UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

> QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934





(Exact name of registrant as specified in its charter)

| | Alberta, Canada                                               | n/a                                     
| | ------------------------------------------------------------- | ----------------------------------------
| | (State or other jurisdiction ofincorporation or organization) | (I.R.S. Employer
    Identification No.)

| | Suite 2600, 500  4th Avenue S.W.
    Calgary, Alberta, Canada | T2P 2V6   
| | -------------------------------------------------------------- | ----------
| | (Address of principal
    executive offices)                   | (Zip Code)

403-263-0262

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 such filing requirements for the past 90
days.

Yes _X__ No____

There were 9,183,325 shares outstanding of the registrants Common Stock without
par value as of March 31, 2003.







ENTERRA ENERGY CORP.

|                                                                       | INDEX                                                                                                      | Page No.
|---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------
|                                                                       | PART I  FINANCIAL
    INFORMATION                                                                         |         
|Item l. Financial Statements
    (Unaudited):                          |                                                                                                           
|                                                                       | Consolidated Balance Sheets at
    March 31, 2003 and December 31, 2002                                    | 3       
|                                                                       | Consolidated Statements of
    Earnings and Retained Earnings - Three Months Ended March 31, 2003 and 2002 | 4       
|                                                                       | Consolidated Statements of Cash
    Flows - Three Months Ended March 31, 2003 and 2002                     | 5       
|                                                                       | Notes to Consolidated Financial
    Statements                                                             | 6       
|Item 2. Managements
    Discussion and Analysis or Plan of Operations | 11                                                                                                        
|Item 3. Controls and Procedures                                        | 21                                                                                                        
|                                                                       | PART II  OTHER INFORMATION                                                                                |         
|Item 1. Legal Proceedings                                              | 22                                                                                                        
|Item 2. Changes in Securities
    and Use of Proceeds                  | 22                                                                                                        
|Item 3. Defaults Upon Senior
    Securities                            | 22                                                                                                        
|Item 4. Submission of Matters
    to a Vote of Security Holders        | 22                                                                                                        
|Item 5. Other Information                                              | 22                                                                                                        
|Item 6. Exhibits and Reports on
    Form 8-K                           | 22                                                                                                        
|Signatures                                                             | 23                                                                                                        
|Sarbanes-Oxley Section 302 Certifications                              | 24                                                                                                        
|                                                                      







2

|ENTERRA ENERGY CORP.                                           
|---------------------------------------------------------------
|Consolidated Balance Sheets                                    
|(Expressed in Canadian dollars)                                
|                                                               
|                                                               
|                                                               
|Assets                                                         
|Current assets                                                 
|Cash                                                           
|Accounts receivable                                            
|Prepaid expenses and deposits                                  
|                                                               
|                                                               
|Capital assets                                                 
|Deferred financing charges (note
    5)                        
|                                                               
|                                                               
|Liabilities                                                    
|Current liabilities                                            
|Accounts payable and accrued
    liabilities                   
|Income taxes payable                                           
|Bank indebtedness (note 2)                                     
|Current portion of long-term debt                              
|                                                               
|                                                               
|Provision for future abandonment
    and site restoration costs
|Future income tax liability                                    
|Long term debt                                                 
|Deferred gain                                                  
|Series 1 preferred shares (note 1)                             
|                                                               
|                                                               
|Shareholders Equity                                           
|Share capital (note 4)                                         
|Contributed surplus (note 4)                                   
|Retained earnings                                              
|                                                               
|                                                               
|Hedging Contracts (note 7)                                     
|                                                               
|                                                               
|                                                               
|Approved on behalf of the Board :                              
|                                                               
|Reg Greenslade                                                 
|Director                                                       
|                                                               
|See accompanying notes to
    consolidated financial statements

3

|ENTERRA ENERGY CORP.                                           
|---------------------------------------------------------------
|Consolidated Statements of
    Earnings and Retained Earnings  
|Three Months Ended March 31                                    
|(Expressed in Canadian dollars)                                
|(Unaudited)                                                    
|                                                               
|Revenue                                                        
|Oil and gas                                                    
|                                                               
|Expenses                                                       
|Royalties, net of ARTC                                         
|Production                                                     
|General and administrative                                     
|Amortization of deferred financing charges                     
|Interest on long-term debt                                     
|Depletion, depreciation and site restoration                   
|                                                               
|Earnings before the following                                  
|Gain on redemption of preferred shares                         
|Earnings before income taxes                                   
|Income taxes :                                                 
|Current                                                        
|Future                                                         
|                                                               
|Net earnings                                                   
|                                                               
|                                                               
|Retained earnings, beginning of period                         
|                                                               
|Retained earnings, end of period                               
|                                                               
|                                                               
|Earnings per share :                                           
|Basic                                                          
|Diluted                                                        
|                                                               
|                                                               
|See accompanying notes to consolidated
    financial statements

