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Exhibit 4.7  


 
 

PENGROWTH ENERGY TRUST    
    


 
 

RECONCILIATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
  OF PENGROWTH ENERGY TRUST FOR THE THREE MONTHS ENDED
  MARCH 31, 2003 TO UNITED STATES GENERALLY ACCEPTED
  ACCOUNTING PRINCIPLES    





       The financial statements included in Pengrowth Energy Trust's 2002 Annual Report have been prepared in accordance with Canadian generally accepted accounting
principles ("Canadian GAAP") which in most respects conforms to generally accepted accounting principles in the United States ("U.S. GAAP"). 


       The
significant differences between those principles as they apply to Pengrowth Energy Trust ("Pengrowth") are as follows: 



	(a)
	As
required annually under U.S. GAAP, the carrying value of petroleum and natural gas properties and related facilities, net of future or deferred income taxes, is limited to
the present value of after tax future net revenue from proven reserves, discounted at 10 percent (based on prices and costs at the balance sheet date), plus the lower of cost and fair value of
unproven properties. Under Canadian GAAP, this "ceiling test" is calculated without application of a discount factor. At December 31, 1998 and 1997 the application of the full cost ceiling test
under U.S. GAAP resulted in a write-down of capitalized costs of $328.6 million and $49.8 million, respectively. At March 31, 2003 and December 31, 2002,
the application of the full cost ceiling test under U.S. GAAP did not result in a write-down of capitalized costs. 




Where
the amount of a ceiling test writedown under Canadian GAAP differs from the amount of the write-down under U.S. GAAP, the charge for depletion, depreciation, and amortization
will differ in subsequent years. 



	(b)
	Under
U.S. GAAP, interest and other income would not be included as a component of Net Revenue.



	(c)
	Under
U.S. GAAP, recognition of compensation cost over the vesting period is required for variable priced stock-based compensation plans such as the Rights Incentive Plan.
Compensation cost is based on the excess of the unit price over the exercise price at the date of the financial statements. Application of this provision results in a compensation cost of $118,000 for
the period ended March 31, 2003. The Rights Incentive Plan was approved on April 23, 2002 and had no effect on the period ended March 31, 2002. 





APB 25
requires recognition of compensation cost with respect to Stock Appreciation Rights granted to employees. Effective October 12, 2002, all outstanding Stock Appreciation Rights
were converted to an equal number of options under the Trust Unit Option Plan. No compensation cost results from application of the above provisions for the period ended March 31, 2002. 



	(d)
	Marketable
securities held by Pengrowth are classified as available-for-sale in accordance with definitions of Statement of Financial Accounting Standards
("SFAS') 115. Under provisions of this Statement, available-for-sale securities are reported at the fair value, with unrealized holding gains and losses included in
comprehensive income and reported as a separate component of unitholders' equity until realized.



	(e)
	SFAS 130
requires the reporting of comprehensive income in addition to net earnings. Comprehensive income includes net income plus other comprehensive income; specifically, all
changes in equity of a company during a period arising from non-owner sources.



	(f)
	SFAS 150
"Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" is effective July 1, 2003. Pengrowth has not determined the
effect of SFAS 150 on the classification of trust units.



	(g)
	Under
U.S. GAAP Pengrowth is required to disclose the estimated fair value of its guarantee under the employee Trust Unit Margin Plan. The maximum amount of the guarantee at
March 31, 2003 was $9,514,780, the fair value of which is estimated to be a nominal amount.



	(h)
	In
2003, Pengrowth adopted SFAS 143, "Accounting for Asset Retirement Obligations", which requires the fair value of a liability for an asset retirement obligation to be
recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long term asset. The standard applies to legal obligations associated with the
reclamation and remediation of Pengrowth's property, plant and equipment including abandoning oil and natural gas properties, processing facilities, and site restoration. The change was effective
January 1, 2003, and the related cumulative adjustment to net income was an increase of $19,225,000 or $0.21 per unit ($0.21 per unit — diluted). The
change resulted in an increase in property, plant and equipment of $48,379,000 and an increase in future site restoration liability of $29,154,000 and an increase to trust unitholders' equity of
$19,225,000. There was no impact on Pengrowth's cash flow as a result of adopting SFAS 143. 



1





 






The
following provides a roll forward of the asset retirement obligations for the current period: 




	 
	 	 
	 
	Future site restoration, January 1, 2003	 	$	73,493	 
	Liabilities settled during the period	 	 	(550	)
	Accretion expense	 	 	1,470	 
	 	 	
	 
	Future site restoration liability, March 31, 2003	 	$	74,413	 
	 	 	
	 







The
following table shows the effect of the implementation on the Pengrowth's net income and net income per unit as if SFAS 143 had been effect in prior periods. There was no effect on reported
amounts for the period ended March 31, 2002. 




