U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 40-F

ANNUAL REPORT

PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (the Act)



For the fiscal year ended: December 31, 2005        Commission File Number: 333-98233



PARAMOUNT ENERGY TRUST

(Exact name of Registrant as specified in its charter)



Alberta, Canada

(Province or other jurisdiction of incorporation or organization)

1311
(Primary Standard Industrial
Classification Code Number)None
(I.R.S. Employer
Identification Number)




500, 630 - 4th Avenue, S.W.

Calgary, Alberta

Canada T2P 0J9

(403) 269-4400

(Address and telephone number of Registrants principal executive offices)



Carter Ledyard & Milburn LLP

2 Wall Street

New York, New York 10005-2072

(212) 732-3200

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)



Securities registered or to be registered pursuant to Section 12(b) of the Act.



|                         |                                               
|------------------------ | ----------------------------------------------
|Title of each class
None | Name of each exchange on which registered
None



Securities registered or to be registered pursuant to Section 12(g) of the Act.



None


(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Trust Units


(Title of Class)



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For Annual Reports indicate by check mark the information filed with this Form:



[ü] Annual information form

[ü] Audited annual financial
statements





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:



There were 82,481,844 Trust Units outstanding as of December 31, 2005.



Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Securities and Exchange Commission (the Commission) pursuant to Rule 12g3-2(b) under the Act.  If Yes is marked, indicate the filing number assigned to the Registrant in connection with such Rule.



Yes ___ 82-_________No _ü_



Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days.



Yes _ü_ No ___





CANADIAN ANNUAL FILINGS



A.

Annual Information Form



The Registrants annual information form is attached to this Form 40-F as Exhibit 99.1.



B.

Consolidated Annual Financial Statements



The Registrants consolidated annual financial statements for the year ended December 31, 2005, including the report of independent registered public accountants with respect to the financial statements, are attached to this Form 40-F as Exhibit 99.2.  A reconciliation of the financial statements to accounting principles that are generally accepted in the United States is included in the financial statements.





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C.

Managements Discussion and Analysis



The Registrants managements discussion and analysis for the year ended December 31, 2005 is attached to this Form 40-F as Exhibit 99.3.



DISCLOSURE CONTROLS AND PROCEDURES



An evaluation was carried out under the supervision and with the participation of the Registrant's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Registrant's disclosure controls and procedures (as defined in Rule 15d-15(e) under the Act) as of December 31, 2005.  Based on that evaluation, the Registrants Chief Executive Officer and Chief Financial Officer concluded that the design and operation of those disclosure controls and procedures were effective as of that date.



During the period covered by this report, there have been no changes in the Registrants internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting.



It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.  Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



AUDIT COMMITTEE FINANCIAL EXPERT



The board of directors of the Registrants administrator, Paramount Energy Operating Corp., has determined that Mr. John W. (Jack) Peltier is an audit committee financial expert (as defined in paragraph 8(b) of General Instruction B to Form 40-F).  Mr. Peltier is the chair of the audit committee.  Mr. Peltier would be considered to be an independent director within the meaning set out in Canadian legislation, specifically Multilateral Instrument 51-110 Audit Committees, and he would be considered to be an independent director within the meaning set out in Rule 10A-3(b) under the Act.



Mr. Peltiers education and experience is set out in the Registrants annual information form attached to this Form 40-F as exhibit 99.1.



CODE OF ETHICS



The Trust has a code of ethics (as that term is defined in paragraph 9 of General Instruction B to Form 40-F) in place that applies to its principal executive officer and principal financial officer as well as all of its directors, officers, employees and consultants. The current code of ethics, referred to as the Registrants Code of Business Conduct, is attached as Exhibit 99.4, is dated July 14, 2005 and is posted on the Registrant's website at www.paramountnenergy.com.





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Since the adoption of the code of ethics, in its current form and in its previously filed form, there have not been any waivers, including implicit waivers, from any provision of the code. The Registrant will post on its website any amendment to, or waiver of, a provision of its code of ethics applicable to its principal officer, principal financial officer, principal accounting officer or person performing similar functions, within four business days following the date of any such amendment or waiver.



PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees



The following sets out the aggregate fees billed for each of the past two fiscal years for professional fees to the Registrants principal accountants for the audit of the Registrants annual financial statements and for services normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.



Fiscal year ended December 31, 2005

Cdn. $83,830

Fiscal year ended December 31, 2004

Cdn. $20,000



Audit-Related Fees



The following sets out the aggregate fees billed for each of the past two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Registrants financial statements and are not reported above under the caption Audit Fees above.



