Paramount Energy Trust Releases First Quarter 2008 Financial and Operating Results and Confirms May Distribution

Paramount Energy Trust ("PET" or the "Trust") (TSX: PMT.UN) is pleased to release its financial and operating results for the first quarter of 2008. Strong production levels led to solid financial and operating results despite lower realized natural gas prices as compared to the first quarter of 2007.

PET is also pleased to confirm that its distribution to be paid on June 16, 2008 in respect of income received by PET for the month of May 2008, for Unitholders of record on May 30, 2008, will be $0.10 per Trust Unit. The ex-distribution date is May 28, 2008. The May distribution brings cumulative distributions paid since the inception of the Trust to $12.424 per Trust Unit.

First Quarter Summary

- Production increased 30 percent to 183.8 MMcfe/d from 141.7 MMcfe/d in the first quarter of 2007, due primarily to the acquisition of natural gas assets in central Alberta in June 2007 ("Birchwavy Assets") as well as continuing exploitation and optimization of the Trust's properties in east central Alberta and early production additions in the Northern district core areas from a successful winter capital program. Production decreased three percent from 190.3 MMcfe/d in the fourth quarter of 2007 as a result of the disposition of several minor non-core assets in southern Alberta and Saskatchewan over the past six months as well as extreme cold weather-related downtime in the Northern district core areas in late January and February. The assets which were sold in late 2007 and the first quarter of 2008 averaged production of 2.5 MMcfe/d for the fourth quarter of 2007.

- Realized natural gas prices decreased to $7.29 per Mcfe for the three months ended March 31, 2008 from $8.94 per Mcfe for the comparative quarter in 2007. In 2007, realized gains on financial instruments of $14.3 million as a result of the Trust's commodity price hedging activity significantly improved PET's realized gas price relative to the average AECO Monthly Index price.

- Funds flow measured $56.2 million ($0.51 per Trust Unit) for the three months ended March 31, 2008 compared to $65.6 million ($0.76 per Trust Unit) for the first quarter of 2007. Lower realized gas prices in 2008 accounted for 93 percent of the reduction in funds flow over the comparative periods.

- Distributions payable for the first quarter of 2008 totaled $0.30 per Trust Unit, comprised of $0.10 per Trust Unit paid on February 15, March 17 and April 15, representing a payout ratio of 59 percent of funds flow.

- The Trust recorded a net loss of $85.7 million for the first quarter due primarily to an unrealized loss on financial instruments of $79.2 million, as a result of the significant increase in AECO and NYMEX forward prices from December 31, 2007 to March 31, 2008. PET's ability to pay distributions will not be impacted by these mark-to-market amounts. Regardless of movements in forward gas prices, PET will realize its fixed hedge price on hedged volumes, assuming that the positions are left in place until settlement. Furthermore, to the extent that the increased forward gas prices that led to the unrealized loss persist, PET will realize higher prices on the unhedged portion of its natural gas sales, resulting in higher funds flows.

- PET successfully completed the execution of a $46 million winter capital program during the first quarter of 2008 which included the drilling of 37 wells (30.2 net) and extensive recompletion, facilities optimization and workover programs focused on over 200 wellbores primarily in the Trust's three core areas in the Northern district. PET's drilling program yielded 35 gas wells (28.6 net) for a 95 percent net success rate. Production additions from the winter program totaled approximately 18 MMcfe/d, the majority of which were onstream as of April 1, 2008. Current production is in excess of 195 MMcfe/d.

- Planning is underway for PET's capital expenditure program for the remainder of 2008 in the Trust's year-round access properties in the Southern district and East Side core areas. PET has budgeted capital spending of $62 million over the final three quarters of 2008.

2008 Outlook and Sensitivities

Significant improvement in the forward market for natural gas coupled with PET's current hedging and physical forward sales portfolio has increased the Trust's financial flexibility substantially. As at May 8, 2008, the current actual and forward market for natural gas for April through December 2008 is $9.60 per GJ at AECO. Combined with actual prices to the end of the first quarter, the AECO Monthly Index forecast for 2008 by the forward market is $8.89 per GJ. The following table reflects PET's projected realized gas price, monthly funds flow and payout ratio at the current monthly distribution of $0.10 per Trust Unit for 2008 at certain AECO natural gas price levels and incorporating the Trust's current financial hedges and physical forward sales contracts.


                                       Average AECO Monthly Index Gas Price
Funds flow sensitivity analysis                April to December 2008 ($/GJ)
                                         $  7.00  $  8.00  $  9.00  $ 10.00
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Oil and natural gas production (MMcfe/d)     188      188      188      188
Realized gas price (1) ($/Mcfe)             7.36     7.79     8.23     8.66
Funds flow (2) ($million/month)             18.6     20.0     22.3     24.2
Per Trust Unit ($/Unit/month)              0.167    0.180    0.201    0.218
Payout ratio (2) (%)                          60       56       48       46
Ending net debt ($million)                   568      551      523      501
Ending net debt to funds flow ratio
 (3) (times)                                 2.5      2.3      2.0      1.7
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(1) PET's weighted average forward price on an average of 102,000 GJ/d for
    the period from April 1 to December 31, 2008 is $7.48 per GJ.
(2) These are non-GAAP measures; see "Significant accounting policies and
    non-GAAP measures" in management's discussion and analysis.
(3) Calculated as ending net debt (including convertible debentures) divided
    by estimated annualized funds flow.