EXHIBIT 99.2
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===============================================================================







                               [GRAPHIC OMITTED]


                              V E R M I L L I O N

                                 ENERGY TRUST






                2005 ANNUAL MANAGEMENT'S DISCUSSION AND ANALYSIS


                           AMENDED NOVEMBER 15, 2006





===============================================================================
<PAGE>

-------------------------------------------------------------------------------
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------

The following  management's  discussion and analysis (MD&A) has been amended to
enhance the  disclosure  relating to the  assessment of the Trust's  disclosure
controls and  procedures  by  Vermilion's  officers as of the end of the period
covered by this MD&A. Please see Disclosure  Controls and Procedures on page 13
of this MD&A.

Although the MD&A has been  updated to reflect  material  events that  occurred
subsequent to the original filing date of March 20, 2006, readers should review
Vermilion's  subsequent  public filings  available  through SEDAR including the
MD&A documents filed for the first, second and third quarters of 2006.

The  following  MD&A is dated  February  15,  2006 and  relates to  Vermilion's
operating and financial results for the years ended December 31, 2005 and 2004.
This  discussion  should  be read  in  conjunction  with  the  Trust's  audited
consolidated  financial  statements  for the years ended  December 31, 2005 and
2004, together with accompanying notes.

NON-GAAP MEASURES

Included in this report are  references  to terms  commonly used in the oil and
gas  industry,  such as cash  flow and  cash  flow  per  unit  and  funds  from
operations  which are expressed  before changes in non-cash working capital and
is used by the Trust to analyze operating performance,  leverage and liquidity.
These  terms  are not  defined  by  Generally  Accepted  Accounting  Principles
("GAAP").  Consequently, these are referred to as non-GAAP measures. Cash flow,
as discussed in this report,  appears as a separate caption on the Trust's cash
flow statement as "funds from operations" and is reconciled to net earnings.

FORWARD-LOOKING INFORMATION

This report  contains  forward-looking  financial and  operational  information
including earnings, cash flow, production and capital expenditure  projections.
These  projections are based on the Trust's  expectations  and are subject to a
number of risks and  uncertainties  that could  materially  affect the results.
These risks include, but are not limited to, future commodity prices,  exchange
rates, interest rates,  geological risk, reserves risk, political risk, product
demand and transportation restrictions.

<TABLE>
<CAPTION>
HIGHLIGHTS ($M EXCEPT PER UNIT AMOUNTS)                                                    2005          2004*         2003*
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>             <C>            <C>
Revenues                                                                            $   529,938     $  354,525     $ 314,146
Net earnings from continuing operations                                                 158,471         66,010        44,962
Net earnings                                                                            158,471        127,513        43,477
   Per unit basic                                                                          2.57           2.12          0.82
   Per unit diluted                                                                        2.49           2.07          0.81
Funds from operations                                                                   278,165        170,179       144,761
   Per unit                                                                                4.50           2.83          2.73
Return on equity (%)                                                                       37.4           34.0          12.0
Total assets                                                                          1,111,739        844,602       780,589
WTI (US$/bbl)                                                                             56.56          41.40         31.04
AECO (CDN$/mcf)                                                                            8.77           6.56          6.69
Realized price ($/boe)                                                                    53.48          39.48         37.52
Cash flow netback ($/boe) (1)                                                       $     30.15     $    20.19     $  17.29
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  2003 netbacks are calculated including the impact of $25.6 million of
     reorganization costs

<TABLE>
<CAPTION>
2005 SUMMARY OF QUARTERLY RESULTS ($M EXCEPT PER UNIT AMOUNTS)              Q1               Q2             Q3            Q4
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>             <C>            <C>
Revenue                                                             $  108,715      $   117,360     $  149,877     $ 153,986
Net earnings                                                            25,990           32,585         50,118        49,778
   Per unit basic                                                         0.43             0.53           0.81          0.80
   Per unit diluted                                                 $     0.41      $      0.53     $     0.79     $    0.78
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
2004 SUMMARY OF QUARTERLY RESULTS ($M EXCEPT PER UNIT AMOUNTS)              Q1               Q2             Q3            Q4
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>             <C>            <C>
Revenue                                                             $   77,610      $    87,420     $   96,260     $  93,235
Net earnings from continuing operations*                                10,797           19,309         14,902        21,002
Net earnings*                                                           11,625           78,184         14,902        22,802
   Per unit basic*                                                        0.20             1.31           0.25          0.38
   Per unit diluted*                                                $     0.19      $      1.28     $     0.24     $    0.37
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*  Restated stock compensation expense (Note 11)


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            2
<PAGE>

QUARTERLY RESULTS

Quarterly results in 2005 have improved due to the Australia  acquisition which
was completed at the end of the first quarter of 2005. In addition,  WTI prices
in the last half of 2005 were approximately US$10.00 per barrel higher than the
first half of 2005. The increase in earnings in the three months ended June 30,
2004 relates to the sale of Aventura for a net gain of $68.0 million.

FOURTH QUARTER 2005

Revenue for the three months ended  December  31, 2005  increased  65% over the
three months ended  December 31, 2004.  This  increase is due to an increase in
production  resulting  from the  acquisition  of assets in Australia as well as
increased  prices  received.  WTI  increased  24% quarter over quarter and AECO
increased 74% in the same period.  Earnings increased  significantly due mostly
to the increase in revenues. In December 2005, the Trust's ownership in Verenex
was decreased to  approximately  49% and the Trust  discontinued  consolidating
Verenex effective December 15, 2005. Prior periods have not been restated.

OPERATIONAL ACTIVITIES

CANADA

In  Canada,  the Trust  participated  in the  drilling  of 66 wells  (30.4 net)
resulting in 19 gas wells (10.7 net),  1 oil well (0.5 net), 2 abandoned  wells
(0.6  net) and 44  standing  wells  (18.6  net)  awaiting  further  evaluation,
completion  or tie-in.  Of the total wells  drilled in 2005, 55 (24.0 net) were
related to the CBM / shallow gas program, which achieved a 100% success rate.

