Upon occasion, earnings reports are studies in how to put lipstick on a pig. So it is refreshing, albeit confusing, to read that Enerplus Resources Fund (NYSE: ERF) senior management believes the company is "essentially meeting our expectations." By all means, don't gush. It takes a fair amount of due diligence to turn up information on this thinly covered Canadian oil and gas exploration and drilling company. Those analysts that do track the stock recommend holding if you already own, but don't sell because you never know, yet certainly don't buy.

Thus far, the only attractive feature I have found with this stock is that it pays a monthly, rather than quarterly, dividend. Other than that, the numbers are not in its favor. Net income was down somewhat, while operating costs were up slightly to Canadian $8.53 BOE (barrel of oil equivalent), as was long-term debt. Gas production was up slightly but crude oil production was down and the number of wells drilled also declined, so crude oil production is likely to stay in decline for the next few quarters. The company spent $240 million on acquisitions in both the US and the Canadian oil sands in Alberta province. The company paid Canadian $61 million for natural gas fields in Wyoming and Canadian $182.5 million for oil sands in Alberta. Capital spending is stable but high at Canadian $415 million. Like most oil and gas exploration companies, Enerplus Resources Fund is hit with increasing higher costs to acquire assets and much higher costs to get oil and gas out of the ground. Additionally, recent Canadian legislation to control greenhouse gas emissions will add over Canadian $1 per produced barrel of oil equivalent, further eating into profits. One factor in its favor is that Enerplus currently controls 443 million BOE in potential reserve, with an additional 57 million BOE in probable reserves. The Alberta oil sands have the potential to produce 60,000 BOE per day for 10 years, or about $3 billion in future development, but at what price economically and environmentally?