QuickLinks
 -- Click here to rapidly navigate through this document
  



 
 

EXHIBIT 4.4    
    


 
 

PETROFUND ENERGY TRUST    
    
    CONSOLIDATED BALANCE SHEET    
    
    (thousands of dollars) (unaudited)    
    



	As at September 30, 2005 and December 31, 2004 
	 	2005
	 	2004
	 
	Assets	 	 	 	 	 	 	 
	
Current assets	
 	
 	

 	
 	
 	

 	
 
	 	Cash	 	$	7,993	 	$	—	 
	 	Accounts receivable	 	 	47,671	 	 	37,713	 
	 	Deferred loss on commodity contracts	 	 	129	 	 	517	 
	 	Commodity contracts (Note 9)	 	 	745	 	 	3,281	 
	 	Prepaid expenses	 	 	16,591	 	 	10,847	 
	 	 	
	 	
	 
	Total current assets	 	 	73,129	 	 	52,358	 
	Asset retirement reserve fund (Note 7(b))	 	 	8,538	 	 	7,053	 
	Goodwill (Note 2)	 	 	190,247	 	 	180,307	 
	Oil and natural gas royalty and property interests, at cost less accumulated depletion and depreciation of $772,403 (2004 — $632,668)	 	 	1,297,522	 	 	1,246,694	 
	 	 	
	 	
	 
	 	 	$	1,569,436	 	$	1,486,412	 
	 	 	
	 	
	 
	
Liabilities and Unitholders' Equity	
 	
 	

 	
 	
 	

 	
 
	
Current liabilities	
 	
 	

 	
 	
 	

 	
 
	 	Bank overdraft	 	$	—	 	$	733	 
	 	Accounts payable and accrued liabilities	 	 	42,052	 	 	60,961	 
	 	Current portion of capital lease obligations	 	 	—	 	 	608	 
	 	Deferred gain on commodity contracts	 	 	38	 	 	184	 
	 	Commodity contracts (Note 9)	 	 	37,051	 	 	14,599	 
	 	Distributions payable to Unitholders (Note 8)	 	 	18,126	 	 	35,568	 
	 	 	
	 	
	 
	Total current liabilities	 	 	97,267	 	 	112,653	 
	Long-term debt (Note 6)	 	 	244,499	 	 	214,414	 
	Future income taxes	 	 	87,658	 	 	81,411	 
	Asset retirement obligations (Note 7(a))	 	 	55,266	 	 	51,408	 
	 	 	
	 	
	 
	Total liabilities	 	 	484,690	 	 	459,886	 
	
Unitholders' equity	
 	
 	

 	
 	
 	

 	
 
	 	Unitholders' capital (Note 3)	 	 	1,560,317	 	 	1,477,963	 
	 	Exchangeable shares (Note 4)	 	 	6,038	 	 	10,518	 
	 	Accumulated earnings	 	 	383,257	 	 	272,612	 
	 	Accumulated cash distributions (Note 8)	 	 	(864,866	)	 	(734,567	)
	 	 	
	 	
	 
	Total unitholders' equity	 	 	1,084,746	 	 	1,026,526	 
	 	 	
	 	
	 
	 	 	$	1,569,436	 	$	1,486,412	 
	 	 	
	 	
	 





The
accompanying notes to the Interim Consolidated Financial Statements are an integral part of this consolidated balance sheet. 


1







 


 
 

CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED EARNINGS    
    
    (thousands of dollars, except per unit amounts) (unaudited)    
    



	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,
	 
	 
	 	2005
	 	2004
	 	2005
	 	2004
	 
	Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Oil and natural gas sales	 	$	212,404	 	$	147,489	 	$	540,003	 	$	360,158	 
	 	Royalties	 	 	(42,095	)	 	(27,578	)	 	(105,048	)	 	(69,173	)
	 	Loss on commodity contracts	 	 	(23,971	)	 	(29,903	)	 	(54,254	)	 	(60,934	)
	 	 	
	 	
	 	
	 	
	 
	 	 	 	146,338	 	 	90,008	 	 	380,701	 	 	230,051	 
	 	 	
	 	
	 	
	 	
	 
	Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Lease operating	 	 	35,558	 	 	30,920	 	 	103,245	 	 	74,388	 
	 	Transportation costs	 	 	2,291	 	 	1,753	 	 	6,222	 	 	4,264	 
	 	Financing costs	 	 	2,123	 	 	1,703	 	 	6,858	 	 	3,792	 
	 	General and administrative	 	 	4,816	 	 	3,764	 	 	12,357	 	 	10,218	 
	 	Capital taxes	 	 	1,023	 	 	788	 	 	3,167	 	 	2,444	 
	 	Depletion, depreciation and accretion	 	 	51,027	 	 	41,982	 	 	141,960	 	 	104,619	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	96,838	 	 	80,910	 	 	273,809	 	 	199,725	 
	 	 	
	 	
	 	
	 	
	 
	Income before provision for income taxes	 	 	49,500	 	 	9,098	 	 	106,892	 	 	30,326	 
	 	 	
	 	
	 	
	 	
	 
	Provision for (recovery of) income taxes	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Current	 	 	202	 	 	100	 	 	418	 	 	368	 
	 	Future	 	 	(1,911	)	 	(6,149	)	 	(4,171	)	 	6,365	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	(1,709	)	 	(6,049	)	 	(3,753	)	 	6,733	 
	 	 	
	 	
	 	
