/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

CALGARY, May 12 /CNW/ - Veresen Inc. ("Veresen" or the "Company") (TSX: VSN) announced today its financial and operating results for the three months ended March 31, 2011.

Highlights for the first quarter of 2011 include:

 <<
 - Net income attributable to Common Shares of $11.0 million or $0.07
 per Share;

 - Distributable cash of $36.7 million or $0.23 per Share;

 - Cash from operating activities of $66.0 million;

 - Closing of the purchase of interests in a portfolio of run-of-river
 hydroelectric facilities and development projects in British Columbia
 from ENMAX Corporation; and

 - Aux Sable Canada purchased an expansion to its Septimus Gas Plant
 which increased capacity to 60 mmcf/d from 25 mmcf/d.
 >>

"Our financial and operating results for the quarter from our three business segments were in line with our expectations," said Stephen White, President and Chief Executive Officer. "This is our first full quarter reflecting the integration of the Pristine assets into our portfolio, and we're pleased they are making a positive contribution to our bottom-line. We're also seeing continued strength in the macro environment for NGL prices and we anticipate that this will have a positive impact on overall results for 2011."

FINANCIAL HIGHLIGHTS

 <<
 Three months ended
 March 31
 -------------------------------------------------------------------------
 ($ Thousands, except per Share amounts) 2011 2010
 -------------------------------------------------------------------------
 Revenues
 Pipelines(1) 98,511 100,398
 Midstream 38,758 37,631
 Power 31,360 21,948
 Veresen - Corporate 13 -
 -------------------------------------------------------------------------
 168,642 159,977
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 Net income (loss) before tax and
 non-controlling interest
 Pipelines 23,644 24,579
 Midstream 8,373 9,390
 Power 448 1,380
 Veresen - Corporate (15,742) (17,228)
 -------------------------------------------------------------------------
 16,723 18,121
 Tax expense (5,346) (4,047)
 Net income attributable to non-controlling
 interest (331) -
 -------------------------------------------------------------------------
 Net income attributable to Common Shares 11,046 14,074
 Per Share ($) 0.07 0.10
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 (1) Net of intersegment eliminations.
 >>

For the three months ended March 31, 2011, Veresen generated net income attributable to Common Shares of $11.0 million or $0.07 per Share compared to $14.1 million or $0.10 per Share for the same period in 2010. Although earnings from each of Veresen's business segments decreased relative to the same period last year, results were consistent with expectations.

Earnings from Veresen's pipeline business, comprised of Alliance and AEGS, decreased by $0.9 million primarily due to the ongoing reduction in equity returns on Alliance's investment base and, to a lesser extent, the effect of the stronger Canadian dollar. In January 2011, Alliance began collecting a non-renewal charge on the U.S. portion of its pipeline system, representing an exit fee for shippers who did not elect to extend their transportation contracts beyond December 1, 2015. Funds from the non-renewal charge are not reflected in earnings, as such amounts have previously been accrued as a long-term receivable on Veresen's balance sheet. However, they are reflected as an increase in distributable cash, as Alliance is distributing these funds to its owners. Importantly, Alliance throughput volumes continue to be strong with average shipments of 1.677 billion cubic feet per day.

NGL market conditions continued to be very favourable throughout the first quarter of 2011 on the strength of high crude oil prices and relatively weaker natural gas prices. Aux Sable sold record volumes of NGLs this quarter, driven by higher heat content in the natural gas delivered from Alliance and higher liquids recovery at Aux Sable's Channahon Facility. These positive factors were offset by lower realized ethane margins, as pricing in Aux Sable's new ethane contract, which became effective January 1, 2011, is less favourable than Aux Sable's previous ethane contract. As a result, Aux Sable's first quarter 2011 earnings decreased by $1.0 million compared to the same period last year. Aux Sable generated $21.7 million of margin-based lease revenues this quarter, of which it recognized $10.1 million for the period. Barring a significant downward shift in NGL market conditions, Aux Sable is expected to recognize the remaining $11.6 million in margin-based lease revenues over the balance of this year.

First quarter earnings from Veresen's power business decreased by $1.0 million compared to the same period last year. Increased operating results from Veresen's gas-fired facilities and district energy systems, as well as from operating assets acquired in 2010, were more than offset by increased development costs, primarily associated with Veresen's run-of-river and wind power projects, administrative costs, depreciation, and interest costs related to higher debt levels. Furry Creek and Clowhom, two run-of-river facilities acquired by Veresen on February 14, 2011, did not make meaningful contributions to first quarter earnings, as winter and early spring are low power producing seasons for these facilities.