In addition to the Trust's  drilling  operations,  an  additional 21 wells were
drilled  on  Vermilion  lands  by  third  party  operators   through   farm-out
arrangements.  Vermilion  maintained  an  overriding  royalty of small  working
interest in these wells.

FRANCE

Vermilion  drilled and completed  three new La Torche wells and  re-entered and
completed the Champotran 23 well which was  temporarily  abandoned in 2004, all
in  the  Paris  Basin.   Average   production   rates  from  these  wells  were
approximately 180 boe/d per well, with each well adding  approximately  400,000
bbls of reserves on a proved plus probable basis.

NETHERLANDS

The  Trust   installed  16  small  diameter   tubing  strings  to  improve  the
deliverability of these gas wells.  Vermilion completed major plant inspections
and  turn-arounds  at its Harlingen and Garijp  facilities  and installed a new
canal crossing for one of its delivery pipelines.

AUSTRALIA

Vermilion applied for and received  government approval to operate the offshore
Wandoo  facilities.  A modest  debottlenecking of the topside facilities on the
Wandoo B platform was successfully  completed during the summer, which combined
with a  modified  cycling  program  of  these  wells  increased  production  by
approximately 200 boe/d.  Vermilion undertook a geological modeling study and a
reservoir study to explore different  avenues to increase  production from this
field.

PRODUCTION

Production  in Canada  during 2005  averaged  4,870 bbls/d of oil and NGL's and
38.4 mmcf/d of natural gas  compared to 5,723  bbls/d of oil and NGL's and 46.4
mmcf/d of natural gas in 2004. Fourth quarter production  averaged 4,522 bbls/d
of oil and NGL's and 39.1 mmcf/d of natural gas, representing an annual decline
of approximately 11% compared to fourth quarter 2004 volumes.

Production  in France  averaged  5,695  boe/d in 2005 a 5% decline  compared to
6,018 boe/d production in 2004. Fourth quarter production  averaged 6,096 boe/d
and  benefited  from a  recent  recompletion  and  tie-in  of new  wells in the
Champotran/La Torche field.

Production in the Netherlands,  acquired in May 2004,  averaged 4,812 boe/d for
the year compared to 3,519 boe/d in 2004.  Fourth quarter  production  from the
Netherlands   averaged   5,214  boe/d,   representing   an  annual  decline  of
approximately 7% compared to fourth quarter 2004 volumes.

Production in Australia, acquired in March 2005, averaged 3,391 boe/d for the
year. Fourth quarter production in Australia averaged 4,294 boe/d.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            3

<PAGE>

Total Trust production  averaged 25,166 boe/d in 2005, compared to 22,990 boe/d
in 2004.  Production  declines  in  Canada  and  France  were  offset  with the
acquisition  of  production in Australia and the full year of production in the
Netherlands.

<TABLE>
<CAPTION>
                       YEAR ENDED   DECEMBER 31, 2005      YEAR ENDED     DECEMBER 31, 2004     YEAR ENDED     DECEMBER 31, 2003
---------------------------------------------------------------------------------------------------------------------------------
                            OIL &    NATURAL                    OIL &     NATURAL                    OIL &    NATURAL
                             NGLS        GAS     TOTAL           NGLS         GAS     TOTAL           NGLS        GAS      TOTAL
                         (bbls/d)   (mmcf/d)   (boe/d)       (bbls/d)    (mmcf/d)   (boe/d)       (bbls/d)   (mmcf/d)    (boe/d)
---------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>      <C>            <C>          <C>      <C>            <C>         <C>       <C>
Vermilion Energy Trust
     Canada                 4,870      38.39    11,268          5,723       46.38    13,453          6,678      59.96     16,671
     France                 5,478       1.30     5,695          5,763        1.53     6,018          6,018       1.51      6,271
     Netherlands (1)           28      28.70     4,812             13       21.03     3,519              -          -          -
     Australia (2)          3,391          -     3,391              -           -         -              -          -          -
---------------------------------------------------------------------------------------------------------------------------------
     Total                 13,767      68.39    25,166         11,499       68.94    22,990         12,696      61.47     22,942
=================================================================================================================================
</TABLE>
(1)  Effective from May 19th, 2004
(2)  Effective from March 31, 2005

<TABLE>
<CAPTION>
2005 QUARTERLY PRODUCTION (BOE/D)                                             Q1          Q2          Q3         Q4
--------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>         <C>        <C>
Canada                                                                    11,978      10,996      11,075     11,035
France                                                                     5,559       5,260       5,856      6,096
Netherlands                                                                5,225       3,789       5,018      5,214
Australia (1)                                                                  -       4,498       4,710      4,294
--------------------------------------------------------------------------------------------------------------------
Total                                                                     22,762      24,543      26,659     26,639
====================================================================================================================
</TABLE>
(1)  Effective from March 31, 2005

<TABLE>
<CAPTION>
2004 QUARTERLY PRODUCTION (BOE/D)                                             Q1          Q2          Q3         Q4
--------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>         <C>        <C>
Canada                                                                    15,055      13,502      12,875     12,398
France                                                                     6,262       5,991       5,869      5,954
Netherlands (1)                                                                -       2,882       5,553      5,593
--------------------------------------------------------------------------------------------------------------------
Total                                                                     21,317      22,375      24,297     23,945
====================================================================================================================
</TABLE>
(1)  Effective from May 19th, 2004

CAPITAL EXPENDITURES

Capital  spending  for the year  totalled  $300.1  million  compared  to $161.2
million spent in 2004. Of this total,  approximately  $95.0 million  relates to
the acquisition in Australia,  $91.6 million relates to the Glacier acquisition
with the remainder spent on drilling and development activities.