4

|ENTERRA ENERGY CORP.                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Consolidated Statements of Cash Flows                                                                                                                                                                       
|Three Months Ended March 31                                                                                                                                                                                 
|(Expressed in Canadian dollars)                                                                                                                                                                             
|(Unaudited)                                                                                                                                                                                                 
|Cash provided by (used in) :                                                                                                                                                                                
|Operations                                                                                                                                                                                                  
|Net earnings                                                                                                                                                                                                
|Add non-cash items :                                                                                                                                                                                        
|Depletion, depreciation and site restoration                                                                                                                                                                
|Future income taxes                                                                                                                                                                                         
|Amortization of deferred financing charges                                                                                                                                                                  
|Amortization of deferred gain                                                                                                                                                                               
|Gain on redemption of preferred shares                                                                                                                                                                      
|Funds from operations                                                                                                                                                                                       
|Net change in non-cash working capital items :                                                                                                                                                              
|Accounts receivable                                                                                                                                                                                         
|Prepaid expenses and deposits                                                                                                                                                                               
|Accounts payable and accrued liabilities                                                                                                                                                                    
|Income taxes payable                                                                                                                                                                                        
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Financing                                                                                                                                                                                                   
|Bank indebtedness                                                                                                                                                                                           
|Long-term debt                                                                                                                                                                                              
|Deferred financing charges                                                                                                                                                                                  
|Issue of common shares, net of issue costs                                                                                                                                                                  
|Redemption of preferred shares                                                                                                                                                                              
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Investing                                                                                                                                                                                                   
|Capital assets                                                                                                                                                                                              
|Proceeds on disposal of capital assets                                                                                                                                                                      
|Future abandonment and site restoration costs                                                                                                                                                               
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|Increase (decrease) in cash                                                                                                                                                                                 
|Cash, beginning of period                                                                                                                                                                                   
|Cash, end of period                                                                                                                                                                                         
|                                                                                                                                                                                                            
|                                                                                                                                                                                                            
|During the three months ended
    March 31, 2003 the Company paid $391,269 (2002 -$208,123) of interest on bank debt. There
    were no income taxes paid in the three months ended March 31, 2003 and 2002.
|                                                                                                                                                                                                            
|See accompanying notes to consolidated
    financial statements                                                                                                                                             



> 

5





For the Three Months ended March 31, 2003 and 2002

(Unaudited)

The interim consolidated financial statements have been prepared by
management in accordance with Canadian generally accepted accounting principles. The
interim consolidated financial statements have been prepared following the same accounting
policies and methods used in preparing the consolidated financial statements for the
fiscal year ended December 31, 2002, and should be read in conjunction with those
statements. The other disclosures below are incremental to those reflected in the annual
statements.



> 

1. Series 1 preferred shares

> As at March 31, 2003 there were 705,135 (2002  1,294,466) Series
>   1 preferred shares outstanding. These shares are non-voting. They are transferable.
>   Holders of these shares are not entitled to receive any dividends until the first
>   anniversary of the date of issue. These shares are redeemable at any time by the Company
>   for $0.85 per share. Holders of these shares may require the Company to redeem all or any
>   of these shares, at $0.85 per share, at any time following the first anniversary of the
>   date of issue (August 16, 2001). There is no market for these shares and none is expected
>   to develop. A dividend of $11,980 was paid on the preferred shares in the quarter ended
>   March 31, 2003. This amount is included in interest expense as the preferred shares are
>   classified as debt as they are redeemable at the option of the holder.

2. Bank indebtedness

> Bank indebtedness represents the outstanding balance under a line of
>   credit of $26,700,000 with the Alberta Treasury Branches. Drawings bear interest at 0.25%
>   above the banks prime lending rate. Security is provided by a first charge over all
>   of the Companys assets. The balance is repayable on demand. While the loan is due on
>   demand, the Company is not subject to scheduled repayments.

3. Long-Term Debt

> Assets secured with long-term debt are tangible oil and gas equipment
>   with a cost of $5,217,500. These assets are subject to depletion.

Description
    **Principal
    Outstanding**
    **Less Current
    Portion**
    **Net****March 31,**
    **2003**
    **Net**
    **December 31,****2002**Capital lease bearing interest at 8.605%,
    repayable monthly at $88,802 plus applicable taxes. The lease term is for 60 months, due
    October 1, 2007, with a purchase option of $1,000,000.
    $ 4,581,155
    $ 695,602
    $ 3,885,553
    $ 4,069,1396Capital lease bearing interest at 12.15%,
    repayable monthly at $4,448 plus applicable taxes. The lease term is 24 months due
    December 19, 2004 with a purchase option of $100.
    79,167
    47,500
    31,667
    43,542Note payable bearing interest at 8%, repayable
    monthly at $7,190. The lease term is 15 months due December 20, 2003.
    62,636
    62,636
    -
    -$ 4,722,958
    $ 805,738
    $ 3,917,220
    $ 4,112,681




4. Share Capital

> (a) Issued:

**Number of common shares**
    **Amount**Balance, December 31, 2002
    9,176,325
    $ 29,665,075Issued on exercise of options
    7,000
    28,000Balance, March 31, 2003
    9,183,325
    $
    29,693,075




> (b) Options:

**Number
    of Options**
    **Weighted-average
    exercise price**Outstanding at December 31, 2002
    871,703
    $4.35Options granted
    4,000
    $10.40Options exercised
    (7,000)
    ($4.00)Options cancelled
    -Outstanding at March 31, 2003
    868,703
    $4.38




> (c) Warrants:
>   On March 28, 2002 the Company agreed to issue 300,000 share
>     purchase warrants to an arms length U.S.-based consulting firm in connection with a
>     potential debt financing in the United States. The warrants are to have a two-year term
>     and are subject to different pricing (100,000 warrants at US$2.60, 100,000 at US$3.30 and
>     100,000 at US$4.00). The US$2.60 warrants have vested since the execution in May 2002 of a
>     non-binding letter of intent relating to the proposed financing. The US$3.30 and US$4.00
>     warrants are to vest only on the successful closing and funding of the proposed financing.
>     A value of $125,000 was assigned to the 100,000 warrants at US$2.60. This value was
>     determined using the Black Scholes Option Pricing model using an interest rate of 5% and a
>     volatility factor of 50%. The $125,000 was credited to the Companys contributed
>     surplus account at December 31, 2002.

