Marcellus Shale Gas Dana W. Johnson, President, U.S. Operations

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1 The Game Plan Marcellus Shale Gas Dana W. Johnson, President, U.S. Operations

2 Marcellus Shale Gas Overview Current land position of ~ 200,000 net acres 70,000 net operated acres with an average working interest of 90% Long lease tenure at attractive entry price in area that has good thickness & maturity Average 24% non-operated working interest in ~467,000 gross acres (~114,000 net) primarily in Pennsylvania and West Virginia with Chief Oil & Gas Average 19% non-operated working interest in ~103,000 gross acres (~20,000 net) in NE Pennsylvania with EXCO Resources 1

3 Marcellus Potential Planned production growth of over 150 MMcf/day over next 4 years Contingent Resource Est Operated Tcfe Non-Operated 2.1 Tcfe 2.7 Tcfe Total 2.1 Tcfe 3.9 Tcfe # of Net Locations Land Utilization 55% 65% Average EUR/Well 3.4 Bcfe average 4.2 Bcfe average Well Costs $4 $5 million $4.5 $6.8 million Density 4-8 wells/640 acres 4-8 wells/640 acres 2P Reserves 24 Bcfe 117 Bcfe 3.9 Tcfe of best estimate contingent resource Majority of reserve bookings are in Lycoming, Susquehanna and Marshall counties - represents about 1 year s drilling Best estimate of contingent resource is nearly 5x booked corporate 2P natural gas reserves Attractive finding and development costs of $1.64/Mcfe in 2010 and over life 2

4 Geologic Variances Across the Play Counties ranked on weighted criteria: Formation at least 25 feet thick Proximity to economic production Original Gas in Place (OGIP) Bcf Maturity (Ro% or Heat Value) Northeast PA average EUR of Bcf+ Southwest PA average EUR of 4.0 Bcfe Although Tier 1 counties in NE PA have much higher OGIP, expect that greater well spacing is required than in the Tier 1 counties in SW PA We expect both regions to have a similar recovery factor 98% of Enerplus wells in our resource assessment are in the dry gas window 3

5 Marcellus Performance Cumulative Production Type curve estimates have been increased as well results have either met or exceeded our expectations 25% of wells are above 6 Bcfe type curve 4

6 Marcellus Performance NE Pennsylvania 21 MARCELLUS HORIZONTAL PRODUCERS Daily Production (Mcf/day) 14,000 12,000 10,000 8,000 6,000 4,000 Lycoming 1 Lycoming 2 Lycoming 4 Lycoming 3 Lycoming 10 Lycoming 11 Lycoming 12 Lycoming 13 Lycoming 14 Lycoming 5 Lycoming 6 Lycoming 7 Lycoming 8 Lycoming 9 Susq. 1 Susq. 2 Susq. 3 Lycoming 15 Lycoming 16 Lycoming 17 Lycoming 18 Average Horizontal Type Curve (EUR 6 BCF) 2, Days on Production 5

7 Marcellus Well Economics NYMEX $/MMbtu IRR 4.0 Bcf Well 5.0 Bcf Well 6.0 Bcf Well Payout (Years) NPV 12% ($MM) IRR Payout (Years) NPV 12% ($MM) IRR Payout (Years) NPV 12% ($MM) * Assumes long-run well cost of $6.0 MM $ % 3.4 $ % 2.5 $ % 2.0 $6.62 $ % 4.9 $ % 3.4 $ % 2.6 $3.99 $4.00 7% 8.6 ($1.02) 13% 5.7 $ % 4.2 $1.35 Wells in the liquids rich gas window of the Marcellus that have higher liquids content show a ~20% improvement in netbacks versus dry gas wells 6.0 Bcf Type Curve 3.5 Bcf Type Curve 6

8 Well Design Drilling (Average 30 days) Operated Drilling primarily delineation wells with vertical pilot, cores and logs 5 single well pads in Centre County, PA (2 wells ) and Preston County, WV (3 wells) Lateral length of 4,000 to 5,000 Closed loop system with synthetic mud Installing water infrastructure Non operated Drilling primarily lease saving operations, rather than pad drilling Vast majority single well pads with a few 2 to 4 well pads Longer laterals 3,000-5,000 Closed loop system with synthetic mud Completions (2 to 4 weeks) Operated frac stages, 300 to 400 per stage 4 perf clusters per stage Slickwater frac with multiple sweeps Non-operated Fewer frac stages and larger frac intervals perf clusters per stage Still testing 1 month resting of wells Reduced chemical loading Drilling costs range from $2.5 $3.5 million Completion costs range from $3.0 $4.0 million 7