	 	
	 
	Net income	 	 	51,209	 	 	15,147	 	 	110,645	 	 	23,593	 
	 	 	
	 	
	 	
	 	
	 
	Accumulated earnings, beginning of period	 	 	332,048	 	 	206,699	 	 	272,612	 	 	198,253	 
	Accumulated earnings, end of period	 	$	383,257	 	$	221,846	 	$	383,257	 	$	221,846	 
	 	 	
	 	
	 	
	 	
	 
	
Net income per Trust unit (Note 3)	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Basic	 	$	0.49	 	$	0.15	 	$	1.08	 	$	0.28	 
	 	Diluted	 	$	0.49	 	$	0.15	 	$	1.08	 	$	0.28	 
	 	 	
	 	
	 	
	 	
	 





The
accompanying notes to the Interim Consolidated Financial Statements are an integral part of these consolidated statements. 


2







 

 
 

CONSOLIDATED STATEMENT OF CASH FLOWS    
    
    (thousands of dollars) (unaudited)    
    



	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,
	 
	 
	 	2005
	 	2004
	 	2005
	 	2004
	 
	Cash provided by (used in):	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Operating activities	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Net income	 	$	51,209	 	$	15,147	 	$	110,645	 	$	23,593	 
	 	Add items not affecting cash:	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Depletion, depreciation and accretion	 	 	51,027	 	 	41,982	 	 	141,960	 	 	104,619	 
	 	 	Commodity contracts unrealized loss	 	 	11,136	 	 	15,344	 	 	25,230	 	 	32,587	 
	 	 	Future income taxes (recovery)	 	 	(1,911	)	 	(6,149	)	 	(4,171	)	 	6,365	 
	 	Actual abandonment costs incurred (Note 7(b))	 	 	(339	)	 	(1,249	)	 	(1,772	)	 	(3,222	)
	 	 	
	 	
	 	
	 	
	 
	 	 	 	111,122	 	 	65,075	 	 	271,892	 	 	163,942	 
	Net change in non-cash operating working capital balances	 	 	(21,083	)	 	(2,395	)	 	(39,516	)	 	24,797	 
	 	 	
	 	
	 	
	 	
	 
	Cash provided by operating activities	 	 	90,039	 	 	62,680	 	 	232,376	 	 	188,739	 
	 	 	
	 	
	 	
	 	
	 
	Financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Long-term debt	 	 	(9,846	)	 	(12,989	)	 	30,085	 	 	(20,640	)
	 	Distributions paid (Note 8)	 	 	(50,150	)	 	(47,684	)	 	(146,837	)	 	(121,759	)
	 	Redemption of exchangeable shares (Note 4)	 	 	(258	)	 	(450	)	 	(904	)	 	(1,352	)
	 	Capital lease repayments	 	 	(74	)	 	(90	)	 	(608	)	 	(264	)
	 	Issuance of Trust units (Note 3)	 	 	452	 	 	1,642	 	 	77,874	 	 	3,351	 
	 	 	
	 	
	 	
	 	
	 
	Cash used in financing activities	 	 	(59,876	)	 	(59,571	)	 	(40,390	)	 	(140,664	)
	 	 	
	 	
	 	
	 	
	 
	Investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Asset retirement reserve (Note 7(b))	 	 	(518	)	 	(482	)	 	(1,485	)	 	(1,228	)
	 	Corporate acquisitions (Note 2 (a)(b))	 	 	42	 	 	5,636	 	 	(56,058	)	 	(1,800	)
	 	Property acquisitions	 	 	(11,287	)	 	598	 	 	(17,768	)	 	(1,544	)
	 	Property dispositions	 	 	871	 	 	—	 	 	871	 	 	—	 
	 	Development expenditures	 	 	(29,895	)	 	(20,486	)	 	(108,908	)	 	(47,931	)
	 	Cash acquired on acquisitions (Note 2 (b))	 	 	—	 	 	—	 	 	88	 	 	9,711	 
	 	 	
	 	
	 	
	 	
	 
	Cash used in investing activities	 	 	(40,787	)	 	(14,734	)	 	(183,260	)	 	(42,792	)
	 	 	
	 	
	 	
	 	
	 
	Net change in cash	 	 	(10,624	)	 	(11,625	)	 	8,726	 	 	5,283	 
	Cash (bank overdraft), beginning of period	 	 	18,617	 	 	19,090	 	 	(733	)	 	2,182	 
	 	 	
	 	
	 	
	 	
	 
	Cash, end of period	 	$	7,993	 	$	7,465	 	$	7,993	 	$	7,465	 
	 	 	
	 	
	 	
	 	
	 
	Interest paid during the period	 	$	2,087	 	$	2,504	 	$	6,521	 	$	3,671	 
	 	 	
	 	
	 	
	 	
	 
	Income taxes paid during the period	 	$	144	 	$	141	 	$	77	 	$	247	 
	 	 	
	 	
	 	
	 	
	 





The
accompanying notes to the Interim Consolidated Financial Statements are an integral part of these consolidated statements. 


3









  




 
 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS    
    
    September 30, 2005 and 2004    
    
    (unaudited)    
    
    (tabular amounts in thousands of dollars,
except unit and per unit amounts)    



1.     INTERIM FINANCIAL STATEMENTS  



These
unaudited interim consolidated financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements. The note disclosure
requirements for annual financial statements are prepared in accordance with Canadian generally accepted accounting principles and provide additional disclosures to that required for interim financial
statements. Accordingly, these interim financial statements should be read in conjunction with the audited consolidated financial statements of Petrofund Energy Trust ("Petrofund" or the "Trust") as
at December 31, 2004 and 2003 and for each of the years in the three-year period ended December 31, 2004. 