Corporate costs decreased by $1.5 million compared to the same period last year. Reduced spending on non-power development projects and lower foreign exchange losses offset higher administrative and interest costs.

First quarter earnings also reflect the impact of Veresen's January 1, 2011 conversion from a limited partnership structure to a taxable corporation, as the Company's earnings are now subject to a higher effective tax rate. The resulting increase in taxes more than offsets the effect of lower taxes due to reduced midstream earnings.

Distributable Cash(1)

 <<
 -------------------------------------------------------------------------
 Three months ended
 March 31
 -------------------------------------------------------------------------
 ($ Thousands, except per Share amounts) 2011 2010
 -------------------------------------------------------------------------
 Pipeline 39,809 33,961
 Midstream 8,215 10,787
 Power 4,723 1,782
 Veresen - Corporate (12,412) (9,360)
 Taxes (3,639) (5,461)
 -------------------------------------------------------------------------
 36,696 31,709
 -------------------------------------------------------------------------
 Per Share ($) 0.23 0.23
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 Cash from operating activities 65,953 66,267
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 (1) This item is not a standard measure under GAAP and may not be
 comparable to similar measures presented by other entities. See
 reconciliation of distributable cash to cash from operating
 activities in the schedules attached to this news release. For more
 information about Non-GAAP measures used by Veresen, see the section
 entitled "Non-GAAP Financial Measures" contained in Veresen's March
 31, 2011 Management's Discussion and Analysis.
 >>

Veresen generated distributable cash of $36.7 million during the first quarter of 2011 compared to $31.7 million for the first quarter of 2010. On a per share basis, distributable cash was $0.23, unchanged from the comparable quarter in 2010. Distributable cash from Veresen's pipeline business increased by $5.8 million compared to the first quarter of 2010, primarily due to Alliance's collection and distribution of the non-renewal charge. Stronger distributable cash generation from the Company's operating power facilities, including incremental contributions from recently acquired facilities, resulted in a $2.9 million increase in first quarter distributable cash. These increases were partially offset by a $2.6 million decrease in midstream distributions, as continued strong NGL market conditions and higher volumes of liquids recovered were offset by the effect of lower ethane margins. Correspondingly, cash taxes decreased compared to the same period last year as a result of lower midstream earnings. First quarter distributable cash also reflects $2.1 million of higher corporate administrative costs, including $0.8 million of integration costs, and $1.0 million of higher corporate interest costs.

Veresen generated $66.0 million of cash from operating activities for the three months ended March 31, 2011, which was comparable to amounts generated for the same period last year.

OPERATING RESULTS

Pipelines

For the three months ended March 31, 2011, transportation deliveries for the Alliance Pipeline averaged 1.677 billion cubic feet per day, comparable to deliveries during the same period last year.

AEGS first quarter toll volumes were 294.4 thousand barrels per day compared to 283.7 mbbls/d for the same period last year. Increased volumes resulted from higher flows of natural gas at the Empress, Alberta straddle plants which strip liquids from natural gas exported at the eastern border of Alberta. The higher natural gas flows were driven by colder than usual weather in eastern markets.

Midstream

During the three months ended March 31, 2011, Aux Sable processed nearly 100 percent of the natural gas delivered by Alliance, consistent with the same period last year. Planning is well underway for Aux Sable to conduct scheduled major maintenance and inspection work on its de-ethanization facilities at Channahon, Illinois. This work is planned for the third quarter of 2011 and is expected to take three weeks. Aux Sable expects to be able to recover propane plus products from two-thirds of the natural gas delivered by Alliance during this period, although it will not recover ethane.

Aux Sable sold 83.2 mbbls/d of NGLs during the first quarter of 2011, up from 76.7 mbbls/d for the same period in 2010. Average ethane volumes increased to 48.6 mbbls/d in the first quarter of 2011 from 45.0 mbbls/d in the first quarter of 2010. Propane plus sales volumes increased to 34.6 mbbls/d for the first quarter of 2011 from 31.7 mbbls/d for the same period last year. The increased volumes reflect higher heat content and higher recoveries, and demonstrate the success of Veresen's strategy to source gas from the Montney and Bakken regions.