7

> (d) Pro forma net income  fair value based method of accounting for stock
>   options:
>   The following shows pro forma net income and earnings per common share
>     had we applied the fair-value based method of accounting to stock options issued in the
>     three months ended March 31, 2003 and 2002:

**2003**
    **2002****Net earnings ( in 000s)**As reported
    $ 4,186
    $ 3,150Less fair value of stock options to employees
    (71)
    (41)Pro Forma
    $ 4,115
    $ 3,109**Earnings Per Common Share ($/share)**Basic as Reported
    $ 0.46
    $ 0.34Pro Forma
    $ 0.45
    $ 0.34Diluted as Reported
    $ 0.42
    $ 0.34Pro Forma
    $ 0.42
    $ 0.34




5. Deferred Financing Charges

> Deferred financing charges include costs related to the capital lease,
>   due October 1, 2007. These costs are being amortized over the life of the lease. The
>   amount amortized in the three months ended March 31, 2003 was $7,000 (2002  NIL).

6. Reconciliation of Earnings per Share Calculations :

**Three Months Ended March 31, 2003****Net**
    **Earnings**
    **Weighted Average
    Shares Outstanding**
    **Per**
    **Share**Basic
    $4,186,119
    9,182,314
    $0.46Options and warrants assumed exercised
    
    1,067,459Shares assumed purchased
    
    (398,277)Diluted
    $4,186,119
    9,851,495
    $0.42


7. Hedging Contracts :

> In February of 2003 the Company entered into several contracts to
>   deliver 2,000 barrels of oil per day for the period April 1, 2003 and December 31, 2003.
>   The prices and volumes are as follows:

**Volumes (in barrels
    per day)**
    **Price (in US
    dollars)**1,000
    US$29.60250
    US$29.71250
    US$29.50500
    US$29.80


8

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table presents a summary of our consolidated statement of
operations derived from our financial statements for the three months ended March 31, 2003
and 2002. The monetary amounts in the table are based on Canadian GAAP. All data presented
below should be read in conjunction with the "Managements Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and accompanying notes included elsewhere in this Form 10-QSB.

Consolidated statements of operations data:

(In thousands, except per share data)Three
    Months Ended
    March 312003
    2002(Unaudited)
    (Unaudited)C$
    C$Revenue
    
    
    $ 22,002
    $ 5,598Royalties, net of ARTC
    
    
    4,935
    809Production expenses
    
    
    3,009
    1,718General and administrative expenses
    
    
    722
    246Interest on long-term debt
    
    
    494
    208Amortization of deferred financing charges
    
    
    240
    -Depreciation, depletion and site restoration
    
    
    5,410
    2,29014,810
    5,271Earnings from operations
    
    
    $ 7,192
    $ 326Net earnings for the period ***
    
    
    $ 4,186
    $ 3,150Basic earnings per share
    
    
    $ 0.46
    $ 0.34


*** includes a gain on redemption of preferred shares of $2.9 million in the three
months ended March 31, 2002.

The following table indicates a summary of our consolidated balance
sheets as of March 31, 2003 and December 31, 2002. The monetary amounts in the table are
based on Canadian GAAP.

Consolidated balance sheet data:

(In thousands)March 31
    December 312003
    2002(Unaudited)C$
    C$Cash
    $ 1
    $ 108Accounts receivable and prepaids
    20,344
    7,971Capital assets
    81,254
    94,354Total assets
    101,718
    102,717Total shareholders equity
    42,877
    38,663


9

Exchange Rate Information

We publish our consolidated financial statements in Canadian dollars.
In this annual report, except where otherwise indicated, all dollar amounts are stated in
Canadian dollars. References to "$" or "C$" are to Canadian dollars
and references to "US$" are to U.S. dollars. The following table sets forth for
each period indicated the period end exchange rates for conversion of U.S. dollars to
Canadian dollars, the average exchange rates on the last day of each month during such
period and the high and low exchange rates during such period. These rates are based on
the noon buying rate in New York City, expressed in U.S. dollars, for cable transfers in
Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The exchange rates are presented as Canadian dollars per $1.00.