2.     ACQUISITIONS  



	(a)
	Acquisition of Northern Crown Petroleums Ltd.  




On
May 10, 2005 Petrofund acquired 100% of the outstanding shares of Northern Crown Petroleums Ltd. and its wholly owned subsidiary Spiral Resources Ltd. for $32.7 million
in cash and assumed debt and negative working capital of $4.8 million. Of the total acquisition costs of $45.7 million, $38.5 million was allocated to oil and gas royalty and
property interest and $7.1 million to goodwill, which is not deductible for tax purposes. 


A
summary of the estimated net assets acquired is as follows: 




	 
	 	(000's)
	 
	Current assets	 	$	1,733	 
	Goodwill	 	 	7,120	 
	Oil and gas royalties and property interests	 	 	38,556	 
	Current liabilities	 	 	(6,550	)
	Asset retirement obligations	 	 	(756	)
	Future income taxes	 	 	(7,398	)
	 	 	
	 
	 	 	$	32,705	 
	 	 	
	 






	(b)
	Acquisition of Tahiti Gas Ltd.  





On
May 31, 2005 Petrofund acquired 100% of the outstanding shares of Tahiti Gas Ltd. ("Tahiti") for $23.4 million in cash and assumed debt and working capital of $23,000. Of the
total acquisition costs of $26.8 million, $24.0 million was allocated to oil and gas royalty and property interest and $2.8 million to goodwill, which is not deductible for tax
purposes. 


A
summary of the estimated net assets acquired is as follows: 




	 
	 	(000's)
	 
	Current assets	 	$	184	 
	Goodwill	 	 	2,820	 
	Oil and gas royalties and property interests	 	 	23,974	 
	Current liabilities	 	 	(161	)
	Asset retirement obligations	 	 	(420	)
	Future income taxes	 	 	(3,020	)
	 	 	
	 
	 	 	$	23,377	 
	 	 	
	 





4







 

3.     TRUST UNITS  



	Authorized: unlimited number of Trust units 
	 	Number of Units
	 	$000's
	 
	Issued	 	 	 	 	 	 
	Balance, December 31, 2004	 	99,511,576	 	$	1,477,963	 
	Issued for cash	 	4,150,000	 	 	75,738	 
	Exchangeable shares exchanged (Note 4)	 	400,000	 	 	4,480	 
	Commissions and issue costs	 	—	 	 	(4,296	)
	Options exercised	 	405,424	 	 	5,751	 
	Unit purchase plan	 	4,118	 	 	79	 
	Unit incentive plan	 	36,002	 	 	602	 
	 	 	
	 	
	 
	Balance, September 30, 2005	 	104,507,120	 	$	1,560,317	 
	 	 	
	 	
	 






The weighted average Trust units/exchangeable shares outstanding are as follows:



	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,

	 
	 	2005
	 	2004
	 	2005
	 	2004

	Basic	 	105,017,651	 	100,266,733	 	102,412,474	 	84,064,168
	Diluted	 	105,039,185	 	100,353,257	 	102,441,345	 	84,210,974






The
diluted amounts include all dilutive instruments. 


Trust units/exchangeable shares outstanding:



	As at September 30, 
	 	2005
	 	2004

	Trust units outstanding	 	104,507,120	 	99,405,256
	Trust units issuable for exchangeable shares (Note 4)	 	539,147	 	939,147
	 	 	
	 	

	 	 	105,046,267	 	100,344,403
	 	 	
	 	







4.     EXCHANGEABLE SHARES  



	Issued and Outstanding 
	 	Number of Shares
	 	$000's
	 
	Balance, December 31, 2004	 	756,648	 	$	10,518	 
	Redemption of shares	 	(37,779	)	 	—	 
	Exchanged for Trust Units(1)	 	(316,251	)	 	(4,480	)
	 	 	
	 	
	 
	Balance, September 30, 2005	 	402,618	 	 	6,038	 
	Exchangeable ratio, end of period	 	1.3391	 	 	—	 
	 	 	
	 	
	 
	Exchangeable for Trust units	 	539,147	 	$	6,038	 
	 	 	
	 	
	 








	(1)
	On
March 7, 2005, 316,251 Exchangeable Shares were exchanged for 400,000 Trust units at an exchange rate of 1.26482. 




5.     RESTRICTED UNIT PLAN ("RUP") AND LONG-TERM INCENTIVE PLAN ("LTIP")  



On
February 17, 2004, the Board of Directors approved the adoption of the RUP and LTIP which authorizes the Trust to issue units to directors, officers, employees, or consultants of the Trust
or any of its subsidiaries. The units, plus accrued distributions, vest over time and upon vesting may be redeemed by the holder for cash or units under the RUP and for units only under the LTIP. The
units are issued, or the cash paid out, on the vesting dates based upon the weighted average trading prices of the units for the last 20 trading days prior to the vesting dates. The estimated
value of the units to be issued, or the cash to be paid out, is charged to expense over the vesting periods of the grants. The number of units outstanding, excluding accrued distributions, is as
follows: 



5







 



	 
	 	RUP
	 	LTIP
	 
	Balance, December 31, 2004	 	54,326	 	31,156	 
	Granted	 	110,067	 	61,245	 
	Units issued	 	(20,315	)	(51,571	)
	Forfeitures	 	(20,905	)	—	 
	 	 	
	 	
	 
	Balance, September 30, 2005	 	123,173	 	40,830	 
	 	 	
	 	
	 






The
Trust recorded compensation expenses of $2.6 million in the nine months ended September 30, 2005 (2004 — $1.2 million). The compensation
expense was based on the September 30, 2005 unit price of $22.82, distributions of $1.44 per unit during the period and management's estimate of the number of RUP and LTIP units to be issued on
maturity. 