Construction of Aux Sable's Heartland off-gas facility in Fort Saskatchewan, Alberta continues to progress on budget and on schedule, and the plant is expected to be operational in the summer of 2011.

Power

During the three months ended March 31, 2011, each of Veresen's power facilities performed in line with expectations. Veresen has assumed operatorship of the Flurry Creek and Clowhom facilities. Power output from Veresen's run-of-river facilities, including Glen Park, tends to be lower in the first quarter and the early part of the second quarter, given the low seasonal water flow at these facilities. Higher output is typical during warmer periods of the year.

Construction of the 400 MW gas-fired York Energy Centre is progressing on budget and on schedule, with commercial operations expected to begin in late spring 2012.

Environmental, Health and Safety

The safe operation of all of Veresen's businesses is of fundamental importance to the Company to safeguard the public, its employees and the environment, and in order to meet all applicable laws and regulations. The recent creation of an Environmental, Health and Safety Committee will assist Veresen's Board of Directors in fulfilling its oversight responsibilities over these important matters. This Committee will oversee the environmental, health and safety programs of each of Veresen's businesses, including the pipeline integrity programs maintained by Alliance and AEGS, and the operations of Aux Sable and the Company's power facilities.

Business Development

Aux Sable is focused on a number of initiatives to ensure the optimal level of rich gas is delivered into the Alliance pipeline for recovery at the Channahon Facility. In the Bakken region of North Dakota, Aux Sable is actively pursuing additional volumes of rich gas and infrastructure positions. Aux Sable is also expanding its rail off-load capacity at the Channahon Facility for shale-based unfractionated NGLs.

Veresen continues to advance its portfolio of power development projects which are primarily focused on hydro and wind renewable power generation. In particular, Veresen is steadily advancing its run-of-river projects with the goal of starting construction of the Dasque-Middle and Culliton Creek projects in the second and fourth quarter of 2011, respectively.

Given current market conditions, Veresen is exploring alternative uses for the proposed Jordan Cove Energy Project and Pacific Connector Gas Pipeline. A number of natural gas producers have expressed strong interest in converting Jordan Cove from an import facility into a liquefaction and LNG export facility.

Updated 2011 Guidance

Veresen updated its guidance for 2011 distributable cash to be in the range of $1.05 per Share to $1.30 per Share, up from previous guidance of $0.90 to $1.20 per Share, issued March 3, 2011. The updated range primarily reflects Aux Sable's solid performance to date, as a trend of strong crude oil prices relative to weak natural gas prices continues to prevail, and Alliance's collection and distribution of the non-renewable charge. Further details concerning 2011 guidance can be found in the "Investor Information" section of Veresen's web site - www.vereseninc.com.

Conference Call

A conference call to discuss Veresen's 2011 first quarter results will be held on Friday, May 13, 2011 at 1:00 pm MT (3:00 pm ET). The call can be accessed at 1 (888) 231-8191 or 1 (647) 427-7450 conference ID 61330827.

A replay will be available shortly thereafter at 1-800-642-1687 and 1-416-849-0833. The access code is 61330827 (followed by the pound sign).

About Veresen Inc.

Veresen Inc. (www.vereseninc.com) is a publicly traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Its common shares and 5.75% convertible unsecured subordinated debentures, Series C due July 31, 2017 are listed on the Toronto Stock Exchange under the symbols "VSN" and "VSN.DB.C", respectively. Veresen is engaged in three principal businesses: pipelines which is comprised of interests in two systems, the Alliance Pipeline and the Alberta Ethane Gathering System; midstream which involves NGL extraction and includes an interest in a world-class extraction facility near Chicago; and power, with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Veresen and each of its businesses are also actively developing a number of greenfield investment opportunities and, in the normal course of business, regularly evaluate and pursue acquisition and development opportunities.