<TABLE>
<CAPTION>
CAPITAL EXPENDITURES ($M)                                                               2005        2004       2003
--------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>           <C>        <C>
Land                                                                                $  2,233    $    493   $  1,520
Seismic                                                                               12,116         787      1,272
Drilling and completion                                                               43,929      34,469     47,440
Production equipment and facilities                                                   25,111      15,757     11,887
Recompletions                                                                         21,163       9,999     12,861
Capitalized exploration administration                                                   267       1,670      2,061
--------------------------------------------------------------------------------------------------------------------
Drilling and development expenditures                                                104,819      63,175     77,041
Property acquisitions (dispositions)                                                  94,967      93,990     (1,294)
Corporate acquisitions                                                                91,613           -          -
Other                                                                                  8,711       4,084      3,819
--------------------------------------------------------------------------------------------------------------------
                                                                                    $300,110    $161,249   $ 79,566
====================================================================================================================

CAPITAL EXPENDITURES BY COUNTRY ($M)                                                    2005        2004       2003
--------------------------------------------------------------------------------------------------------------------
Canada                                                                              $141,022    $ 31,722   $ 33,511
France                                                                                50,649      35,028     30,469
Netherlands                                                                           12,434      94,499          -
Australia                                                                             96,005           -          -
Trinidad                                                                                   -           -     15,586
--------------------------------------------------------------------------------------------------------------------
                                                                                    $300,110    $161,249   $ 79,566
====================================================================================================================
</TABLE>


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            4
<PAGE>

FINANCIAL REVIEW

The Trust  (excluding  Verenex  Energy  Inc.  "Verenex")  generated  funds from
operations  of $87.9  million  ($1.29 per unit) in the fourth  quarter of 2005,
compared to $47.5 million  ($0.72 per unit) in the fourth  quarter of 2004. The
Trust's  distributions  in the fourth quarter  totaled $31.8 million ($0.51 per
unit) for a payout ratio of 36%. Cash flow  (excluding  Verenex) for the twelve
months ended December 31, 2005 totaled $277.2 million ($4.07 per unit) compared
to  $169.8  million  ($2.57  per  unit)  in  the  prior  year.  The  full  year
distributions  in 2005 totaled  $126.2  million  compared to $122.6  million in
2004. This represents a payout ratio of  approximately  45% of total cash flow.
Development  capital  expenditures during the fourth quarter of 2005 (excluding
Verenex)  were $27.2  million  bringing  the full year total to $102.6  million
($50.7 million in 2004). Vermilion took advantage of strong cash flow driven by
high  commodity  prices to  inject a further  $25.2  million  into the  Trust's
reclamation fund, increasing the fund to $42.2 million.  Vermilion is committed
to  maintaining a source of funds  available for  abandonment  and  reclamation
activities,  such that future  distribution and capital program  decisions will
not be impacted by these liabilities.

Vermilion's net debt as of December 31, 2005 was $244.9 million,  less than 0.9
times trailing cash flow. Financial  derivatives put in place by the Trust late
in 2002 to protect  against a fall in oil prices expired at the end of 2005. In
2005,  Vermilion  recorded a cash cost of approximately  $41 million related to
these financial  instruments.  Vermilion has changed its approach in its use of
financial  instruments and is currently using a combination of puts and collars
to provide downside commodity price protection.

CASH FLOW NETBACKS

Cash flow was $278.2  million in 2005, up from $170.2 million in 2004. A higher
average  wellhead  price was  recorded in 2005 as a result of a 34% increase in
AECO pricing and a 37% increase in average WTI pricing compared with 2004.

<TABLE>
<CAPTION>
2005 CASH FLOW ($/BOE)               Q1            Q2          Q3           Q4          2005        2004       2003
----------------------------------------------------------------------------------------------------------------------
<S>                              <C>           <C>         <C>          <C>           <C>         <C>        <C>
Oil and gas revenues             $53.36        $52.90      $61.42       $62.87        $57.94      $43.21     $39.90
Realized hedging losses           (3.98)        (4.29)      (5.13)       (4.36)        (4.46)      (3.73)     (2.38)
Royalties (net)                   (7.01)        (9.40)     (10.37)      (10.94)        (9.54)      (7.54)     (8.92)
Transportation                    (1.43)        (0.96)      (0.82)       (0.81)        (0.99)      (1.17)     (1.24)
Lifting costs                     (7.52)        (8.52)      (7.54)       (7.99)        (7.89)      (6.63)     (6.11)
----------------------------------------------------------------------------------------------------------------------
Operating netbacks                33.42         29.73       37.56        38.77         35.06       24.14      21.25
General and administration        (1.58)        (1.65)      (1.16)       (1.39)        (1.43)      (1.59)     (1.24)
Reorganization costs                  -             -           -            -             -           -      (1.05)
Interest                          (0.47)        (0.54)      (0.78)       (0.90)        (0.69)      (0.37)     (1.05)
Current and capital taxes         (3.40)        (3.12)      (3.95)       (0.52)        (2.71)      (2.03)     (0.59)
Foreign exchange                  (0.08)        (0.06)      (0.13)       (0.05)        (0.08)       0.04      (0.03)
----------------------------------------------------------------------------------------------------------------------
Cash flow netbacks               $27.89        $24.36      $31.54       $35.91        $30.15      $20.19     $17.29
======================================================================================================================
</TABLE>

2004 CASH FLOW ($/BOE)               Q1            Q2          Q3           Q4
-------------------------------------------------------------------------------
Oil and gas revenues             $41.71        $44.21      $43.79       $43.04
Realized hedging losses           (2.84)        (3.34)      (4.35)       (4.23)
Royalties (net)                   (9.67)        (8.33)      (6.74)       (5.75)
Transportation                    (1.43)        (1.35)      (0.99)       (0.97)
Lifting costs                     (6.16)        (6.72)      (6.86)       (6.74)
-------------------------------------------------------------------------------
Operating netbacks                21.61         24.47       24.85        25.35
General and administration        (1.58)        (1.67)      (1.59)       (1.53)
Interest                          (0.69)        (0.39)      (0.17)       (0.26)
Current and capital taxes         (1.24)        (1.99)      (2.81)       (1.97)
Foreign exchange                      -          0.05        0.09            -
-------------------------------------------------------------------------------
Cash flow netbacks               $18.10        $20.47      $20.37       $21.59
===============================================================================

REVENUE

Total revenues in 2005 were $529.9 million  compared to $354.5 million in 2004.
Vermilion's  combined  crude oil & NGL price was  $64.79  per bbl for 2005,  an
increase of 37% over the $47.26 per bbl reported in 2004. The natural gas price
realized in 2005 was $8.28 per mcf  compared  to $6.53 per mcf  realized a year
ago, a 27% year-over-year increase.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            5
<PAGE>

In the following  chart,  "Derivative  instruments" is the  amortization of the
fair value loss of Vermilion's hedges in place as of January 1, 2004.

                                                    YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                                2005              2004
-------------------------------------------------------------------------------
Crude oil & NGL's                                  $326,754          $199,060
Per boe                                              $64.79            $47.26
Natural gas                                         207,902           165,174
Per mcf                                               $8.28             $6.53
-------------------------------------------------------------------------------
Combined                                            534,656           364,234
Derivative instruments                               (4,718)           (9,709)
-------------------------------------------------------------------------------
Petroleum and natural gas revenue                  $529,938          $354,525
===============================================================================


DERIVATIVE INSTRUMENTS

Vermilion  continues to manage its risk exposure through prudent  commodity and
currency economic hedging  strategies.  Vermilion has the following collars and
puts in place at the end of 2005:

RISK MANAGEMENT: OIL                 FUNDED COST      BBLS/D           US$/BBL
-------------------------------------------------------------------------------
Collar - WTI
   Q1 2006                     US$0.50-$1.00/bbl       1,250   $53.00 - $72.75
   Q2 2006                           US$1.50/bbl         250   $53.00 - $73.90
Collar - BRENT
   2006                              US$1.00/bbl       1,000   $53.00 - $67.70
   Q3 2006                           US$1.00/bbl         250   $52.00 - $68.50
   Q4 2006                           US$1.50/BBL         250   $53.00 - $69.80
===============================================================================

RISK MANAGEMENT: NATURAL GAS         FUNDED COST        GJ/D             C$/GJ
-------------------------------------------------------------------------------
Collar
   Q1 2006                              $0.25/GJ       2,500    $9.50 - $16.00
   Feb-Mar 2006                         costless       2,500   $11.00 - $20.74
   Apr-Oct 2006                         $0.25/GJ       2,500    $8.00 - $15.00
Put
   Q1 2006                              $0.23/GJ       5,000            $10.50
===============================================================================

The impact of Vermilion's  hedging  program  reduced cash netbacks by $4.46 per
boe on a combined basis for the year ended 2005 compared to an economic hedging
loss of $3.73 per boe in 2004. Oil hedging resulted in a $41.6 million cost for
the year or $4.51 per boe. For 2004,  oil hedging  resulted in a $34.1  million
cost for the year or $4.04 per boe. For the year the Trust  recorded a net gain
from its power  hedges  totalling  $0.5  million  or $0.05  per boe.  In 2004 a
currency hedge gain of $3.3 million or $0.39 per boe was recorded.

ROYALTIES

Total  royalties,  net of ARTC,  increased  to $9.54  per boe in 2005 or 16% of
sales  compared  with $7.54 per boe or 17% of sales in 2004.  The increase on a
per boe basis is due to the impact of higher commodity prices.  The decrease on
a  percentage  basis  is due to the fact  there  are no  royalties  paid in the
Netherlands offset somewhat by a higher royalty rate in Australia. Contributing
to the lower percentage is the fact that gas royalties in Canada have reached a
plateau as prices have increased  beyond the maximum  royalty  calculation.  In
France,  royalties  for the most part are  calculated  on a unit of  production
basis and rates do not react to price  changes,  therefore as prices  increase,
the royalties,  as a percentage of sales, decline. In Australia,  royalties are
reduced by capital reinvestment in the country.  For 2005,  Vermilion's capital
program in Australia was minimal  resulting in the Trust paying royalties at or
near the maximum rate.

                                                      YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                               2005              2004
-------------------------------------------------------------------------------
Crude oil & NGL's                                 $ 61,322          $ 31,105
Per boe                                           $  12.16          $   7.39
Natural gas                                       $ 26,679          $ 32,450
Per mcf                                           $   1.06          $   1.28
-------------------------------------------------------------------------------
Combined                                          $ 88,001          $ 63,555
-------------------------------------------------------------------------------
Per boe                                           $   9.54          $   7.54
===============================================================================


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            6
<PAGE>

OPERATING COSTS

Operating  costs increased to $7.89 per boe in 2005 from $6.63 per boe in 2004.
The increase in the dollar  amount of operating  costs over 2004 was due to the
acquisition  of higher cost assets in  Australia.  In Canada,  the  significant
activity  levels in the industry  combined with  increased  energy costs,  have
placed  upward  pressure  on costs  across  the  board.  When  combined  with a
reduction in production volumes due primarily to plant  turnarounds,  year over
year  increases in costs per boe have been  experienced.  In France,  operating
costs are down due to a  reclassification  of  certain  expenses  in the fourth
quarter of 2005. In the Netherlands,  operating costs are up due primarily to a
reduction in production  volumes and extensive plant  maintenance in the second
quarter of 2005.  Cost of  operations  in Australia  averaged  $9.09 per boe of
production since acquiring the assets at the end of the first quarter.