6.     LONG-TERM DEBT  



Under
the loan agreements, as at September 30, 2005, Petrofund Corp. ("PC"), a wholly-owned subsidiary of the Trust had a revolving working capital operating facility of $25 million and
a syndicated facility of $390 million. On April 29, 2005, PC increased its syndicated facility to $390 million, bringing PC's borrowing base to $415 million
(December 31, 2004 — $325 million). Interest on the working capital loan is at prime and interest on the syndicated facility varies with PC's debt
to cash ratio from prime or, at the Trust's option, Banker's Acceptances rates plus 80 to 125 basis points plus stamping fees. The prime rate at September 30, 2005 was 4.50%. As
at September 30, 2005, there was no amount outstanding under the working capital facility and $244.5 million outstanding under the syndicated facility. 


The
revolving period on the syndicated facility ends on April 28, 2006, unless extended for a further 364 day period. In the event that the revolving bank line is not extended at the end
of the 364 day revolving period, no payments are required to be made to non-extending lenders during the first year of the term period. However, PC will be required to maintain
certain minimum balances on deposit with the syndicate agent. 


The
limit of the syndicated facility is subject to adjustment from time to time to reflect changes in PC's asset base. 



The
credit facility is secured by a debenture of $600 million pursuant to which a Canadian chartered bank, as principal and as agent for the other lenders, received a first ranking security
interest on all of PC's assets. 


The
loan is the legal obligation of PC. While principal and interest payments are allowable deductions in the calculation of royalty income, the Unitholders have no direct liability to the bank or to
PC should the assets securing the loan generate insufficient cash flow to repay the obligation. 


Substantially
all of the credit facility is financed with Banker's Acceptances, resulting in a reduction in the stated bank loan interest rates. 




7.     ASSET RETIREMENT OBLIGATIONS AND RESERVE FUND  



	(a)
	Asset Retirement Obligations ("ARO")  





The
total future asset retirement obligation was estimated by management based on the Trust's net ownership interest in wells and facilities and the estimated timing of the costs to be incurred in
future periods. 


The
following reconciles the Trust's outstanding ARO for the periods indicated: 




	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,
	 
	($000's) 
	 	2005
	 	2004
	 	2005
	 	2004
	 
	Balance, at beginning of period	 	$	54,126	 	$	50,506	 	$	51,408	 	$	34,363	 
	Increase in liabilities during the period	 	 	490	 	 	204	 	 	2,229	 	 	540	 
	Accretion expense during period	 	 	989	 	 	824	 	 	2,225	 	 	1,932	 
	Actual costs incurred during the period	 	 	(339	)	 	(1,249	)	 	(1,772	)	 	(3,222	)
	Acquisitions additions during the period (Note 2)	 	 	—	 	 	—	 	 	1,176	 	 	16,672	 
	 	 	
	 	
	 	
	 	
	 
	Balance, at end of period	 	$	55,266	 	$	50,285	 	$	55,266	 	$	50,285	 
	 	 	
	 	
	 	
	 	
	 





6







 

	(b)
	Asset Retirement Reserve Fund  





PC
maintains a cash reserve to finance large and unusual oil and natural gas property reclamation and abandonment costs by withholding amounts, which would otherwise represent distributions accruing
to Unitholders. At September 30, 2005, the cash reserve was $8.5 million (December 31, 2004 — $7.1 million). In the third quarter of
2005, PC increased the cash reserve by withholding $518,000 (2004 — $482,000) from distributions accruing to Unitholders. In addition, routine ongoing reclamation
and abandonment costs of $339,000 in the third quarter of 2005 (2004 — $1.2 million) were incurred and deducted from distributions accruing to Unitholders.
Ongoing reclamation and abandonment cost of $1.8 million for nine months ended September 30, 2005 (2004 — $3.2 million) were incurred and
deducted from distributions accruing the unitholders. 





8.     RECONCILIATION OF CASH FLOW AND DISTRIBUTIONS  



Cash
distributions are calculated in accordance with the Trust Indenture. To arrive at cash distributions, funds from operations, before changes in non-cash working capital, is reduced by
reclamation fund contributions including interest earned on the fund, a portion of capital expenditures, debt repayments, Trust expenses, unit retraction or repurchases, if any, and all amounts paid
into the reserve account. The portion of cash flow withheld to fund capital expenditures and to made debt repayments is at the discretion of the Board of Directors. 