March 31
    March 31
    December 312003
    2002
    2002End of period
    0.67970
    0.62710
    0.63416Average for the three months ended
    0.66211
    0.62738
    N/AHigh during the three months ended
    0.68570
    0.63550
    N/ALow during the three months ended
    0.63270
    0.61750
    N/A
















10

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our results of operations and financial
condition should be read in conjunction with the financial statements, other financial
information included in this quarterly report and with managements discussion and
analysis contained in the 2002 Annual Report and Form 10-KSB. The statements that relate
to matters that are not historical facts are "forward-looking statements". Words
such as "anticipate", "believe", "expect", "plan",
"intend", "estimate", "project", "will",
"should" "could", "may", "predict" and similar
expressions are intended to identify forward-looking statements. Future events and actual
results may differ materially from the results set forth in or implied in the
forward-looking statements. Factors that might cause such a difference such as those
discussed under "Risk factors" and elsewhere, include:

> fluctuations in worldwide prices of oil and natural gas and demand for oil and natural
>       gas;
>     fluctuations in levels of oil and gas exploration and development activities;
>     the existence of competitors, technological changes and developments in the industry;
>     the existence of operating risks and hazards inherent in the industry, such as blowouts,
>       oil spills, fires, adverse weather, natural disasters, injury to third parties, oil spills
>       and other environmental damages;
>     the existence of regulatory uncertainties;
>     possible insufficient liquidity to meet the Companys expansion plans; and
>     general economic conditions.

The following discussion is to inform you about our financial
conditions, liquidity and capital resources as of March 31, 2003 and December 31, 2002 and
the results of operations for the three ended March 31, 2003 and 2002. The information is
expressed in Canadian dollars

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

Financial Condition, Liquidity and Capital Resources

At March 31, 2003 Enterras working capital was a deficit of $17.7
million (December 31, 2002 - $38.0 million). Included as part of current liabilities at
March 31, 2003 is bank debt of $24.7 million (December 31, 2002 - $24.4 million). The
classification of our bank debt as a current liability is the result of Canadian
accounting rules which came into effect January 1, 2002. These rules specify that all
borrowings where, among other things, the lender has a right to demand repayment within 12
months (which is the case with our revolving production facility) are to be classified as
current liabilities. We are not subject to principal repayments under our banking
arrangement. Other than in the event of a default or a breach of covenants, the Company
does not expect any principal payments in 2003.

Cash flow from operations for the three months ended March 31, 2003 was
$12.7 million (2002 - $2.4 million) for a 423% increase. The 2003 cash flow was higher
because of higher production ( 5,178 boe/day in 2003 compared to 2,422 boe/day in 2002),
higher prices (up 84% on average) and lower operating costs (both as a percentage of
revenue and on a per boe basis).



11

Financing Activities

Enterras ability to maintain and grow its operating income and
cash flow is dependent upon continued capital spending to replace depleting assets.
Enterra believes its future cash flow from operations, borrowing capacity and future
equity issues should be sufficient to fund capital expenditures and to service debt.
However, our ability to raise additional funds at all, or to do so on acceptable terms,
depends largely on factors beyond our control, such as world prices for oil and gas,
prevailing interest rates and general economic conditions.

Enterras bank debt at March 31, 2003 was $24.7 million (December
31, 2002 - $24.4 million). Our bank debt is used to acquire capital assets and support
ongoing operations. At March 31, 2003 Enterras bank facility consisted of a line of
credit of $26.7 million (December 31, 2002 - $26.7 million) of which $24.7 million was
drawn (December 31, 2002 - $24.4 million). Interest on amounts drawn is based on the
banks prime rate plus 0.25%.

Security is provided by a first charge over all of the Companys
assets. While the loan is repayable on demand, Enterra is not subject to scheduled
repayments. The lender has advised the Company that, subject to annual review of the
borrowing base and the Company continuing to comply with the terms of the loan agreement,
no payments will be required in 2003.

At March 31, 2003 the Company had 9,183,325 common shares outstanding
(December 31, 2002  9,176,325).

During the quarter the Company sold several non-core properties for net
proceeds of $15 million, which were used to reduce our bank debt and to reduce our working
capital deficit. Approximately $9.5 million of these proceeds were included in accounts
receivable at March 31, 2003. They were collected during the first week of April 2003.

The Company has approximately $39 million in tax pools available at
March 31, 2003 (December 31, 2002 - $63 million).

The bank debt to equity ratio at March 31, 2003 was 0.58 to 1 (December
31, 2002  0.63 to 1).

Investing Activities

The timing of most of Enterras capital expenditures is
discretionary. Enterra has no material long-term commitments associated with its capital
expenditure plans or operating agreements. Consequently, the Company has a significant
degree of flexibility to adjust the level of such expenditures as circumstances warrant.
The level of capital expenditures will vary in future periods depending on the success we
experience on planned drilling activities, oil and gas price conditions and other related
economic factors.

Capital expenditures for the three months ended March 31, 2003 were
$7.2 million (March 31, 2002 - $2.8 million).

The Company drilled 13 (11.0 net) wells in the quarter, resulting in 9
(9.0 net) oil wells and 2 (1.0 net) gas wells, for a success rate of 91% on a net basis.

Proceeds on disposal of oil and gas properties were $15 million during
the quarter. These proceeds were applied to reduce bank debt and improve working capital.
As mentioned above, approximately $9.5 million of the proceeds were included in accounts
receivable at March 31, 2003 and subsequently collected in the days following.

12



Results of Operations

Gross revenue for the three months ended March 31, 2003 was $22 million
(2002 - $5.6 million) for a 293% increase. Production volumes for the three months ended
March 31, 2003 were 5,178 boe/day (2002  2,422 boe/day) for a 114% increase.

Average oil prices received by Enterra were $48.40 per barrel in the
three months ended March 31, 2003 (2002 - $27.57) for an increase of 76%. The Company
received an average of $7.27 per mcf for its natural gas production during the three
months ended March 31, 2003 (2002 - $3.59) for an increase of 103%. As a result,
Enterras revenue per boe increased by $21.53 per boe (or 84%) to $47.21 per boe in
the first quarter of 2003 (2002 - $25.68).

Royalties for the three months ended March 31, 2003 were $4.9 million
(2002 - $0.8 million). As a percentage of oil and gas revenues, royalties were 22% for the
three months ended March 31, 2003 (2002  14%). This large increase is due to the
increased production and the higher commodity prices in effect during the quarter.

Operating expenses for the three months ended March 31, 2003 were $3.0
million (2002 - $1.7 million). On a barrel of oil equivalent basis operating costs for the
three months ended March 31, 2003 were $6.46 (2002 - $7.88) for an 18% decrease. The
reduction in operating costs will continue over the next quarters as the Company focuses
its drilling on a few selected areas, which makes it easier to manage and control costs.

General and administrative expenses for the three months ended March
31, 2003 were $0.7 million (2002 - $0.2 million). On a barrel of oil equivalent basis
administrative costs were $1.55 for the three months ended March 31, 2003 (2002 - $1.13)
for a 37% increase. The 2003 increase is due mainly to higher payroll costs and additional
legal fees incurred in the quarter. As our production increases over time it is expected
that the general and administrative expenses will fall back to a level between $1.00 and
$1.50 per boe.

Interest expense for the three months ended March 31, 2003 was $0.49
million (2002 - $0.2 million). The increase in interest expense is due to higher debt
levels in 2003, including bank debt, capital lease and vendor financing arrangements.
Included in interest expense in the three months ended March 31, 2002 is $11,980 (2002
 NIL) of dividends paid to the preferred shareholders.

Depletion and depreciation for the three months ended March 31, 2003
was $5.4 million (2002 - $2.3 million). The increase reflects the higher cost base in our
capital assets in 2003. The Company also amortized $0.2 million in deferred financing
charges during the quarter (2002  NIL).

Current and future income tax expense for the three months ended March
31, 2003 were $30,000 and $3.0 million respectively (2002  $33,000 and $49,000). The
2002 income tax expense was low because the 2002 earnings of $3.1 million included a
non-taxable gain on redemption of preferred shares of $2.9 million. This gain was excluded
from the 2002 tax calculation as it is not subject to income tax. The future income tax
expenses are calculated based on the timing difference of deductions for accounting and
tax purposes on petroleum and gas assets.

13

The Companys earnings were $4.2 million for the three months
ended March 31, 2003 (2002 - $3.1 million) for an increase of 33%. The 2002 earnings
include a $2.9 million gain on redemption of preferred shares. Enterra redeemed 6,123,870
of its Series 1 preferred shares with a face redemption price of $5,205,290 for $2.3
million, resulting in a gain of $2.9 million. Without this gain, earnings for the three
months ended March 31, 2002 would have been $244,447.

Earnings per share for the three months ended March 31, 2003 were $0.46
(2002 - $0.34). The weighted average number of shares outstanding for the three months
ended March 31, 2003 was 9,182,314 (2002  9,150,622). Without the gain on redemption
of preferred shares, the earnings per share for the three months ended March 31, 2002
would have been $0.03.

The Company had 9,183,325 common shares outstanding at March 31, 2003
(December 31, 2002 - 9,176,325)

Stock based compensation

Effective January 1, 2002 the Company prospectively adopted the new
recommendations of the CICA with respect to the accounting for stock-based compensation
and other stock-based payments. In accordance with the new standard, the Company elected
to continue its policy that no compensation is recorded on the grant of employee stock
options and consideration paid on the exercise of such options is recorded as share
capital. In addition, the new standard requires a fair value based method of accounting
for other stock-based payments. Had compensation expense for the Companys
stock-based compensation plan been determined based on the fair value at the grant dates
for awards under the plan after January 1, 2002, the Companys net income and
earnings per share would not have been materially different than those reported.

Share Capital

**Number of
    common shares**
    **Amount**Balance, December 31, 2002
    9,176,325
    $ 29,665,075Issued on exercise of options
    7,000
    28,000Balance, March 31, 2003
    9,183,325
    $
    29,693,075


**Number of Options**
    **Weighted-average
    exercise price**Outstanding at December 31, 2002
    871,703
    $4.35Options granted
    4,000
    $10.40Options exercised
    (7,000)
    ($4.00)Options cancelled
    -
    -Outstanding at March 31, 2003
    868,703
    $4.38


14

On March 28, 2002 the Company agreed to issue 300,000 share purchase
warrants to an arms length U.S.-based consulting firm in connection with a potential
debt financing in the United States. The warrants are to have a two-year term and are
subject to different pricing (100,000 warrants at US$2.60, 100,000 at US$3.30 and 100,000
at US$4.00). The US$2.60 warrants are to vest upon the execution of a non-binding letter
of intent relating to the proposed financing. The US$3.30 and US$4.00 warrants are to vest
only on the successful closing and funding of the proposed financing. A value of $125,000
was assigned to the 100,000 warrants at US$2.60. This value was determined using the Black
Scholes Option Pricing model using an interest rate of 5% and a volatility factor of 50%.
The $125,000 was credited to the Companys contributed surplus account in 2002.



Hedging Contracts

During the first quarter of 2003 the Company entered into several
contracts to deliver 2,000 barrels of oil per day for the period April 1, 2003 and
December 31, 2003. The prices and volumes are as follows:

**Volumes (in barrels
    per day)**
    **Price (in US
    dollars)**1,000
    US$29.60250
    US$29.71250
    US$29.50500
    US$29.80




New Accounting Pronouncements

In February 2003, the Canadian Institute of Chartered Accountants (CICA) issued
Accounting Guideline 14, "Disclosure of Guarantees" (AcG-14). AcG-14 elaborates
on the disclosures required with respect to any obligations as a result of issuing
guarantees. The disclosure requirements are effective for interim and annual periods
beginning on or after January 1, 2003. FASB Interpretation No. 45, "Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others", is the US equivalent of AcG-14. Enterra did not have any
guarantees outstanding at December 31, 2002 or March 31, 2003.



Factors That May Affect Future Results

This report may contain forward-looking statements and other
prospective information relating to future events. These forward-looking statements and
other information are subject to certain risks and uncertainties that could cause results
to differ materially from historical or anticipated results, including the following:



15

We have a working capital deficiency at March 31, 2003; our Credit facilities can be
called at any time.

At March 31, 2003, we had a working capital deficiency of $17.7
million, which means our current liabilities exceeded our current assets by that amount.
Our credit facilities are all on a demand basis and, although we are not subject to
principal repayments under our current banking arrangement, they could be called for
repayment at any time. Other than in the event of a default or a breach of covenants, the
Company does not expect any principal payments in 2003.



Our assets are highly leveraged.

We have incurred a high amount of debt relative to our assets. A
decrease in the amount of our production or the price we receive for it could make it
difficult for us to service our loan or may cause the bank that issued our loan to
determine that our assets are insufficient security for our bank debt.

Our operations are subject to numerous risks of crude oil and natural
gas drilling and production activities.

Crude oil and natural gas drilling and production activities are
subject to numerous risks, many of which are beyond our control. These risks include the
following:

> that no commercially productive crude oil or natural gas reservoirs
>       will be found;
>     that crude oil and natural gas drilling and production activities may
>       be shortened, delayed or canceled; and
>     that our ability to develop, produce and market our reserves may be
>       limited by:title problems,
>         weather conditions,
>         compliance with governmental requirements, and
>         mechanical difficulties or shortages or delays in the delivery of
>           drilling rigs and other equipment.

In the past, we have had difficulty securing drilling equipment in
certain of our core areas. We cannot assure you that the new wells we drill will be
productive or that we will recover all or any portion of our investment. Drilling for
crude oil and natural gas may be unprofitable. Dry wells and wells that are productive but
do not produce sufficient net revenues after drilling, operating and other costs are
unprofitable. In addition, our properties may be susceptible to hydrocarbon draining from
production by other operations on adjacent properties.

Our industry also experiences numerous operating risks. These operating
risks include the risk of fire, explosions, blow-outs, pipe failure, abnormally pressured
formations and environmental hazards. Environmental hazards include oil spills, gas leaks,
ruptures or discharges of toxic gases. If any of these industry operating risks occur, we
could have substantial losses. Substantial losses also may result from injury or loss of
life, severe damage to or destruction of property, clean-up responsibilities, regulatory
investigation and penalties and suspension of operations. In accordance with industry
practice, we maintain insurance against some, but not all, of the risks described above.
We cannot assure you that our insurance will be adequate to cover losses or liabilities.
Also, we cannot predict the continued availability of insurance at premium levels that
justify its purchase.

16

We operate in a highly competitive industry which may adversely affect
our operations.

We operate in a highly competitive environment. Competition is
particularly intense with respect to the acquisition of desirable undeveloped crude oil
and natural gas properties. The principal competitive factors in the acquisition of such
undeveloped crude oil and natural gas properties include the staff and data necessary to
identify, investigate and purchase such properties, and the financial resources necessary
to acquire and develop such properties. We compete with major and independent crude oil
and natural gas companies for properties and the equipment and labor required to develop
and operate such properties. Many of these competitors have financial and other resources
substantially greater than ours.

The principal resources necessary for the exploration and production of
crude oil and natural gas are leasehold prospects under which crude oil and natural gas
reserves may be discovered, drilling rigs and related equipment to explore for such
reserves and knowledgeable personnel to conduct all phases of crude oil and natural gas
operations. We must compete for such resources with both major crude oil and natural gas
companies and independent operators. Although we believe our current operating and
financial resources are adequate to preclude any significant disruption of our operations
in the immediate future we cannot assure you that such materials and resources will be
available to us.

Our ability to replace production with new reserves is highly dependent
on acquisitions or successful development and exploration activities.

The rate of production from crude oil and natural gas properties
declines as reserves are depleted. Our proved reserves will decline as reserves are
produced unless we acquire additional properties containing proved reserves, conduct
successful exploration and development activities or, through engineering studies,
identify additional behind-pipe zones or secondary recovery reserves. Our future crude oil
and natural gas production is therefore highly dependent upon our level of success in
acquiring or finding additional reserves. We cannot assure you that our exploration and
development activities will result in increases in reserves. Our operations may be
curtailed, delayed or cancelled if we lack necessary capital and by other factors, such as
title problems, weather, compliance with governmental regulations, mechanical problems or
shortages or delays in the delivery of equipment. Our ability to continue to acquire
producing properties or companies that own such properties assumes that major integrated
oil companies and independent oil companies will continue to divest many of their crude
oil and natural gas properties. We cannot assure you that such divestitures will continue
or that we will be able to acquire such properties at acceptable prices or develop
additional reserves in the future.