Certain information contained herein relating to, but not limited to, Veresen and its businesses constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Veresen expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to: the ability of Aux Sable to recognize margin-based lease revenues during the balance of 2011; the timing of maintenance and inspection work by Aux Sable; the timing of completion of construction for Aux Sable's Heartland off-gas facility, York Energy Centre, and the Dasque-Middle and Culliton Creek hydro projects; the timing of commencement of construction for the Dasque-Middle and Culliton Creek run-of-river projects; Veresen's ability to realize its growth objectives; and the ability of each of its businesses to generate distributable cash in 2011. The risks and uncertainties that may affect the operations, performance, development and results of Veresen's businesses include, but are not limited to, the following factors: the ability of Veresen to successfully implement its strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services and materials; fluctuations in foreign exchange and interest rates; Veresen's ability to successfully obtain regulatory approvals; changes in tax, regulatory, environmental, and other laws and regulations; competitive factors in the pipeline, midstream and power industries; operational breakdowns, failures, or other disruptions; and the prevailing economic conditions in North America. Additional information on these and other risks, uncertainties and factors that could affect Veresen's operations or financial results are included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Readers are also cautioned that the foregoing list of factors and risks is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time. Although Veresen believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual result achieved will vary from the information provided herein and the variations may be material. Veresen makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Veresen does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.

Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in Canada and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in Canada. For further information on non-GAAP financial measures used by Veresen see Management's Discussion and Analysis, in particular, the section entitled "Non-GAAP Financial Measures" contained in the annual Management Discussion and Analysis, filed by Veresen with Canadian securities regulators.

 <<
 Veresen Inc.
 -------------------------------------------------------------------------

 Consolidated Statement of Financial Position
 -------------------------------------------------------------------------

 March 31, December 31,
 ($ Thousands; unaudited) 2011 2010
 -------------------------------------------------------------------------

 Assets
 Current assets
 Cash and short-term investments 104,307 66,270
 Restricted cash 13,026 10,572
 Receivables 101,210 97,997
 Other 21,668 26,080
 -------------------------------------------------------------------------
 240,211 200,919

 Long-term receivables 311,692 315,563
 Pipeline, plant and other capital assets 2,501,015 2,419,671
 Intangible assets 172,459 164,106
 Other assets 15,862 18,320
 -------------------------------------------------------------------------
 3,241,239 3,118,579
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Liabilities
 Current liabilities
 Payables 116,976 103,292
 Transportation security deposits 4,921 4,912
 Dividends payable 3,341 4,493
 Current portion of long-term senior debt 133,831 124,047
 -------------------------------------------------------------------------
 259,069 236,744

 Long-term senior debt 1,703,344 1,596,234
 Subordinated convertible debentures 82,557 82,411
 Future taxes 293,927 295,459
 Other long-term liabilities 51,385 53,803
 -------------------------------------------------------------------------
 2,390,282 2,264,651
 -------------------------------------------------------------------------


 Shareholders' Equity
 Share capital 1,300,475 1,270,285
 Cumulative other comprehensive loss (66,071) (61,367)
 Cumulative net income 674,505 663,459
 Cumulative dividends (1,072,678) (1,032,767)
 -------------------------------------------------------------------------
 Shareholders' equity attributable to
 Common Shares 836,231 839,610
 Non-controlling interest 14,726 14,318
 -------------------------------------------------------------------------
 850,957 853,928
 -------------------------------------------------------------------------
 3,241,239 3,118,579
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------



 Veresen Inc.
 -------------------------------------------------------------------------

 Consolidated Statement of Income and Cumulative Income
 -------------------------------------------------------------------------
 Three months ended March 31
 -------------------------------------------------------------------------
 ($ Thousands, except per Share amounts;
 unaudited) 2011 2010
 -------------------------------------------------------------------------

 Revenues
 Operating revenues 168,353 159,513
 Interest and other 289 464
 -------------------------------------------------------------------------
 168,642 159,977
 -------------------------------------------------------------------------
 Expenses
 Operations and maintenance 59,319 53,941
 Depreciation and amortization 37,788 33,785
 Interest and other finance 28,822 27,612
 General, administrative and project
 development 28,203 25,680
 Foreign exchange and other (2,213) 838
 -------------------------------------------------------------------------
 151,919 141,856
 -------------------------------------------------------------------------
 Net income before taxes and non-controlling
 interest 16,723 18,121
 Current taxes 3,770 5,562
 Future taxes 1,576 (1,515)
 -------------------------------------------------------------------------
 Net income before non-controlling interest 11,377 14,074
 Net income attributable to non-controlling
 interest 331 -
 -------------------------------------------------------------------------
 Net income attributable to Common Shares 11,046 14,074
 Cumulative net income at the beginning of the
 period 663,459 583,718
 -------------------------------------------------------------------------
 Cumulative net income at the end of the period 674,505 597,792
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Net income per Common Share
 Basic and diluted 0.07 0.10
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------


