future net revenues for individual properties may not reflect the same confidence level as estimates of reserves and future net revenues for all properties due to the effects of aggregation.

 

Production

The following table provides a summary of production volumes from the Trust’s main producing areas:
	2007		2006
	Oil and NGL	Natural Gas	Oil and NGL	Natural Gas
	(Bbls/day)	(MCF/day)	(Bbls/day)	(MCF/day)
___________________________________________________________________________________________________________________
Pembina, Alberta	2,346	5,555	2,178	4,768
Shaunavon, Saskatchewan	310	-	348	-
Dodsland, Saskatchewan	206	97	251	141
Peck Lake, Saskatchewan	-	293	-	392
Pinto, Saskatchewan	65	80	72	97
Redwater, Alberta	37	79	36	73
Midale, Saskatchewan	39	4	40	8
Other	110	519	115	535
_____________________________________________________________________________
	3,113	6,627	3,040	6,014

Land Holdings

The Trust’s holdings of petroleum and natural gas leases and rights are as follows:
	2007		2006
	Gross Acres	Net Acres	Gross Acres	Net Acres
Alberta	133,216	83,609	119,777	73,431
Saskatchewan	33,778	30,409	63,136	48,538
_____________________________________________________________________________
	166,994	114,018	182,913	121,969
_____________________________________________________________________________

Petroleum and Natural Gas Capital Expenditures

The following table summarizes petroleum and natural gas capital expenditures incurred by the Trust on acquisitions, land, seismic, exploration and development drilling and production facilities for the years ended December 31:
	2007	2006
Acquisitions(1)	$18,369,000	$-
Disposals(1)	(17,664,000)	-
Exploration and development costs	18,595,000	38,348,000
_____________________________________________________________________________
Net petroleum and natural gas capital expenditures	$19,300,000	$38,348,000
_____________________________________________________________________________

⁽¹⁾ Included in acquisitions and disposals is an asset swap valued at $17,664,000.

Drilling History

The following table summarizes the Trust’s gross and net drilling activity and success:
			2007
	Development		Exploratory		Total
	Gross	Net	Gross	Net	Gross	Net
_____________________________________________________________________________
Crude Oil	22	15.3	-	-	22	15.3
Natural Gas	2	0.7	-	-	2	0.7
Dry	-	-	-	-	-	-
_____________________________________________________________________________
Total	24	16.0	-	-	24	16.0
_____________________________________________________________________________
Success rate	100%	100%	-	-	100%	100%
_____________________________________________________________________________
			2006
	Development		Exploratory		Total
	Gross	Net	Gross	Net	Gross	Net
_____________________________________________________________________________
Crude Oil	43	30.3	-	-	43	30.3
Natural Gas	9	6.5	-	-	9	6.5
Dry	9	8.8	-	-	9	8.8
_____________________________________________________________________________
Total	61	45.6	-	-	61	45.6
_____________________________________________________________________________
Success rate	85%	81%	-	-	85%	81%
			2005
	Development		Exploratory		Total
	Gross	Net	Gross	Net	Gross	Net
_____________________________________________________________________________
Crude Oil	42	15.0	-	-	42	15.0
Natural Gas	2	1.0	-	-	2	1.0
Dry	4	2.5	-	-	4	2.5
_____________________________________________________________________________
Total	48	18.5	-	-	48	18.5
_____________________________________________________________________________
Success rate	92%	86%	-	-	92%	86%
_____________________________________________________________________________