9 Marcellus Well Timeline 6 8 months Well application / permit approval Site Build Drilling Waiting on Frac Crews Fracing days in PA days days/well days 7-14 days days in WV Assumes water sources permitted Current regulations Cannot begin building site until permit in hand Depends on time of year Multi-well pads self-skidding rigs help reduce drilling time Shortage of frac fleets relative to basin-wide drilling activity Note: Timeline excludes well resting and tie-in to gathering systems 8

10 Gathering Gas in the Marcellus NE PA Susquehanna, Bradford, Sullivan, Lycoming Central PA Clearfield, Clinton, Centre Midstream Party Chief Midstream Caiman/ Chief Midstream South PA Cambria, Somerset, Fayette SW PA & WV Marshall, Green PA Caiman Caiman / MarkWest Plant Comments Most mature area of the field where Chief has been acquiring ROW and laying pipe to their own producing wells for the past 2 years New drills are just being evaluated and egress routes being investigated Pipeline activity wasn t started until 2010 as no wells were completed (assume 1 year behind Marshall County) Liquids rich gas area that is currently flowing wet into the sales pipe waiting on the MW Plant for liquids extraction Wells to be tied-in in

11 Marcellus Drilling Activity To Date* Gross Wells Drilled (at Mar 3, 2011) Horizontal Vertical Total Producing Partially Drilled** Waiting on Completion Waiting on Pipeline Total Gross Wells * Includes operated and non-op wells drilled by Chief & Exco **Vertical portion of well drilled, awaiting horizontal extension Planned drilling activity in 9 counties in PA, Marshall and Preston counties in West Virginia, and Garrett county in Maryland Majority of producing wells in Bradford, Lycoming and Susquehanna Counties in NE PA (>80% of current production) and Marshall County in WV Current net production is ~20 MMcfe/day 10

12 2011 Marcellus Plans 2011 capital program of $160 million 150 gross wells planned (22.4 net) Operated : 5 gross wells, 1 rig Non-Operated: 145 gross wells, 8-10 rigs Expect to complete ~121 gross wells with 94 new gross wells on stream by the end of the year Capital: 25% directed to liquids rich gas in SW PA and NW WV 30% directed to delineation activity to preserve lease positions and identify future potential 45% of capital directed to development drilling in areas with EUR s of 4.5 to 5.5 Bcf May see upward pressure on capital due to activity levels Current average netback ~$2.50/Mcfe Production growth of 150% in

13 Moving Natural Gas Out of the Marcellus Enerplus has taken several steps to ensure we can move our growing Marcellus gas production to market: Entered into longer term (5 years +) firm must take contracts with creditworthy substantial end users of the natural gas who: hold firm capacity on the various interstate pipelines (Transco, Tennessee) have storage capacity and trading ability These contracts have flexibility to increase delivered volumes as we bring production to pipe: MMBtu/d Min Max Min Max Min Max Min Max Min Max Committed Sales into Transco Pipeline: Committed Sales in to Tennessee Gas Pipeline: Participated in the Wyoming Pipeline Project that creates optionality for our production between the two key pipelines - Transco and Tennessee Entered into a firm processing and marketing agreement with MarkWest for our liquids rich gas produced in Marshall County 12

14 Water Access & Handling ERF and our JV partners have sufficient water source permits to execute development plans ERF and our JV partners are permitting and constructing additional water impoundments ERF developing centralized water infrastructure with gas gathering system (Centre County, PA) Implemented closed loop system for drilling fluids management in 2010 Goal to recycle 100% of produced and flow back water by end of 2011 Chief building a centralized tank farm for storage and recycling ERF reusing flow back fluid on location to reduce fresh water use JV partners utilizing industrial water treatment plants and disposal wells for water disposal 13

15 Industry Challenges Key Concerns Actions Environment Drilling and completion best practice being utilized surface, intermediate and production casing cemented to surface Fracing more than a mile below water table Surface containment systems Pre-testing water wells Fracing EPA frac study underway On-going education and transparency by industry needed Regulatory/Government/ Stakeholder Sitting on various industry associations to leverage relationships and provide input on regulation Holding town hall meetings in new areas to build landowner relationships and address local issues 14

16 Marcellus Summary Enerplus has a meaningful position in North America s best shale gas play Marcellus offers significant future growth potential Results to date exceeding expectations 2011 operations focusing on appraisal drilling in our operated leasehold, continued appraisal and development drilling in our non-operated leasehold We re managing the challenges 15