Crude oil and natural gas price declines and volatility could adversely
affect our revenue, cash flows and profitability.

Our revenue, profitability and future rate of growth depend
substantially upon prevailing prices for crude oil and natural gas. Crude oil and natural
gas prices fluctuate and until recently have declined significantly. Prices also affect
the amount of cash flow available for capital expenditures and our ability to borrow money
or raise additional capital. In 1998 and 1999, we reduced our capital expenditures budget
because of lower crude oil and natural gas prices. In addition, we may have ceiling test
write-downs when prices decline. At December 31, 2001 the Company would have realized a
U.S. GAAP ceiling test write-down of C$17.5 million (after tax). Lower prices may also
reduce the amount of crude oil and natural gas that we can produce economically.

17

We may enter into hedge agreements and other financial arrangements at
various times to attempt to minimize the effect of crude oil and natural gas price
fluctuations. We cannot assure you that such transactions will reduce risk or minimize the
effect of any decline in crude oil or natural gas prices. Any substantial or extended
decline in crude oil or natural gas prices would have a material adverse effect on our
business and financial results. Hedging activities may limit the risk of declines in
prices, but such arrangements may also limit additional revenues from price increases.

Lower crude oil and natural gas prices increase the risk of ceiling
limitation write-downs.

The Company uses the "full cost" method of accounting for
petroleum and natural gas properties. All costs related to the exploration for and the
development of oil and gas reserves are capitalized into a single cost centre representing
the Companys activity which is undertaken exclusively in Canada. Costs capitalized
include land acquisition costs, geological and geophysical expenditures, lease rentals on
undeveloped properties and costs of drilling productive and non-productive wells. Proceeds
from the disposal of properties are applied as a reduction of cost without recognition of
a gain or loss except where such disposals would result in a major change in the depletion
rate. Capitalized costs are depleted and depreciated using the unit-of-production method
based on the estimated gross proven oil and natural gas reserves before royalties as
determined by independent engineers. Units of natural gas are converted into barrels of
equivalents on a relative energy content basis. Capitalized costs, net of accumulated
depletion and depreciation, are limited to estimated future net revenues from proven
reserves, based on year-end prices, undiscounted, less estimated future abandonment and
site restoration costs, general and administrative expenses, financing costs and income
taxes. Estimated future abandonment and site restoration costs are provided for over the
life of proven reserves on a unit-of-production basis. The annual charge is included in
depletion and depreciation expense and actual abandonment and site restoration costs are
charged to the provision as incurred. The amounts recorded for depletion and depreciation
and the provision for future abandonment and site restoration costs are based on estimates
of proven reserves and future costs. The recoverable value of capital assets is based on a
number of factors including the estimated proven reserves and future costs. By their
nature, these estimates are subject to measurement uncertainty and the impact on financial
statements of future periods could be material.

The Company performs a cost recovery ceiling test which limits net
capitalized costs to the undiscounted estimated future net revenue from proven oil and gas
reserves plus the cost of unproven properties less impairment, using year-end prices or
average prices in that year, if appropriate. In addition, the value is further limited by
including financing costs, administration expenses, future abandonment and site
restoration costs and income taxes. Under U.S. GAAP, companies using the "full
cost" method of accounting for oil and gas producing activities perform a ceiling
test using discounted estimated future net revenue from proven oil and gas reserves using
a discount factor of 10%. Prices used in the U.S. GAAP ceiling tests performed for this
reconciliation were those in effect at the applicable year-end. Financing and
administration costs are excluded from the calculation under U.S. GAAP.

The risk that the Company will be required to write down the carrying
value of crude oil and natural gas properties increases when crude oil and natural gas
prices are low or volatile. The Company may experience additional ceiling test write-downs
in the future.

18

We may undertake acquisitions that could limit our ability to manage
and maintain our business, result in adverse accounting treatment and are difficult to
integrate into our business.

A component of future growth will depend on the ability to identify,
negotiate, and acquire additional companies and assets that complement or expand existing
operations. However we may be unable to complete any acquisitions, or any acquisitions we
may complete may not enhance our business. Any acquisitions could subject us to a number
of risks, including:

> diversion of management's attention;
>     amortization of substantial goodwill, adversely affecting our
>       reported results of operations;
>     inability to retain the management, key personnel and other employees
>       of the acquired business;
>     inability to establish uniform standards, controls, procedures and
>       policies;
>     inability to retain the acquired company's customers;
>     exposure to legal claims for activities of the acquired business
>       prior to acquisition; and inability to integrate the acquired company and its employees
>       into our organization effectively.

We may be subject to environmental liability claims that could result
in significant costs to us.

We may be subject to claims for damages related to any impact that our
operations have on the environment. An environmental claim could materially adversely
affect our business because of the costs of defending against these types of lawsuits, the
impact on senior management's time and the potential damage to our reputation. Our oil and
gas operations are subject to government regulations and control. Failure to comply with
applicable government rules could restrict our ability to engage in further oil and gas
exploration and development opportunities.