Reconciliation of Distributions Accruing to Unitholders

(thousands of dollars) 



	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,
	 
	 
	 	2005
	 	2004
	 	2005
	 	2004
	 
	Distributions payable, beginning of period	 	$	67,504	 	$	26,029	 	$	35,568	 	$	53,452	 
	 	 	
	 	
	 	
	 	
	 
	Distributions accruing during the period	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cash provided by operating activities	 	 	90,039	 	 	62,680	 	 	232,376	 	 	188,739	 
	 	Net change in non-cash operating working capital balance	 	 	21,083	 	 	2,395	 	 	39,516	 	 	(24,797	)
	 	Amortization of the cost of commodity contracts	 	 	—	 	 	(238	)	 	—	 	 	(701	)
	 	Redemption of exchangeable shares	 	 	(258	)	 	(450	)	 	(904	)	 	(1,352	)
	 	Asset retirement reserve contributions	 	 	(518	)	 	(482	)	 	(1,485	)	 	(1,228	)
	 	Capital lease repayment	 	 	(74	)	 	(90	)	 	(608	)	 	(264	)
	 	 	
	 	
	 	
	 	
	 
	Cash flow before capital reinvestment	 	 	110,272	 	 	63,815	 	 	268,895	 	 	160,397	 
	 	Weyburn deferred capital obligation	 	 	—	 	 	(1	)	 	—	 	 	(34,931	)
	 	Capital expenditures funded from cash flow	 	 	(109,500	)	 	(15,000	)	 	(139,500	)	 	(30,000	)
	 	 	
	 	
	 	
	 	
	 
	Total distributions accruing during the period	 	 	772	 	 	48,814	 	 	129,395	 	 	95,466	 
	Distributions paid	 	 	(50,150	)	 	(47,684	)	 	(146,837	)	 	(121,759	)
	 	 	
	 	
	 	
	 	
	 
	Distributions payable, end of period	 	$	18,126	 	$	27,159	 	$	18,126	 	$	27,159	 
	 	 	
	 	
	 	
	 	
	 






Accumulated Cash Distributions

(thousands of dollars) 



	 
	 	3 months ended

September 30,
	 	9 months ended

September 30,

	 
	 	2005
	 	2004
	 	2005
	 	2004

	Accumulated cash distributions, beginning of period	 	$	863,836	 	$	628,709	 	$	734,567	 	$	581,155
	Distributions accruing during the period	 	 	772	 	 	48,814	 	 	129,395	 	 	95,466
	Redemption of exchangeable shares	 	 	258	 	 	450	 	 	904	 	 	1,352
	 	 	
	 	
	 	
	 	

	Accumulated cash distributions, end of period	 	$	864,866	 	$	677,973	 	$	864,866	 	$	677,973
	 	 	
	 	
	 	
	 	






7







 

9.     DERIVATIVE FINANCIAL INSTRUMENTS  



The
Trust enters into various pricing mechanisms to reduce price volatility and establish minimum prices for a portion of its oil and gas production. These include fixed-price contracts and the use of
derivative financial instruments. 


The
outstanding derivative financial instruments and related contracts as at September 30, 2005 and the related unrealized gains or losses are summarized separately below: 



	Natural Gas 
	 	Term
	 	Volume

mcf/d
	 	Price

$/mcf
	 	Delivery

Point
	 	Unrealized Gain (Loss)

$000's
	 
	Collar	 	April 1, 2005 to

October 31, 2005	 	4,737	 	$6.33-$8.44	 	AECO	 	$	(491	)
	Collar	 	April 1, 2005 to

October 31, 2005	 	4,737	 	$6.33-$9.60	 	AECO	 	 	(288	)
	Collar	 	April 1, 2005 to

October 31, 2005	 	4,737	 	$6.33-$8.44	 	AECO	 	 	(491	)
	Collar	 	April 1, 2005 to

October 31, 2005	 	4,737	 	$6.33-$8.44	 	AECO	 	 	(455	)
	Three way collar	 	April 1, 2005 to

October 31, 2005	 	4,737	 	$4.75-$5.80-$7.92	 	AECO	 	 	(535	)
	Three way collar	 	November 1, 2005 to March 31, 2006	 	4,737	 	$5.65-$6.70-$10.55	 	AECO	 	 	(2,809	)
	Three way collar	 	November 1, 2005 to March 31, 2006	 	4,737	 	$5.28-$6.33-$12.98	 	AECO	 	 	(1,583	)
	Collar	 	November 1, 2005 to March 31, 2006	 	4,737	 	$7.39-$13.72	 	AECO	 	 	(1,351	)
	Collar	 	November 1, 2005 to March 31, 2006	 	4,737	 	$7.39-$16.15	 	AECO	 	 	(815	)
	Floor	 	November 1, 2005 to March 31, 2006	 	4,737	 	$8.44	 	AECO	 	 	43	 
	Floor	 	November 1, 2005 to March 31, 2006	 	4,737	 	$8.44	 	AECO	 	 	53	 
	Three way collar	 	April 1, 2006 to October 31, 2006	 	4,737	 	$6.07-$7.39-$8.99	 	AECO	 	 	(2,237	)
	Collar	 	April 1, 2006 to October 31, 2006	 	4,737	 	$7.39-$10.55	 	AECO	 	 	(1,318	)
	Collar	 	April 1, 2006 to October 31, 2006	 	4,737	 	$8.44-$11.35	 	AECO	 	 	(794	)
	Collar	 	April 1, 2006 to October 31, 2006	 	4,737	 	$8.44-$14.51	 	AECO	 	 	38	 
	 	 	 	 	 	 	 	 	 	 	
	 
	Total	 	 	 	 	 	 	 	 	 	$	(13,033	)
	 	 	 	 	 	 	 	 	 	 	
	 




8







 