 Consolidated Statements of Comprehensive Income and Cumulative Other
 Comprehensive Income
 -------------------------------------------------------------------------
 Three months ended March 31
 -------------------------------------------------------------------------
 ($ Thousands; unaudited) 2011 2010
 -------------------------------------------------------------------------

 Net income attributable to Common Shares 11,046 14,074
 Other comprehensive loss, net of taxes
 Cumulative translation adjustment
 Unrealized foreign exchange loss on
 translation of self-sustaining foreign
 operations (5,516) (9,947)
 Cumulative translation adjustment
 reclassified to net income 809 3,353
 Gain on hedge of self-sustaining foreign
 operation - 498
 Other 3 (1,482)
 -------------------------------------------------------------------------
 (4,704) (7,578)
 -------------------------------------------------------------------------
 Comprehensive income attributable to Common
 Shares 6,342 6,496
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Cumulative other comprehensive loss at the
 beginning of the period (61,367) (54,624)
 Other comprehensive loss, net of taxes (4,704) (7,578)
 -------------------------------------------------------------------------
 Cumulative other comprehensive loss at the
 end of the period (66,071) (62,202)
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------



 Veresen Inc.
 -------------------------------------------------------------------------

 Consolidated Statement of Cash Flows
 -------------------------------------------------------------------------
 Three months ended March 31
 -------------------------------------------------------------------------
 ($ Thousands; unaudited) 2011 2010
 -------------------------------------------------------------------------

 Operating
 Net income attributable to Common Shares 11,046 14,074
 Non-cash transportation revenue 5,024 1,048
 Depreciation, amortization and other non-cash
 items 34,309 28,964
 Unrealized foreign exchange loss 3,371 471
 Future taxes 1,576 (1,515)
 Non-controlling interest 331 -
 Changes in non-cash working capital 10,296 23,225
 -------------------------------------------------------------------------
 65,953 66,267
 -------------------------------------------------------------------------
 Financing
 Long-term debt issued, net of issue costs 62,911 -
 Long-term debt repaid (3,981) (1,481)
 Net change in credit facilities 53,874 72,543
 Dividends paid (10,863) (17,401)
 -------------------------------------------------------------------------
 101,941 53,661
 -------------------------------------------------------------------------
 Investing
 Acquisitions, net of cash acquired (99,961) (80,708)
 Pipeline, plant and other capital assets (27,471) (7,041)
 Restricted cash (1,794) 1,763
 Other 5,709 (1,780)
 Changes in non-cash investing working capital (5,570) (8,821)
 -------------------------------------------------------------------------
 (129,087) (96,587)
 -------------------------------------------------------------------------
 Increase in cash and short-term investments 38,807 23,341
 Effect of foreign exchange rate changes on cash
 and short-term investments (770) (506)
 Cash and short-term investments at the
 beginning of the period 66,270 57,945
 -------------------------------------------------------------------------
 Cash and short-term investments at the end of
 the period 104,307 80,780
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------



 Veresen Inc.
 -------------------------------------------------------------------------

 Distributable Cash (1)
 -------------------------------------------------------------------------
 Three months ended March 31
 ($ Thousands, except where noted; unaudited) 2011 2010
 -------------------------------------------------------------------------

 Alliance distributions, prior to withholdings
 for capital expenditures and net of debt
 service 35,887 30,426
 AEGS distributable cash, after non-recoverable
 capital expenditures and debt service 3,922 3,535
 Aux Sable distributions, net of support
 payments, non-recoverable maintenance capital
 expenditures and debt service 8,215 10,787
 Power distributable cash, after maintenance
 capital expenditures and debt service(2) 4,723 1,782
 -------------------------------------------------------------------------
 52,747 46,530

 Corporate
 General and administrative (5,975) (3,904)
 Interest and other finance (5,687) (4,667)
 Principal repayments on senior debt (750) (789)
 -------------------------------------------------------------------------
 (12,412) (9,360)
 Taxes (3,639) (5,461)
 -------------------------------------------------------------------------
 (16,051) (14,821)
 -------------------------------------------------------------------------