Our revenue is subject to volatile oil and gas prices that could reduce
our revenue and profitability.

The price we receive for oil and gas production is subject to
significant volatility. Our revenue, cash flow and profitability are substantially
dependent on prevailing prices for oil and gas. Historically oil and gas prices and
markets have been volatile and they are likely to continue to be volatile in the future.
Some factors that contribute to volatility include:

> political conditions in the Middle East, the former Soviet Union and
>       other regions;
>     domestic and foreign supplies of oil and gas;
>     the level of consumer demand;
>     weather conditions;
>     domestic and foreign government regulations;
>     the availability and prices of alternative fuels; and
>     overall economic conditions.

To counter this volatility from time to time we may enter into
agreements to receive fixed prices on its oil and gas production to offset the risk of
revenue losses if commodity prices decline; however, if commodity prices increase beyond
the levels set in such agreements, We will not benefit from such increases.

19

As a Canadian oil and gas company, we may be adversely affected by
changes in the exchange rate between U.S. and Canadian dollars.

The price we receive for oil and gas production is expressed in U.S. dollars, which is
the standard for the oil and gas industry worldwide. However, we pay operating expenses,
drilling expenses and general overhead expenses in Canadian dollars. Changes to the
exchange rate between U.S. and Canadian dollars can adversely affect us. When the value of
the U.S. dollar increases, we receive higher revenue and when the value of the U.S. dollar
declines, we receive lower revenue on the same amount of production sold at the same
prices.

We depend on key personnel for critical management decisions and
industry contacts but have no employment contracts or key person insurance.

We are dependent upon the continued services of our management team. We
do not have employment contracts with any of these executives and do not carry key person
insurance on their lives. The loss of the services of our executive officers, through
incapacity or otherwise, could have a material adverse effect on our business and would
require us to seek and retain other qualified personnel.

We have not paid dividends (except to our preferred shareholders), do
not intend to pay dividends in the foreseeable future and are currently restricted from
paying dividends pursuant to the terms of our credit facility and Alberta corporate law.

We have not paid any cash dividends on our common stock and do not
expect to pay any cash or other dividends in the foreseeable future. We have paid
dividends of $11,980 to our preferred shareholders in the quarter ended March 31, 2003.
Dividends will be paid to our preferred shareholders at a rate of $0.85 per share (on an
annual basis). This dividend will decrease over time as the Company is gradually redeeming
these preferred shares. At March 31, 2003 there were 705,135 preferred shares outstanding.
The terms of our current banking credit facility prohibit us from declaring and paying
dividends except from assets that are in excess of the required amount of security under
our credit facility, and Alberta corporate law prohibits the payment of dividends unless
stated solvency tests are met. The Companys banker is aware of the dividends being
paid to the preferred shareholders and will allow such payments as long as all our bank
covenants are being met.

Our stock is thinly traded and is subject to price volatility.

Trading volume in our common stock has historically been limited.
Accordingly, the trading price of our common stock could be subject to wide fluctuations
in response to quarterly variations in operating results, changes in financial estimates
by securities analysts, an imbalance of purchasers and sellers, or other factors.



20



ITEM 3. CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer have evaluated our disclosure
controls and procedures. They concluded that our disclosure controls and procedures were
adequate and effective in ensuring that material information relating to the Company is
properly recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms, and that such information is accumulated and communicated
to allow timely decisions regarding required disclosure.

We currently have in place systems relating to internal controls and procedures with
respect to our financial information. Management reviews and evaluates these internal
control systems on an on-going basis. Based on these evaluations, there were no
significant deficiencies or material weaknesses in these internal controls requiring
corrective actions. As a result, no corrective actions were taken. There have been no
significant changes in these internal controls or in other factors that could
significantly affect these internal controls subsequent to the review and evaluation.





PART II - OTHER INFORMATION



Not Applicable.

ITEM 2. CHANGES IN SECURITIES.

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable

ITEM 5. OTHER INFORMATION.

Not Applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

> Exhibits

|99.1 | Certification of Chief
    Executive Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|99.2 | Certification of Chief
    Financial Officer pursuant to 18 U.S.C.ss.1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.

> Reports on Form 8-K  None

22





Date: May 14, 2003

Enterra Energy Corp.



Luc Chartrand

Chief Financial Officer

(Duly Authorized Officer and Principal

Financial and Accounting Officer)

23



Sarbanes-Oxley Section 302 Certification

I, Reg J. Greenslade, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Enterra Energy Corp.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls
and procedures to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared; b)
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this quarterly report (the
"Evaluation Date"); and c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function): a) all significant
deficiencies in the design or operation of internal controls which could adversely affect
the registrant's ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 14, 2003

/s/ Reg J. Greenslade

Reg J. Greenslade.

Chief Executive Officer

24

Sarbanes-Oxley Section 302 Certification

I, Luc Chartrand, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Enterra Energy Corp.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls
and procedures to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared; b)
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this quarterly report (the
"Evaluation Date"); and c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function): a) all significant
deficiencies in the design or operation of internal controls which could adversely affect
the registrant's ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 14, 2003

/s/ Luc Chartrand

Luc Chartrand

Chief Financial Officer

25