	Oil 
	 	Term
	 	Volume

bbl/d
	 	Price

$/bbl
	 	Delivery Point
	 	Unrealized Gain (Loss)

$000's
	 
	Three way collar	 	January 1, 2005 to December 31, 2005	 	1,000	 	$23.25-$27.90-$33.72	 	Edmonton	 	$	(5,244	)
	Three way collar	 	January 1, 2005 to December 31, 2005	 	1,000	 	$27.90-$31.39-$39.53	 	Edmonton	 	 	(4,539	)
	Three way collar	 	January 1, 2005 to December 31, 2005	 	1,000	 	$26.74-$31.39-$38.37	 	Edmonton	 	 	(4,680	)
	Three way collar	 	July 1, 2005 to December 31, 2005	 	1,000	 	$40.69-$46.51-$69.76	 	Edmonton	 	 	(978	)
	Collar	 	October 1, 2005 to December 31, 2005	 	1,000	 	$48.83-$69.76	 	Edmonton	 	 	(794	)
	Three way collar	 	January 1, 2006 to March 31, 2006	 	1,000	 	$40.69-$46.51-$61.62	 	Edmonton	 	 	(1,571	)
	Collar	 	January 1, 2006 to March 31, 2006	 	1,000	 	$48.83-$69.76	 	Edmonton	 	 	(964	)
	Collar	 	January 1, 2006 to March 31, 2006	 	1,000	 	$52.32-$81.39	 	Edmonton	 	 	(425	)
	Collar	 	January 1, 2006 to March 31, 2006	 	1,000	 	$58.14-$93.02	 	Edmonton	 	 	(117	)
	Collar	 	January 1, 2006 to March 31, 2006	 	1,000	 	$58.14-$79.94	 	Edmonton	 	 	(462	)
	Collar	 	January 1, 2006 to

June 30, 2006	 	1,000	 	$63.95-$103.48	 	Edmonton	 	 	194	 
	Three way collar	 	April 1, 2006 to

June 30, 2006	 	1,000	 	$43.02-$48.83-$68.89	 	Edmonton	 	 	(1,179	)
	Collar	 	April 1, 2006 to

June 30, 2006	 	1,000	 	$55.23-$81.39	 	Edmonton	 	 	(487	)
	Collar	 	April 1, 2006 to

June 30, 2006	 	1,000	 	$58.14-$75.58	 	Edmonton	 	 	(638	)
	Collar	 	April 1, 2006 to

June 30, 2006	 	1,000	 	$58.14-$88.37	 	Edmonton	 	 	(241	)
	Collar	 	April 1, 2006 to

June 30, 2006	 	1,000	 	$58.14-$94.18	 	Edmonton	 	 	(124	)
	Collar	 	July 1, 2006 to

September 30, 2006	 	1,000	 	$58.14-$75.58	 	Edmonton	 	 	(648	)
	Collar	 	July 1, 2006 to

September 30, 2006	 	1,000	 	$58.14-$87.78	 	Edmonton	 	 	(268	)
	Collar	 	July 1, 2006 to

September 30, 2006	 	1,000	 	$58.14-$93.89	 	Edmonton	 	 	(138	)
	Collar	 	July 1, 2006 to

September 30, 2006	 	1,000	 	$63.95-$96.74	 	Edmonton	 	 	(24	)
	Collar	 	October 1, 2006 to

December 31, 2006	 	1,000	 	$58.14-$75.58	 	Edmonton	 	 	(653	)
	 	 	 	 	 	 	 	 	 	 	
	 
	Total	 	 	 	 	 	 	 	 	 	$	(23,980	)
	 	 	 	 	 	 	 	 	 	 	
	 




9







 


	Electricity 
	 	Term
	 	Volume

MW/h
	 	Price

$/MWh
	 	Delivery Point
	 	Unrealized Gain

$000's

	Fixed Price	 	February 1, 2004 to December 31, 2005	 	2.0	 	$44.50	 	Alberta Power Pool	 	$	155
	Fixed Price	 	January 1, 2006 to December 31, 2008	 	2.0	 	$57.00	 	Alberta Power Pool	 	 	552
	 	 	 	 	 	 	 	 	 	 	

	Total	 	 	 	 	 	 	 	 	 	$	707
	 	 	 	 	 	 	 	 	 	 	






Derivative
financial instruments and related hedge contracts involve a degree of credit risk, which the Trust controls through the use of financially sound counterparties. The gains or losses incurred
are recognized on a monthly basis over the terms of the hedge contracts. All foreign exchange calculations incorporate the Bank of Canada U.S. dollar rate at the close on September 30,
2005 of CDN $1.1627: U.S. $1. 




10.   DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

        ACCOUNTING PRINCIPLES ("GAAP")  



The
Trust's unaudited interim consolidated financial statements (the "Consolidated Financial Statements") have been prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP"). These principles, as they pertain to the Trust's Consolidated Financial Statements, differ from United States generally accepted accounting principles ("U.S. GAAP") as
follows: 


	(a)
	Under
U.S. GAAP, the carrying value of oil and gas royalty and property interests, net of future income taxes, is limited to the present value of after tax future net revenue
from proven reserves excluding future assets retirement costs, discounted at 10% (based on prices and costs at the balance sheet date), plus the lower of cost and fair value of unproven properties.
Where the amount of an impairment test write-down under Canadian GAAP differs from the amount of the write-down under U.S. GAAP, the charge for depletion, depreciation
and accretion will differ in subsequent years.