                                                     YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                              2005              2004
-------------------------------------------------------------------------------
Crude oil & NGL's                                $ 39,060          $ 30,632
Per boe                                          $   7.75          $   7.27
Natural gas                                      $ 33,796          $ 25,285
Per mcf                                          $   1.35          $   1.00
-------------------------------------------------------------------------------
Combined                                         $ 72,856          $ 55,917
-------------------------------------------------------------------------------
Per boe                                          $   7.89          $   6.63
===============================================================================

TRANSPORTATION

Transportation costs, as presented in the statement of earnings, are defined by
the point of legal transfer of the product.  Transportation costs are dependent
upon where the product is sold,  product  split,  location of  properties,  and
industry transportation rates that are driven by supply and demand of available
transport capacity.  For Canadian gas production,  legal title transfers at the
intersection of major pipelines (referred to as "the Hub") whereas the majority
of Vermilion's Canadian oil production is sold at the wellhead. The majority of
Vermilion's  transportation  costs are made up of boat charges  incurred in the
Aquitaine  Basin in France where oil  production is  transported by tanker from
Ambes shipping  terminal in Bordeaux to Donges,  France.  In Australia,  oil is
sold at the Wandoo B platform and in the  Netherlands  gas is sold at the plant
gate, resulting in no transportation  costs relating to Vermilion's  production
in these countries.

                                                    YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                             2005              2004
-------------------------------------------------------------------------------
Transportation                                    $9,136            $9,865
-------------------------------------------------------------------------------
Per boe                                           $ 0.99            $ 1.17
===============================================================================

GENERAL AND ADMINISTRATION EXPENSES

General and  administration  expenses  for the year  decreased to $1.43 per boe
from  $1.59 per boe in 2004.  The  decrease  per boe is a result of the  higher
production volumes experienced in 2005.

                                                     YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                              2005              2004
-------------------------------------------------------------------------------
General and administration                        $13,241           $13,410
-------------------------------------------------------------------------------
Per boe                                           $  1.43           $ $1.59
===============================================================================

UNIT COMPENSATION EXPENSE

A non-cash  trust unit  compensation  expense of $1.52 per boe was  recorded in
2005 compared to $0.80 per boe for 2004.  This non-cash  amount  relates to the
value attributable to rights granted to officers, directors and employees under
the Trust Unit Rights  Incentive  Plan ("Unit  Rights Plan") and the Trust Unit
Award Plan ("Award Plan").

From  inception of the unit rights  incentive  plan until January 1, 2005,  the
Trust applied the intrinsic value  methodology  based on the initial  asessment
that the number of uncertainties regarding the reduction in the strike price of
the rights  precluded a reasonable  estimate of the fair value of the rights on
the date of grant.

Effective on January 1, 2005,  the Trust  prospectively  applied the fair value
based method of accounting for the rights plan.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            7
<PAGE>

In the fourth  quarter of 2005  however,  it has been  determined  that, in the
circumstances,  the fair value  methodology could be applied since inception of
the plan rather than the intrinsic value  methodology.  The Trust has therefore
computed a fair value estimate of the rights at the  respective  dates of grant
and has  retroactively  restated  its  unit  compensation  expense  back to the
inception of the plan in 2003.

In March 2005, the Board of Directors established the new Award Plan to replace
the  existing  Unit Rights Plan.  The new Award Plan will result in  directors,
officers,  employees  and  consultants  of the Trust and its  Affiliates  being
awarded  a  specified  number  of  Restricted  Units  and the  Units  shall  be
designated  as either a Restricted  Time Based Award  ("RTBA's")  for which the
number of awards is fixed or a Performance  Based Award ("PBA's") for which the
number of awards is variable.  Payment in respect of Restricted Units that have
vested shall be made by  delivering  Units or  corresponding  cash value to the
Grantee.  The fair value of the Awards will be  recognized in earnings over the
vesting period of the Awards outstanding.

                                                    YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                             2005              2004
-------------------------------------------------------------------------------
                                                                (Restated)
Unit compensation expense                       $ 14,000          $  6,738
-------------------------------------------------------------------------------
Per boe                                         $   1.52          $  $0.80
===============================================================================

INTEREST EXPENSE

Interest expense  increased to $0.69 per boe in 2005 from $0.37 per boe in 2004
as a result of higher average debt levels in 2005 stemming from the purchase of
the assets in the Netherlands in May of 2004, the Australia assets in the first
quarter of 2005 and the  Glacier  acquisition  in  December  2005.  The Trust's
interest rates have remained steady over the year.

                                                   YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                            2005              2004
-------------------------------------------------------------------------------
Interest                                        $ 6,331          $  3,086
-------------------------------------------------------------------------------
Per boe                                         $  0.69          $   0.37
===============================================================================

DEPLETION, DEPRECIATION AND ACCRETION EXPENSES

Depletion,  depreciation and accretion  expense  increased to $13.23 per boe in
2005 from $11.57 per boe in 2004. The increase is due mainly to the increase of
finding  and  development  costs  in  Canada  and  the  increase  in the  asset
retirement obligation, resulting primarily from the Australia acquisition.

                                                     YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                              2005              2004
-------------------------------------------------------------------------------
Depletion, depreciation and accretion           $ 122,098          $ 97,540
-------------------------------------------------------------------------------
Per boe                                         $   13.23          $  11.57
===============================================================================

TAXES

The Trust's  current tax  provision has increased to $2.71 per boe in 2005 from
$2.03  per  boe in  2004  and is due  primarily  to the  increase  in  earnings
generated  by strong  commodity  prices.  The current  provision is based on an
approximate  $13.4 million tax liability in France, an approximate $3.6 million
tax liability in the Netherlands and an approximate  $7.4 million tax liability
in  Australia.  The tax  liability in Australia  was  allocated to the purchase
price for the period from  January 1 to March 31, 2005 in  accordance  with the
allocation of revenues and expenses  related to the  Australia  assets for that
same time period. The Netherlands  acquisition closed on May 19, 2004 resulting
in only a partial tax payment in 2004 compared to a full period assessment this
year. In Canada, it is anticipated that there will be no current taxes due with
the  exception  of capital  taxes which are  assessed on an annual  basis.  The
recovery  in  future  income  taxes  is a  result  of the  taxable  portion  of
distribution payments made to unitholders.  In the Trust's structure,  payments
are made between the operating  company and the Trust  transferring both income
and future income tax liability to the unitholder.  Therefore it is the opinion
of  management  that no cash income  taxes in Canada are expected to be paid by
the  operating  company  in the  future,  and as such,  the  future  income tax
liability recorded on the balance sheet related to Canadian  operations will be
recovered through earnings over time.

                                                    YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                             2005              2004
-------------------------------------------------------------------------------
Current and capital tax                         $ 25,007          $ 17,108
-------------------------------------------------------------------------------
Per boe                                         $  $2.71          $   2.03
===============================================================================


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            8
<PAGE>

FOREIGN EXCHANGE

A combined  realized and unrealized  foreign exchange loss of $0.12 per boe was
recorded  in 2005  with a gain of  $0.16  per boe in 2004.  The loss is  mostly
unrealized  and  relates to the  impact of the  strengthening  Canadian  dollar
compared to the Euro on the foreign working capital.

                                                   YEAR ENDED DECEMBER 31
($000'S EXCEPT PER BOE)                            2005              2004
-------------------------------------------------------------------------------
Foreign exchange loss (gain)                    $ 1,083          $ (1,285)
-------------------------------------------------------------------------------
Per boe                                         $  0.12          $  (0.16)
===============================================================================

EARNINGS

Net earnings from continuing operations in the year increased to $158.5 million
or $2.57 per unit from $66.0 million or $1.10 per unit in 2004. The increase in
earnings is due mainly to the record  commodity  prices realized in the year as
well as the full year impact of the  Netherlands  operations  and the impact of
the operations in Australia acquired in 2005.

LIQUIDITY AND CAPITAL RESOURCES

Vermilion's  debt (net of working  capital)  on  December  31,  2005 was $244.9
million.  Vermilion  entered into an unsecured  covenant based credit  facility
with a syndicate of chartered banks in July 2005. This $410 million facility is
comprised of a one year revolving  period with a one year term to follow with a
final  settlement  payment required at the end of the second year. In July 2006
this  facility  was  increased  to $500  million  as a result  of the  reserves
purchased in France (See Proposed Transaction).

LIQUIDITY AND CAPITAL RESOURCES                    2005        2004       2003
-------------------------------------------------------------------------------
Debt and working capital ($m)                  $244,889    $ 84,686   $131,498
Bank facility ($m)                             $410,000    $240,000   $240,000
Unused bank facility ($m)                      $165,111    $155,314   $108,502
Debt-to-cash-flow ratio (1)                        0.88        0.50       0.87
Debt-to-equity ratio (1)                           0.53        0.22       0.38
===============================================================================
(1)  Debt includes working capital

Vermilion has a long-term and short-term need for capital.  Short-term  working
capital will be required to finance  accounts  receivable,  crude oil inventory
and other similar short-term  assets.  Short-term capital may also be used from
time to time to fund cash  distributions  to maintain  consistent  monthly cash
distributions  to  unitholders  of the  Trust.  However,  the  acquisition  and
development of petroleum and natural gas  properties  requires large amounts of
long-term  capital.  There are  essentially  three  components in financing the
capital needs of Vermilion: debt, equity and internally generated cash.

There is  currently  an active  market for the  equity  financing  of  Canadian
resource trusts.  Accordingly,  any future significant acquisition of producing
properties  is expected to be financed  through  additional  bank debt combined
with the issuance of trust units.

Internally generated cash is used primarily for distributions, internal capital
requirements and contributions to the Trust's  reclamation fund.  Internal cash
flow is  significantly  influenced  by commodity  prices.  Other risks  include
exchange rates, interest rates and marketing opportunities, among others. For a
thorough  discussion  of these  risks and how they are  managed  by  Vermilion,
please see the section on Risk Management.

RECLAMATION FUND

Vermilion  has  established  a  reclamation  fund for the  ultimate  payment of
environmental  and site  restoration  costs on its asset base. The  reclamation
fund  will  be  funded  by  Vermilion   Resources  Ltd.  and/or  its  operating
subsidiaries.  Contributions in 2005 totalled $25.2 million.  Contributions are
currently  made on a barrel of oil  equivalent of  production  basis in Canada,
France the Netherlands,  and Australia and are occasionally  supplemented  with
lump sum  contributions.  Contribution  levels to the reclamation  fund will be
reviewed  on a regular  basis and will be  adjusted  when  necessary  to ensure
reclamation   obligations   associated   with  the   Trust's   assets  will  be
substantially funded when the costs are forecast to be incurred.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                            9
<PAGE>

ASSET RETIREMENT OBLIGATION

At December 31, 2005, Vermilion had recorded an asset retirement  obligation of
$70.2 million for future abandonment and reclamation of its properties compared
to $51.7 million in 2004. The increase is due to the liabilities  recorded as a
function of the asset acquisition in Australia.

DISTRIBUTIONS

Vermilion  maintained  monthly  distributions  at  $0.17  per unit for the year
distributing  a total of $126.2  million  compared  to $122.6  million  in 2004
before the impact of the Trust's DRIP  program.  Vermilion has  maintained  its
distributions at $0.17 per month since its conversion to a trust,  resulting in
35 continuous months of distributions at this level. Of the distributions  paid
in the year,  approximately  86% will be taxed in the hands of taxable Canadian
unitholders'  as other  income.  The  balance,  considered  to be a  return  of
capital,  is tax deferred and will reduce the adjusted cost base of trust units
held by unitholders'.

The Trust defines distributable income as funds from operations.  For 2005, the
Trust has paid out 45% of its distributable income (72% in 2004).

UNITHOLDERS' EQUITY

During the year  approximately  1.8 million  units were issued on conversion of
exchangeable shares, unit rights exercised, issued pursuant to the terms of the
Trust's  bonus  plan  and   unitholders'   participation  in  the  distribution
reinvestment  plan.  Unitholders'  capital  increased  during the year by $26.6
million as a result of the issuance of those units and $4.2 million as a result
of contributed  surplus  transfer on exercise of unit rights.  This increase in
equity was offset by cash distributions of $126.2 million in the year.

NON-CONTROLLING INTEREST - EXCHANGEABLE SHARES

The Trust has recorded  non-controlling  interest  attributed to the issued and
outstanding  exchangeable  shares in accordance  with  accounting  requirements
pursuant to EIC-151 (see Note 2 of the  consolidated  financial  statements for
further discussion). The intent of the new standard is that exchangeable shares
of a  subsidiary  which  are  transferable  to third  parties,  outside  of the
consolidated entity, represent a non-controlling interest in the subsidiary.

The   exchangeable   shares  are   transferable   to  third  parties.   In  all
circumstances,  including in the event of liquidation or insolvency, holders of
exchangeable shares will receive trust units in exchange for their exchangeable
shares and as a result the  exchangeable  shares and trust units are considered
to be economically equivalent. Therefore, the Trust does not believe that there
is a  permanent  non-controlling  interest  as  all  exchangeable  shares  will
ultimately  be  exchanged  for  trust  units by  passage  of time  whereby  the
exchangeable  shares will be redeemed  for trust  units.  Consequently,  as the
exchangeable   shares  are   exchanged   for  trust   units   over  time,   the
non-controlling  interest  will  decrease and  eventually  will be nil when all
exchangeable  shares have been  exchanged for trust units on or before  January
22, 2013.

The  non-controlling  interest in 2005 of $38.8 million ($24.7 million in 2004)
on the  consolidated  balance sheet  represents the book value of  exchangeable
shares plus accumulated earnings  attributable to the outstanding  exchangeable
shares.  The  reduction  in 2005 and 2004 net  income,  respectively,  of $14.4
million  and $10.1  million,  represents  the net  income  attributable  to the
exchangeable  shareholders  for 2005 and 2004. As the  exchangeable  shares are
converted to trust units,  Unitholders' capital is increased for the fair value
of the trust units issued.

As at December 31, 2005 there were 4.6 million  exchangeable shares outstanding
at exchange ratio of 1.37836  whereby 6.4 million trust units would be issuable
upon conversion.  The exchangeable  shares can be converted into trust units or
redeemed  by the  exchangeable  share  holder  for  trust  units  at any  time.
Vermilion may redeem all outstanding  exchangeable  shares on or before January
22,  2013 and may redeem the  exchangeable  shares at any time if the number of
exchangeable shares outstanding falls below 500,000 shares. Vermilion may issue
cash or trust  units  upon  redemption  of  exchangeable  shares  and it is the
intention to issue trust units upon redemption.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                           10

<PAGE>

PROPOSED TRANSACTION

On October 18, 2005, Vermilion announced that a wholly-owned subsidiary entered
into  an  exclusive  arrangement  with  a  French  subsidiary  of  Exxon  Mobil
Corporation, to negotiate the purchase of its 89.886% shareholding in Esso Rep.
On July 10,  2006,  the Trust,  through  its France  subsidiary  completed  the
acquisition  of the  89.886%  interest  in Esso  Rep and on July  12,  2006 the
remaining  10.114%  interest  in  Esso  Rep was  acquired  from  another  party
resulting in an ownership  interest of 100%.  Please refer to Vermilion's  MD&A
and interim  financial  statements  for the period ended  September 30, 2006 as
filed on SEDAR for additional information.

DISCONTINUED OPERATIONS

The Trust  made a  strategic  decision  to sell its  interest  in the  Trinidad
operations.  On May 6, 2004, the Trust  completed the sale of the shares of its
subsidiary,  Aventura,  for gross proceeds of $164.6 million.  As a result, the
Trust  realized an  estimated  $68.0  million  (net of tax) gain on the sale of
shares, which was recorded in the second quarter.

RISK MANAGEMENT

Crude oil and natural gas  exploration,  production,  acquisition and marketing
operations  involve  a  number  of  risks.  These  risks  include   operational
fluctuations in commodity prices,  exchange rates, interest rates,  exploration
uncertainties,  product demand,  transportation  restrictions  and governmental
regulatory changes.

Vermilion  considers its commodity price risk  management  program as a form of
insurance that protects its cash flow and rate of return. The primary objective
of the risk management program is to support Vermilion's  distributions and its
internal  capital  development  program.  Maintenance  of  a  strong  financial
position  and a stable cash flow stream  through the  development  of long-life
reserves is key to mitigating business risks.

To manage the adverse  impact of  significant  movements in  commodity  prices,
exchange rates and interest rates,  Vermilion uses  over-the-counter  financial
structures as well as fixed/collar structures as a part of physical natural gas
sales.  Vermilion  has  strict  controls  and  guidelines  in place and  enacts
transactions only with counter parties that have high credit ratings.

Vermilion  maintains an insurance program  consistent with industry practice to
protect  against losses from accidental  destruction of assets,  well blowouts,
pollution and other potential business interruptions.

CURRENCY RISK

Vermilion's  primary exposure to currency risk comes from a revenue stream that
is denominated in U.S.  dollars.  Vermilion's  exposure to  fluctuations in the
Euro  and  Australian   dollar  is  limited   primarily  to  reinvestment   and
repatriation of funds and forward-sale  contracts can be used to mitigate these
risks.  The remaining cash flow from  Vermilion's  international  operations is
reinvested in each country, creating a natural hedge to the working capital and
cash flow stream when they are converted to Euros and Australian dollars.

CRITICAL ACCOUNTING ESTIMATES

The amounts  recorded for depletion  and  depreciation  of property,  plant and
equipment and the provision for future asset  retirement  obligations are based
on  estimates.  The ceiling  test  calculation  is based on estimates of proved
reserves,  production rates, oil and natural gas prices, future costs and other
relevant  assumptions.   By  their  nature,  these  estimates  are  subject  to
measurement uncertainty and the effect on the consolidated financial statements
from changes in such estimates in future years could be significant.



2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                           11
<PAGE>

SENSITIVITIES

Crude oil and  natural gas prices may change  significantly  because of factors
Vermilion  cannot control.  The following table provides a summary of estimated
sensitivities  to  price  fluctuations  for  pro-forma  production  levels  and
expenses for the year ended December 31, 2006.

<TABLE>
<CAPTION>
                                                              CASH AVAILABLE FOR DISTRIBUTIONS       CASH AVAILABLE
                                                              PER UNIT AND EXCHANGEABLE SHARES    FOR DISTRIBUTIONS
---------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                                 <C>
Change in crude oil price by Cdn$1.00/bbl                                           $     0.05       $  3.2 million
Change in natural gas price by Cdn$0.10/mcf                                         $     0.02       $  1.3 million
Change in interest rate by one point                                                $     0.03       $  2.0 million
Change in Cdn/U.S. foreign exchange rate by one point                               $     0.05       $  3.5 million
Change in cdn/euro foreign exchange rate by one point                               $     0.01       $  0.8 million
---------------------------------------------------------------------------------------------------------------------
</TABLE>

OFF BALANCE SHEET ARRANGEMENTS

The Trust has certain  lease  agreements  that are  entered  into in the normal
course of  operations.  All leases are treated as operating  leases whereby the
lease payments are included in operating  expenses or G&A expenses depending on
the nature of the lease. No asset or liability value has been assigned to these
leases in the balance sheet as of December 31, 2005.

The Trust has not entered into any guarantee or off balance sheet  arrangements
that  would  adversely  impact the  Trust's  financial  position  or results of
operations.

ENVIRONMENT, HEALTH AND SAFETY

Vermilion remains committed to conducting its activities in an  environmentally
responsible  manner,  protecting the health and safety of its employees and the
public in every  country in which it operates.  It is a condition of employment
that  Vermilion  personnel  work  safely  and in  accordance  with  established
regulations and procedures.

In 2005,  Vermilion  remained  committed to the principles of the  Environment,
Health and Safety  Stewardship  Program set out by the Canadian  Association of
Petroleum  Producers  (CAPP).  This  voluntary  initiative  promotes  continual
improvement  in the  areas  of  environment,  health  and  safety  performance,
supplemented by progress reports to stakeholders.

Vermilion  continued its commitment to protect land, water and air, as policies
and procedures,  demonstrating  leadership in these areas,  were maintained and
further  developed  in  2005.  Examples  of  accomplishments  during  the  year
included:

-    Reducing long-term environmental liabilities through decommissioning,
     abandoning and reclaiming well leases and facilities;
-    Monitoring long-term liabilities through regular inspections;
-    Continuing reductions in flaring and greenhouse gas emissions;
-    Minimizing waste products by reducing, recycling and recovering; and
-    Continuing risk management efforts with detailed emergency-response
     planning.

Vermilion  is a member of several  organizations  concerned  with  environment,
health and safety,  including  the Western  Canadian Air Shed and numerous area
co-operatives.

In the area of  stakeholder  relations,  Vermilion  works  to  build  long-term
relationships with environmental stakeholders and communities.

CORPORATE GOVERNANCE

Vermilion is committed to a high standard of corporate governance practices,  a
dedication  that  begins at Board level and extends  throughout  the Trust.  We
believe good corporate  governance is in the best interest of our  unitholders,
and that  successful  companies are those that deliver growth and a competitive
return along with a commitment to the  environment,  to the  communities  where
they  operate  and to  their  employees.  We  comply  with the  objectives  and
guidelines  relating  to  corporate  governance  adopted by the  Toronto  Stock
Exchange.  In addition,  the Board monitors and considers the implementation of
corporate   governance   standards   proposed   by   various   regulatory   and
non-regulatory  authorities  in Canada.  A full  examination  of our  corporate
governance policies will be provided in our annual Information Circular,  which
will be filed on SEDAR  (www.sedar.com)  and  mailed to all  unitholders  on or
before March 31, 2006.


2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                           12

<PAGE>

SARBANES OXLEY UPDATE

On July 31, 2002,  the United States  Congress  enacted the Sarbanes  Oxley Act
("SOX")  that  applies to all  companies  registered  with the  Securities  and
Exchange  Commission  ("SEC").  On March 2, 2005,  the  Securities and Exchange
Commission  ("SEC")  announced a one year extension of the compliance  date for
all  foreign  private  issuers.  As a result of this  extension,  Vermilion  is
currently  required  to  comply  with  section  404 of the SOX  legislation  on
December 31, 2006.  Section 404 of the SOX legislation  "Internal Controls Over
Financial  Reporting" requires that management identify,  document,  assess and
remediate  internal  controls  and issue an  opinion  on the  effectiveness  of
internal  controls  surrounding  the  financial  reporting  process.  The Trust
currently has a comprehensive plan and a dedicated team of individuals in place
to execute the plan of meeting the SOX Section 404 compliance date.

DISCLOSURE CONTROLS AND PROCEDURES

Vermilion's  officers,  including  the Chief  Executive  Officer  and the Chief
Financial  Officer,  have  established and maintained  disclosure  controls and
procedures which are designed to provide reasonable assurance that all relevant
information  is gathered  and  reported  to senior  management,  including  the
Trust's Chief Executive Officer and Chief Financial Officer,  on a timely basis
so that appropriate decisions can be made regarding public disclosure.

As of the period  covered by this MD&A,  Vermilion's  officers,  including  the
Chief  Executive  Officer and the Chief Financial  Officer,  have evaluated and
concluded that the Trust's disclosure controls and procedures were effective to
provide reasonable  assurance that information  required to be disclosed in the
Trust's   annual  and  interim   filings  (as  such  terms  are  defined  under
Multilateral Instrument 52-109,  Certification of Disclosure in Issuers' Annual
and Interim  Filings)  and other  reports  filed or  submitted  under  Canadian
securities laws is recorded, processed, summarized and reported within the time
periods  specified by those laws and that material  information  is accumulated
and  communicated  to  management of the Trust,  including the Chief  Executive
Officer  and the  Chief  Financial  Officer,  as  appropriate  to allow  timely
decisions regarding required disclosure.





2005 AMENDED ANNUAL MD&A - VERMILLION ENERGY TRUST                           13