 Distributable cash(1) 36,696 31,709
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Distributable cash per Share ($)(3) 0.23 0.23
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Distributions paid/payable(4) 39,902 35,012
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Dividends paid/payable per Share ($) 0.25 0.25
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 (1) Distributable cash is not a standard measure under generally accepted
 accounting principles in Canada and may not be comparable to similar
 measures presented by other entities. Distributable cash represents
 the cash available to Veresen for distribution to shareholders after
 providing for debt service obligations and any capital expenditures
 that are not growth-oriented or recoverable but does not include
 distribution reserves, if any, held by Veresen's businesses, project
 development costs, or transaction costs incurred in conjunction with
 acquisitions. Project development costs are discretionary,
 non-recoverable costs incurred to assess the commercial viability of
 new greenfield business initiatives unrelated to the Company's
 operating businesses. We consider transaction costs to be part of the
 consideration paid for an acquired business and, as such, are
 unrelated to our operating businesses. (Effective January 1, 2011,
 GAAP requires transaction costs to be expensed.) Distributable cash
 is an important measure used by the investment community to assess
 the source and sustainability of Veresen's cash distributions and
 should be used to supplement other performance measures prepared in
 accordance with generally accepted accounting principles in Canada.
 See the following table for the reconciliation of distributable cash
 to cash flow from operating activities.

 (2) In the case of Veresen's majority-owned power facilities, currently
 comprised of East Windsor Cogeneration LP and EnPower Green Energy
 Generation Limited Partnership, distributable cash is calculated
 based on our 75 percent ownership interests in each of these
 businesses.

 (3) The number of Shares used to calculate distributable cash per Share
 is based on the average number of Shares outstanding at each record
 date. For the three months ended March 31, 2011, the average number
 of Shares outstanding for this calculation was 159,670,796 and
 165,578,330 (2010 - 140,101,723 and 142,363,354) on a basic and
 diluted basis, respectively. The number of Shares outstanding would
 increase by 5,907,534 (2010 - 2,261,621) Shares if the outstanding
 Convertible Debentures as at March 31, 2011 were converted into
 Shares.

 (4) Includes $30.2 million (2010 - $20.1 million) satisfied through the
 issuance of Shares under the Company's Dividend Reinvestment Plan.



 Veresen Inc.
 -------------------------------------------------------------------------

 Reconciliation of Distributable Cash to Cash Flow from Operating
 Activities
 -------------------------------------------------------------------------
 Three months ended March 31
 -------------------------------------------------------------------------
 ($ Thousands; unaudited) 2011 2010
 -------------------------------------------------------------------------

 Consolidated cash from operating activities 65,953 66,267
 Deduct: Cash generated from operating
 activities applicable to jointly held
 businesses(5) (36,381) (44,873)
 -------------------------------------------------------------------------
 Cash from operating activities applicable to
 wholly-owned businesses(6) 29,572 21,394

 Add (deduct) amounts applicable to
 wholly-owned businesses:
 Project development costs(7) 2,651 4,499
 Change in non-cash working capital 6,923 4,610
 Principal repayments on senior notes (2,143) (1,446)
 Maintenance capital expenditures (391) (867)
 Distributions earned greater than
 distributions received(8) 84 3,519
 -------------------------------------------------------------------------

 Distributable cash 36,696 31,709
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 (5) Represents cash from operating activities applicable to jointly held
 businesses which is not under our sole control and, consequently, is
 not included in distributable cash until distributions are declared
 by the jointly held businesses.

 (6) Net of aggregate support payments made to Alliance Canada Marketing
 and Sable NGL Services of $2.8 million for the three months ended
 March 31, 2011 (2010 - $2.8 million).

 (7) Represents costs incurred by the Company and its wholly-owned
 businesses in relation to projects where the recoverability of such
 costs has not yet been established. Amounts incurred for the three
 months ended March 31, 2011 relate primarily to the Jordan Cove LNG
 terminal project, the Pacific Connector Gas Pipeline project, and
 various power development projects.

 (8) Represents the difference between distributions declared by jointly
 held businesses and distributions received.
 >>

For further information: Stephen H. White, President & CEO, Phone: (403) 296-0140; Richard G. Weech, Senior Vice President, Finance & CFO, Phone: (403) 296-0140; Email: investor-relations@vereseninc.com, www.vereseninc.com