	(b)
	U.S. GAAP
utilizes the concept of comprehensive income, which includes items not included in net income. At the current time, there is no similar concept under Canadian GAAP.



	(c)
	Prior
to the Trust adopting AcG-13 for Canadian GAAP purposes, a difference existed in that U.S. GAAP accounting and reporting standards required that all
derivative instruments (including derivative instruments embedded in other contracts), as defined, be recorded in the balance sheet as either an asset or a liability measured at fair value and
requires that changes in fair value be recognized currently in income unless specific hedge accounting criteria are met. In 2005 and 2004, for Canadian GAAP purposes, Petrofund applied the fair value
method of accounting for all derivative transactions. 





U.S. GAAP
hedge accounting treatment allows unrealized gains and losses to be deferred in other comprehensive income (for the effective portion of the hedge) until such time as the
forecasted transaction occurs and requires that an entity formally document, designate and assess effectiveness of derivative instruments that receive hedge accounting treatment. For 2005 and 2004 the
Trust has elected to use fair value accounting for its derivative instruments for U.S. GAAP and the change in fair value of these contracts has been reported in income. 



	(d)
	Prior
to January 1, 2003, for Canadian GAAP purposes, compensation expense for options granted under the Unit Incentive Plan was measured based on the intrinsic value of the
award at the grant date. For the years ended December 31, 2004, 2003 and 2002 pro forma disclosures are included in the notes to the financial statements of the impact on net income and
net income per Trust unit had the Trust accounted for compensation expense based on the fair value of options granted during 2002. No options have been granted since 2002. Effective January 1,
2003, the Trust accounts for compensation expense for options awarded on or after January 1, 2003, based on the fair value method of accounting. 





For
U.S. GAAP purposes, the Unit Incentive Plan has been accounted for as a variable compensation plan as the exercise price of the options is subject to downward revisions from time to time.
Accordingly, compensation expense is determined as the excess of the market price of the Trust units over the adjusted exercise price of the options at each financial reporting date and is deferred
and recognized in income over the vesting period of the options. After the options have vested, compensation expense is recognized in income in the period in which a change in the market price of the
Trust units or the exercise price of the options occurs. 



	(e)
	On
January 1, 2003 Petrofund adopted the U.S. reporting requirements for ARO through a cumulative effect adjustment in the Consolidated Statement of Operations.
Petrofund adopted the equivalent Canadian standard for ARO on January 1, 2004. These standards are consistent except for the method of implementation and the adoption date. 



10







 



	(f)
	The
Trust presents oil and natural gas sales and royalty amounts gross in the Consolidated Statement of Operations. These line items would be combined and presented net in a statement
of operations prepared in accordance with U.S. GAAP. This difference does not result in an adjustment to the financial results as reported under Canadian GAAP.



	(g)
	An
income statement prepared in accordance with U.S. GAAP segregates operating and non-operating expenses in the statement of operations. Management fees, financing
costs and internalization of management contracts would be presented in the non-operating section of the statement of operations. This difference does not result in an adjustment to the
financial results as reported under Canadian GAAP.



	(h)
	The
Trust presents cash flow before changes in non-cash operating working capital as a subtotal in the Consolidated Statement of Cash Flows. This line item would not be
presented in a cash flow statement prepared in accordance with U.S. GAAP. This difference does not result in an adjustment to the financial results as reported under Canadian GAAP. 




Under
U.S. GAAP, the Trust's bank overdraft would be presented as a financial activity rather than as a component of cash. Therefore, cash used in financing activities under U.S. GAAP
would be $39,657 for the nine months ended September 30, 2005. 


The
net change in non-cash operating working capital balances for the nine months ended is comprised of the following: 




	 
	 	Nine Months Ended

September 30,
	 
	(000's)
 
	 
	 	2005
	 	2004
	 
	Accounts receivable	 	$	(8,313	)	$	(3,980	)
	Prepaids and deposits	 	 	(5,744	)	 	(1,299	)
	Accounts payable and accrued liabilities	 	 	(25,459	)	 	30,076	 
	 	 	
	 	
	 
	 	 	$	(39,516	)	$	24,797	 
	 	 	
	 	
	 






	(i)
	In
2004 and 2005, the FASB issued new and revised standards, all of which were assessed by Management to be not applicable to the Trust with the exception that tin
December 2004, the FASB issued SFAS No. 123R, "Share Based Payments", which addresses the issue of measuring compensation cost associated with Share Based Payment plans. This
statement requires that all such plans be measured at fair value using an option pricing model whereas previously certain plans could be measured using either a fair value method or an intrinsic value
method. The revision is intended to increase the consistency and comparability of financial results by only allowing one method of application. This revised standard is effective for the Trust's 2006
fiscal year. Management is in the process of evaluating the impact of this standard.



	(j)
	Under
U.S. GAAP, the number of authorized and issued Trust units and Exchangeable Shares would be disclosed on the face of the balance sheet.



	(k)
	Under
U.S. GAAP, redeemable equity instruments which are not mandatorily redeemable at a specific or determinable date must be presented as temporary equity and carried on the
balance sheet at redemption value. Changes in redemption value between periods are charged or credited to retained earnings. The Trust has concluded that the restrictions on redemption are not
substantive and the trust units must be presented as temporary equity and carried on the balance sheet at their redemption value.