Fiscal year ended December 31, 2005

Cdn. $209,625

Fiscal year ended December 31, 2004

Cdn. $244,380



In 2005, the Registrant incurred fees for quarterly review and services provided with respect to a prospectus, a convertible debenture issue and the filing of its Form 40-F for the period ended December 31, 2004.

In 2004, the Registrant incurred fees for quarterly reviews and services provided with respect to a prospectus and information circular.  The Registrant also incurred fees in connection with the gas over bitumen issue described Exhibits 99.1 and 99.3 attached to this Annual Report.

Tax Fees



The following sets out the aggregate fees billed for each of the past two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.



Fiscal year ended December 31, 2005

Cdn. $39,756

Fiscal year ended December 31, 2004

Cdn. $55,860



These services relate to issues regarding a wholly owned subsidiary of the Registrant and the preparation and filing of trust and corporate income tax returns.



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All Other Fees



No fees were billed in each of the last two fiscal years for products and services provided by our principal accountant other than services reported above.

Audit Committee Approval



The Administrators audit committee has adopted policies and procedures with respect to the pre-approval of audit and permitted non-audit services to be provided by its principal accountant, KPMG LLP.  The policies and procedures sufficiently detail the particular services to be provided to ensure that (i) the audit committee knows precisely what services it is being asked to pre-approve and (ii) it is not necessary for any member of management to make a judgment as to whether a proposed service fits within the pre-approved services.



The audit committee must pre-approve the provision of permitted services by its principal accountant which are outside of the pre-approved policies and procedures discussed above, including the fees and terms of the proposed services.  Prohibited services may not be pre-approved by the audit committee.



For 2005 and 2004, all of the audit and permitted non-audit services described above were pre-approved under the audit committees policies and procedures.



OFF-BALANCE SHEET ARRANGEMENTS



The Registrant has no off-balance sheet arrangements that have,
or are reasonably likely to have, a current or future effect on the Registrant's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors. For a discussion of the Registrant's other off-balance
sheet arrangements, please read Notes 11 and 12 to the Registrant's audited
consolidated annual financial statements for the year ended December 31, 2005 attached
as Exhibit 99.2 to this Form 40-F.



TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS



Contractual ObligationsPayments Due by Period
(CDN$ Millions)TotalLess than 1 Year1-3
Years3-5
YearsMore than 5 YearsBank  and Other Debt$168.1$162.4$0.8$0.9$4.0Convertible Debentures$64.9------$64.9---Total$233.0$162.4$0.8$65.8$4.0






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UNDERTAKING AND CONSENT TO SERVICE OF PROCESS



A.

Undertaking



The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by Commission staff, information relating to:  the securities registered pursuant to Form 40-F;  the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.



B.

Consent to Service of Process



A Form F-X signed by the Registrant and its agent for service of process was filed with the Commission on May 19, 2004.



SIGNATURES



Pursuant to the requirements of the Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, duly authorized.





Date:

March 21, 2006

PARAMOUNT ENERGY TRUST

By its administrator, Paramount Energy Operating Corp.









Per:Signed

Cameron R. Sebastian

Vice President, Finance

and Chief Financial Officer





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INDEX TO EXHIBITS



Exhibit

Description



99.1

Annual Information Form for the fiscal year ended December 31, 2005



99.2

Consolidated Annual Financial Statements for the fiscal year ended December 31, 2005 (includes Auditors Report and US GAAP Reconciliation)



99.3

Managements Discussion and Analysis for the fiscal year ended December 31, 2005



99.4

Code of Business Conduct (Code of Ethics) dated July 14, 2005



99.5

Certification of Chief Executive Officer pursuant to Rule 15d-14(a) (as adopted pursuant to Section 302 of the Sarbanes-Oxley Actof 2002)



99.6

Certification of Chief Financial Officer pursuant to Rule 15d-14(a) (as adopted pursuant to Section 302 of the Sarbanes-Oxley Actof 2002)



99.7

Certification of Chief Executive Officer pursuant to Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)



99.8

Certification of Chief Financial Officer pursuant to Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002)



99.9

Consent of Independent Registered Public Accountants to the inclusion of its report dated March 20, 2006 on the annual financial statements of the Registrant as at December 31, 2005



99.10

Consent of McDaniel & Associates Consultants Ltd. to the reference to it and to the inclusion of its report dated March 15, 2006 evaluating the reserves of the Registrant