	 
	 	As at and for the years ended December 31

	 
	 	2001
	 	2002

	As reported:	 	 	 	 	 	 
	Net income under U.S. GAAP	 	$	110,748	 	$	73,246
	Net income per unit under U.S. GAAP	 	 	 	 	 	 
	 	— Basic	 	$	1.56	 	$	0.81
	 	— Diluted	 	$	1.56	 	$	0.81
	
Pro forma amounts assumed SFAS 143 was applied retroactively:	
 	
 	

 	
 	
 	

 
	Net income under U.S. GAAP	 	$	113,783	 	$	81,134
	Net income per unit under U.S. GAAP	 	 	 	 	 	 
	 	— Basic	 	$	1.60	 	$	0.90
	 	— Diluted	 	$	1.60	 	$	0.90
	Future site restoration liability	 	 	 	 	 	 
	 	— Balance beginning of year	 	$	66,634	 	$	69,927
	 	— End of year	 	$	69,927	 	$	73,493






Prior
to January 1, 2003, U.S. GAAP required the provision for abandonment costs to be recorded as a reduction of capital assets. 



	(i)
	SFAS 133,
"Accounting for Derivative instruments and Hedging Activities" establishes accounting and reporting standards for derivative instruments and for hedging
activities. This statement requires an entity to establish, at the inception of a hedge, the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach
for determining the ineffective aspect of the hedge. Those methods must be consistent with the entity's approach to managing risk. 




At
March 31, 2003, $4,031,000 has been recorded as an asset in respect of the fair value of crude oil hedges outstanding at period end of which $25,000 has been included in earnings as the
ineffective portion of the hedge. Of the asset, $2,176,000 has been classified as current and $1,855,000 has been classified as long term. As at March 31, 2003, $14,777,000 has been recorded as
a liability in respect of the fair value of natural gas hedges outstanding at period end with a corresponding decrease in other comprehensive income. Of the liability, $7,403,000 has been classified
as current and $7,374,000 has been classified as long term. As at March 31, 2002, $4,708,000 was recorded as a liability in respect of the fair value of crude oil hedges outstanding at period
end of which $1,121,000 has been included in earnings as the ineffective portion of the hedge. At March 31, 2002, $1,030,000 was recorded as an asset in respect of the fair value of natural gas
hedges outstanding at period end with a corresponding increase in accumulated other comprehensive income. 


At
March 31, 2003, $481,000 has been recorded as a liability in respect of the fair value of interest rate swaps outstanding at period end with a corresponding decrease in accumulated other
comprehensive income. Of this amount, $618,000 has been classified as a current liability and $137,000 has been classified as a long term asset. As at March 31, 2002, $2,517,000 was recorded as
an asset in respect of the fair value of the interest rate swaps outstanding at period end with a corresponding increase in accumulated other comprehensive income. 



At
March 31, 2003, an asset of $791,000 has been recorded in respect of the fair value of a foreign exchange swap outstanding at period end with a corresponding increase in accumulated other
comprehensive income. Of the asset, $459,000 has been classified as current and $332,000 has been classified as long term. There were no foreign exchange swaps outstanding as at March 31, 2002. 




2





 







Consolidated Statements of Income  


       The application of U.S. GAAP would have the following effect on net income as reported: 


       Stated
in thousands of Canadian Dollars, except per unit amounts 



	 
	 	Three months ended March 31,
	 
	 
	 	2002
	 	2003
	 
	 
	 	(unaudited)


	 
	Net income, as reported	 	$	442	 	$	61,050	 
	 	Adjustments net of tax	 	 	 	 	 	 	 
	 	 	Depletion adjustments (a)(h)	 	 	6,311	 	 	5,539	 
	 	 	Compensation cost (c)	 	 	—	 	 	(118	)
	 	 	Unrealized gain (loss) on oil and gas contracts that do not qualify as hedges (i)	 	 	(1,121	)	 	985	 
	 	 	Future site restoration adjustment (h)	 	 	—	 	 	3,099	 
	 	 	
	 	
	 
	Net income before cumulative effect of change in Accounting principle under US GAAP	 	 	5,632	 	 	70,555	 
	Cumulative effect of change in accounting principles (h)	 	 	—	 	 	19,225	 
	 	 	
	 	
	 
	Net income for the period — US GAAP	 	$	5,632	 	$	89,780	 
	

Other comprehensive income:	
 	
 	

 	
 	
 	

 	
 
	 	Unrealized gain (loss) on available-for-sale securities (d)(e)	 	 	236	 	 	(271	)
	 	Unrealized hedging gains (e)(i)	 	 	2,846	 	 	10,364	 
	 	Unrealized hedging losses (e)(i)	 	 	(5,079	)	 	—	 
	 	 	
	 	
	 
	Comprehensive income — U.S. GAAP	 	$	3,635	 	$	99,873	 
	 	 	
	 	
	 