	(l)
	Additional
accounts payable and accrued liability disclosure include: 





Accounts Payable and Accrued Liabilities




	(000's)
 
	 	September 30,

2005
	 	December 31,

2004

	Capital accrual	 	$	12,117	 	$	16,850
	Joint venture and trade payables	 	 	5,565	 	 	22,165
	Other	 	 	24,370	 	 	21,946
	 	 	
	 	

	Total	 	$	42,052	 	$	60,961
	 	 	
	 	






11







 

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



	 
	 	Nine Months Ended

September 30,
	 
	($ Cdn (000's) other than per unit amounts)
 
	 
	 	2005
	 	2004
	 
	Net income as reported in consolidated statement of operations	 	$	110,645	 	$	23,593	 
	Adjustments:	 	 	 	 	 	 	 
	 	Realized/(unrealized) loss on derivatives	 	 	—	 	 	6,774	 
	 	Compensation expense	 	 	(633	)	 	1,493	 
	 	Depletion and depreciation	 	 	12,167	 	 	10,938	 
	 	Future income taxes	 	 	(4,258	)	 	(6,233	)
	 	 	
	 	
	 
	Net income, U.S. GAAP	 	$	117,921	 	$	36,565	 
	 	 	
	 	
	 
	Net income per unit, U.S. GAAP	 	 	 	 	 	 	 
	 	Basic	 	$	1.15	 	$	0.43	 
	 	Diluted	 	$	1.15	 	$	0.43	 






The
application of U.S. GAAP would have the following effects on Petrofund's consolidated balance sheet as at September 30, 2005: 



	(000's)
 
	 	As

reported
	 	Decrease
	 	U.S.

GAAP
	 
	As at September 30, 2005	 	 	 	 	 	 	 	 	 	 
	Oil and gas royalty and property interests, net	 	$	1,297,522	 	$	(149,051	)	$	1,148,471	 
	Future income taxes	 	 	87,658	 	 	(42,734	)	 	44,924	 
	Temporary equity	 	 	—	 	 	2,397,156	 	 	2,397,156	 
	Unitholders' equity	 	 	1,084,746	 	 	(2,503,473	)	 	(1,418,727	)






The
following presents the consolidated statement of unitholders' equity and temporary equity for the year ended December 31, 2004 and the nine months ended September 30, 2005, under
U.S. GAAP. 



	(000's)
 
	 	Accumulated Distributions
	 	Retained Earnings

(Deficit)
	 	Total Unitholders' Equity

(Deficiency)
	 	Temporary Equity
	 
	December 31, 2003	 	$	(581,155	)	$	(282,083	)	$	(863,238	)	$	1,383,465	 
	Units issued	 	 	—	 	 	—	 	 	—	 	 	452,807	 
	Redemption of exchangeable shares	 	 	(1,803	)	 	—	 	 	(1,803	)	 	—	 
	Commission & issue costs	 	 	—	 	 	—	 	 	—	 	 	—	 
	Options excercised	 	 	—	 	 	—	 	 	—	 	 	3,771	 
	Unit purchase plan	 	 	—	 	 	—	 	 	—	 	 	70	 
	Unit incentive plan	 	 	—	 	 	—	 	 	—	 	 	638	 
	Net income	 	 	—	 	 	90,190	 	 	90,190	 	 	—	 
	Stock based compensation expense	 	 	—	 	 	—	 	 	—	 	 	(1,991	)
	Distribution accruing to unitholders	 	 	(151,609	)	 	—	 	 	(151,609	)	 	—	 
	Change in redemption value	 	 	—	 	 	270,724	 	 	270,724	 	 	(270,724	)
	 	 	
	 	
	 	
	 	
	 
	December 31, 2004	 	 	(734,567	)	 	78,831	 	 	(655,736	)	 	1,568,036	 
	 	 	
	 	
	 	
	 	
	 
	Units issued	 	 	—	 	 	—	 	 	—	 	 	75,738	 
	Redemption of exchangeable shares	 	 	(904	)	 	—	 	 	(904	)	 	—	 
	Commission & issue costs	 	 	—	 	 	—	 	 	—	 	 	(4,296	)
	Options exercised	 	 	—	 	 	—	 	 	—	 	 	5,751	 
	Unit purchase plan	 	 	—	 	 	—	 	 	—	 	 	79	 
	Unit incentive plan	 	 	—	 	 	—	 	 	—	 	 	602	 
	Net income	 	 	—	 	 	117,921	 	 	117,921	 	 	—	 
	Stock based compensation expense	 	 	—	 	 	—	 	 	—	 	 	633	 
	Distribution accruing to unitholders	 	 	(129,395	)	 	—	 	 	(129,395	)	 	—	 
	Change in redemption value	 	 	—	 	 	(750,613	)	 	(750,613	)	 	750,613	 
	 	 	
	 	
	 	
	 	
	 
	September 30, 2005	 	$	(864,866	)	$	(553,861	)	$	(1,418,727	)	$	2,397,156	 
	 	 	
	 	
	 	
	 	
	 





12











QuickLinks



EXHIBIT 4.4


PETROFUND ENERGY TRUST CONSOLIDATED BALANCE SHEET (thousands of dollars) (unaudited)

CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED EARNINGS (thousands of dollars, except per unit amounts) (unaudited)

CONSOLIDATED STATEMENT OF CASH FLOWS (thousands of dollars) (unaudited)


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS September 30, 2005 and 2004 (unaudited) (tabular amounts in thousands of dollars, except unit and per unit amounts)