Document:

exv4w6

 

Exhibit 4.6

- 4 - PENGROWTH ENERGY TRUST

Management’s Discussion and Analysis

     The following discussion and analysis of financial results should be read in
conjunction with:

	 	•	 	The MD&A and the audited consolidated financial statements as
at and for the year ended December 31, 2001 and 2000; and
	 	•	 	The interim unaudited consolidated financial statements as at and for
the three months ended June 30, 2002.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

	 	This discussion and analysis contains forward-looking statements. These
statements relate to future events or our future performance. In some cases,
you can identify forward-looking statements by terminology such as “may”,
“will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”,
“predict”, “potential”, “continue”, or the negative of these terms or other
comparable terminology. These statements are only predictions. A number of
factors may cause actual results to vary materially from these estimates.
Actual events or results may differ materially. In addition, this discussion
contains forward-looking statements attributed to third party industry sources.
Readers should not place undue reliance on these forward-looking statements.

Note Regarding Currency

All figures contained within this discussion and analysis are quoted in
Canadian dollars unless otherwise indicated.

Distributable Income

Distributable income declined by 24% to $48.1 million for the second quarter of
2002, from $63.4 million in the second quarter of 2001; however, distributable
income increased 45% compared to the first quarter of 2002. Distributable
income per unit was $0.54 per unit in the second quarter of 2002 compared to
$0.83 per unit in the second quarter of 2001. For the six months ended June
30, 2002, Pengrowth recorded $81.2 million in distributable income or $0.95 per
unit, compared to $135.5 million or $1.97 per unit in the first six months of
2001. The lower distributable income in 2002 compared to the same period last
year is due mainly to lower average commodity prices, offset in part by a 12%
increase in total production.

The following is a summary of recent monthly distributions and future key dates:

	 	 	 	 	 	 	 
	Ex-Distribution	 	Record Date	 	Distribution	 	Distribution Amount
	Date *	 	 	 	Payment Date	 	per Trust Unit
	

	December 27, 2001

January 30, 2002

February 27, 2002

March 27, 2002

April 29, 2002

May 30, 2002

June 26, 2002

July 29, 2002

August 28, 2002

September 26, 2002

October 29, 2002

November 28, 2002	 	
December 31, 2001

February 1, 2002

March 1, 2002

April 1, 2002

May 1, 2002

June 3, 2002

June 28, 2002

July 31, 2002

August 30, 2002

September 30, 2002

October 31, 2002

December 2, 2002
	 	January 15, 2002

February 15, 2002

March 15, 2002

April 15, 2002

May 15, 2002

June 15, 2002

July 15, 2002

August 15, 2002

September 15, 2002

October 15, 2002

November 15, 2002

December 15, 2002
	 	$0.13

 0.13

 0.13

 0.13

 0.15

 0.21

 0.17

 0.16

Pengrowth Monthly Cash Distributions

(cents Canadian)

     

Including August 15, 2002 distribution

* Taxable amount for 2002 is estimated

 

PENGROWTH ENERGY TRUST  - 5 -

Prices

Pengrowth’s average crude oil price was 11% lower in the first six months of
2002 compared to the first six months of 2001. This decline is due to a 13%
decrease in the WTI benchmark price for crude oil after adjusting for the
weaker Canadian exchange rate in 2002. Pengrowth’s average crude oil price for
the first six months of 2002 includes a hedging loss of $0.11 per bbl compared
to a hedging loss of $0.66 per bbl in the first half of 2001.

Pengrowth’s average natural gas price for the first six months of 2002 fell by
53% to $3.29 per mcf compared to $6.98 per mcf over the same period last year.
By comparison the AECO and Nymex average prices fell by 57% and 53%
respectively in the first six months of 2002 as compared to the same period
last year. Included in the net realized price for natural gas for the period is
a hedging loss of $0.03 per mcf for the first six months of 2002, compared to a
hedging loss of $1.09 per mcf for the first half of 2001.

The combined effect of the decline in realized crude oil, natural gas and
natural gas liquids prices resulted in an average price of $30.06 per boe in
the second quarter of 2002, down 17% from the second quarter of 2001. For the
first six months of 2002, Pengrowth’s average realized price was down 31% from
the same period in the prior year.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average Prices C$	 	Three months ended	 	Six months ended
	

	 	 	June 30,	 	June 30,	 	%	 	June 30,	 	June 30,	 	%
	 	 	2002	 	2001	 	Change	 	2002	 	2001	 	Change
	 
	Crude oil (per bbl)
	 	$	38.63	 	 	$	39.44	 	 	 	-2	%	 	$	35.61	 	 	$	39.90	 	 	 	-11	%
	Natural gas (per mcf)
	 	$	3.75	 	 	$	5.72	 	 	 	-34	%	 	$	3.29	 	 	$	6.98	 	 	 	-53	%
	Natural gas liquids (per boe)
	 	$	28.04	 	 	$	34.42	 	 	 	-19	%	 	$	25.48	 	 	$	37.64	 	 	 	-32	%
	

	Total per boe (6:1)
	 	$	30.06	 	 	$	36.11	 	 	 	-17	%	 	$	27.17	 	 	$	39.49	 	 	 	-31	%
	

	 	 	 
	AECO Gas Price

($C / mcf)	 	WTI Oil Price

($US / bbl)
		 	

Production

Total BOE production has increased 11% in the second quarter of 2002, compared
to the second quarter of 2001. For the six months ended June 30, 2002 total
production is 12% higher than the same period last year.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Daily Production	 	Three months ended	 	Six months ended
	
	
	

	 	 	June 30,	 	June 30,	 	%	 	June 30,	 	June 30,	 	%
	 	 	2002	 	2001	 	Change	 	2002	 	2001	 	Change
	 
	Crude oil (bbls/d)
	 	 	18,096	 	 	 	19,650	 	 	 	-8	%	 	 	18,302	 	 	 	20,039	 	 	 	-9	%
	Natural gas (mcf/d)
	 	 	103,856	 	 	 	75,753	 	 	 	+37	%	 	 	106,936	 	 	 	74,709	 	 	 	+43	%
	Natural gas liquids (bbls/d)
	 	 	5,350	 	 	 	4,418	 	 	 	+21	%	 	 	5,176	 	 	 	4,385	 	 	 	+18	%
	Sulphur (Lt)
	 	 	16	 	 	 	147	 	 	 	 	 	 	 	11	 	 	 	57	 	 	 	 	 
	

	Total boe/d (6:1)
	 	 	40,771	 	 	 	36,840	 	 	 	+11	%	 	 	41,312	 	 	 	36,933	 	 	 	+12	%
	

 

 

- 6 - PENGROWTH ENERGY TRUST

Crude oil production was 8% lower in the second quarter of 2002 compared to the
second quarter of 2001, and declined 9% in the first six months of 2002
compared to the first six months of 2001. This decline is attributable to
dispositions of non-core properties in the first half of 2002 and 2001 as well
as natural production declines at existing properties, offset in part by
production additions from development activities.

Production Profie

(boe/day)

	 	 	 
		 	
Natural gas production increased 37% in
the second quarter of 2002 compared to
the second quarter of 2001. This
increase is attributable mainly to the
Sable acquisition in June, 2001. The
acquisition of other natural gas
properties including Quirk Creek in May,
2002, and Kaybob Notikewan in March, 2001
also contributed to the increase in
natural gas volumes. The disposition of
Portage Gas Unit in April 2001,
production declines at other properties,
as well as an increase in gas volumes
required for the miscible flood at Judy
Creek partially offset the incremental
volumes from recent acquisitions. For
the first six months of 2002 natural gas
production increased 43% over the same
period last year

Natural gas liquids production increased 21% in the second quarter of 2002
compared to the second quarter of 2001 due mainly to the acquisition of the
Sable interest. For the first half of 2002 natural gas liquids production
increased 18% over the same period last year.

For the first six months of 2002, Pengrowth’s production portfolio consisted of
44% crude oil, 43% natural gas, with natural gas liquids making up the
remaining 13% of production.

Price Risk Management Program

In the first six months of 2002, Pengrowth realized a net hedging loss of $0.5
million related to fixed price gas contracts (as compared to monthly AECO
average spot prices) and natural gas financial swap contracts compared to a
hedging loss of $14.8 million for the same period last year. Net hedging
losses realized on crude oil price swap transactions were $0.4 million compared
to a $2.4 million hedging loss in the first half of 2001.

At June 30, 2002 Pengrowth had entered into financial swap transactions that fix the price on:

	•	 	4,000 barrels of oil per day for the remainder of 2002 at an average price of Cdn$36.12/bbl.
	•	 	7,000 Mmbtu per day of natural gas until the end of 2004 at a fixed price of $US3.90 per Mmbtu
	•	 	5,000 Mmbtu per day of natural gas for 2003 and 2004 at a fixed price of
Cdn$7.05/Mmbtu and Cdn$6.90/Mmbtu respectively.

Pengrowth also has sales commitments to deliver 8,720 mcf/d of natural gas at
an average plantgate price of Cdn$2.99/mcf until the end of October 2002.
Approximately 17% of Pengrowth’s estimated natural gas production for the
second half of 2002 is now hedged.

Subsequent to quarter-end, Pengrowth entered into additional oil price swap
transactions, fixing the price on an additional 1,000 barrels per day from
August 1st to December 31, 2002, at a fixed price of Cdn$41.35/bbl and an
additional 1,000 barrels per day for 2003 at a fixed price of Cdn$39.05.
Approximately 27% of estimated third and fourth quarter oil production (4,832
barrels per day) is now hedged at an average price of Cdn$37.02 per bbl.

 

 

PENGROWTH ENERGY TRUST - 7 -

Interest Rate and Foreign Exchange Hedging

Pengrowth has entered into interest rate swaps on $125 million of its long term
debt for three year periods ending in November 2004 ($75 million), December
2004 ($25 million) and March 2005 ($25 million), at an average interest rate of
4.09% (before stamping fees).

Subsequent to quarter end, Pengrowth entered into a foreign exchange hedge
which fixes the U.S. dollar exchange rate at $1.55 Cdn/USD on US$750,000 per
month for the calendar periods 2003 and 2004, to reduce exposure of the $US
denominated natural gas hedge.

Operating Costs

Operating costs increased to $30.5 million (or $8.22/boe) for the second
quarter of 2002, compared to $22.2 million (or $6.62/boe) for the second
quarter of 2001. For the six months ended June 30, 2002, operating costs were
$58.1 million ($7.77 / boe), compared to $43.8 million ($6.55/boe) for the
first half of 2001. The increase in operating costs is attributable mainly to
property acquisitions over the last year, offset in part by property
dispositions. The Sable acquisition has increased Pengrowth’s average
operating cost per boe, since Pengrowth pays processing fees to the owners of
the offshore platforms and the gathering and processing facilities. Enhanced
oil recovery projects at Goose River and Weyburn also contribute to higher
operating costs per boe.

Amortization of Injectants for miscible floods

Amortization of injectants for the second quarter of 2002 was $11.3 million
down 4% from $11.8 million for the second quarter of 2001. For the six-month
period, amortized injectant costs were $23.4 million compared to $22.5 million
for the first half of 2001. Injectant costs are amortized over a 30-month
period, based on the estimated period of economic benefit. Based on current
injection levels and prices for ethane and methane, the amortization amount is
expected to continue to decline in the third and fourth quarters of 2002.

On-going initiatives to maximize the use of on-site solvents at Judy Creek and
reduce the requirement for purchased injectants have been successful. As a
result of the reduction in purchased injectant volumes, coupled with a much
lower ethane price in 2002, Pengrowth’s total solvent purchases in the second
quarter were reduced to $4.1 million, compared to $22.0 million for the same
period in 2001. On a year to date basis, third party solvent purchases were
$7.4 million for the first half of 2002, compared to $40.1 million in 2001.

Royalties

Royalties, including crown and freehold royalties, were 12.8% of oil and gas
sales in the three months ended June 30, 2002, compared to 13.7% in the second
quarter of 2001. For the six-month period, royalties were 13.6% and 17.5% in
2002 and 2001 respectively. The decline in the royalty percentage in 2002 over
2001 is due to lower commodity prices in 2002 (particularly natural gas), a
reduction in hedging losses realized in 2002, and lower royalties on Sable
revenues, offset in part by lower injection credits in 2002.

Depletion and depreciation

Depletion and depreciation for the second quarter of 2002 was $31.7 million, a
14% increase from $27.9 million for the second quarter of 2001. For the six
months ended June 30, 2002, depletion and depreciation is $62.1 million, a 10%
increase over the same period last year. This increase is in line with
production increases over the same period. On a per boe basis, depletion and
depreciation was $8.31 per boe for the first six months of 2002, down 2% from
$8.49 per boe in the first half of 2001.

Interest

Interest expense for the three months ended June 30, 2002 was $3.1 million
compared to $5.1 million for the second quarter of 2001. For the first six
months of 2002, interest expense was $6.2 million compared to $9.9 million for
the first half of 2001. This reduction is due in part to lower interest rates
in 2002 as well as lower average debt in 2002.

 

 

- 8 - PENGROWTH ENERGY TRUST

General and Administrative

General and administrative expenses (G&A) were $3.0 million in the second
quarter of 2002 compared to $1.5 million for the second quarter of 2001. The
increase in 2002 includes incremental costs related to drafting, printing and
mailing of the annual report and information circular. These costs were
substantially higher in 2002 due to the much larger size of the information
circular document and a larger number of mail-outs due to an increase in the
number of unitholders, as well as legal costs to redraft the four agreements
contained in the Information Circular. Administrative costs associated with
the Sable property have also increased G&A. For the six months ended June 30,
2002, G&A expenses were $5.2 million compared to $3.6 million for the same
period last year. On a per boe basis, year to date G&A is $0.70 per boe,
compared to $0.54 per boe for the first half of 2001.

Management Fee

Management fees were $1.7 million for the second quarter of 2002 compared to
$1.9 million for the second quarter of 2001. For the six-month period,
management fees were $3.1 million in 2002 compared to $4.7 million in 2001. On
a per boe basis, management fees for the first six months of 2002 are $0.42 per
boe, compared to $0.71 per boe in 2001.

Net Income

Net income for the three months ended June 30, 2002 was $13.6 million or $0.16
per unit compared to $33.8 million ($0.50 per unit) in the second quarter of
2001. For the six months ended June 30, 2002, net income was $14.0 million
($0.17 per unit) compared to $75.8 million ($1.15 per unit) for the similar
period last year. Most of this decline is attributable to lower commodity
prices and higher operating expenses and depletion, offset in part by a 12%
increase in production volumes in 2002.

	 	 	 
	Acquisitions

On May 23, 2002 Pengrowth acquired additional
interests in the Quirk Creek area of southwest
Alberta, through the exercise of Rights of First
Refusal, for a total purchase price of $32.7 million,
before adjustments. The acquisition included an
additional 55.9% working interest in three producing
gas wells, and an additional 26.4 % working interest
in ten producing gas wells. Pengrowth also acquired an
additional 25.9% working interest in the Quirk Creek
gas plant. Prior to this acquisition, Pengrowth held
an average working interest of 5.5% in 13 producing
gas wells at Quirk Creek and a 4.6% working interest
in the gas plant	 	

	 
	Gilbert Laustsen Jung Associates estimates the
established reserves attributable to the acquired Quirk
Creek Assets are 2.9 million boe. The estimated 2002
proved producing production volumes attributable to the
acquired Quirk Creek Assets are 4 mmcfpd of gas and 193
bpd of liquids for a total of 856 boepd. The
acquisition also provides significant natural gas
processing revenue	 

The Quirk Creek purchase represents an excellent add-on interest for Pengrowth
with potential opportunity for additional future gas development and processing
services in the immediate area.

Dispositions

On April 30, 2002, Pengrowth closed the sale of non-core properties including
interests in Strachan, North Pembina Cardium Unit, Minehead and Niton for total
proceeds of $40.2 million, before adjustments.

Equity Issue

On June 4, 2002, Pengrowth successfully completed a public offering of 8.0
million units at $15.40 per unit to raise total gross proceeds of $123.2
million and net proceeds of approximately $116 million. The net proceeds from
this issue were used to repay bank indebtedness incurred to fund prior
acquisitions of petroleum and natural gas properties.

 

 

PENGROWTH ENERGY TRUST - 9 -

Financial Resources

Pengrowth’s long-term debt at June 30, 2002 was $219.1 million, compared to
$345.5 million at December 31, 2001. The following is a reconciliation of
long-term debt for the first six months of 2002:

	 	 	 	 	 	 
	Long-term Debt Continuity	 	millions
	

	 	Balance at December 31, 2001
	 	$	345.5	 
	 	Difference between solvent purchases and expenses
	 	 	(16.0	)
	 	Acquisitions, net of adjustments
	 	 	34.0	 
	 	Dispositions, net of adjustments
	 	 	(44.6	)
	 	Capital expenditures, excluding acquisitions
	 	 	25.4	 
	 	Proceeds from the issue of trust units including option exercises and DRIP
	 	 	(117.2	)
	 	Change in working capital and Remediation Trust Fund
	 	 	(8.0	)
	

	 	Balance at June 30, 2002
	 	$	219.1	 
	

The ratio of debt to trailing 12-month distributable income at June 30, 2002
was 1.4 times, compared to 1.6 times at December 31, 2001. The ratio of
long-term debt to long term debt plus equity has declined to 20% from 30% at
year-end 2001. Distributable income covered interest expense by 12 times in
the first six months of 2002. These favorable ratios reflect the successful
debt-reduction initiatives over the last eight months, including the
disposition of non-core assets and the completion of public equity offerings in
December 2001 and June of 2002.

Reconciliation of Distributions to Funds Generated from Operations

The following table demonstrates Pengrowth’s current policy of distributing all
of the funds generated by operations, after adjusting for the manner in which
Pengrowth amortizes miscible injectant costs. A comparison of the
“Distributions” amount shown on Pengrowth’s Consolidated Statement of Cash Flow
to “Funds Generated from Operations” also requires an adjustment for the
two-month time lag between when funds are generated by the business and when
they are paid to unitholders.

	 	 	 	 	 	 
	Reconciliation of Distributions to Funds Generated From Operations	 	Six months ended
	Consolidated Statement of Cash Flow	 	June 30, 2002
	

	 	 	 	millions
	Distributions per Statement of Cash Flow
	 	$	72.4	 
	Subtract: Distributions paid in 2002 but earned in 2001 (Distributions payable December 31, 2001)
	 	 	(22.2	)
	Add: Distributions earned in the first six months but unpaid at June 30, 2002 (May and June
distributions and any balance unpaid)
	 	 	31.0	 
	 	Total Adjusted Distributions for the period (Distributable Income)
	 	 	81.2	 
	Purchase of injectants for miscible floods
	 	 	(7.4	)
	Amortization of injectants for miscible floods
	 	 	23.4	 
	Items included in Distributable Income but not in Net Income (e.g. remediation trust fund
	 	 	 	 
	contributions in excess of expenses)
	 	 	0.3	 
	

	 	Funds Generated From Operations
	 	$	97.5	 
	

Capital Spending

Capital expenditures for the six months ending June 30, 2002 totaled $25.4
million of which $19.2 million was spent on drilling, completion and tie-ins,
and $6.2 million was spent on facilities. 2002 expenditures include $11.0
million at Judy Creek, $4.5 million at Sable, $2.0 million at Goose River, $1.7
million at McLeod River, and $1.4 million at Weyburn.

 

 

- 10 - PENGROWTH ENERGY TRUST

Review of Development Activities

Second quarter development activities at Pengrowth’s operated properties
include the following:

At Judy Creek:

	 	•	 	Drilled three wells in “A” Pool, as part of Pengrowth’s ongoing
Judy Creek development program.
	 	•	 	Solvent injection was active in eight patterns during the second
quarter – seven in “A” Pool and one in “B” Pool.
	 	•	 	Workovers completed on 20 wells in “A” and “B” Pools resulting in
total incremental production of approximately 215 bopd.

At McLeod:

	 	•	 	Drilled a 60% WI gas well, which will be tied in during August.
	 	•	 	Four additional drilling locations have been identified which are
expected to be drilled in the third and fourth quarters of 2002.
	 	•	 	Two farmout deals with two well commitments on Pengrowth lands were negotiated in the second quarter.

At Enchant:

	 	•	 	Good Production Practice (GPP) was approved for the Arcs CC&EE Pool
in June 2002, which is expected to increase oil production by
approximately 20bbls/day (11bbls/day net).

At Pengrowth’s partner-operated properties, second quarter development
activities include the following:

At Sable:

	 	•	 	Sable raw gas production averaged 532 mmcf/d (44.6 mmcf/d net to
Pengrowth) during the first half of 2002. This compares with average raw gas
production of 488 mmcf/d (41.0 mmcf/d net to Pengrowth) during the first half
of 2001. (Pengrowth acquired the Sable royalty interest on June 15, 2001.)

At Goose River:

	 	•	 	Pengrowth has a 42% working interest
• The two new oil wells tied in during the first quarter of 2002
continue to meet performance expectations.
	 	•	 	Pengrowth has agreed to participate in the drilling of an additional two
wells. The first well located at 4-8-67-18W5M was spudded on June 23, 2002 and
has been cased as a potential oil well. Completion operations are currently
underway. The second well located at 12-5-67-18W5 will commence drilling in
July.

At Weyburn:

	 	•	 	The CO2 miscible flood program operated by EnCana continues to
exhibit positive performance indications with the incremental gross oil
production from the flood estimated at 5,300 bopd (517 bopd net to
Pengrowth’s 9.75% interest, current production rates are approximately
21,000 bpd (gross) and 2,000 bpd (net).
	 	•	 	Expansion of the CO2 miscible flood has continued on schedule with
two new injection patterns anticipated to commence injection in August,
and injection into the next two patterns scheduled for September.

 

 

PENGROWTH ENERGY TRUST - 11 -

2002 Tax Estimate Update
Pengrowth forecasts that in the current commodity price environment,
approximately 40 to 45% of distributions paid in 2002 will be taxable to
unitholders, with the remainder of distributions treated as return of capital
and thus tax deferred. The taxability may be reduced if Pengrowth makes
additional acquisitions and issues new equity during the balance of the year.

 

PENGROWTH CORPORATION

James S. Kinnear

President and Chief

Executive Officer

Pengrowth Energy Trust

August 1, 2002

For further information about Pengrowth, please visit our website
www.pengrowth.com or contact:

Dan Belot, Manager, Investor Relations, Calgary E-mail:
pengrowth@pengrowth.com Telephone: (403) 213-8650 Toll Free:
1-800-223-4122 Facsimile: (403) 294-0051

Sally Elliott, Investor Relations, Toronto E-mail: sallye@pengrowth.com
Telephone: (416) 362-1748 Toll Free: 1-888-744-1111 Facsimile: (416) 362-8191exv4w7

 

Exhibit 4.7

PENGROWTH ENERGY TRUST

UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS

JUNE 30, 2002

 

PENGROWTH ENERGY TRUST

FINANCIAL AND OPERATING HIGHLIGHTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
											
			Three Months ended						
			June 30				Six Months ended June 30		
			
		%		
		%
			2002		2001		Change		2002		2001		Change
			
		
		
		
		
		

			
			(thousands, except per unit amounts)
			(unaudited)
	
    
    INCOME STATEMENT
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Oil and gas sales
    

    	 	$	111,544	 	 	$	121,043	 	 	 	-8%	 	 	$	203,178	 	 	$	264,004	 	 	 	-23%	 
	
    
    Net income
    

    	 	$	13,604	 	 	$	33,844	 	 	 	-60%	 	 	$	14,046	 	 	$	75,752	 	 	 	-81%	 
	
    
    Net income per unit
    

    	 	$	0.161	 	 	$	0.500	 	 	 	-68%	 	 	$	0.168	 	 	$	1.150	 	 	 	-85%	 
	
    
    Distributable income
    

    	 	$	48,141	 	 	$	63,395	 	 	 	-24%	 	 	$	81,259	 	 	$	135,466	 	 	 	-40%	 
	
    
    Distributable income per trust unit
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Based on weighted average units outstanding
    

    	 	$	0.569	 	 	$	0.936	 	 	 	-39%	 	 	$	0.974	 	 	$	2.057	 	 	 	-53%	 
	 	
    
    Based on actual distributions paid or declared
    

    	 	$	0.540	 	 	$	0.830	 	 	 	-35%	 	 	$	0.950	 	 	$	1.970	 	 	 	-52%	 
	
    
    Weighted average number of units outstanding
    

    	 	 	84,613	 	 	 	67,727	 	 	 	25%	 	 	 	83,446	 	 	 	65,868	 	 	 	27%	 
	 
	
    
    BALANCE SHEET
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Working capital
    

    	 	$	(27,766	)	 	$	(16,673	)	 	 	67%	 	 	$	(27,766	)	 	$	(16,673	)	 	 	67%	 
	
    
    Property, plant and equipment and other assets
    

    	 	$	1,145,197	 	 	$	1,286,651	 	 	 	-11%	 	 	$	1,145,197	 	 	$	1,286,651	 	 	 	-11%	 
	
    
    Long-term debt
    

    	 	$	219,123	 	 	$	374,820	 	 	 	-42%	 	 	$	219,123	 	 	$	374,820	 	 	 	-42%	 
	
    
    Unitholders’ equity
    

    	 	$	867,213	 	 	$	801,563	 	 	 	8%	 	 	$	867,213	 	 	$	801,563	 	 	 	8%	 
	 
	
    
    TRUST UNIT TRADING (TSX)
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    High
    

    	 	$	17.00	 	 	$	21.95	 	 	 	 	 	 	$	17.00	 	 	$	21.95	 	 	 	 	 
	 	
    
    Low
    

    	 	$	14.60	 	 	$	17.11	 	 	 	 	 	 	$	13.25	 	 	$	17.11	 	 	 	 	 
	 	
    
    Close
    

    	 	$	15.05	 	 	$	18.10	 	 	 	 	 	 	$	15.05	 	 	$	18.10	 	 	 	 	 
	
    
    Value
    

    	 	$	197,063	 	 	$	205,179	 	 	 	-4%	 	 	$	362,733	 	 	$	381,429	 	 	 	-5%	 
	
    
    Volume
    

    	 	 	12,588	 	 	 	10,048	 	 	 	25%	 	 	 	23,983	 	 	 	18,832	 	 	 	27%	 
	 
	
    
    TRUST UNIT TRADING (NYSE) — listed on
    April 10, 2002
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    High
    

    	 	 	US$ 10.90	 	 	 	—	 	 	 	 	 	 	 	US$ 10.90	 	 	 	—	 	 	 	 	 
	 	
    
    Low
    

    	 	 	US$9.50	 	 	 	—	 	 	 	 	 	 	 	US$9.50	 	 	 	—	 	 	 	 	 
	 	
    
    Close
    

    	 	 	US$9.93	 	 	 	—	 	 	 	 	 	 	 	US$9.93	 	 	 	—	 	 	 	 	 
	
    
    Value
    

    	 	 	US$ 18,108	 	 	 	—	 	 	 	 	 	 	 	US$ 18,108	 	 	 	—	 	 	 	 	 
	
    
    Volume
    

    	 	 	1,784	 	 	 	—	 	 	 	 	 	 	 	1,784	 	 	 	—	 	 	 	 	 
	 
	
    
    DAILY PRODUCTION
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Crude oil (barrels)
    

    	 	 	18,096	 	 	 	19,650	 	 	 	-8%	 	 	 	18,302	 	 	 	20,039	 	 	 	-9%	 
	
    
    Natural gas (thousands of cubic feet)
    

    	 	 	103,856	 	 	 	75,753	 	 	 	37%	 	 	 	106,936	 	 	 	74,709	 	 	 	43%	 
	
    
    Natural gas liquids (barrels)
    

    	 	 	5,350	 	 	 	4,418	 	 	 	21%	 	 	 	5,176	 	 	 	4,385	 	 	 	18%	 
	
    
    Other
    

    	 	 	16	 	 	 	147	 	 	 	0%	 	 	 	11	 	 	 	57	 	 	 	-81%	 
	
    
    Total production (BOE) 6:1
    

    	 	 	40,771	 	 	 	36,840	 	 	 	11%	 	 	 	41,312	 	 	 	36,933	 	 	 	12%	 
	 
	
    
    PRODUCTION INCREASE
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    (6:1 boe) (year over year)
    

    	 	 	11%	 	 	 	11%	 	 	 	 	 	 	 	12%	 	 	 	9%	 	 	 	 	 
	 
	
    
    PRODUCTION PROFILE (6:1 conversion)
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Crude oil
    

    	 	 	44%	 	 	 	54%	 	 	 	 	 	 	 	44%	 	 	 	54%	 	 	 	 	 
	
    
    Natural gas
    

    	 	 	43%	 	 	 	34%	 	 	 	 	 	 	 	43%	 	 	 	34%	 	 	 	 	 
	
    
    Natural gas liquids
    

    	 	 	13%	 	 	 	12%	 	 	 	 	 	 	 	13%	 	 	 	12%	 	 	 	 	 
	 
	
    
    AVERAGE PRICES
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Crude oil (per barrel)
    

    	 	$	38.63	 	 	$	39.44	 	 	 	-2%	 	 	$	35.61	 	 	$	39.90	 	 	 	-11%	 
	
    
    Natural gas (per mcf)
    

    	 	$	3.75	 	 	$	5.72	 	 	 	-34%	 	 	$	3.29	 	 	$	6.98	 	 	 	-53%	 
	
    
    Natural gas liquids (per barrel)
    

    	 	$	28.04	 	 	$	34.42	 	 	 	-19%	 	 	$	25.48	 	 	$	37.64	 	 	 	-32%	 
	
    
    Average price per BOE 6:1
    

    	 	$	30.06	 	 	$	36.11	 	 	 	-17%	 	 	$	27.17	 	 	$	39.49	 	 	 	-31%	 

2

 

PENGROWTH ENERGY TRUST

CONSOLIDATED BALANCE SHEETS

	 	 	 	 	 	 	 	 	 	 
			As at		As at
			June 30		December 31
			2002		2001
			
		

			
			(Stated in
			thousands of dollars)
			(unaudited)		(audited)
	
    ASSETS
	
    
    CURRENT ASSETS
    

    	 	 	 	 	 	 	 	 
	 	
    
    Cash and term deposits
    

    	 	$	—	 	 	$	3,797	 
	 	
    
    Marketable securities (Note 6)
    

    	 	 	2,689	 	 	 	—	 
	 	
    
    Accounts receivable
    

    	 	 	32,742	 	 	 	27,859	 
	 	
    
    Inventory
    

    	 	 	1,258	 	 	 	2,687	 
	 	 	 	
	 	 	 	
	 
	 	 	 	36,689	 	 	 	34,343	 
	
    
    REMEDIATION TRUST FUND
    

    	 	 	6,808	 	 	 	6,470	 
	
    
    PROPERTY, PLANT AND EQUIPMENT AND OTHER ASSETS
    

    	 	 	1,145,197	 	 	 	1,208,526	 
	 	 	 	
	 	 	 	
	 
	 	 	$	1,188,694	 	 	$	1,249,339	 
	 	 	 	
	 	 	 	
	 
	 
	
    LIABILITIES AND SHAREHOLDER’S
    EQUITY
	
    
    CURRENT LIABILITIES
    

    	 	 	 	 	 	 	 	 
	 	
    
    Bank indebtedness
    

    	 	$	3,452	 	 	$	—	 
	 	
    
    Accounts payable and accrued liabilities
    

    	 	 	29,403	 	 	 	31,359	 
	 	
    
    Distributions payable to unitholders
    

    	 	 	31,046	 	 	 	22,207	 
	 	
    
    Due to Pengrowth Management Limited
    

    	 	 	554	 	 	 	523	 
	 	 	 	
	 	 	 	
	 
	 	 	 	64,455	 	 	 	54,089	 
	
    
    LONG-TERM DEBT (Note 3)
    

    	 	 	219,123	 	 	 	345,456	 
	
    
    FUTURE SITE RESTORATION COSTS
    

    	 	 	37,903	 	 	 	32,591	 
	
    
    TRUST UNITHOLDERS’ EQUITY (Note 4)
    

    	 	 	867,213	 	 	 	817,203	 
	 	 	 	
	 	 	 	
	 
	 	 	$	1,188,694	 	 	$	1,249,339	 
	 	 	 	
	 	 	 	
	 

See accompanying notes to the consolidated
financial statements.

3

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF INCOME AND
DISTRIBUTABLE INCOME

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Three months ended		Six months ended
			June 30		June 30
			
		

			2002		2001		2002		2001
			
		
		
		

			
			(Stated in thousands of dollars)
			(Unaudited)
	
    
    REVENUES
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Oil and gas sales
    

    	 	$	111,544	 	 	$	121,043	 	 	$	203,178	 	 	$	264,004	 
	 	
    
    Processing and other income
    

    	 	 	1,349	 	 	 	1,682	 	 	 	3,036	 	 	 	3,359	 
	 	
    
    Crown royalties
    

    	 	 	(12,415	)	 	 	(14,885	)	 	 	(24,383	)	 	 	(41,915	)
	 	
    
    Alberta Royalty Tax Credit
    

    	 	 	125	 	 	 	125	 	 	 	250	 	 	 	250	 
	 	
    
    Freehold royalties and mineral taxes
    

    	 	 	(1,895	)	 	 	(1,756	)	 	 	(3,306	)	 	 	(4,275	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	98,708	 	 	 	106,209	 	 	 	178,775	 	 	 	221,423	 
	 	
    
    Interest and other income
    

    	 	 	(952	)	 	 	904	 	 	 	(525	)	 	 	1,063	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    NET REVENUE
    

    	 	 	97,756	 	 	 	107,113	 	 	 	178,250	 	 	 	222,486	 
	
    
    EXPENSES
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Operating
    

    	 	 	30,532	 	 	 	22,157	 	 	 	58,057	 	 	 	43,790	 
	 	
    
    Amortization of injectants for miscible floods
    

    	 	 	11,276	 	 	 	11,833	 	 	 	23,454	 	 	 	22,518	 
	 	
    
    Interest
    

    	 	 	3,127	 	 	 	5,090	 	 	 	6,165	 	 	 	9,929	 
	 	
    
    General and administrative
    

    	 	 	2,989	 	 	 	1,450	 	 	 	5,219	 	 	 	3,627	 
	 	
    
    Management fee
    

    	 	 	1,744	 	 	 	1,885	 	 	 	3,140	 	 	 	4,714	 
	 	
    
    Capital taxes
    

    	 	 	(122	)	 	 	1,333	 	 	 	281	 	 	 	1,812	 
	 	
    
    Depletion and depreciation
    

    	 	 	31,666	 	 	 	27,938	 	 	 	62,113	 	 	 	56,748	 
	 	
    
    Future site restoration
    

    	 	 	2,930	 	 	 	1,565	 	 	 	5,759	 	 	 	3,556	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	84,142	 	 	 	73,251	 	 	 	164,188	 	 	 	146,694	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    INCOME BEFORE THE FOLLOWING
    

    	 	 	13,614	 	 	 	33,862	 	 	 	14,062	 	 	 	75,792	 
	
    
    ROYALTY INCOME ATTRIBUTABLE TO ROYALTY UNITS
    OTHER THAN THOSE HELD BY PENGROWTH ENERGY TRUST
    

    	 	 	10	 	 	 	18	 	 	 	16	 	 	 	40	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    NET INCOME
    

    	 	 	13,604	 	 	 	33,844	 	 	 	14,046	 	 	 	75,752	 
	
    
    Add:   Depletion, depreciation and
    future site restoration
    

    	 	 	34,596	 	 	 	29,503	 	 	 	67,872	 	 	 	60,304	 
	 	 	
    
    Alberta Royalty Credit received during period
    

    	 	 	500	 	 	 	517	 	 	 	500	 	 	 	517	 
	
    
    Deduct: Alberta Royalty Credit accrued for
    period
    

    	 	 	(125	)	 	 	(125	)	 	 	(250	)	 	 	(250	)
	 	 	
    
    Reclamation expenses and Remediation Trust Fund
    

    	 	 	(434	)	 	 	(344	)	 	 	(909	)	 	 	(857	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    DISTRIBUTABLE INCOME
    

    	 	$	48,141	 	 	$	63,395	 	 	$	81,259	 	 	$	135,466	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    NET INCOME PER UNIT (Note 4) Basic
    

    	 	$	0.161	 	 	$	0.500	 	 	$	0.168	 	 	$	1.150	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Diluted
    

    	 	$	0.161	 	 	$	0.494	 	 	$	0.168	 	 	$	1.141	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    DISTRIBUTABLE INCOME PER UNIT (Note 4)
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Based on weighted average units outstanding
    

    	 	$	0.569	 	 	$	0.936	 	 	$	0.974	 	 	$	2.057	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	
    
    Based on actual distributions paid or declared
    

    	 	$	0.540	 	 	$	0.830	 	 	$	0.950	 	 	$	1.970	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

See accompanying notes to the consolidated
financial statements.

4

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOW

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Three months ended June 30		Six months ended June 30
			
		

			2002		2001		2002		2001
			
		
		
		

			
			(Stated in thousands of dollars)
			(unaudited)
	
    
    CASH PROVIDED BY (USED FOR):
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    OPERATING
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Net income
    

    	 	$	13,604	 	 	$	33,844	 	 	$	14,046	 	 	$	75,752	 
	 	
    
    Items not involving cash Depletion, depreciation
    and future site restoration
    

    	 	 	34,596	 	 	 	29,503	 	 	 	67,872	 	 	 	60,304	 
	 	
    
    Amortization of injectants
    

    	 	 	11,276	 	 	 	11,833	 	 	 	23,454	 	 	 	22,518	 
	 	
    
    Purchase of injectants
    

    	 	 	(4,110	)	 	 	(22,027	)	 	 	(7,446	)	 	 	(40,114	)
	 	
    
    Expenditures on remediation
    

    	 	 	(223	)	 	 	(116	)	 	 	(447	)	 	 	(416	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Funds generated from operations
    

    	 	 	55,143	 	 	 	53,037	 	 	 	97,479	 	 	 	118,044	 
	 	
    
    Distributions
    

    	 	 	(40,340	)	 	 	(67,267	)	 	 	(72,420	)	 	 	(142,115	)
	 	
    
    Changes in non-cash operating working capital
    (Note 5)
    

    	 	 	1,844	 	 	 	(9,718	)	 	 	(8,898	)	 	 	(17,845	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	16,647	 	 	 	(23,948	)	 	 	16,161	 	 	 	(41,916	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    FINANCING
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Change in long-term debt (119,962)
    

    	 	 	 	 	 	 	27,847	 	 	 	(126,333	)	 	 	87,747	 
	 	
    
    Proceeds from issue of trust units
    

    	 	 	116,363	 	 	 	215,774	 	 	 	117,223	 	 	 	219,312	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	(3,599	)	 	 	243,621	 	 	 	(9,110	)	 	 	307,059	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    INVESTING
    

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
    
    Deposit on acquisition
    

    	 	 	—	 	 	 	(3,000	)	 	 	—	 	 	 	(3,000	)
	 	
    
    Expenditures on property acquisitions
    

    	 	 	(33,955	)	 	 	(215,552	)	 	 	(33,955	)	 	 	(249,709	)
	 	
    
    Expenditures on property, plant and equipment
    

    	 	 	(14,042	)	 	 	(19,849	)	 	 	(25,432	)	 	 	(33,765	)
	 	
    
    Proceeds on property dispositions
    

    	 	 	39,641	 	 	 	22,046	 	 	 	44,595	 	 	 	22,046	 
	 	
    
    Change in Remediation Trust Fund
    

    	 	 	(150	)	 	 	(166	)	 	 	(338	)	 	 	(377	)
	 	
    
    Marketable securities
    

    	 	 	(1,023	)	 	 	—	 	 	 	(2,689	)	 	 	—	 
	 	
    
    Change in non-cash investing working capital
    (Note 5)
    

    	 	 	(4,434	)	 	 	(2,416	)	 	 	3,519	 	 	 	(2,464	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	(13,963	)	 	 	(218,937	)	 	 	(14,300	)	 	 	(267,269	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    INCREASE (DECREASE) IN CASH
    

    	 	 	(915	)	 	 	736	 	 	 	(7,249	)	 	 	(2,126	)
	
    
    CASH AND TERM DEPOSITS (BANK INDEBTEDNESS) AT
    BEGINNING OF PERIOD
    

    	 	 	(2,537	)	 	 	1,671	 	 	 	3,797	 	 	 	4,533	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    CASH AND TERM DEPOSITS (BANK INDEBTEDNESS) AT END
    OF PERIOD
    

    	 	$	(3,452	)	 	$	2,407	 	 	$	(3,452	)	 	$	2,407	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

See accompanying notes to the consolidated
financial statements.

5

 

PENGROWTH ENERGY TRUST

CONSOLIDATED STATEMENTS OF TRUST
UNITHOLDERS’ EQUITY

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Three months ended June 30		Six months ended June 30
			
		

			2002		2001		2002		2001
			
		
		
		

			
			(Stated in thousands of dollars)
			(unaudited)
	
    
    Unitholders’ equity at beginning of period
    

    	 	$	785,387	 	 	$	615,340	 	 	$	817,203	 	 	$	641,965	 
	
    
    Units issued, net of issue costs
    

    	 	 	116,363	 	 	 	215,774	 	 	 	117,223	 	 	 	219,312	 
	
    
    Net income for period
    

    	 	 	13,604	 	 	 	33,844	 	 	 	14,046	 	 	 	75,752	 
	
    
    Distributable income
    

    	 	 	(48,141	)	 	 	(63,395	)	 	 	(81,259	)	 	 	(135,466	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    TRUST UNITHOLDERS’ EQUITY AT END OF PERIOD
    

    	 	$	867,213	 	 	$	801,563	 	 	$	867,213	 	 	$	801,563	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

6

 

PENGROWTH ENERGY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)

June 30, 2002

(Tabular amounts are stated in thousands of
dollars except per unit amounts)

1.  Significant Accounting
Policy

     
The interim consolidated financial statements of
Pengrowth Energy Trust and Pengrowth Corporation (collectively
referred to as “Pengrowth”) have been prepared by
management in accordance with accounting principles generally
accepted in Canada. The interim consolidated financial
statements have been prepared following the same accounting
policies and methods of computation as the consolidated
financial statements for the fiscal year ended December 31,
2001 with the exception of the change in accounting policy noted
below. The disclosures provided below are incremental to those
included with the annual consolidated financial statements. The
interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and the
notes thereto in Pengrowth’s annual report for the year
ended December 31, 2001.

2.  Change in Accounting
Policy

     
Effective January 1, 2002, Pengrowth adopted
the new standard on accounting for options or similar unit based
compensation. Pengrowth prospectively adopted the new standard.
For options or similar instruments granted to non-employees, an
amount equal to the grant date fair value of the instrument will
be recorded as a charge to earnings over the vesting period, if
any. The new standard also requires recognition of compensation
cost with respect to Stock Appreciation Rights granted to
employees. No compensation cost results from application of the
above provisions for the three months ended June 30, 2002
or for the year ended December 31, 2001.

     
For options granted to employees of Pengrowth,
the standard provides that Pengrowth may elect not to use this
fair value method but to disclose the impact of the fair value
method on a pro forma basis. Had compensation cost for options
granted to employees been calculated based on the fair value
method, an amount of $675,000 would have been recorded as
compensation expense for the three months ended June 30,
2002. Pengrowth’s net income and net income per unit for
the three months and six months ended June 30, 2002 would
have been $12,929,000 ($0.153 per unit) and $13,371,000 ($0.160
per unit) respectively.

     
The weighted average fair market value of options
granted during the three months ended June 30, 2002 was
$0.92 per option based on the date of grant using a modified
Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 4.5 percent,
dividend yield of 13 percent, expected volatility of
29 percent, normalized dilution of 3 percent,
liquidity discount of 10 percent and expected life of five
years.

3.  Long-Term Debt

     
Pengrowth has a $425 million revolving
credit facility syndicated among nine financial institutions
with an extendible 364 day revolving period and a three
year amortization term period. In addition, it has a
$35 million demand operating line of credit. The two
facilities are currently reduced by outstanding letters of
credit in the amount of approximately $34 million. Interest
payable on amounts drawn is at the prevailing bankers’
acceptance rates plus stamping fees, lenders’ prime lending
rates, or U.S. libor rates plus applicable margins,
depending on the form of borrowing by the Corporation. The
margins and stamping fees vary from 0.25 percent to
1.40 percent depending on financial statement ratios and
the form of borrowing.

     
The revolving credit facility will revolve until
June 22, 2003, whereupon it is expected to be renewed for a
further 364 days, subject to satisfactory review by the
lenders. If the revolving facility is not renewed, it will
convert into a term facility with amounts outstanding under the
facility repayable in 12 equal quarterly installments. Pengrowth
can post, at its option, security suitable to the banks in lieu
of the first year’s

7

 

PENGROWTH ENERGY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

(Unaudited)

June 30, 2002

(Tabular amounts are stated in thousands of
dollars except per unit amounts)

payments. In such an instance, no principal
payment would be made to the banks for one year following the
date of non-renewal.

4.     Trust
Units

     
The authorized capital of Pengrowth is
500,000,000 trust units.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			June 30, 2002		December 31, 2001
			
		

			Number of				Number of		
	Trust Units Issued		units		Amount		units		Amount
	
		
		
		
		

	
    
    Balance, beginning of period
    

    	 	 	82,240,069	 	 	$	1,280,599	 	 	 	63,852,198	 	 	$	974,724	 
	
    
    Issued for cash
    

    	 	 	8,000,000	 	 	 	123,200	 	 	 	17,622,500	 	 	 	311,974	 
	
    
    Less: issue expenses
    

    	 	 	—	 	 	 	(7,466	)	 	 	—	 	 	 	(18,727	)
	
    
    Issued for cash on exercise of stock options
    

    	 	 	47,100	 	 	 	623	 	 	 	628,828	 	 	 	10,060	 
	
    
    Issued for cash under Distribution Reinvestment
    (“DRIP”) Plan
    

    	 	 	60,109	 	 	 	866	 	 	 	136,543	 	 	 	2,568	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Balance, end of period
    

    	 	 	90,347,278	 	 	$	1,397,822	 	 	 	82,240,069	 	 	$	1,280,599	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

     
The per unit amounts for net income and
distributable income are based on weighted average units
outstanding for the period. The weighted average units
outstanding for the three months ended June 30, 2002 were
84,612,513 units and for the six months ended June 30, 2002
were 83,445,980 units (three months ended June 30,
2001 — 67,727,300 units, six months ended
June 30, 2001 — 65,868,024 units). In computing
diluted net income per unit, 34,995 units were added to the
weighted average number of units outstanding during the quarter
ended June 30, 2002 (June 30, 2001 — 356,387
units) and 29,608 units were added for the six months ended
June 30, 2002 (six months ended June 30,
2001 — 358,670 units) for the dilutive effect of
employee stock options. The per unit amount of distributions
paid or declared reflect actual distributions paid or declared
based on units outstanding at the time.

     Trust Unit
Option Plan

     
As at June 30, 2002, options to purchase
4,156,451 trust units were outstanding (December 31,
2001 — 3,106,635) that expire at various dates to
June 28, 2009.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			June 30, 2002		December 31, 2001
			
		

					Weighted				Weighted
			Number of		Average		Number of		Average
	Trust Unit Options		options		Exercise Price		options		Exercise Price
	
		
		
		
		

	
    
    Outstanding at beginning of period
    

    	 	 	3,106,635	 	 	$	17.78	 	 	 	2,893,554	 	 	$	17.45	 
	
    
    Granted
    

    	 	 	1,367,303	 	 	 	14.14	 	 	 	905,979	 	 	 	17.66	 
	
    
    Exercised
    

    	 	 	(47,100	)	 	 	13.24	 	 	 	(628,828	)	 	 	16.00	 
	
    
    Cancelled
    

    	 	 	(270,387	)	 	 	17.93	 	 	 	(64,070	)	 	 	18.98	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 
	
    
    Outstanding at period-end
    

    	 	 	4,156,451	 	 	 	16.62	 	 	 	3,106,635	 	 	 	17.78	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 
	
    
    Exercisable at period-end
    

    	 	 	2,736,158	 	 	 	17.15	 	 	 	2,238,406	 	 	 	17.69	 
	 	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 

8

 

PENGROWTH ENERGY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

(Unaudited)

June 30, 2002

(Tabular amounts are stated in thousands of
dollars except per unit amounts)

     
Amendments to the trust unit option plan were
approved by trust unitholders at the annual meeting of Pengrowth
unitholders on April 23, 2002. The maximum number of units
which may be reserved for option grants has been increased from
7 million to 10 million, provided that the number of
options granted does not exceed 10 percent of issued and
outstanding trust units. The expiry date for all issued and
unexercised options, and any options subsequently granted under
the plan, has been increased from five years to seven years.

5.     Change in
Non-Cash Operating Working Capital

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Three months ended		Six months ended
			
		

			June 30		June 30		June 30		June 30
			2002		2001		2002		2001
			
		
		
		

	
    
    Accounts receivable
    

    	 	$	(1,523	)	 	$	4,093	 	 	$	(4,883	)	 	$	(936	)
	
    
    Inventory
    

    	 	 	(821	)	 	 	5,034	 	 	 	1,429	 	 	 	1,243	 
	
    
    Accounts payable and accrued liabilities
    

    	 	 	3,975	 	 	 	(18,587	)	 	 	(5,475	)	 	 	(17,755	)
	
    
    Due to Pengrowth Management Limited
    

    	 	 	213	 	 	 	(258	)	 	 	31	 	 	 	(397	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	$	1,844	 	 	$	(9,718	)	 	$	(8,898	)	 	$	(17,845	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

          Change
in Non-Cash Investing Working Capital

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Three months ended		Six months ended
			
		

			June 30		June 30		June 30		June 30
			2002		2001		2002		2001
			
		
		
		

	
    
    Accounts payable for capital accruals
    

    	 	$	(414	)	 	$	1,764	 	 	$	3,519	 	 	$	1,716	 
	
    
    Note receivable on disposition of properties
    

    	 	 	—	 	 	 	(4,180	)	 	 	—	 	 	 	(4,180	)
	
    
    Deposit on disposition of properties
    

    	 	 	(4,020	)	 	 	—	 	 	 	—	 	 	 	—	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	$	(4,434	)	 	$	(2,416	)	 	$	3,519	 	 	$	(2,464	)
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

     
The cash payments made for taxes for the quarter
ending June 30, 2002 were $435,000 (June 30,
2001 — $1,399,000) and for the six months ended
June 30, 2002 were $790,000 (six months ended June 30,
2001 — $1,829,000). Cash payments for interest for the
quarter ending June 30, 2002 were $3,134,000 (June 30,
2001 — $6,178,000) and for the six months ended
June 30, 2002 were $6,538,000 (six months ended
June 30, 2001 — $15,180,000).

6.     Financial
Instruments

     Interest Rate
Risk

     
As at June 30, 2002, Pengrowth had entered
into interest rate swaps on $125 million of its long term
debt for periods of three years ending November 30, 2004
($75 million), December 31, 2004 ($25 million)
and March 4, 2005 ($25 million) at an average interest
rate of 4.09% (before stamping fees).

     
The estimated fair value of the interest rate
swaps has been determined based on the amount that Pengrowth
would receive or pay to terminate the contracts at period end.
At June 30, 2002, the amount that Pengrowth would receive
to terminate the interest rate swaps is $313,000.

9

 

PENGROWTH ENERGY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

(Unaudited)

June 30, 2002

(Tabular amounts are stated in thousands of
dollars except per unit amounts)

     Forward and
Futures Contracts

     
Pengrowth has a price risk management program
whereby the commodity price associated with a portion of its
future production is fixed. Pengrowth sells forward a portion of
its future production through a combination of fixed price sales
contracts with customers and commodity swap agreements with
financial counterparties. The forward and futures contracts are
subject to market risk from fluctuating commodity prices and
exchange rates, however gains or losses on the contracts are
offset by changes in the value of Pengrowth’s production.

     
As at June 30, 2002, Pengrowth had fixed the
price applicable to future production as follows:

Financial Swap Contracts

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
					
			Crude Oil		Natural Gas
			
		

			Volume		Price		Volume		
			(bbl/d)		C$/bbl		(MMbtu/d)		Fixed Price
			
		
		
		

	
    
    2002
    

    	 	 	4,000	 	 	$	36.12	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 
	
    
    2003
    

    	 	 	—	 	 	 	—	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 
	 	 	 	—	 	 	 	—	 	 	 	5,000	 	 	$	7.05 Cdn/MMbtu	 
	
    
    2004
    

    	 	 	—	 	 	 	—	 	 	 	7,000	 	 	$	3.90 US/MMbtu	 
	 	 	 	—	 	 	 	—	 	 	 	5,000	 	 	$	6.90 Cdn/MMbtu	 

     
As well, Pengrowth has natural gas fixed price
sales contracts which fixed the price on 8,720 mcf/d until
October 31, 2002 at a price of $2.99 Cdn/mcf.

     
The estimated fair value of the crude oil
financial swap contracts and the natural gas fixed price sales
contracts have been determined based on the amounts Pengrowth
would receive or pay to terminate the contracts at period-end.
At June 30, 2002 the amount Pengrowth would pay to
terminate the crude oil and natural gas contracts would be
$2,923,000 and $5,720,000, respectively.

     Fair Value of
Financial Instruments

     
The carrying value of financial instruments
included in the balance sheet, other than bank debt, remediation
trust fund and marketable securities, approximate their fair
value due to their short maturity. The fair value of the
marketable securities at June 30, 2002, was $3,323,000. The
fair value of the Remediation Trust Fund was $6,821,000
(December 31, 2001 — $6,473,000).

10

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