	Net income before cumulative adjustment per unit U.S. GAAP	 	 	 	 	 	 	 
	 	— Basic	 	$	0.07	 	$	0.64	 
	 	— Diluted	 	$	0.07	 	$	0.64	 
	

Net income per unit U.S. GAAP	
 	
 	

 	
 	
 	

 	
 
	 	— Basic	 	$	0.07	 	$	0.81	 
	 	— Diluted	 	$	0.07	 	$	0.81	 
	 	 	
	 	
	 





Consolidated Balance Sheets  


       The application of U.S. GAAP would have the following effect on the Balance Sheets as reported: 


Stated
in thousands of Canadian Dollars 



	December 31, 2002
 
	 	As Reported
	 	Increase

(Decrease)
	 	U.S. GAAP
	 
	Assets:	 	 	 	 	 	 	 	 	 	 
	 	Marketable securities (d)	 	$	1,906	 	$	271	 	$	2,177	 
	 	Capital assets (a)(h)	 	 	1,444,668	 	 	(314,280	)	 	1,130,388	 
	 	 	
	 	
	 	
	 
	 	 	 	 	 	 	$	(314,009	)	 	 	 
	 	 	
	 	
	 	
	 
	Liabilities:	 	 	 	 	 	 	 	 	 	 
	 	Accounts payable and accrued liabilities (c)(i)	 	$	43,092	 	$	960	 	$	44,052	 
	 	Current portion of unrealized hedging loss (i)	 	 	—	 	 	14,462	 	 	14,462	 
	 	Long term portion of unrealized hedging loss (i)	 	 	—	 	 	6,363	 	 	6,363	 
	 	Provision for abandonment costs (h)	 	 	44,339	 	 	(44,339	)	 	—	 
	

Unitholders' equity:	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Other comprehensive income (e)(i)	 	 	—	 	 	(20,554	)	 	(20,554	)
	 	Trust Unitholders' Equity (a)	 	 	1,053,939	 	 	(270,901	)	 	783,038	 
	 	 	
	 	
	 	
	 
	 	 	 	 	 	$	(314,009	)	 	 	 
	 	 	
	 	
	 	
	 




3





 


	March 31, 2003 (unaudited) 



	 
	Assets:	 	 	 	 	 	 	 	 	 	 
	 	Accounts receivable (i)	 	$	61,231	 	$	25	 	$	61,256	 
	 	Current portion of unrealized hedging gain (i)	 	 	—	 	 	2,610	 	 	2,610	 
	 	Long term portion of unrealized hedging gain (i)	 	 	—	 	 	2,324	 	 	2,324	 
	 	Capital assets (a)(h)	 	 	1,421,605	 	 	(216,023	)	 	1,205,582	 
	 	 	
	 	
	 	
	 
	 	 	 	 	 	$	(211,064	)	 	 	 
	 	 	
	 	
	 	
	 
	Liabilities:	 	 	 	 	 	 	 	 	 	 
	 	Current portion of unrealized hedging loss (i)	 	$	—	 	$	8,021	 	$	8,021	 
	 	Long term portion of unrealized hedging loss (i)	 	 	—	 	 	7,374	 	 	7,374	 
	 	Provision for abandonment costs (h)	 	 	48,358	 	 	26,055	 	 	74,413	 
	

Unitholders' equity:	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Other comprehensive income (e)(i)	 	 	—	 	 	(10,461	)	 	(10,461	)
	 	Trust Unitholders' Equity (a)	 	 	1,024,162	 	 	(242,053	)	 	782,109	 
	 	 	
	 	
	 	
	 
	 	 	 	 	 	$	(211,064	)	 	 	 
	 	 	
	 	
	 	
	 





Additional disclosures required under U.S. GAAP  


       The components of accounts receivable are as follows: 


Stated
in thousands of Canadian Dollars 



	 
	 	December 31,

2002
	 	March 31,

2003

	 
	 	 
	 	(unaudited)



	Trade	 	$	35,148	 	$	54,314
	Prepaids	 	 	5,084	 	 	5,495
	Other	 	 	1,194	 	 	1,422
	 	 	
	 	

	 	 	$	41,426	 	$	61,231
	 	 	
	 	






       The components of accounts payable and accrued liabilities are as follows: 


Stated
in thousands of Canadian Dollars 



	 
	 	December 31,

2002
	 	March 31,

2003

	 
	 	 
	 	(unaudited)



	Accounts payable	 	$	29,806	 	$	30,811
	Accrued liabilities	 	 	13,286	 	 	13,350
	 	 	
	 	

	 	 	$	43,092	 	$	44,161
	 	 	
	 	





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PENGROWTH ENERGY TRUST

RECONCILIATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF PENGROWTH ENERGY TRUST FOR THE THREE MONTHS ENDED MARCH 31, 2003 TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES