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Exhibit 10.8 (a) Form of Registration Rights Agreement

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of October 16, 2002, by and between I. T. Technology, Inc., a Delaware corporation (the "Company"), and the shareholders executing this Agreement listed in Appendix 1 attached hereto and made a part hereof (collectively, the "Shareholders"), with reference to the following facts. 

W I T N E S S E T H:

WHEREAS, on the date hereof, pursuant to the terms of the Confidential Offering Memorandum  dated September 18, 2002, as amended by Amendment No 1. thereto dated October 3, 2002,  and the Subscription Agreement between the Company and the each of the Shareholders,  (the "Offering") the Shareholders have acquired an aggregate amount of 10,250,000 shares of the Company's $.0002 par value per share common stock (the "Common Stock") (hereinafter collectively referred to as the "Shares");

WHEREAS, the Company has agreed with the Shareholders to grant certain registration rights to Shareholders with respect to the Shares.

NOW, THEREFORE, in consideration of the mutual representations, covenants and agreements contained herein, the parties hereto agree as follows:

1.

Registration of the Shares.

(a)

Subject to the terms and conditions contained herein, and except as otherwise provided in Section 2(a) below, the Company shall use commercially reasonable efforts to prepare and file with the Securities and Exchange Commission (the "SEC") within ninety (90) days after the completion of the Offering, a Registration Statement pursuant to Securities Act of 1933, as amended (the "Act"), covering the reoffer and resale from time to time of the Shares by the Shareholders, including any exhibit and amendment thereto, and any preliminary or final prospectus, and any supplement thereto (the "Registration Statement"). The Company agrees to use its commercially reasonable efforts to cause the Registration Statement to become effective under the Act as soon as reasonably practicable after the filing thereof.  In connection with the foregoing, the Shareholders agree to cooperate with the Company and to provide the Company in a timely manner with all information regarding the Shareholders as the Company may reasonably request in connection with the preparation of the Registration Statement. In addition, the Shareholders agree to promptly notify the Company of any changes in the information set forth in the Registration Statement regarding Shareholders or such Shareholders'  plan of distribution as set forth in such Registration Statement. Notwithstanding the foregoing, the Shareholders hereby acknowledge and agree that the Company cannot and is not representing when, if ever, the Registration Statement will be declared effective by the SEC. 

1

(b)

The Company shall prepare and file with the SEC (i) such amendments and supplements to the Registration Statement and any "Prospectus," as such term is hereinafter defined, used in connection therewith, and (ii) such other filings required by the SEC, in each case as may be necessary to keep the Registration Statement continuously effective and not misleading until the first to occur of  (A) all of the Shares have been  previously sold or disposed of pursuant to the Registration Statement; (B) all of the Shares  have otherwise been sold, transferred  or disposed of to any entity other than an Affiliate of the Shareholders; or (C) one hundred and eighty (180) days from the effective date of the Registration Statement or such other time thereafter as the Company in its sole discretion may agree to.

(c)

In order to facilitate the public sale or other disposition of all or any of the Shares by the Shareholders pursuant to the Registration Statement , the Company shall furnish to the Shareholders with respect to the Shares registered under the Registration Statement such number of copies of prospectuses, prospectus supplements and preliminary prospectuses as such Shareholders reasonably requests in conformity with the requirements of the Act (collectively, the “Prospectus”).

(d)

The Company shall file such documents, if any, reasonably required of the Company for normal blue sky clearance in New York and such other state(s) as the Company in its sole discretion may agree to; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this clause (d), (ii) subject itself to general taxation in any such jurisdiction; (iii) consent to general service of process in any such jurisdiction; or (iv) undertake compliance with substantive requirements of the blue sky laws or regulations of a jurisdiction which are unreasonably burdensome or onerous, including escrow requirements.

2.

Registration Statement Delaying or Suspension Events.

(a)

Notwithstanding anything to the contrary contained herein, the Company shall be entitled to (i) postpone the filing of the Registration Statement required to be prepared and filed by it hereunder or (ii) withdraw the Registration Statement after its filing but before it has been declared effective, if, in either case, the Company in its good faith discretion determines that such registration would interfere in any material respect with any proposal or plan by the Company to engage in any financing or any material acquisition or disposition by the Company or any subsidiary thereof of the capital stock or assets (other than in the ordinary course of business), any tender offer or any offering, merger, consolidation, corporate reorganiza­tion or restructuring or other similar transaction material to the Company and its subsidiaries as a whole ("Material Event").  In the event the filing of the Registration Statement is postponed or withdrawn, the Company shall file or re-file the Registration Statement within ten (10) days after the Company, in its good faith discretion, determines that the Material Event has been completed or terminated.  

(b)

The Shareholders further acknowledge and agree that after the effective date of the Registration Statement the Company may, in its good faith discretion, determine that there is a Material Event and that the use of the Prospectus should be suspended 

2

until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the SEC, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Securities Exchange Act of 1934, as amended, to report the Material Event. Each Shareholder hereby covenants that it will not sell any Shares pursuant to the Prospectus during the period commencing at the time at which the Company gives such Shareholder written notice of the suspension of the use or the Prospectus and ending at the time the Company gives such Shareholder written notice that the Shareholders may thereafter effect sales pursuant to the Prospectus.

(c)

The Company shall disclose to the Shareholders the nature of any Material Event or the business purpose for which it has delayed or withdrawn the Registration Statement or suspended the use of the Prospectus, provided the Shareholders agree to keep any information so disclosed confidential and not complete any trades of Common Stock until the Company informs the Shareholders the information is considered public information or is no longer material.

3.

Transfer of Shares.  Shareholders agree not to effect any disposition of the Shares that would constitute a "sale" within the meaning of the Act, except pursuant to the Registration Statement or in a transaction exempt from registration under the Act, in which case the Shareholders shall, prior to effecting such disposition, submit to the Company an opinion of counsel in form and substance reasonably satisfactory to the Company to the effect that the proposed transaction is in compliance with the Act.

4.

Registration Expenses

All expenses incident to the Company's performance of or compliance with this Agreement including, without limitation (i) all registration and filing fees, all fees and expenses associated with filings required to be made with the NASD, as may be required by rules and regulations of the NASD (other than fees required in excess of fees which would otherwise pertain in the event that Shareholders is a member of the NASD), fees and expenses of compliance with securities or blue sky laws (including fees and disbursements of counsel in connection with blue sky qualifications for the Shares), if any, rating agency fees, printing expenses (including expenses of printing certificates for the Shares in a form eligible for deposit with the Depository Trust Company and of printing prospectuses, messenger and delivery expenses, (ii) internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), and (iii) fees and expenses of counsel for the Company and its independent certified public accountants (all such expenses being herein called "Registration Expenses") will be borne by the Company, all other expenses shall be borne by the Shareholders, including, without limitation, any underwriting discounts or commissions attributable to the sale of the Shares or any direct out-of-pocket expenses of Shareholders, including  fees and expenses of counsel or accountants for the Shareholders. In the event that following effectiveness of the Registration Statement, it becomes necessary for the Company to prepare and file a supplemental prospectus or amended prospectus in order to 

3

maintain the effectiveness of such Registration Statement, the Company shall pay all printing costs associated with the printing of such supplemental or amended Prospectus to be distributed in connection with sales of their securities pursuant thereto.

5.

Miscellaneous

(a)

Publicity.  No press release, publicity, disclosure or notice to any Person concerning any of the transactions contemplated by this Agreement shall be issued, given, made or otherwise disseminated by the Shareholders, or any of their respective Associates at any time , without the prior written approval of the Company. Notwithstanding anything to the contrary contained herein, the Company shall be entitled to issue press releases regarding the transactions contemplated by this Agreement.

(b)

Governing Law.  This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of California (without giving effect to principles of conflicts of law).

(c)

Arbitration of Disputes.

(i)

All Disputes arising between the parties hereto with respect to the making, construction, terms, or interpretation of this Agreement or any breach thereof, or the rights or obligations of any party hereto or thereto, shall, in lieu of court action, be submitted to mandatory, binding arbitration, pursuant to the terms of Section 5 of each Shareholder's Subscription Agreement. 

(ii)

BY INITIALING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” SECTION OF YOUR SUBSCRIPTION  AGREEMENT DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY THE LAWS OF THE STATE OF CALIFORNIA AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.  BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES”  SECTION OF YOUR SUBSCRIPTION AGREEMENT.  IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE LAWS OF THE STATE OF CALIFORNIA.  YOU AGREE THAT YOUR AGREEMENT TO THIS ARBITRATION SECTION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” SECTION OF YOUR SUBSCRIPTION AGREEMENT TO NEUTRAL ARBITRATION.

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______ INITIALS ______

______  INITIALS  ______      

______ INITIALS ______

______  INITIALS  ______      

COMPANY'S INITIALS

          ______      

(d)

Notices.  All notices and other communications required or permitted under this Agreement shall be in writing which are addressed as provided in this Section 5(d) if delivered personally against proper receipt or by confirmed facsimile transmission shall be effective upon delivery and (ii) if delivered (A) by certified or registered mail with postage prepaid shall be effective five (5) Business Days or (B) by Federal Express or similar courier service with courier fees paid by the sender, shall be effective two (2) Business Days following the date when mailed or couriered, as the case may be.  Any party hereto may from time to time change its address for the purpose of notices to such party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the party sought to be charged with its contents. Initially, all notices shall be sent to the parties hereto as follows:

if to the Company:

I. T. Technology, Inc..

15303 Ventura Boulevard

Suite 900

Sherman Oaks, CA. 91403

Attention: Jonathan Herzog

Telephone: (818) 380-3020

Facsimile: (818) 380-3021

with a copy to (not constituting notice):

Barry L. Burten, Esq.

Jeffer, Mangels, Butler & Marmaro LLP

1900 Ave. of the Stars, 7th Floor

Los Angeles, CA 90067

Telephone:  (310) 785-5359

Facsimile: (310) 712-3359

if to the Shareholders at the addresses or facsimile numbers set forth beneath their respective names on the signature page hereof.

(f)

Headings.  The table of contents of this Agreement and the underlined headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

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(g)

Assignment.  No Shareholder may assign any of its rights or delegate any of its obligations under this Agreement to any other person without the prior written consent of the Company. The Company may assign the Company's rights and obligations hereunder to an Affiliate or pursuant to the acquisition of all or substantially all of the voting securities or assets of the Company by means of a merger, stock purchase or other similar transaction.

(h)

Third Party Beneficiaries.  Nothing in this Agreement is intended to provide any rights or remedies to any person (including any employee or creditor of any Shareholder) other than the parties hereto.

(i)

Severability.  In the event that any provision of this Agreement, or the application of such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be affected and shall continue to be valid and enforceable to the fullest extent permitted by law.

(j)

Integration, Entire Agreement.  Except as expressly noted in Section 5(c) above, this Agreement sets forth the entire understanding of the Parties hereto and supersedes all other agreements and understandings between any of the parties relating to the subject matter hereof and thereof.

(k)

No Waiver.  No failure on the part of either party hereto to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of either party hereto in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

(l)

Amendments.  This Agreement may not be amended, modified, altered or supplemented except by means of a written instrument executed by the Company and the Shareholders.

(m)

Representations and Warranties, Representatives.  No party hereto shall make any warranties or representations, or assume or create any obligations, on the other party’s behalf except as may be expressly permitted hereunder or in writing by such other party.  Each party hereto shall be solely responsible for the actions of all its representative employees, agents and representatives.

(n)

Interpretation of the Agreement:

(i)

Each party hereto acknowledges that it has participated in the drafting of this Agreement, and any applicable rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in connection with the construction or interpretation of this Agreement;

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(ii)

Whenever required by the context hereof, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; and the neuter gender shall include the masculine and feminine genders;

(iii)

As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words “without limitation”; and

(iv)

References herein to “Sections” and “Exhibits” are intended to refer to Sections of and Exhibits to this Agreement.

(o)

Counterparts  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Company:

I. T. Technology, Inc.., a Delaware corporation

By:_______________________________________

Name:____________________________________

Title:_____________________________________

SHAREHOLDERS:

___________________________, an Individual 

___________________________________________

STREET ADDRESS:  _______________________

CITY, STATE, ZIP CODE:  __________________

FACSIMILE NUMBER: _____________________

___________________________, an Individual 

___________________________________________

STREET ADDRESS:  _______________________

CITY, STATE, ZIP CODE:  __________________

FACSIMILE NUMBER: _____________________

___________________________, an Individual 

___________________________________________

STREET ADDRESS:  _______________________

CITY, STATE, ZIP CODE:  __________________

FACSIMILE NUMBER: _____________________

8exv4w1

 

Exhibit 4.1

PENGROWTH ENERGY TRUST

RENEWAL ANNUAL INFORMATION FORM

May 17, 2002

Pengrowth Energy Trust is an energy investment trust
formed under the laws of the Province of Alberta which offers
and sells its Trust Units to the public. The Trust Units are not
“deposits” within the meaning of the Canadian Deposit
Insurance Corporation Act (Canada) and are not insured under the
provisions of that Act or any other legislation. Furthermore,
Pengrowth Energy Trust is not a trust company and, accordingly,
is not registered under any trust and loan company legislation
as it does not carry on or intend to carry on the business of a
trust company.

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	
    
    TABLE OF CONTENTS
    

    	 	 	2	 
	
    
    GLOSSARY OF TERMS
    

    	 	 	4	 
	
    
    PENGROWTH ENERGY TRUST
    

    	 	 	7	 
	
    
    GENERAL DEVELOPMENT OF PENGROWTH ENERGY TRUST
    

    	 	 	7	 
	 	
    
    Organization and Structure
    

    	 	 	7	 
	 	
    
    Business Strategy
    

    	 	 	9	 
	 	
    
    Historical Development
    

    	 	 	10	 
	
    
    PENGROWTH MANAGEMENT LIMITED
    

    	 	 	12	 
	 	
    
    Business
    

    	 	 	12	 
	 	
    
    Management Agreement
    

    	 	 	12	 
	
    
    PENGROWTH CORPORATION — OPERATIONAL
    INFORMATION
    

    	 	 	13	 
	 	
    
    Principal Properties
    

    	 	 	13	 
	 	
    
    Production
    

    	 	 	18	 
	 	 	
    
    Production History
    

    	 	 	18	 
	 	 	
    
    Producing Wells
    

    	 	 	18	 
	 	 	
    
    Drilling Activity
    

    	 	 	19	 
	 	 	
    
    Capital Expenditures
    

    	 	 	19	 
	 	
    
    Reserves
    

    	 	 	19	 
	 	
    
    Replacement of Properties
    

    	 	 	23	 
	 	
    
    Borrowing
    

    	 	 	23	 
	 	
    
    Marketing Arrangements
    

    	 	 	24	 
	 	
    
    Interest Rate Swaps
    

    	 	 	24	 
	
    
    TRUST UNITS
    

    	 	 	24	 
	 	
    
    The Trust Indenture
    

    	 	 	24	 
	 	
    
    Computershare Trust Company of Canada as Trustee
    

    	 	 	25	 
	 	
    
    Cash Distributions
    

    	 	 	25	 
	 	
    
    Redemption Right
    

    	 	 	25	 
	 	
    
    Voting Rights in Pengrowth Trust
    

    	 	 	25	 
	 	
    
    Termination of Pengrowth Trust
    

    	 	 	26	 
	 	
    
    Limitation on Non-Resident Ownership
    

    	 	 	26	 
	 	
    
    Reporting to Trust Unitholders
    

    	 	 	26	 
	 	
    
    Pengrowth Corporation as Administrator
    

    	 	 	26	 
	
    
    ROYALTY UNITS
    

    	 	 	27	 
	 	
    
    The Royalty Indenture
    

    	 	 	27	 
	 	
    
    The Royalty
    

    	 	 	27	 
	 	
    
    The Trustee
    

    	 	 	28	 
	 	
    
    Alberta Royalty Credit
    

    	 	 	28	 
	 	
    
    Environmental Obligations — Reclamation
    Fund
    

    	 	 	28	 
	
    
    DISTRIBUTABLE INCOME PER UNIT
    

    	 	 	29	 
	
    
    INDUSTRY CONDITIONS
    

    	 	 	29	 
	 	
    
    Introduction
    

    	 	 	29	 
	 	
    
    Pricing and Marketing — Oil
    

    	 	 	29	 
	 	
    
    Pricing and Marketing — Natural Gas
    

    	 	 	29	 
	 	
    
    Exports from Canada
    

    	 	 	30	 
	 	
    
    Royalties and Incentives
    

    	 	 	30	 
	 	
    
    Environmental Regulation
    

    	 	 	30	 

2

 

	 	 	 	 	 	 
	
    
    SELECTED FINANCIAL INFORMATION
    

    	 	 	31	 
	
    
    MANAGEMENT’S DISCUSSION AND ANALYSIS OF
    OPERATING RESULTS AND FINANCIAL CONDITION
    

    	 	 	32	 
	
    
    RECENT DEVELOPMENTS AND ANNUAL AND SPECIAL
    MEETING APRIL 23, 2002
    

    	 	 	32	 
	
    
    MARKET FOR SECURITIES
    

    	 	 	35	 
	
    
    DIRECTORS AND OFFICERS
    

    	 	 	35	 
	 	
    
    Directors and Officers of Pengrowth Management
    

    	 	 	35	 
	 	
    
    Principal Holders of Shares of Pengrowth
    Management
    

    	 	 	35	 
	 	
    
    Directors and Officers of Pengrowth Corporation
    

    	 	 	36	 
	
    
    DIRECTORS’ AND OFFICERS’ LIABILITY
    INSURANCE
    

    	 	 	37	 
	
    
    INDEBTEDNESS OF DIRECTORS AND OFFICERS
    

    	 	 	37	 
	
    
    LONG TERM INCENTIVE PLANS
    

    	 	 	37	 
	 	
    
    Trust Unit Option Plan of Pengrowth Trust
    

    	 	 	37	 
	 	
    
    Trust Unit Purchase Plan
    

    	 	 	39	 
	 	
    
    Instalment Receipt Purchase Plan
    

    	 	 	39	 
	 	
    
    Trust Unit Margin Purchase Plan
    

    	 	 	39	 
	 	
    
    Share Appreciation Rights
    

    	 	 	39	 
	 	
    
    Principal Holders of Shares and Royalty Units of
    Pengrowth Corporation
    

    	 	 	40	 
	
    
    CORPORATE GOVERNANCE
    

    	 	 	40	 
	 	
    
    Mandates of the Trustee, Pengrowth Management and
    the Board of Directors of Pengrowth Corporation
    

    	 	 	40	 
	 	
    
    Board Independence
    

    	 	 	40	 
	 	
    
    Board Approvals and Structure
    

    	 	 	41	 
	
    
    RISK FACTORS
    

    	 	 	44	 
	 	
    
    Volatility of Crude Oil and Natural Gas Prices
    

    	 	 	44	 
	 	
    
    Reserves Replacement (Sustainability)
    

    	 	 	44	 
	 	
    
    Environmental Concerns
    

    	 	 	44	 
	 	
    
    Debt Service
    

    	 	 	45	 
	 	
    
    Purchase of Reserves
    

    	 	 	45	 
	 	
    
    Changes in Legislation
    

    	 	 	45	 
	 	
    
    Investment Eligibility
    

    	 	 	45	 
	 	
    
    Operational Matters
    

    	 	 	46	 
	 	
    
    Experience of the Manager
    

    	 	 	46	 
	 	
    
    Depletion of Reserves
    

    	 	 	46	 
	 	
    
    Limited Purpose Trust
    

    	 	 	46	 
	 	
    
    Capital Investment
    

    	 	 	46	 
	 	
    
    Investment Eligibility
    

    	 	 	46	 
	 	
    
    Additional Financing
    

    	 	 	47	 
	 	
    
    Competition
    

    	 	 	47	 
	 	
    
    Return of Capital
    

    	 	 	47	 
	 	
    
    Nature of Trust Units
    

    	 	 	47	 
	 	
    
    Unitholder Limited Liability
    

    	 	 	48	 
	 	
    
    Conflict of Interest
    

    	 	 	48	 
	 	
    
    SOEP Property Risks
    

    	 	 	48	 
	 	
    
    Marketability
    

    	 	 	48	 
	
    
    CONFLICTS OF INTEREST
    

    	 	 	49	 
	
    
    ADDITIONAL INFORMATION
    

    	 	 	50	 

3

 

GLOSSARY OF TERMS

     
Certain terms used in this Annual Information
Form are defined below:

 

			
	
    ARC
    		
    Alberta Royalty Credits;
    
	 
	
    bbl
    		
    barrel, “bpd” means barrels per day,
    “mbbls” means thousands of barrels and
    “mmbbls” means millions of barrels;
    
	 
	
    boe
    		
    barrels of oil equivalent determined
    approximately on the basis that 6 mcf of gas are equivalent to
    one bbl of oil. The factor used to convert gas to oil equivalent
    is not based upon either energy content or prices. A
    corresponding adjustment is made for natural gas liquids;
    “boepd” means barrels of oil equivalent per day,
    “mboe” means thousands of barrels of oil equivalent
    and “mmboe” means millions of barrels of oil
    equivalent;
    
	 
	
    Board of Directors
    		
    board of directors of Pengrowth Corporation;
    
	 
	
    Computershare
    		
    Computershare Trust Company of Canada (formerly
    Montreal Trust Company of Canada);
    
	 
	
    Emera:
    		
    Emera Offshore Incorporated, a wholly owned
    subsidiary of Emera Inc.
    
	 
	
    Established Reserves
    		
    Proved Reserves plus Probable Reserves risked at
    50% as described in the GLJ Report;
    
	 
	
    Extraordinary Resolution
    		
    a resolution passed by a majority of not less
    than 66 2/3% of the votes cast, either in person or by
    proxy, at a meeting of Trust Unitholders or Royalty Unitholders,
    or both, as the case may be, called for the purpose of approving
    such resolution, or approved in writing by not less than
    66 2/3% of the Unitholders entitled to vote on such
    resolution. A quorum for the passage of an Extraordinary
    Resolution is two persons representing at least 5% of the votes
    attached to all outstanding Units entitled to vote on such
    resolution;
    
	 
	
    GLJ
    		
    Gilbert Laustsen Jung Associates Ltd.,
    independent petroleum consultants, Calgary, Alberta;
    
	 
	
    GLJ Report
    		
    the report prepared by Gilbert Laustsen Jung
    Associates Ltd. dated February 15, 2002, having an
    effective date of December 31, 2001;
    
	 
	
    mmcf
    		
    millions of cubic feet, “mcf” means
    thousands of cubic feet, “bcf” means billions of cubic
    feet, “mcf/d” means thousands of cubic feet per day
    and “mmcf/d” means millions of cubic feet per day;
    
	 
	
    Pengrowth Corporation
    		
    Pengrowth Corporation, the administrator of
    Pengrowth Trust;
    
	 
	
    Pengrowth Management
    		
    Pengrowth Management Limited, the manager of
    Pengrowth Trust and Pengrowth Corporation;
    
	 
	
    Pengrowth Trust
    		
    Pengrowth Energy Trust;
    
	 
	
    Probable Reserves
    		
    those reserves which an analysis of drilling,
    geological, geophysical and engineering data does not
    demonstrate to be proved under current technology and existing
    economic conditions, but where such analysis suggests the
    likelihood of their existence and future recovery. Probable
    reserves to be obtained by the application of enhanced recovery
    processes will be the increased recovery over and above that
    estimated in the proved category which can be
    

4

 

			
	
		
    realistically estimated for the pool on the basis
    of enhanced recovery processes which can be reasonably expected
    to be instituted in the future;
    
	 
	
    Proved Reserves
    		
    those reserves estimated as recoverable under
    current technology and existing economic conditions, in the case
    of constant pricing, and anticipated economic conditions, in the
    case of escalated pricing, from that portion of a reservoir
    which can be reasonably evaluated as economically productive on
    the basis of analysis of drilling, geological, geophysical and
    engineering data, including the reserves to be obtained by
    enhanced recovery processes demonstrated to be economic and
    technically successful in the subject reservoir;
    
	 
	
    Reserve Life Index
    		
    the number of years determined by dividing the
    Established Reserves of a property by the estimated production
    per year from such property using year 2001 production as a
    reference;
    
	 
	
    Royalty
    		
    99% of Royalty Income as defined in the Royalty
    Indenture relating to the working interests and royalty
    interests held by Pengrowth Corporation in petroleum and natural
    gas properties. Under the terms of the Royalty Indenture,
    although Pengrowth Corporation is entitled to retain a 1% share
    of “Royalty Income” and all miscellaneous income to
    the extent this amount exceeds the aggregate of debt service
    charges, general and administrative expenses and management
    fees, the result of the computation is that the Royalty is
    effectively 100% of “Royalty Income”. (See note 1
    to the audited financial statements of Pengrowth Trust.)
    
	 
	
    Royalty Indenture
    		
    the Amended and Restated Royalty Indenture dated
    April 23, 2002 (replacing the Royalty Indenture dated
    December 2, 1988, as amended) pursuant to which Pengrowth
    Corporation granted the Royalty to Pengrowth Trust;
    
	 
	
    Royalty Unit
    		
    a fractional undivided interest in the Royalty;
    
	 
	
    SOEP
    		
    Sable Offshore Energy Project
    
	 
	
    stb
    		
    means stock tank barrel, “mstb” means
    thousands of stock tank barrels and “mmstb” means
    millions of stock tank barrels;
    
	 
	
    Trust Indenture
    		
    the Amended and Restated Trust Indenture dated
    April 23, 2002 (replacing the Trust Indenture dated
    December 2, 1988, as amended) pursuant to which Pengrowth
    Trust was established and is governed;
    
	 
	
    Trust Unit
    		
    a fractional undivided interest in Pengrowth
    Trust;
    
	 
	
    Unanimous Shareholder Agreement
    		
    the Amended and Restated Unanimous Shareholder
    Agreement dated April 23, 2002 (replacing the unanimous
    Shareholder Agreement dated December 2, 1988, as amended);
    
	 
	
    Units
    		
    Trust Units or Royalty Units; and
    
	 
	
    Unitholder
    		
    a holder of Trust Units or a holder of Royalty
    Units.
    

5

 

     
In this Annual Information Form measurements are
given in standard Imperial or metric units only. The following
table sets forth certain standard conversions.

	 	 	 	 	 	 	 	 	 
	To Convert From		To		Multiply By
	
		
		

	
    
    mcf
    

    	 	 	cubic metre	 	 	 	28.174	 
	
    
    cubic metre
    

    	 	 	cubic feet	 	 	 	35.494	 
	
    
    bbls
    

    	 	 	cubic metre	 	 	 	0.159	 
	
    
    cubic metre
    

    	 	 	bbls	 	 	 	6.290	 
	
    
    feet
    

    	 	 	metre	 	 	 	0.305	 
	
    
    metre
    

    	 	 	feet	 	 	 	3.281	 
	
    
    miles
    

    	 	 	kilometre	 	 	 	1.609	 
	
    
    kilometre
    

    	 	 	miles	 	 	 	0.621	 
	
    
    acres
    

    	 	 	hectares	 	 	 	0.405	 
	
    
    hectares
    

    	 	 	acres	 	 	 	2.471	 

     
Unless otherwise stated, all sums of money
referred to in this Annual Information Form are expressed in
Canadian dollars.

6

 

PENGROWTH ENERGY TRUST

     
Pengrowth Trust is an open-ended energy
investment trust created under the laws of the Province of
Alberta on December 2, 1988. Pengrowth Trust is governed by
a Trust Indenture between Pengrowth Corporation and
Computershare Trust Company of Canada
(“Computershare”) as Trustee. The Trust’s
original name, Pengrowth Gas Income Fund, was changed to
Pengrowth Energy Trust by a resolution of the holders of the
Trust Units passed on April 26, 1996. Pengrowth Trust was
created to purchase and hold Royalty Units issued by Pengrowth
Corporation and to issue Trust Units to the public. Pengrowth
Corporation acquires, owns and manages working interests and
royalty interests in petroleum and natural gas properties,
facilities interests and other assets. The beneficiaries of
Pengrowth Trust are holders of the Trust Units. The principal
place of business of Pengrowth Trust is located at
Suite 700, 112 Fourth Avenue SW, Calgary, Alberta
T2P 0H3.

     
Pengrowth Corporation was incorporated under the
Business Corporations Act (Alberta) on December 30,
1987. The name of Pengrowth Corporation was changed from
Pengrowth Gas Corporation to Pengrowth Corporation in 1998.
Pengrowth Corporation has 1100 common shares outstanding 1000 of
which are owned by the Trust and 100 of which are owned by
Pengrowth Management Limited. The head office of Pengrowth
Corporation is located at Suite 700, 112 Fourth Avenue SW,
Calgary, Alberta T2P 0H3.

     
Pengrowth Management was incorporated under the
Business Corporations Act (Alberta) on December 16,
1982. Pengrowth Management acts as the manager of Pengrowth
Corporation and Pengrowth Trust with duties that include the
acquisition, development, operation and disposition of petroleum
and natural gas properties and other related assets. The head
and principal office of Pengrowth Management is located at
Suite 700, 112 Fourth Avenue SW, Calgary, Alberta
T2P 0H3.

     
Pengrowth Trust and Pengrowth Corporation are
structured so that income taxation generally occurs in the hands
of the Trust Unitholders. Distributable income received by Trust
Unitholders consists primarily of operating cash flow generated
through oil and natural gas properties held by Pengrowth
Corporation and of lease income associated with facilities held
by Pengrowth Trust. Pengrowth Corporation pays the Royalty to
Pengrowth Trust on a monthly basis and distributable income is
then distributed to Trust Unitholders also on a monthly basis,
normally on the 15th of each month.

GENERAL DEVELOPMENT OF PENGROWTH ENERGY
TRUST

Organization and Structure

     
Pursuant to the Royalty Indenture between
Pengrowth Corporation and Computershare, Pengrowth Corporation
granted the Royalty to the Royalty Unitholders. Pursuant to the
Trust Indenture, Pengrowth Trust issued Trust Units to the Trust
Unitholders. Pengrowth Trust acquires and holds Royalty Units.
Holders of Trust Units are entitled to receive monthly
distributions in respect to the Royalty and in respect to
investments that are held directly by Pengrowth Trust.

     
Pengrowth Trust presently holds approximately
99.97% of all Royalty Units issued by Pengrowth Corporation
together with other permitted investments which include oil and
gas processing facilities interests and cash. In 1998, Pengrowth
Trust acquired interests in certain Judy Creek and Swan Hills
facilities for $106 million under a transaction where the
facilities were leased back to Pengrowth Corporation in
consideration for lease payments which are distributed to the
holders of Trust Units. The Royalty Units represent fractional
undivided interests in the Royalty.

     
Pursuant to the Unanimous Shareholder Agreement,
the Unitholders are entitled to notice of, and to attend, all
meetings of shareholders of Pengrowth Corporation and (other
than Computershare) to one vote per Royalty Unit or Trust Unit
held, on any ballot at such meeting. The holders of Units (other
than Computershare) are entitled to vote as shareholders at all
meetings of the shareholders of Pengrowth Corporation to the
same extent as if they were holders of common shares of
Pengrowth Corporation including, without limitation, voting on
the election of the directors of Pengrowth Corporation (other
than the two directors to be elected by Pengrowth Management),
approving its financial statements, appointing its auditors

7

 

and appointing the auditor of Pengrowth Trust. In
addition, Unitholders are entitled to vote on any proposed
amendment to the Unanimous Shareholder Agreement. Pengrowth
Management refrains from exercising its rights as a shareholder
except in respect of the election of two directors, or except as
otherwise may be permitted by the provisions of the Business
Corporations Act (Alberta), and then only as directed by the
votes of the Unitholders.

     
The scope of the business of Pengrowth Trust has
been expanded over time from the acquisition and holding of
petroleum and natural gas properties and related assets to
include the investment in securities of Pengrowth Corporation or
other subsidiaries of the Trust to fund the acquisition,
development, exploitation and disposition of all types of energy
business related assets, including petroleum and natural gas
related assets, oilsands interests, electricity or power
generating assets and pipeline, gathering, processing and
transportation assets.

     
Pengrowth Trust is an open-ended investment
trust. The Trust Indenture contains rights attached to Trust
Units entitling a Unitholder to require Pengrowth Trust, at any
time, on the demand of the Unitholder, to redeem his or her
Trust Units. On such redemption, all of such Unitholder’s
rights to, and under, the Trust Units tendered for redemption
would be surrendered and the Unitholder would be entitled to
receive a price per Trust Unit as determined by a market price
formula. The redemption price payable by Pengrowth Trust would
be satisfied by way of a cash payment subject to a monthly cash
cap of $25,000. As with most other open-ended funds, it is
anticipated that trading, which in the case of Pengrowth Trust
occurs on the Toronto Stock Exchange and the New York Stock
Exchange, and not the right of retraction will continue as the
primary mechanism to provide Unitholders with liquidity for
their investment.

8

 

     Structure
diagram

 

Business Strategy

     
Pengrowth Trust is an actively managed trust
which, through Pengrowth Corporation, has a thirteen year track
record of achieving asset growth and increasing distributions
per Trust Unit by prudent acquisitions of high quality, long
life, oil and natural gas properties. See “Selected
Financial Information”.

     Investment
Guidelines

     
The following guidelines are used by Pengrowth
Management and the Board of Directors of Pengrowth Corporation
in purchasing oil and natural gas properties:

		
	 	     
    1. Acquisitions should increase
    distributions on a per Trust Unit basis based upon current
    economics.
    

9

 

		
	 	     
    2. The aggregate purchase price of all
    properties acquired in a single transaction should not exceed
    the undiscounted aggregate projected net cash flow from those
    properties from the date of their purchase plus a reasonable
    rate of return.
    
	 
	 	     
    3. Acquisition properties should be high
    quality, long life, proven producing properties primarily in
    unitized areas. Pengrowth Corporation will give priority to
    properties with:
    

			
	 	• 	
    long reserve life;
    
	 
	 	• 	
    relatively low anticipated capital expenditures
    compared to the cash generation potential of the property;
    
	 
	 	• 	
    low operating costs/high margins;
    
	 
	 	• 	
    experienced, well regarded operators or where
    operatorship may be assumed by Pengrowth Corporation;
    
	 
	 	• 	
    favourable production history;
    
	 
	 	• 	
    upside potential through infill drilling,
    improved field operations and other development activities; and
    
	 
	 	• 	
    relatively low environmental and site remediation
    risk.
    

		
	 	     
    4. Pengrowth Corporation will seek to
    acquire oil and gas producing properties, in the context of the
    market, which have an attractive rate of return and a low
    reserve cost.
    
	 
	 	     
    5. Each purchase of new properties will be
    based on an independent engineering report except for properties
    where the purchase price is less than $5 million.
    

     
Pengrowth Corporation believes that, by assuming
operatorship of selected properties, it can add value through
controlling costs, increasing efficiency and adopting new
operating methods. Pengrowth Corporation operates the Judy Creek
Beaverhill Lake Unit and the Judy Creek Beaverhill West Lake
Unit in the Swan Hills area of Alberta, including the gas
processing plant and other facilities (the “Judy Creek
Properties”) which together with Pengrowth
Corporation’s interest in the Swan Hills Unit #1 represent
a combined total investment by Pengrowth Corporation and
Pengrowth Trust of approximately $500 million. Pengrowth
Management believes that there are opportunities to add value to
the Judy Creek properties through the current program of infill
drilling, through edge well drilling based in part upon three
dimensional seismic interpretation and through horizontal
miscible injection wells. See “Pengrowth
Corporation — Judy Creek Beaverhill Lake
Unit — Development Activity”. Pengrowth
Corporation also operates its interests in Strachan, Enchant,
Kaybob Notikewan, Nipisi and McLeod River.

Historical Development

     
Pengrowth Corporation’s first acquisition,
in December of 1988, was the purchase of a 2.6507% interest in
the Dunvegan Gas Unit No. 1 located near Fairview, Alberta
(the “Dunvegan Unit”). Pengrowth Corporation financed
the acquisition by issuing 1,250,000 Royalty Units at a price of
$10.00 per Royalty Unit, substantially all of which were issued
to Pengrowth Trust. Pengrowth Trust issued 1,243,500 Trust Units
to the public at a price of $10.00 per Trust Unit for gross
proceeds of $12,435,000 which were used to pay for the Royalty
Units.

     
Commencing in 1991, Pengrowth Management adopted
a plan, and established criteria, to build Unitholder value by
making accretive acquisitions and financing those acquisitions.
In 1991, 760,218 Trust Units were issued by Pengrowth Trust upon
the exercise of rights to acquire Trust Units, at a price of
$5.00 per Trust Unit for gross proceeds of $3,801,090. The
proceeds were applied by Pengrowth Corporation to acquire a
0.9789% working interest in the Nipisi Gilwood Unit No. 1
oil producing property in North Central Alberta (the
“Nipisi Unit”).

     
During 1992 Pengrowth Trust completed private
placements for a total of 500,000 Trust Units at a price of
$5.00 per Trust Unit for gross proceeds of $2,500,000. The
proceeds were applied by Pengrowth Corporation to repay bank
debt incurred to acquire various interests in the Dunvegan Unit,
Nipisi Unit, Sylvan

10

 

Lake Gas Unit No. 2, Sundre Unit 2,
Harmattan East Viking Unit No. 1 and Olds Gas Unit
No. 1 thereby broadening the base of oil and natural gas
unit interests held by Pengrowth Corporation. A distribution
reinvestment plan was created for Pengrowth Trust in 1992 which
provides holders of Trust Units with the option of directing
Computershare to reinvest any Trust Unit distributions in new
Trust Units of Pengrowth Trust.

     
Two rights offerings were completed by Pengrowth
Trust during 1993. On February 3, 1993, Pengrowth Trust
issued 1,524,318 Trust Units upon the exercise of rights to
acquire Trust Units at a price of $5.50 per Trust Unit for gross
proceeds of $8,383,749 and on October 22, 1993, 2,968,700
Trust Units were issued by Pengrowth Trust upon the exercise of
rights to acquire Trust Units at a price of $7.75 per Trust Unit
for gross proceeds of $23,007,425. The proceeds were applied by
Pengrowth Corporation to repay bank debt incurred to acquire
various additional unitized oil and gas producing interests.

     
Pengrowth Trust commenced a series of fully
marketed equity offerings in 1994 to fund various property
acquisitions. On June 2, 1994, Pengrowth Trust issued
4,190,476 Trust Units at a price of $10.50 per Trust Unit for
gross proceeds of $43,999,998. The proceeds were used primarily
by Pengrowth Corporation to finance the purchase of producing
properties from Acquifund Resources Limited and Dunbar Oil Ltd.
During 1995 gross proceeds of $65,686,500 were raised through
two public offerings of an additional 5,060,000 Trust Units. The
first offering of 3,310,000 Trust Units, at a price of $11.65
per Trust Unit, was completed on May 19, 1995 and the
second offering of 1,750,000 Trust Units, at a price of $15.50
per Trust Unit, was completed on December 28, 1995. During
1996 gross proceeds of $82,555,000 were raised through a public
offering of 5,225,000 Trust Units at a price of $15.80.

     
Effective July 1, 1997, Pengrowth
Corporation acquired a 98.11% working interest in the Judy Creek
Beaverhill Lake Unit, a 94.58% working interest in the Judy
Creek West Beaverhill Lake Unit, and a 9.58% working interest in
the Swan Hills Unit No. 1 for $496.1 million. In
November 1997, Pengrowth Corporation increased its working
interest in the Judy Creek Beaverhill Lake Unit to 100%. On
October 15, 1997, Pengrowth Trust completed an offering of
23,928,572 Trust Units on an instalment receipt basis with
$12.50 per Trust Unit paid on closing and the balance of $8.75
per unit due on or before October 15, 1998. Gross proceeds
raised amounted to $508 million comprised of cash of
$299 million and an installment receivable of
$209 million. On April 15, 1998, Pengrowth Corporation
assumed operatorship of the Judy Creek Units from Imperial Oil
Resources. Effective October 15, 1998, Pengrowth Trust
acquired certain facilities interests related to operations in
the Judy Creek and Swan Hills areas from Pengrowth Corporation
for consideration of $106,000,000. Pengrowth Trust entered into
an agreement to lease the facilities back to Pengrowth
Corporation.

     
Oil and natural gas prices declined in 1998 and
there was an associated decline in the market trading price of
Trust Units and the number of acquisitions completed by
Pengrowth Corporation. In 1999 and 2000, in conjunction with the
recovery of commodity markets, Pengrowth Corporation resumed
acquisition activities.

     
On May 18, 1999, Pengrowth Trust issued
6,120,000 Trust Units to raise gross proceeds of $79,254,000.
Pengrowth Corporation acquired interests in certain properties
from Gulf Canada Resources Ltd., Colin Partnership, Talisman
Energy Inc., Suncor Energy Inc. and Renaissance Energy Ltd. an
acquisition by Pengrowth Corporation in October 1999 from
Renaissance Energy Ltd., which included interests in 46
producing wells and three gas plants in the McLeod River area of
Alberta, was completed for a cash consideration of $51,800,000.

     
On November 10, 2000, Pengrowth Trust issued
8,165,000 Trust Units to raise gross proceeds of $155,135,000
which were applied to acquire interests in Goose River, House
Mountain, Minnehik Buck Lake, Mitsue and Weyburn from Canadian
Natural Resources Limited for cash consideration of $128,000,000
and the transfer of certain properties. The balance of the net
proceeds were applied to the purchase of an average 95% working
interest in 32 producing oil wells in the Nipisi area of Alberta
in October 2000.

11

 

     
On May 31, 2001, Pengrowth Trust issued
10,895,000 Trust Units to raise gross proceeds of $225,526,500.
Net proceeds of the issue were used to repay existing
indebtedness of Pengrowth Corporation incurred to fund earlier
acquisitions of petroleum and natural gas properties.

     
Effective June 15, 2001, Pengrowth
Corporation acquired a royalty representing substantially all of
the beneficial interest in the natural gas and liquids
production from an 8.4% working interest in the Sable Offshore
Energy Project (“SOEP”) from Nova Scotia Resources
(Ventures) Limited (“NSRVL”), for $265 million
(net adjusted price of $228.4 million).

     
On December 18, 2001 Pengrowth Trust issued
5,850,000 Trust Units to raise gross proceeds of $75,172,500. On
December 24, 2001 Pengrowth Trust issued 877,500 Trust
Units for additional gross proceeds of $11,275,875, representing
the full underwriters’ overallotment option from the equity
issue which closed on December 18, 2001 (for a total of
$36,448,875 in issue proceeds). Net proceeds of the issue were
used to repay existing indebtedness of Pengrowth Corporation
incurred to fund capital requirements associated with Pengrowth
Corporation’s Western Canadian oil and gas properties.

     
On December 24, 2001 Pengrowth Corporation
acquired certain additional petroleum and natural gas rights and
other assets from NSRVL for a gross purchase price of
$27.5 million including $22.5 million cash and
forgiveness of debt associated with the West Eagle property
previously sold to NSRVL in June 2001.

PENGROWTH MANAGEMENT LIMITED

Business

     
The principal business of Pengrowth Management is
that of a specialty fund manager. Pengrowth Management currently
provides advisory, management, and administrative services
primarily to Pengrowth Trust and Pengrowth Corporation.
Pengrowth Management also previously provided investment
advisory and management services in relation to investments by
several Canadian pension funds in the energy sector. These
investments were subsequently acquired by Pengrowth Corporation
for Royalty Units and cash. All activities undertaken by
Pengrowth Management are directed towards maximizing
distributable income to the Unitholders while at the same time
striving for long term growth in the value of the assets of
Pengrowth Corporation. Pengrowth Management utilizes its
extensive experience and employs prudent oil and gas business
practices to increase the value of the assets of Pengrowth
Corporation. Pengrowth Management has focused upon high quality,
long life proven producing properties located in Canada.
Pengrowth Corporation is unique among Canadian energy trusts in
holding a substantial interest in eastern Canada through its
royalty interest in the SOEP. Pengrowth Management will continue
to focus upon acquisitions which are strategic and which add
value to Pengrowth Corporation and Pengrowth Trust.

Management Agreement

     
Pengrowth Corporation and Pengrowth Trust entered
into a management agreement (the “Management
Agreement”) with Pengrowth Management and Computershare
effective April 23, 2002 (replacing a management agreement
dated December 2, 1988 as amended). The primary duties of
Pengrowth Management under the Management Agreement are to:
(i) advise Pengrowth Corporation with respect to its oil
and natural gas properties, including the acquisition,
development and disposition of such properties; (ii) manage
the oil and gas properties of Pengrowth Corporation and
Pengrowth Trust; (iii) administer all matters relating to
the Royalty Units and the Trust Units; and (iv) provide
Pengrowth Corporation and Pengrowth Trust with office space and
equipment and all necessary clerical, administrative and
accounting services necessary to carry out their business and
affairs (which costs are flowed through to Pengrowth Corporation
and Pengrowth Trust). The services performed by Pengrowth
Management also include strategic planning, conduct of oil and
gas economics, conduct of financings, and the provision of
specialized advice in the areas of geology, engineering,
production operations, land administration, oil and gas
accounting and risk management. The Board of Directors reviews,
on an ongoing basis, both the nature and extent of the services
provided by Pengrowth Management and the cost of those services.
All amendments to the Management Agreement will

12

 

be reviewed by the Board of Directors and by
Computershare and presented to the Unitholders for approval by a
Unitholders resolution.

     Management
Fee

     
The management fee is based upon an “Income
Amount” which is the aggregate of the net production
revenue of Pengrowth Corporation and income earned by Pengrowth
Trust from certain other categories of permitted investments,
other than Royalty Units. The “Management Fee” is
calculated with reference to the Income Amount on a sliding
scale for each 3.5% of the first $50,000,000, 3.0% of the next
$50,000,000 and 2.5% of any Income Amount in excess of
$100,000,000.

     Bonus
Pool

     
As an incentive to officers, employees and
special consultants of Pengrowth Management (including employees
of Pengrowth Corporation but excluding the President, James S.
Kinnear), a bonus pool has been established which is carved out
from the management fee paid to Pengrowth Management, determined
as a minimum of 0.25% of the Income Amount. Bonuses are paid
from time to time in accordance with criteria to be set at the
discretion of Pengrowth Management as a further incentive for
performance.

     Acquisition
Fee

     
An acquisition fee is also paid to Pengrowth
Management which is 1% of a “Base Amount” of the
acquisitions in each year and 0.5% in respect of any
acquisitions in excess of the Base Amount. The Base Amount was
set at $100 million in 2000 and will be a minimum of
$100 million in all subsequent years. Commencing in 2002,
if Pengrowth Corporation succeeds in replacing production from
the previous year, the Base Amount shall be increased (but not
decreased) to the actual purchase price of replacing production
in that prior year. The new Base Amount will apply to the year
in which production is replaced and to all subsequent years
under the Management Agreement unless further increased as a
result of replacing production in a subsequent year. The
acquisition fee will be 0.5% of the purchase price of
acquisitions beyond the Base Amount. There is no fee in respect
to the disposition of properties.

     Term of
Agreement

     
The term of the Management Agreement is a rolling
three (3) years provided that the Management Agreement must
be considered by Unitholders every three years. Based upon the
recommendation of the independent committee of the Board of
Directors of Pengrowth Corporation, an extension of the
Management Agreement was approved at the Special Meeting of
Pengrowth Corporation Unitholders and at the Special and Annual
Meeting of Trust Unitholders which were held on April 26,
2000 and accordingly will be reviewed again by the Unitholders
at the Annual General Meeting in 2003.

PENGROWTH CORPORATION — OPERATIONAL
INFORMATION

     
As at December 31, 2001, Pengrowth
Corporation had 169 permanent employees. Pengrowth Corporation
has invested more than $1.35 billion in the energy sector
primarily to purchase mature, proven producing oil and natural
gas properties in Canada.

Principal Properties

     
The portfolio of properties acquired and held by
Pengrowth Corporation primarily includes long life, unitized oil
and gas producing properties with established production
profiles. In 2001, Pengrowth Corporation’s remaining
recoverable Established Reserves increased from 183 million
boe to 211 million boe. During the year, 48.4 mmboe of new
Established Reserves were acquired at a cost of $5.72 per boe.
Pengrowth Corporation raised its average production from 31,821
boepd in 1999, to 33,581 boepd in 2000, and to 40,320 boepd in
2001.

13

 

     
Pengrowth Corporation obtained the GLJ Report in
respect to the oil and gas properties of Pengrowth Corporation
effective December 31, 2001 as adjusted for production and
acquisitions to December 31, 2001. All reserve data
presented under this sub-heading is based on the GLJ Report. The
term “net” when used to describe Pengrowth
Corporation’s share of production under this sub-heading
means the total of Pengrowth Corporation’s working interest
share before deducting royalties owned by others.

     
Pengrowth Corporation’s major producing
properties are summarized in the following table:

Summary of the Major Property Interests Held
by Pengrowth Corporation as at December 31, 2001

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
													2002
			Remaining		Reserve						2002 Oil		Estimated
			Reserve		Life		Gross(3)		Value at 12%		Equivalent		Net Cash
			Life		Index		Reserves		Discount		Production(1)		Flow
			(Years)		(Years)		(Mboe)		($000)		(boepd)		($000)
			
		
		
		
		
		

	
    
    Judy Creek BHL Unit
    

    	 	 	50	 	 	 	15	 	 	 	49,575	 	 	 	256,045	 	 	 	10,634	 	 	 	35,486	 
	
    
    Judy Creek West BHL Unit
    

    	 	 	50	 	 	 	17	 	 	 	11,172	 	 	 	52,772	 	 	 	2,322	 	 	 	6,517	 
	
    
    Weyburn Unit
    

    	 	 	39	 	 	 	20	 	 	 	14,833	 	 	 	56,778	 	 	 	2,028	 	 	 	4,021	 
	
    
    Swan Hills Unit No. 1
    

    	 	 	50	 	 	 	23	 	 	 	14,626	 	 	 	54,283	 	 	 	1,755	 	 	 	7,297	 
	
    
    Enchant
    

    	 	 	50	 	 	 	19	 	 	 	7,115	 	 	 	25,939	 	 	 	1,094	 	 	 	2,284	 
	
    
    Dunvegan Gas Unit No. 1
    

    	 	 	50	 	 	 	17	 	 	 	7,077	 	 	 	30,841	 	 	 	1,023	 	 	 	3,870	 
	
    
    McLeod River
    

    	 	 	35	 	 	 	8	 	 	 	5,271	 	 	 	37,735	 	 	 	1,972	 	 	 	8,457	 
	
    
    Nipisi Non-Unit
    

    	 	 	23	 	 	 	9	 	 	 	4,012	 	 	 	27,712	 	 	 	1,248	 	 	 	6,072	 
	
    
    Monogram Gas Unit
    

    	 	 	38	 	 	 	11	 	 	 	4,916	 	 	 	42,995	 	 	 	1,480	 	 	 	7,843	 
	
    
    Goose River Unit No. 1
    

    	 	 	31	 	 	 	6	 	 	 	4,200	 	 	 	29,430	 	 	 	1,158	 	 	 	8,932	 
	
    
    House Mountain Unit No. 1
    

    	 	 	50	 	 	 	16	 	 	 	3,346	 	 	 	15,708	 	 	 	481	 	 	 	581	 
	
    
    Hanlan Swan Hills Pool Gas Unit No. 1
    

    	 	 	32	 	 	 	9	 	 	 	3,872	 	 	 	25,130	 	 	 	1,262	 	 	 	4,498	 
	
    
    Kaybob Notikewin Unit No. 1
    

    	 	 	50	 	 	 	12	 	 	 	3,983	 	 	 	27,170	 	 	 	863	 	 	 	4,875	 
	
    
    Other(2)
    

    	 	 	50	 	 	 	14	 	 	 	76,524	 	 	 	431,107	 	 	 	13,000	 	 	 	76,635	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total
    

    	 	 	50	 	 	 	14	 	 	 	210,522	 	 	 	1,113,645	 	 	 	40,320	 	 	 	177,368	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

Source: GLJ Report

		
	(1) 	
    Natural gas has been converted to equivalent
    barrels of oil at 6:1.
    
	 
	(2) 	
    “Other” includes Pengrowth
    Corporation’s royalty interest in Emera’s 8.4% working
    interest in SOEP, other Swan Hills, other S.E. Saskatchewan,
    other shallow gas and other miscellaneous properties. In
    accordance with the confidentiality agreement between Pengrowth
    Corporation, Emera and the other SOEP owners, Pengrowth
    Corporation is precluded from presenting certain information
    with respect thereto except on a consolidated basis.
    
	 
	(3) 	
    Remaining recoverable Established Reserves.
    

     Judy Creek
Beaverhill Lake Unit and Judy Creek West Beaverhill Lake
Unit

     
Pengrowth Corporation holds a 100% working
interest in the Judy Creek Beaverhill Lake Unit (the “Judy
Creek A Pool”) and a 94.6% working interest in the Judy
Creek Beaverhill West Lake Unit (the “Judy Creek B
Pool”), (together “Judy Creek”). Judy Creek is
located approximately 200 kilometers northwest of Edmonton in
North-Central Alberta and covers an area of approximately
155.4 square kilometers (60 sections). Judy Creek was
discovered in 1959, placed on waterflood (secondary recovery) in
1962 and miscible flood (tertiary recovery) in 1985. Original
oil in place totalled 815 mmbls of oil in the Judy Creek A
Pool, making it one of the largest oil pools discovered in
Western Canada. To December 31, 2001, 341.4 mmbbls has been
produced from the Judy Creek A Pool. Remaining Established
Reserves at December 31, 2001 are estimated at
49.6 mmboe. Original oil in place at the Judy Creek B
Pool totalled 262 mmbls and, as at

14

 

December 31, 2001, 112.9 mmbbls had been
produced. GLJ estimates the net remaining Established Reserves
at December 31, 2001 for the July Creek B Pool are
11.2 mmboe. Average production for Judy Creek in 2001 was
12,956 boepd and the remaining producing reserve life is
50 years and the Reserve Life Index is 15 years.

     Development
Activity

     
Pengrowth Corporation operates both the Judy
Creek A and B Pools. Pengrowth Corporation has continued the
enhanced oil recovery program that was initiated at Judy Creek
in 1985. In the Judy Creek hydrocarbon miscible flood program,
oil production is increased by injecting a light,
hydrocarbon-based solvent (ethane and methane) into the
reservoir. In 2001, solvent was injected at 12 solvent
injection wells and Pengrowth Corporation is anticipating
increased oil production from up to 32 offsetting production
wells.

     
New development continued in 2001 with the
drilling of four oil wells and three water/ solvent injection
wells in the Judy Creek A Pool. At year-end, oil production
from the development program was in excess of 600 bpd, with
associated reserves of approximately 1.6 mmbbls.

     
In addition to oil development, Pengrowth
Corporation pursued natural gas opportunities in shallower
reservoirs in Judy Creek. By drilling new wells and working over
existing suspended wells, Pengrowth Corporation placed eight
natural gas wells on production in 2001, achieving year-end
natural gas production rates of 4.4 mmcf/d net to Pengrowth
Corporation. This was an internally-generated opportunity the
value of which was not included in the engineering appraisal for
the property when it was acquired by Pengrowth Corporation.

     
There may be other methods of enhancing future
production in Judy Creek including the use of CO2 as
a solvent, potentially reducing solvent costs, or developing the
coal bed methane potential on Pengrowth Corporation’s
acreage. Coal bed methane technology in Canada is still in the
developmental state, but is being researched by a number of
major oil and gas companies. The technology is more advanced in
the United States where coal bed methane resources have been
successfully harnessed for economic gas production.

     
During 2001, Pengrowth Corporation focussed upon
reducing operating costs at Judy Creek, particularly in the area
of piping. Stainless steel pipe was installed in various
facilities to minimize failures and increase safety. Pengrowth
Corporation also optimized the use of onsite solvent to minimize
the cost of solvent purchases.

     
Development plans in 2002 include drilling at
least three oil wells and two vertical injection wells.
Pengrowth Corporation will also carry out additional
stimulations following a successful 2001 acid fracture in a
lower deliverability oil well.

     Swan Hills
Unit No. 1

     
Pengrowth Corporation holds a 10.45% working
interest in the Swan Hills Unit No. 1 located approximately
180 kilometers northwest of Edmonton in North-Central Alberta.
The Swan Hills Beaverhill Lake A and B pools were
discovered and placed on production in 1957. The pools were
unitized in 1963 to facilitate the implementation of a line
drive waterflood project. Swan Hills Unit No. 1 is the
second largest producing crude oil unit in Canada, producing
16,794 boepd and is operated by Devon Canada Ltd. Pengrowth
Corporation’s share of unit production for 2002 is
estimated to be 1,772 boepd of oil from 200 (20.9 net) oil
wells. GLJ estimates that the remaining Established Reserves at
December 31, 2001 are 109.3 (11.4 net) mmbls of oil
and 80.1 (8.4 net) bcf of natural gas with a remaining
producing life of 50 years and a Reserve Life Index of
22.6 years.

     Development
Activity

     
Development activities in the Swan Hills Unit
No. 1 during 2001 included the drilling of 3 wells in the
east platform and 5 wells in the reef margin.

15

 

     Dunvegan Gas
Unit No. 1

     
Pengrowth Corporation holds a 7.97% working
interest in the Dunvegan Unit located near Fairview, Alberta,
approximately 430 kilometers northwest of Edmonton. The Dunvegan
natural gas field is operated by Devon Canada Ltd., has 120 (9.5
net) producing natural gas wells and covers an area of
approximately 213 square kilometers. Approximately 95% of the
Dunvegan Unit’s identified natural gas reserves are
contained in the Mississippian Debolt formation at a depth of
approximately 1,465 meters. A natural gas processing plant, a
gathering system and satellite facilities were built in 1973. A
deep cut facility was completed in 1987 for the purpose of
extracting propane, butane, and heavier natural gas liquids from
the raw natural gas stream. Sour gas processing facilities were
added in 1996. A natural gas storage project has also been
implemented in the Dunvegan Unit.

     
GLJ estimates that Established Reserves of 393
(31.4 net) bcf of natural gas and 23.2 (1.9 net) mmbbls of
natural gas liquids remain to be produced from the Dunvegan Unit
as at December 31, 2001 and that it has a remaining life of
50 years and a Reserve Life Index of 17 years. Current
production from Dunvegan Unit is obtained from five zones. In
2002, Pengrowth Corporation’s share of production is
estimated to average 1,170 boepd. The majority of unit gas
is currently being sold under contract to Progas Limited with
the remainder going to Pan-Alberta Gas Ltd. and other direct
markets.

     Development
Activity

     
Development activities in 2001 included drilling
four wells and an additional six recompletions.

     Weyburn
Unit

     
Pengrowth Corporation holds a 9.75% working
interest in the Weyburn Unit located approximately 80 miles
southeast of Regina in southeast Saskatchewan. The unit
encompasses approximately 216 square kilometers. Production
commenced from the Midale formation, within the unitized area,
in 1955 under primary depletion (solution gas expansion). The
Weyburn Unit was formed in 1963 for the purpose of implementing
an inverted nine-spot waterflood pressure maintenance scheme.
Commencing in 1985, the operator, PanCanadian Petroleum Limited,
embarked on an extensive infill drilling and waterflood
reconfiguration program. In recent years horizontal wells have
been extensively used to arrest production declines. Produced
oil averages 31 API and contains approximately 2% sulphur. GLJ
estimates remaining Established Reserves at December 31,
2001 at 149 (14.6 net) mmbbls of oil with a remaining
producing life of 50 years and a Reserve Life Index of
19.5 years. In 2001, production from the Weyburn Unit
averaged 20,800 (2,028 net) boepd from 653 (63.7 net)
oil wells.

     Development
Activity

     
A carbon dioxide (CO2) miscible flood
project was initiated in the fall of 2000. CO2
injection has been initiated in seventeen of nineteen patterns
in phase 1A of the flood with injection rates reaching the
targeted 90 to 95 mmcf per day in September 2001. The 2002
program includes the addition of four more injection patterns.
Incremental oil production to date from the CO2
project has ranged from 1,887 to 2,295 bpd and the
incremental rates are expected to increase to 7,500 bpd
during 2002 (731 bbls net to Pengrowth Corporation).

     Mcleod
River

     
The McLeod River property is located
approximately 70 miles from Edmonton. Production is obtained
from the Rock Creek, Gething and Cardium formations. Pengrowth
Corporation drilled two gas wells during 2001, with working
interests of 87.5 and 100 percent, respectively. Both wells
are tied in and are on production. A compressor package was also
installed on a well to reduce back pressure and maintain
production. Mcleod River production at December 31, 2001
averaged 1,972 boepd.

16

 

     Development
Activity

     
Pengrowth Corporation has drilled and placed one
additional well on production in March, 2002 and expects to
drill at least three additional gas wells in 2002. Wellhead
compression will be installed on one or two wells to maintain
production.

     Enchant

     
The Enchant property is located approximately 120
miles southeast of Calgary. The property consists of four
operated oil pools in which Pengrowth Corporation holds an
average 88% working interest. These pools produce 32API oil from
the Nisku formation.

     
Pengrowth Corporation holds a 100% working
interest in the largest pool (the J and VV pool) which consists
of 33 producing and 9 injection wells with treating, water
handling and gas conservation handled at a central battery.
Primary production commenced in 1992 and a waterflood project
was implemented in 1995. Net Established Reserves are estimated
at 6.6 mmbbls of oil and 2.9 bcf of natural gas with an
estimated 2002 average net production rate of 933 bpd and
0.4 mmcf/d of natural gas. GLJ estimates that the Enchant
property has a reserve life of 50 years and a Reserve Life
Index of 19.4 years.

     
Pengrowth Corporation drilled one 100% oil well
during 2001 in the J & VV Pool. During 2001, Pengrowth
Corporation also completed a stimulation on a zone of bypassed
pay, which increased production by 25 bpd. Another
producing oil well was converted from a rod pump to high volume
submersible pump, which increased production by 50 bpd. A
third well was converted to an injection well to provide
pressure support in the interior portion of the pool.

     
In the Enchant Arcs Unit No. 2, where
Pengrowth Corporation converted a well to injection in mid-2000,
pressure support is now apparent and consequently no production
decline is anticipated in 2002.

     Development
Activity

     
Pengrowth Corporation expects to drill one
potential oil well in the J and VV pool in 2002.

     Sable
Offshore Energy Project (SOEP)

     
SOEP is located offshore the Province of Nova
Scotia. On June 15, 2002 Pengrowth Corporation acquired a
99.9% royalty interest in the reserves and production associated
with Emera’s 8.4% working interest (the “SOEP
Royalty”) and is responsible for its royalty share of
associated capital and operating costs. As of December 31,
2002 the total SOEP remaining established reserves are estimated
by Pengrowth Corporation to be in the range of 3.5 tcf and 109
mmbbls of natural gas liquids, with Pengrowth Corporation’s
SOEP Royalty share estimated at 206 bcf of natural gas and
9.1 million barrels of natural gas liquids. SOEP production
averaged 543 mmcf/d during the fourth quarter of 2001 (45.6
mmcf/d net to Pengrowth Corporation).

     
The SOEP gas reserves were discovered in the
early 1970’s and commercial gas production began in
December 1999. SOEP currently produces gas and NGLs from three
fields in the vicinity of Sable Island, Nova Scotia: Venture,
North Triumph and Thebaud. The SOEP project consists of two
tiers. The first tier, completed in December 1999, included the
construction of the main gas processing plant at Goldboro, a
natural gas liquids fractionation plant at Point Tupper,
offshore platforms at Thebaud, North Triumph and Venture and the
offshore pipeline system.

     
Subject to owner approval, Tier 11 is expected to
be developed over the 2002 — 2007 timeframe and will
add three platforms and production from wells in Alma, Glenelg
and South Venture. The first tier 11 platform is expected to be
installed in the Alma Field. Fabrication and construction are
planned for 2002, followed by installation, commissioning and
start up in 2003. Development of the Tier 11 fields will be
managed in a staged approach over the next several years.

     
Sales gas from SOEP is delivered to the onshore
gas plant facility at Goldboro, and the liquids are processed at
the fractionation plant in Point Tupper. The refined gas is
transported to market via the Maritimes & Northeast Pipeline.

17

 

Production

     Production
History

     
The natural gas, natural gas liquids and oil
production of Pengrowth Corporation is set out in the following
table:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
													
			Natural Gas						
			
		Natural Gas Liquids		Crude Oil		
					Average Daily		
		
		Average Daily
					Production				Average Daily				Average Daily		Total
			Gas		mmcf/d per				Production				Production		Production
	12 Months To		mmcf		day		mstb		bpd		mstb		bpd		boepd(1)
	
		
		
		
		
		
		
		

	
    
    December 31, 1997
    

    	 	 	18,744	 	 	 	51,355	 	 	 	677.2	 	 	 	1,856	 	 	 	2,792.3	 	 	 	7,650	 	 	 	18,140	 
	
    
    December 31, 1998
    

    	 	 	21,063	 	 	 	57,707	 	 	 	1,219.7	 	 	 	3,342	 	 	 	6,093.8	 	 	 	16,695	 	 	 	29,741	 
	
    
    December 31, 1999
    

    	 	 	22,445	 	 	 	61,494	 	 	 	1,433.4	 	 	 	3,927	 	 	 	6,413.0	 	 	 	17,570	 	 	 	31,821	 
	
    
    December 31, 2000
    

    	 	 	25,656	 	 	 	70,098	 	 	 	1,539.1	 	 	 	4,205	 	 	 	6,441.2	 	 	 	17,599	 	 	 	33,581	 
	
    
    December 31, 2001
    

    	 	 	33,494	 	 	 	91,764	 	 	 	1,919.2	 	 	 	5,258	 	 	 	7,200.0	 	 	 	19,726	 	 	 	40,320	 

Note:

		
	(1) 	
    6:1 gas to oil conversion, including sulphur
    production.
    

     Producing
Wells

     
The producing wells of Pengrowth Corporation are
summarized in the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
							
			Gas		Oil		Total
			
		
		

	Property		Gross		Net		Gross		Net		Gross		Net
	
		
		
		
		
		
		

	
    
    Judy Creek BHL Unit
    

    	 	 	—	 	 	 	—	 	 	 	128.00	 	 	 	128.00	 	 	 	128.00	 	 	 	128.00	 
	
    
    Weyburn Unit
    

    	 	 	—	 	 	 	—	 	 	 	652.00	 	 	 	63.55	 	 	 	652.00	 	 	 	63.55	 
	
    
    Swan Hills Unit No.1
    

    	 	 	—	 	 	 	—	 	 	 	228.00	 	 	 	23.82	 	 	 	228.00	 	 	 	23.82	 
	
    
    Judy Creek West BHL Unit
    

    	 	 	—	 	 	 	—	 	 	 	33.00	 	 	 	31.21	 	 	 	33.00	 	 	 	31.21	 
	
    
    Enchant
    

    	 	 	—	 	 	 	—	 	 	 	43.00	 	 	 	41.20	 	 	 	43.00	 	 	 	41.20	 
	
    
    Nipisi Non-Unit
    

    	 	 	—	 	 	 	—	 	 	 	44.00	 	 	 	41.80	 	 	 	44.00	 	 	 	41.80	 
	
    
    Goose River BHL Unit No.1
    

    	 	 	—	 	 	 	—	 	 	 	30.00	 	 	 	12.68	 	 	 	30.00	 	 	 	12.68	 
	
    
    Dunvegan Gas Unit No.1
    

    	 	 	177.00	 	 	 	14.12	 	 	 	—	 	 	 	—	 	 	 	177.00	 	 	 	14.12	 
	
    
    McLeod River
    

    	 	 	61.00	 	 	 	31.40	 	 	 	3.00	 	 	 	1.25	 	 	 	64.00	 	 	 	32.65	 
	
    
    Monogram Gas Unit
    

    	 	 	375.00	 	 	 	201.82	 	 	 	—	 	 	 	—	 	 	 	375.00	 	 	 	201.82	 
	
    
    Hanlan Swan Hills Pool Gas Unit No.1
    

    	 	 	11.00	 	 	 	0.86	 	 	 	—	 	 	 	—	 	 	 	11.00	 	 	 	0.86	 
	
    
    Kaybob Notikewin Unit No.1
    

    	 	 	24.00	 	 	 	15.49	 	 	 	—	 	 	 	—	 	 	 	24.00	 	 	 	15.49	 
	
    
    House Mountain Unit No.1
    

    	 	 	—	 	 	 	—	 	 	 	104.00	 	 	 	13.01	 	 	 	104.00	 	 	 	13.01	 
	
    
    House Mountain Unit No.2
    

    	 	 	—	 	 	 	—	 	 	 	18.00	 	 	 	1.27	 	 	 	18.00	 	 	 	1.27	 
	
    
    Minnehik Buck Lake Unit No.1
    

    	 	 	22.00	 	 	 	3.94	 	 	 	—	 	 	 	—	 	 	 	22.00	 	 	 	3.94	 
	
    
    Other
    

    	 	 	960.00	 	 	 	170.66	 	 	 	514.00	 	 	 	76.16	 	 	 	1474.00	 	 	 	246.82	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total

    	 	 	1630.00	 	 	 	438.28	 	 	 	1797.00	 	 	 	433.95	 	 	 	3427.00	 	 	 	872.23	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

18

 

     Drilling
Activity

     
The number of wells drilled by Pengrowth
Corporation over the past 5 years is set out in the
following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
																			
									Dry &		
			Gas		Oil		Service		Abandoned		Total
			
		
		
		
		

	Period		Gross		Net		Gross		Net		Gross		Net		Gross		Net		Gross		Net
	
		
		
		
		
		
		
		
		
		
		

	
    
    1997
    

    	 	 	15	 	 	 	2.92	 	 	 	73	 	 	 	7.28	 	 	 	—	 	 	 	—	 	 	 	5	 	 	 	0.35	 	 	 	93	 	 	 	10.56	 
	
    
    1998
    

    	 	 	60	 	 	 	27.74	 	 	 	62	 	 	 	4.77	 	 	 	11	 	 	 	6.45	 	 	 	18	 	 	 	3.02	 	 	 	151	 	 	 	41.98	 
	
    
    1999
    

    	 	 	5	 	 	 	0.46	 	 	 	21	 	 	 	3.52	 	 	 	—	 	 	 	—	 	 	 	3	 	 	 	1.21	 	 	 	29	 	 	 	5.19	 
	
    
    2000
    

    	 	 	8	 	 	 	1.2	 	 	 	61	 	 	 	21.4	 	 	 	19	 	 	 	2.99	 	 	 	3	 	 	 	0.78	 	 	 	91	 	 	 	26.37	 
	
    
    2001
    

    	 	 	62	 	 	 	32.36	 	 	 	75	 	 	 	13.82	 	 	 	9	 	 	 	3.8	 	 	 	2	 	 	 	1.10	 	 	 	148	 	 	 	51.09	 

     Capital
Expenditures

     
The capital expenditures, excluding property
acquisitions, made by Pengrowth Corporation to December 31,
2001 are set out in the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 
			
			Capital Expenditures
			($000’s)
			

	12 Months to		Drilling and Exploration		Production Facilities		Total
	
		
		
		

	
    
    December 31, 1997
    

    	 	 	14,534	 	 	 	3,006	 	 	 	17,540	 
	
    
    December 31, 1998
    

    	 	 	25,330	 	 	 	9,595	 	 	 	34,925	 
	
    
    December 31, 1999
    

    	 	 	11,712	 	 	 	6,030	 	 	 	17,742	 
	
    
    December 31, 2000
    

    	 	 	45,351	 	 	 	14,408	 	 	 	59,759	 
	
    
    December 31, 2001
    

    	 	 	59,516	 	 	 	14,510	 	 	 	74,026	 

Reserves

     
The following summary of reserves includes those
working interests and gross overriding royalty interests held by
Pengrowth Corporation as at December 31, 2001. Both the
escalated and constant price cases are based on the GLJ Report.
Assumptions and qualifications contained in the GLJ Report
relating to prices, costs and inflation are set forth in the
notes to the tables. All evaluations have been stated prior to
any provision for income taxes, interest costs or general and
administrative costs. It should not be assumed that the
estimated present worth values represent the fair market value
of the reserves of Pengrowth Corporation. Probable reserves and
cash flows have been reduced by 50% to reflect the risk of
recovery. Pengrowth Corporation is not aware of any material
adverse changes in the information contained in the GLJ Report.

RESERVES

Pengrowth Corporation

Escalated Prices and Costs

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
																			
							Estimated Future Net Cash Flow
			Gross Reserves		Net Reserves		Before Income Tax ($million)
			
		
		

					Natural						Natural						
					Gas		Natural						Gas		Natural						Discounted at
			Oil		Liquids		Gas		BOE		Oil		Liquids		Gas		BOE				

			(mbbls)		(mbbls)		(bcf)		(mbbls)		(mbbls)		(mbbls)		(bcf)		(mbbls)		Undiscounted		10%		12%		15%
			
		
		
		
		
		
		
		
		
		
		
		

	
    
    Proved Producing
    

    	 	 	64,651	 	 	 	15,000	 	 	 	289.6	 	 	 	127,911	 	 	 	55,039	 	 	 	10,785	 	 	 	229.9	 	 	 	104,146	 	 	$	1,532	 	 	 	875	 	 	 	815	 	 	 	741	 
	
    
    Proved Non-Producing
    

    	 	 	22,737	 	 	 	6,858	 	 	 	121.2	 	 	 	49,794	 	 	 	19,994	 	 	 	5,262	 	 	 	97.0	 	 	 	41,424	 	 	$	515	 	 	 	205	 	 	 	172	 	 	 	132	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total Proved
    

    	 	 	87,388	 	 	 	21,858	 	 	 	410.8	 	 	 	177,705	 	 	 	75,033	 	 	 	16,047	 	 	 	326.9	 	 	 	145,570	 	 	$	2,047	 	 	 	1,080	 	 	 	987	 	 	 	873	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Risked Probable
    

    	 	 	17,796	 	 	 	4,106	 	 	 	65.4	 	 	 	32,817	 	 	 	14,645	 	 	 	2,943	 	 	 	48.9	 	 	 	25,724	 	 	$	489	 	 	 	149	 	 	 	127	 	 	 	103	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total Proved + Risked Probable
    

    	 	 	105,184	 	 	 	25,964	 	 	 	476.2	 	 	 	210,522	 	 	 	89,678	 	 	 	18,990	 	 	 	375.8	 	 	 	171,294	 	 	$	2,536	 	 	 	1,229	 	 	 	1,114	 	 	 	976	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

		
	* 	
    Based on GLJ Report.
    

19

 

RESERVES

Pengrowth Corporation

Constant Prices and Costs

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
																			
							Estimated Future Net Cash Flow
			Gross Reserves		Net Reserves		Before Income Tax ($million)
			
		
		

					Natural						Natural						
					Gas		Natural						Gas		Natural						Discounted at
			Oil		Liquids		Gas		BOE		Oil		Liquids		Gas		BOE				

			(mbbls)		(mbbls)		(bcf)		(mbbls)		(mbbls)		(mbbls)		(bcf)		(mbbls)		Undiscounted		10%		12%		15%
			
		
		
		
		
		
		
		
		
		
		
		

	
    
    Proved Producing
    

    	 	 	64,810	 	 	 	15,085	 	 	 	291.0	 	 	 	128,395	 	 	 	55,034	 	 	 	10,854	 	 	 	231.4	 	 	 	104,452	 	 	$	1,437	 	 	 	845	 	 	 	789	 	 	 	719	 
	
    
    Proved Non-Producing
    

    	 	 	22,662	 	 	 	6,966	 	 	 	123.3	 	 	 	50,171	 	 	 	19,701	 	 	 	5,358	 	 	 	98.9	 	 	 	41,543	 	 	$	532	 	 	 	216	 	 	 	182	 	 	 	142	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total Proved
    

    	 	 	87,472	 	 	 	22,051	 	 	 	414.3	 	 	 	178,566	 	 	 	74,735	 	 	 	16,212	 	 	 	330.3	 	 	 	145,995	 	 	$	1,969	 	 	 	1,061	 	 	 	971	 	 	 	861	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Risked Probable
    

    	 	 	17,809	 	 	 	4,093	 	 	 	65.1	 	 	 	32,762	 	 	 	14,561	 	 	 	2,928	 	 	 	48.5	 	 	 	25,568	 	 	$	447	 	 	 	146	 	 	 	124	 	 	 	101	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Total Proved + Risked Probable
    

    	 	 	105,281	 	 	 	26,144	 	 	 	479.4	 	 	 	211,328	 	 	 	89,296	 	 	 	19,140	 	 	 	378.8	 	 	 	171,563	 	 	$	2,416	 	 	 	1,207	 	 	 	1,095	 	 	 	962	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 

		
	* 	
    Based on GLJ Report.
    

ESTIMATED NET CASH FLOWS

Pengrowth Corporation

Established Reserves

Escalated Prices and Costs

($ millions)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
							Net																Net Cash
							Revenue														Net		Flow
			Company				After						Net								Capital		Before
			Interest		Royalty		Royalty		Operating		Other		Production				Other		Abandon-		Invest-		Income
	Year		Revenue		Burdens		Burdens		Expenses		Expenses		Revenue		ARC		Income		ment Cost		ment		Taxes
	
		
		
		
		
		
		
		
		
		
		
		

	
    
    2002
    

    	 	 	397.3	 	 	 	67.8	 	 	 	329.5	 	 	 	109.5	 	 	 	3.4	 	 	 	216.6	 	 	 	0.5	 	 	 	4.8	 	 	 	2.2	 	 	 	42.4	 	 	 	177.4	 
	
    
    2003
    

    	 	 	417.9	 	 	 	59.3	 	 	 	358.6	 	 	 	156.2	 	 	 	3.0	 	 	 	199.4	 	 	 	0.5	 	 	 	15.2	 	 	 	2.0	 	 	 	77.1	 	 	 	136.1	 
	
    
    2004
    

    	 	 	429.1	 	 	 	63.4	 	 	 	365.7	 	 	 	128.7	 	 	 	3.1	 	 	 	233.9	 	 	 	0.5	 	 	 	6.8	 	 	 	2.9	 	 	 	42.7	 	 	 	195.6	 
	
    
    2005
    

    	 	 	410.8	 	 	 	63.5	 	 	 	347.3	 	 	 	124.0	 	 	 	2.9	 	 	 	220.4	 	 	 	0.5	 	 	 	3.7	 	 	 	2.8	 	 	 	39.8	 	 	 	182.0	 
	
    
    2006
    

    	 	 	403.9	 	 	 	78.1	 	 	 	325.8	 	 	 	111.6	 	 	 	2.7	 	 	 	211.4	 	 	 	0.5	 	 	 	(2.4	)	 	 	3.2	 	 	 	19.2	 	 	 	187.1	 
	
    
    2007
    

    	 	 	367.3	 	 	 	72.8	 	 	 	294.5	 	 	 	103.1	 	 	 	2.6	 	 	 	188.8	 	 	 	0.5	 	 	 	(3.7	)	 	 	0.8	 	 	 	25.9	 	 	 	158.9	 
	
    
    2008
    

    	 	 	337.1	 	 	 	70.4	 	 	 	266.7	 	 	 	96.0	 	 	 	2.5	 	 	 	168.2	 	 	 	0.5	 	 	 	(7.1	)	 	 	1.3	 	 	 	11.9	 	 	 	148.5	 
	
    
    2009
    

    	 	 	318.8	 	 	 	67.7	 	 	 	251.1	 	 	 	92.3	 	 	 	2.3	 	 	 	156.4	 	 	 	0.5	 	 	 	(8.1	)	 	 	1.2	 	 	 	12.1	 	 	 	135.5	 
	
    
    2010
    

    	 	 	276.7	 	 	 	59.1	 	 	 	217.6	 	 	 	79.4	 	 	 	2.2	 	 	 	136.1	 	 	 	0.5	 	 	 	(6.7	)	 	 	1.3	 	 	 	8.1	 	 	 	120.6	 
	
    
    2011
    

    	 	 	252.2	 	 	 	56.7	 	 	 	195.6	 	 	 	69.4	 	 	 	2.1	 	 	 	124.1	 	 	 	0.5	 	 	 	(6.4	)	 	 	0.7	 	 	 	4.7	 	 	 	112.7	 
	
    
    2012
    

    	 	 	238.7	 	 	 	53.8	 	 	 	184.8	 	 	 	66.3	 	 	 	1.8	 	 	 	116.7	 	 	 	0.5	 	 	 	(6.1	)	 	 	0.6	 	 	 	5.0	 	 	 	105.6	 
	
    
    2013
    

    	 	 	208.7	 	 	 	44.5	 	 	 	164.2	 	 	 	63.7	 	 	 	1.7	 	 	 	98.8	 	 	 	0.5	 	 	 	(5.1	)	 	 	0.3	 	 	 	4.4	 	 	 	89.5	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Subtotal
    

    	 	 	4,058.4	 	 	 	757.0	 	 	 	3,301.4	 	 	 	1,200.2	 	 	 	30.4	 	 	 	2,070.9	 	 	 	6.0	 	 	 	(15.0	)	 	 	19.4	 	 	 	293.2	 	 	 	1,749.4	 
	
    
    Remaining
    

    	 	 	2,281.3	 	 	 	346.0	 	 	 	1,935.4	 	 	 	1,030.9	 	 	 	16.3	 	 	 	888.1	 	 	 	15.6	 	 	 	(38.9	)	 	 	48.3	 	 	 	30.4	 	 	 	786.2	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    TOTAL
    

    	 	 	6,339.7	 	 	 	1,102.9	 	 	 	5,236.8	 	 	 	2,231.1	 	 	 	46.7	 	 	 	2,959.0	 	 	 	21.6	 	 	 	(53.9	)	 	 	67.6	 	 	 	323.6	 	 	 	2,535.5	 
	
    
    Discounted Value at 12% DCF
    

    	 	 	2,636.0	 	 	 	467.5	 	 	 	2,168.6	 	 	 	813.3	 	 	 	19.7	 	 	 	1,335.5	 	 	 	4.4	 	 	 	0.5	 	 	 	15.0	 	 	 	211.7	 	 	 	1,113.6	 

20

 

ESTIMATED NET CASH FLOWS

Pengrowth Corporation

Established Reserves

Constant Prices and Costs

($ millions)

     
[NTD: Parenthesis rather than negative
symbol?]

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
							Net																Net Cash
							Revenue																Flow
			Company				After						Net								Net		Before
			Interest		Royalty		Royalty		Operating		Other		Production				Other		Abandonment		Capital		Income
	Year		Revenue		Burdens		Burdens		Expenses		Expenses		Revenue		ARC		Income		Cost		Investment		Taxes
	
		
		
		
		
		
		
		
		
		
		
		

	
    
    2002
    

    	 	 	397.4	 	 	 	67.8	 	 	 	329.6	 	 	 	109.5	 	 	 	3.5	 	 	 	216.7	 	 	 	0.5	 	 	 	4.8	 	 	 	2.2	 	 	 	42.4	 	 	 	177.4	 
	
    
    2003
    

    	 	 	403.5	 	 	 	56.3	 	 	 	347.2	 	 	 	153.9	 	 	 	2.7	 	 	 	190.4	 	 	 	0.5	 	 	 	15.2	 	 	 	1.9	 	 	 	75.9	 	 	 	128.3	 
	
    
    2004
    

    	 	 	417.8	 	 	 	61.8	 	 	 	356.0	 	 	 	124.9	 	 	 	2.9	 	 	 	228.2	 	 	 	0.5	 	 	 	6.8	 	 	 	2.8	 	 	 	41.5	 	 	 	191.2	 
	
    
    2005
    

    	 	 	407.3	 	 	 	64.7	 	 	 	342.6	 	 	 	118.6	 	 	 	2.7	 	 	 	221.3	 	 	 	0.5	 	 	 	3.7	 	 	 	2.7	 	 	 	38.0	 	 	 	184.8	 
	
    
    2006
    

    	 	 	398.6	 	 	 	78.9	 	 	 	319.6	 	 	 	105.2	 	 	 	2.6	 	 	 	211.9	 	 	 	0.5	 	 	 	(2.4	)	 	 	3.0	 	 	 	18.1	 	 	 	188.8	 
	
    
    2007
    

    	 	 	359.1	 	 	 	72.8	 	 	 	286.3	 	 	 	95.7	 	 	 	2.4	 	 	 	188.2	 	 	 	0.5	 	 	 	(3.7	)	 	 	0.8	 	 	 	24.1	 	 	 	160.2	 
	
    
    2008
    

    	 	 	327.2	 	 	 	69.9	 	 	 	257.3	 	 	 	87.9	 	 	 	2.2	 	 	 	167.2	 	 	 	0.5	 	 	 	(7.1	)	 	 	1.2	 	 	 	10.8	 	 	 	148.6	 
	
    
    2009
    

    	 	 	306.7	 	 	 	66.6	 	 	 	240.1	 	 	 	83.3	 	 	 	2.2	 	 	 	154.6	 	 	 	0.5	 	 	 	(8.1	)	 	 	1.1	 	 	 	10.9	 	 	 	135.1	 
	
    
    2010
    

    	 	 	262.6	 	 	 	57.4	 	 	 	205.2	 	 	 	70.5	 	 	 	2.0	 	 	 	132.6	 	 	 	0.5	 	 	 	(6.7	)	 	 	1.1	 	 	 	7.2	 	 	 	118.2	 
	
    
    2011
    

    	 	 	235.7	 	 	 	54.1	 	 	 	181.6	 	 	 	60.8	 	 	 	1.9	 	 	 	118.9	 	 	 	0.5	 	 	 	(6.4	)	 	 	0.7	 	 	 	4.1	 	 	 	108.2	 
	
    
    2012
    

    	 	 	221.2	 	 	 	50.9	 	 	 	170.2	 	 	 	57.1	 	 	 	1.7	 	 	 	111.4	 	 	 	0.5	 	 	 	(6.1	)	 	 	0.5	 	 	 	4.3	 	 	 	101.1	 
	
    
    2013
    

    	 	 	191.2	 	 	 	41.6	 	 	 	149.6	 	 	 	54.1	 	 	 	1.6	 	 	 	93.9	 	 	 	0.5	 	 	 	(5.1	)	 	 	0.4	 	 	 	3.8	 	 	 	85.2	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    Subtotal
    

    	 	 	3,928.1	 	 	 	742.9	 	 	 	3,185.3	 	 	 	1,121.4	 	 	 	28.4	 	 	 	2,035.4	 	 	 	6.0	 	 	 	(15.0	)	 	 	18.3	 	 	 	281.0	 	 	 	1,727.1	 
	
    
    Remaining
    

    	 	 	1,819.5	 	 	 	286.6	 	 	 	1,532.9	 	 	 	747.3	 	 	 	13.0	 	 	 	772.5	 	 	 	13.5	 	 	 	(43.6	)	 	 	30.3	 	 	 	22.7	 	 	 	689.3	 
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	
    
    TOTAL
    

    	 	 	5,747.6	 	 	 	1,029.5	 	 	 	4,718.1	 	 	 	1,868.7	 	 	 	41.4	 	 	 	2,807.9	 	 	 	19.5	 	 	 	(58.6	)	 	 	48.7	 	 	 	303.7	 	 	 	2,416.4	 
	
    
    Discounted Value at 12% DCF
    

    	 	 	2,539.9	 	 	 	456.2	 	 	 	2,083.7	 	 	 	756.5	 	 	 	18.4	 	 	 	1,308.7	 	 	 	4.3	 	 	 	0.3	 	 	 	13.8	 	 	 	204.2	 	 	 	1,095.4	 

General Notes:

			
	 	(1) 	
    Gross reserves are defined as the total Pengrowth
    Corporation share of reserves. Net reserves are defined as
    Pengrowth Corporation’s gross reserves less all royalties
    payable to the Crown and others.
    
	 
	 	(2) 	
    GLJ has used its best engineering judgement in
    estimating production rates and product pricing in evaluating
    the properties. It should be recognized, however, that
    uncertainties in the oil and gas industry may result in
    production rates and product prices being different from those
    used in the GLJ Report.
    
	 
	 	(3) 	
    Proved Reserves: Those reserves estimated as
    recoverable under current technology and existing economic
    conditions, in the case of constant pricing, and anticipated
    economic conditions, in the case of escalated pricing, from that
    portion of a reservoir which can be reasonably evaluated as
    economically productive on the basis of analysis of drilling,
    geological, geophysical and engineering data, including the
    reserves to be obtained by enhanced recovery processes
    demonstrated to be economic and technically successful in the
    subject reservoir.
    
	 
	 	    	
    Proved Producing Reserves: Those proved reserves
    that are actually on production or, if not producing, that could
    be recovered from existing wells or facilities and where the
    reason for the current non-producing status is the choice of the
    owner rather than the lack of markets or some other reason. An
    illustration of such a situation is where a well or zone is
    capable but is shut-in because its deliverability is not
    required to meet contract commitments.
    
	 
	 	    	
    Proved Non-Producing Reserves: Those proved
    reserves that are not currently producing either due to lack of
    facilities and/or markets.
    
	 
	 	    	
    Probable Additional Reserves: Those reserves
    which an analysis of drilling, geological, geophysical and
    engineering data does not demonstrate to be proved under current
    technology and existing economic conditions, but where such
    analysis suggests the likelihood of their existence and future
    recovery. Probable additional reserves to be obtained by the
    application of enhanced recovery processes will be the increased
    recovery over and above that estimated in the proved category
    which can be realistically
    

21

 

			
	 		
    estimated for the pool on the basis of enhanced
    recovery processes which can be reasonably expected to be
    instituted in the future.
    
	 
	 	(4) 	
    Net cash flow is income derived from the sale of
    net reserves of oil, gas and gas by-products, gas processing and
    other revenue, less all capital costs, production taxes and
    operation costs and before provision for income taxes and
    administrative overhead costs.
    
	 
	 	(5) 	
    All values are shown in Canadian dollars.
    
	 
	 	(6) 	
    Pengrowth Corporation is entitled to claim
    Alberta Royalty Credits (“ARC”). The ARC program is
    based on a price-sensitive formula linked to crude oil prices.
    Credits vary from a high of 75% of the eligible Alberta Crown
    Royalties for a taxation year to a maximum of $1,500,000 (75% of
    $2,000,000) when the price of oil falls below U.S. $15 per
    barrel, to a low of 25% (maximum $500,000) when the price of oil
    rises above U.S. $30 per barrel. In the GLJ Report, the ARC
    program is assumed to continue indefinitely.
    
	 
	 	(7) 	
    The escalating price assumptions assume the
    continuance of current laws and regulations and any forecast
    changes in wellhead selling prices and takes into account
    inflation with respect to future operating and capital costs. In
    the escalating price assumptions evaluation contained in the GLJ
    Report, operating and capital costs have been escalated in
    accordance with GLJ’s estimate thereof. GLJ’s oil and
    gas base case price forecasts effective December 31, 2001
    are as shown below.
    
	 
	 	(8) 	
    Pengrowth Trust bases its distributions to
    Unitholders on distributable income calculated in accordance
    with Canadian generally accepted accounting principles. The net
    cash flows estimated in the GLJ Report will not correspond
    directly to distributable income reported by Pengrowth Trust for
    several reasons including the following:
    

			
	 	(a) 	
    net cash flow before income tax from the GLJ
    Report is stated prior to general and administrative expenses,
    interest and management fees;
    
	 
	 	(b) 	
    for purposes of calculating distributable income,
    Pengrowth Trust amortizes the cost of miscible flood injection
    fluids purchased from third parties over the period of expected
    future economic benefit arising from the injection of those
    fluids, which is currently 30 months. The GLJ Report
    includes the full cost of purchased injection fluids
    ($14.6 million in 2002) in operating costs in the year
    incurred.
    

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
													
			Oil Prices						
			
				Capital and		Natural Gas Liquid Prices FOB
							Operating		Edmonton
			Edmonton				Gas Prices		Cost		

			FOB		West Texas		Average		Escalation		Condensate		Propane		Butane
			CDN		Intermediate		Alberta Price		Factors		CDN		CDN		CDN
	Year		$/bbl		US $/bbl		CDN $/mcf		%/yr		$/bbl		$/bbl		$/bbl
	
		
		
		
		
		
		
		

	
    
    2002
    

    	 	 	30.75	 	 	 	20.00	 	 	 	3.95	 	 	 	1.5	 	 	 	31.75	 	 	 	19.75	 	 	 	20.75	 
	
    
    2003
    

    	 	 	31.25	 	 	 	21.00	 	 	 	4.35	 	 	 	1.5	 	 	 	32.25	 	 	 	20.25	 	 	 	21.25	 
	
    
    2004
    

    	 	 	30.50	 	 	 	21.00	 	 	 	4.45	 	 	 	1.5	 	 	 	31.50	 	 	 	19.50	 	 	 	20.50	 
	
    
    2005
    

    	 	 	29.50	 	 	 	21.00	 	 	 	4.50	 	 	 	1.5	 	 	 	30.00	 	 	 	18.50	 	 	 	19.50	 
	
    
    2006
    

    	 	 	29.50	 	 	 	21.25	 	 	 	4.50	 	 	 	1.5	 	 	 	30.00	 	 	 	18.50	 	 	 	19.50	 
	
    
    2007
    

    	 	 	30.00	 	 	 	21.75	 	 	 	4.50	 	 	 	1.5	 	 	 	30.50	 	 	 	19.00	 	 	 	20.00	 
	
    
    2008
    

    	 	 	30.50	 	 	 	22.00	 	 	 	4.50	 	 	 	1.5	 	 	 	31.00	 	 	 	19.50	 	 	 	20.50	 
	
    
    2009
    

    	 	 	31.00	 	 	 	22.25	 	 	 	4.55	 	 	 	1.5	 	 	 	31.50	 	 	 	19.75	 	 	 	21.00	 
	
    
    2010
    

    	 	 	31.50	 	 	 	22.50	 	 	 	4.60	 	 	 	1.5	 	 	 	32.00	 	 	 	20.25	 	 	 	21.50	 
	
    
    2011
    

    	 	 	32.00	 	 	 	23.00	 	 	 	4.70	 	 	 	1.5	 	 	 	32.50	 	 	 	20.50	 	 	 	22.00	 
	
    
    2012
    

    	 	 	32.50	 	 	 	23.25	 	 	 	4.75	 	 	 	1.5	 	 	 	33.00	 	 	 	20.75	 	 	 	22.50	 

     
and thereafter escalate at 1.5% per annum

			
	 	(9) 	
    The US/Canadian dollar exchange rate is assumed
    to be $0.635 for 2002, $0.65 for 2003, $0.67 for 2004, $0.69 for
    2005, $0.70 for 2006 and beyond.
    

		
	(10) 	
    The constant price assumptions assume that the
    prices set out above for 2001, adjusted to the wellhead and for
    oil quality, will remain constant for the economic life of the
    reserves.
    

22

 

		
	(11) 	
    Operating costs are based on actual costs
    determined from a review of operating statements. Capital costs
    have been included to drill, complete, equip and tie-in wells
    where applicable. Capital costs have been escalated similarly to
    operating costs. All operating costs and capital cost figures
    quoted in the GLJ Report are in terms of 2002 dollars.
    
	 
	(12) 	
    GLJ estimates the total capital costs net to
    Pengrowth Corporation necessary to achieve the estimated future
    net proved and risked probable production revenues in respect of
    the Existing Reserves to be as follows:
    

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
			
			Projected Capital Costs ($ millions)
			

			2002		2003		2004		2005		Remainder		Total
			
		
		
		
		
		

	
    
    Escalated
    

    	 	 	42.4	 	 	 	77.1	 	 	 	42.7	 	 	 	39.8	 	 	 	121.7	 	 	 	323.6	 
	
    
    Prices & Costs Constant Pricing
    

    	 	 	42.4	 	 	 	75.9	 	 	 	41.5	 	 	 	38.0	 	 	 	106.0	 	 	 	303.7	 

		
	(13) 	
    Well abandonment and reclamation have been
    considered in evaluating the reserves.
    

Replacement of Properties

     
In the event that Pengrowth Corporation
determines that the sale of any of its interests in properties,
and the release of the Royalty therefrom, would be in the best
interest of the Unitholders, the Royalty Indenture permits it to
make sales without the requirement of approval of the
Unitholders, provided that the aggregate properties sold in any
given year total less than 25% of the assets of Pengrowth
Corporation, determined as at the date of disposition of the
properties based upon an independent engineering appraisal. Any
sale exceeding this threshold must be approved by a Special
Resolution of the Unitholders.

     
In connection with any sale of properties, the
management of Pengrowth Corporation will also be required to
consider whether the net proceeds of the sale should be
distributed or reinvested to purchase replacement properties
(the “Replacement Properties”). If the proceeds of
disposition are not reinvested in the purchase of Replacement
Properties within the same calendar year then these proceeds are
allocated to the Royalty Unitholders.

Borrowing

     
Pursuant to the Royalty Indenture, Pengrowth
Corporation is permitted to borrow funds to finance the purchase
of properties or for capital expenditures, to incur take or pay
obligations and other burdens and encumbrances in respect of the
properties, and to grant security on the properties in priority
to the Royalty to secure the borrowing of such funds. Repayment
of debt shall be scheduled so as to minimize, to the extent
possible, income tax payable by Pengrowth Corporation. Debt
service charges (to the extent that they exceed certain revenues
of Pengrowth Corporation) and taxes payable by Pengrowth
Corporation will be deducted in computing Royalty Income.

     
As at December 31, 2001, Pengrowth
Corporation had a $415 million revolving credit facility
syndicated among nine financial institutions with an extendible
364 day revolving period and a three year amortization
term. In addition, it had a $35 million demand operating
line of credit. The facilities are secured by a
$500 million first fixed and floating charge debenture on
all of Pengrowth Corporation’s assets. In addition,
Pengrowth Trust has issued a guarantee and a $200 million
debenture granting a first fixed security interest in the Judy
Creek and Swan Hills facilities to the financial institutions in
the credit facility. The credit facility is available by way of
Canadian and U.S. dollar prime based loans, bankers’
acceptances, libor loans and letters of credit. The facility
bears interest at the bank’s prime lending rate, libor rate
plus applicable margins or bankers’ acceptance rates plus a
stamping fee depending on the form of borrowing by Pengrowth
Corporation. The margins and stamping fees vary with the debt to
cash flow ratio and can range from 0.625% to 1.125%. Pengrowth
Corporation pays a standby fee of 0.15% per annum on the
unutilized portion of the credit facility.

     
The credit facility will revolve until
June 23, 2002, where upon it is expected to be renewed for
a further 364 days, subject to satisfactory review by the
lenders. If the revolving credit facility is not extended, the
principal amount outstanding is to be repaid in 12 equal
quarterly instalments.

23

 

Marketing Arrangements

     
Pengrowth Corporation has hedged a total of 7,000
mmbtu/d of SOEP natural gas using financial swaps for the
remainder of 2002 at an average Goldboro netback price of
$4.40/mmbtu. Pengrowth Corporation has also hedged 12,000
mmbtu/d of Sable Island gas for the periods 2003 and 2004 at an
average Goldboro netback price of $4.52/mmbtu.

     
Pengrowth Corporation has currently hedged 4,000
bopd of crude oil, including foreign exchange risk, for the
remainder of 2002 at an average price of $36.89/bbl (21% of
estimated oil production).

     
Pengrowth Corporation has 6,785 mcf/d of Alberta
natural gas hedged for the remainder of 2002 at an average
plantgate price of $2.99/mcf.

     
In the first quarter of 2002, Pengrowth
Corporation realized a net hedging gain of $0.3 million
related to fixed price contracts (as compared to monthly AECO
average spot prices) and natural gas contracts. Net hedging
gains realized on crude oil price swap transactions were
$0.5 million.

Interest Rate Swaps

     
Pengrowth Corporation has 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 these interest rate
swaps at March 31, 2002 (the amount that Pengrowth
Corporation would receive to terminate these contracts) was
$2.5 million.

TRUST UNITS

The Trust Indenture

     
A maximum of 500,000,000 Trust Units may be
created and issued pursuant to the Trust Indenture. The Trust
Units represent fractional undivided beneficial interests in
Pengrowth Trust. The Trust Indenture, among other things,
provides for the calling of meetings of Trust Unitholders, the
conduct of business at such meetings, notice provisions, the
appointment and removal of Computershare as trustee and the form
of Trust Unit certificates. The Trust Indenture may be amended
from time to time. Amendments to the Trust Indenture, the early
termination of Pengrowth Trust and the sale or transfer of the
property of Pengrowth Trust as an entirety, or substantially as
an entirety, require approval by Special Resolution of the Trust
Unitholders.

     
The original Trust Indenture, dated
December 12, 1988, was prepared in conjunction with the
formation of Pengrowth Corporation and Pengrowth Trust. In
conjunction with the evolution and growth of the royalty trust
industry and of Pengrowth Corporation, changes to the Trust
Indenture were considered and approved by Trust Unitholders from
time to time. At the Special and Annual General Meeting held on
April 23, 2002, an Amended and Restated Trust Indenture was
approved by the holders of Trust Units to incorporate all of the
previous amendments and to adopt certain additional changes
recommended by management. See “Recent
Developments — Annual and Special Meeting
April 23, 2002”.

     
On April 23, 2002, the Trust Unitholders
passed an Extraordinary Resolution permitting meetings of Trust
Unitholders to be held partially or entirely by means of a
telephonic, electronic or other communication facility and the
distribution and receipt of proxies in respect thereof, thereby
potentially increasing the efficiency and reducing the expense
of the process. On April 23, 2002, the Trust Unitholders
also approved an Extraordinary Resolution permitting Pengrowth
Trust to guarantee the obligations of Pengrowth Corporation
under its bank credit facilities and to subordinate any
obligations to make distributions to the Trust Unitholders to
the obligations to the lenders. Pengrowth Trust was also
specifically authorized to guarantee the obligations of
Pengrowth Corporation pursuant to an Amended and Restated
Preliminary Net Royalty Agreement with Emera Inc., dated as of
April 26, 2001 in respect of which Pengrowth Corporation
acquired the SOEP Royalty.

24

 

Computershare Trust Company of Canada as
Trustee

     
Computershare is the Trustee of Pengrowth Trust
(the “Trustee”). The Trustee is responsible for:
(i) reviewing and accepting subscriptions for Trust Units
received by Pengrowth Trust and issuing Trust Units pursuant
thereto, subject to the right of Pengrowth Corporation to reject
any subscription in whole or in part; (ii) subscribing for
Royalty Units or making other “Permitted Investments”
as defined in the Trust Indenture; (iii) issuing Trust
Units in exchange for Royalty Units tendered to it;
(iv) maintaining records and providing timely reports to
Trust Unitholders; and (v) supervising the activities of
Pengrowth Trust. In accordance with its power to delegate under
the Trust Indenture, the Trustee has appointed Pengrowth
Corporation as the administrator of Pengrowth Trust to assume
those functions of the Trustee which are largely discretionary
pursuant to the Trust Indenture, subject to the prescribed
duties of Pengrowth Management.

     
The Trustee is reappointed or replaced every two
years as may be determined by a majority of the votes cast at an
annual meeting of the Trust Unitholders. At the Special and
Annual Meeting of holders of Trust Units held on April 25,
2001, the appointment of Computershare was extended for a
further two year period and the Unitholders approved amendments
to the Trust Indenture on April 23, 2002, including making
Computershare a party thereto. See “Recent
Developments — Annual And Special Meeting
April 23, 2002”. The Trustee may resign upon
60 days notice to the Trust Unitholders and may be removed
by Special Resolution of the Trust Unitholders. Such resignation
or removal shall become effective upon the acceptance of
appointment by a successor.

Cash Distributions

     
Since June 15, 1992, cash distributions have
been made on the 15th day of each month to Trust Unitholders of
record on the tenth business day immediately preceding the cash
distribution date. The amount to be paid to a Trust Unitholder
on a cash distribution date is equal to the Trust
Unitholders’ share of Royalty income, processing income and
other income received by Pengrowth Trust, less the expenses of
Pengrowth Trust and amounts reimbursed by Pengrowth Trust to
Pengrowth Corporation in respect of Crown Royalties. Pengrowth
Trust also has a United States currency pay feature whereby
Unitholders may elect to receive their distributions in United
States funds.

Redemption Right

     
Trust Units are redeemable by the Trustee at the
request of a Trust Unitholder when properly endorsed for
transfer and when accompanied by a duly completed and properly
executed notice requesting redemption to a maximum of $25,000 of
Trust Units in any calendar month.

Voting Rights in Pengrowth Trust

     
At all meetings of the Trust Unitholders, each
holder is entitled to one vote in respect of each Trust Unit
held. Subject to applicable securities legislation, meetings of
Trust Unitholders may be called on 21 days notice and held
for the purposes of: (i) the removal or election of the
Trustee; (ii) the appointment or removal of the auditor of
Pengrowth Trust; (iii) the approval of subdivisions or
consolidations of Trust Units; (iv) the approval of
material amendments to the Trust Indenture; (v) the sale of
the assets of Pengrowth Trust as an entity; (vi) the
termination of Pengrowth Trust; or (vii) the consideration
of any other business relating to Pengrowth Trust. In any event,
meetings of Trust Unitholders may be called at any time by the
Trustee or upon written request of Trust Unitholders holding in
the aggregate not less than 20% of the Trust Units and shall be
called by the Trustee and held annually. All activities
necessary to organize any such meeting will be undertaken by
Pengrowth Management on behalf of the Trustee.

     
Trust Unitholders may attend and vote at all
meetings of the Trust Unitholders either in person or by proxy
and a proxy holder need not be a Trust Unitholder. Two persons
present in person or represented by proxy and representing in
the aggregate at least 5% of the votes attaching to all
outstanding Trust Units constitute a quorum for the transaction
of business at all such meetings. Except where otherwise
provided in the Trust Indenture, matters requiring the approval
of the Trust Unitholders must be approved by Special Resolution.

25

 

     
A meeting of Trust Unitholders shall be called by
the Trustee upon the written request of the Trust Unitholders
holding in the aggregate not less than 5% of the Trust Units for
the purpose of considering the appointment of an inspector to
investigate whether the Trustee has performed its duties arising
under the Trust Indenture. Such an inspector shall be appointed
if a resolution approving the appointment of such inspector is
passed by a majority of the votes duly cast at the meeting held
for that purpose. The Trust Indenture contains provisions as to
the notice required and other procedures with respect to the
calling and holding of meetings of Trust Unitholders.

 

Termination of Pengrowth Trust

     
The Trust Unitholders may vote to terminate
Pengrowth Trust at any meeting of the Unitholders, subject to
the following: (i) a vote may only be held: (a) if
requested in writing by the holders of not less than 25% of the
Trust Units, or (b) if the Trust Units have become
ineligible for investment by RRSPs, RRIFs, or DPSPs; and
(ii) the termination must be approved by Special Resolution
of the Trust Unitholders. If the Trust Unitholders approve
termination, the Trustee will distribute the Royalty Units held
by it directly to the Trust Unitholders.

 

Limitation on Non-Resident Ownership

     
In order for Pengrowth Trust to maintain its
status as a Mutual Fund Trust under the Income Tax Act
(Canada), Pengrowth Trust must not be established or maintained
primarily for the benefit of non-residents of Canada
(“nonresidents”) within the meaning of the Income
Tax Act (Canada). Accordingly, the Trust Indenture provides
that at no time may non-residents be the beneficial owners of a
majority of the Trust Units. Under the terms of the Trust
Indenture the Trustee is authorized to take certain actions to
ensure that the ownership by beneficial owners of Trust Units by
nonresidents of Canada is below 49% of the total issued and
outstanding number of Trust Units.

 

Reporting to Trust Unitholders

     
All correspondence between Pengrowth Corporation
or Pengrowth Management and the Royalty Unitholders will be sent
to the Trust Unitholders.

     
The accounts of Pengrowth Trust are audited
annually by an independent firm of chartered accountants. The
consolidated financial statements of Pengrowth Trust, (which
combine the financial statements of Pengrowth Corporation and
Pengrowth Trust with inter-entity transactions eliminated)
together with the report of such chartered accountants, are
mailed annually to all Trust Unitholders shown in the register
of Trust Unitholders on the record date chosen within the
periods prescribed by applicable securities legislation. The
year end of Pengrowth Trust is December 31.

Pengrowth Corporation as
Administrator

     
The Trustee has delegated to Pengrowth
Corporation, as Administrator, responsibility for:

		
	 	     
    (a) any and all matters relating to an offer
    of Trust Units;
    
	 
	 	     
    (b) any and all matters and decisions
    relating to the acquisition of facilities, interests or royalty
    interests or other assets by Pengrowth Trust; and
    
	 
	 	     
    (c) the determination of distributable
    income.
    

ROYALTY UNITS

The Royalty Indenture

     
A maximum of 500,000,000 Royalty Units can be
created and issued only to residents of Canada pursuant to the
Royalty Indenture. The Royalty Units represent fractional
undivided interests in the Royalty. The Royalty Indenture, among
other things, provides for the calling of meetings of
Unitholders, the conduct of

26

 

business thereat, notice provisions, the
appointment and removal of the Trustee and the form of Royalty
Unit certificates.

     
The Royalty Indenture may be amended or varied
only by Special Resolution of the Unitholders.

The Royalty

     
The Royalty consists of a 99% share of
“Royalty Income”. Under the terms of the Royalty
Indenture, Pengrowth Corporation is entitled to retain a 1%
share of “Royalty Income” and all miscellaneous income
to the extent this amount exceeds the aggregate of debt service
charges, general and administrative expenses and management
fees. However, the result of the computation is that the Royalty
is effectively 100% of “Royalty Income” (see
note 1 in the audited financial statements of Pengrowth
Trust).

     
“Royalty Income” means the aggregate of
any special distribution and gross revenue less, without
duplication, the aggregate of the following amounts:

		
	 	     
    (i) operating costs;
    
	 
	 	     
    (ii) general and administrative costs;
    
	 
	 	     
    (iii) management fees and debt service
    charges;
    
	 
	 	     
    (iv) taxes or other charges payable by the
    grantor; and
    
	 
	 	     
    (v) any amounts paid into the
    “Reserve”.
    

     
The “Reserve” is established by
Pengrowth Corporation to fund the payment of operating costs,
future abandonments, environmental and reclamation costs,
general and administrative costs, management fees and debt
service charges.

     
Gross revenues essentially consist of cash
proceeds from the sale of petroleum substances produced from the
properties of Pengrowth Corporation and all other money and
things of value received by or incurring to Pengrowth
Corporation by virtue of its legal and beneficial ownership of
the properties, but not including processing revenues or
proceeds from the sale of properties.

     
Pengrowth Corporation is required to pay to the
Royalty Unitholders, on each cash distribution date, 99% of
“Royalty Income” received by Pengrowth Corporation
from the properties for the period ending on the last day of the
second month immediately preceding that cash distribution date.
The Royalty Unitholders, including Pengrowth Trust, reimburse
Pengrowth Corporation for 99% of the Crown royalties and other
Crown charges payable by Pengrowth Corporation in respect of
production from, or ownership of, the properties. Pengrowth
Corporation at all times is entitled to set off its right to be
so reimbursed against its obligation to pay the Royalty.

     
To date, Pengrowth Corporation has not incurred
income taxes but is subject to the federal large corporations
tax and the Saskatchewan Resource Surcharge. Any taxes payable
by Pengrowth Corporation will reduce the Royalty Income, and
thus the distributions received by holders of Royalty Units and
Trust Units.

     
On April 29, 1998, the Royalty Unitholders
passed an Extraordinary Resolution providing for the release of
security granted by Pengrowth Corporation to Montreal Trust
Company of Canada (as it then was) as Trustee on behalf of the
Royalty Unitholders under a fixed and floating charge debenture
and the removal of the security provisions contained in the
Royalty Indenture in order to enable Pengrowth Corporation the
ability to establish a commercial paper program or to permit
other forms of borrowing by Pengrowth Corporation. The release
of security was granted by Montreal Trust Company of Canada (as
it then was) on December 11, 1998.

     
On April 26, 2000, the Unitholders of
Pengrowth Corporation and Pengrowth Trust approved an
Extraordinary Resolution removing the voting rights of Royalty
Unitholders at a meeting of Shareholders of Pengrowth
Corporation provided that the resolution receives unanimous
approval from Royalty Unitholders. The resolution was sought by
Pengrowth Management to provide a basis for negotiating certain
structural

27

 

considerations with the Securities and Exchange
Commission in the United States. It has been unnecessary, to the
present, for Pengrowth Corporation to implement the
Extraordinary Resolution.

     
On April 23, 2002, the Royalty Unitholders
passed an Extraordinary Resolution approving a subordination of
the rights of Royalty Unitholders to be paid the Royalty by
Pengrowth Corporation to the rights of lenders under Pengrowth
Corporation’s credit facility. This resolution clarified
Pengrowth Corporation’s obligations to repay its lenders in
order to increase Pengrowth Corporation’s financing
options. See “Recent Developments — Annual and
Special Meeting April 23, 2002”.

The Trustee

     
Computershare is the Trustee under the Royalty
Indenture. It will remain the Trustee thereunder unless it
resigns or is removed by Unitholders. The Trustee or its
successor may resign on 60 days prior notice to the
Unitholders, and may be removed by Special Resolution of the
Unitholders. The Trustee’s successor must be approved in
the same manner.

Alberta Royalty Credit

     
Pengrowth Corporation is entitled to claim ARC in
respect of amounts reimbursed by it to Pengrowth Corporation for
Alberta Crown Royalties. Under current legislation, the ARC
program is based on a price-sensitive formula linked to crude
oil prices. Credits vary from a high of 75% of ARC when the
price of oil falls below $100 per cubic metre, to a low of 25%
when the price of oil rises above $210 per cubic metre. The
maximum Crown Royalty to which the rate applies annually is
$2.0 million per applicant or associated group of
applicants. In 1996, Pengrowth Corporation reached the maximum
allowable limit of $2.0 million in eligible Crown
Royalties. In 2001, the maximum allowable limit was reduced to
approximately $0.5 million. ARC is currently paid by way of
a single payment to Pengrowth Trust which is normally received
during the second quarter of each year.

Environmental Obligations —
Reclamation Fund

     
Pengrowth Corporation will be liable for its
share of ongoing environmental obligations and for the ultimate
reclamation of the properties upon abandonment. Ongoing
environmental obligations are expected to be funded out of cash
flow. In conjunction with the acquisition of interests in the
Judy Creek and Swan Hills areas from Imperial Oil Resources
Limited, Pengrowth Corporation established a reclamation fund.

     
Pengrowth Corporation carries out its activities
and operations on its operated properties in compliance with all
relevant and applicable environmental regulations and good
industry practice. At present, Pengrowth Corporation believes
that it meets all existing environmental standards and
regulations and has included appropriate amounts in its capital
expenditure budget to continue to meet environmental protection
requirements. The estimates of reserves and the present worth of
future net cash flows from such reserves contained in the GLJ
are stated after providing for estimated well abandonment and
site restoration costs.

     
Pengrowth Corporation emphasizes the importance
of creating and maintaining a safe and environmentally sound
operation by focusing on proper training of field operators,
continuous and thorough review of operating procedures and
policies conducted by the field operations staff and management
and by monitoring and ensuring compliance with safety and
environmental regulations. Pengrowth Corporation regularly
conducts safety and environment training for the field foremen
and operations staff, who then implement this training in the
field with employees and other operators. Production
optimization, operator training and development and orientation
programs are held and include such topics as emergency response,
media relations, first aid and CPR and oil spill training.
Occupational health and safety, environmental regulations, site
remediation and waste handling training are also included to
continually improve the knowledge and expertise of the personnel
employed by Pengrowth Corporation.

28

 

DISTRIBUTABLE INCOME PER UNIT

     
All net cash flow, after expenses and operating
costs, is distributed to the holders of Royalty Units and Trust
Units. The following Distributable Income per Unit has been
reported in respect of the quarters indicated since
January 1, 1989:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Quarter		2001		2000		1999		1998		1997		1996		1995		1994		1993		1992		1991		1990		1989
	
		
		
		
		
		
		
		
		
		
		
		
		
		

	
    
    First
    

    	 	$	1.1400	 	 	$	0.8900	 	 	$	0.4670	 	 	$	0.4300	 	 	$	0.5500	 	 	$	0.3400	 	 	$	0.2900	 	 	$	0.2774	 	 	$	0.2792	 	 	$	0.2588	 	 	$	0.4784	 	 	$	0.4472	 	 	$	0.1079	 
	
    
    Second
    

    	 	 	0.8300	 	 	 	0.8250	 	 	 	0.5990	 	 	 	0.3550	 	 	 	0.5730	 	 	 	0.6210	 	 	 	0.3944	 	 	 	0.2600	 	 	 	0.3400	 	 	 	0.1200	 	 	 	0.1174	 	 	 	0.1395	 	 	 	0.2150	 
	
    
    Third
    

    	 	 	0.6300	 	 	 	0.9600	 	 	 	0.6800	 	 	 	0.3300	 	 	 	0.3900	 	 	 	0.3600	 	 	 	0.2950	 	 	 	0.2750	 	 	 	0.1700	 	 	 	0.1300	 	 	 	0.0302	 	 	 	0.0602	 	 	 	0.1616	 
	
    
    Fourth
    

    	 	 	0.4100	 	 	 	1.1100	 	 	 	0.7400	 	 	 	0.4100	 	 	 	0.5040	 	 	 	0.5990	 	 	 	0.3310	 	 	 	0.3969	 	 	 	0.2202	 	 	 	0.3788	 	 	 	0.1236	 	 	 	0.2126	 	 	 	0.0780	 
	
    
    Total Annual
    

    	 	$	3.0100	 	 	$	3.7850	 	 	$	2.4860	 	 	$	1.5250	 	 	$	2.0170	 	 	$	1.9200	 	 	$	1.3104	 	 	$	1.2093	 	 	$	1.0094	 	 	$	0.8876	 	 	$	0.7496	 	 	$	0.8595	 	 	$	0.5625	 
	
    
    Cumulative
    

    	 	$	21.3313	 	 	$	18.3213	 	 	$	14.5363	 	 	$	12.0503	 	 	$	10.5253	 	 	$	8.5083	 	 	$	6.5883	 	 	$	5.2779	 	 	$	4.0686	 	 	$	3.0592	 	 	$	2.1716	 	 	$	1.4220	 	 	$	0.5625	 

Notes:

		
	(1) 	
    On June 15, 1992, Pengrowth Trust commenced
    making monthly distributions to Trust Unitholders to provide a
    more stable income stream, similar to that offered by bonds and
    other money market instruments. Rather than reference a fixed
    monthly distribution rate, Pengrowth Trust’s current policy
    is to distribute its earnings on a monthly basis subject to
    accounting estimates and accruals necessary for timely financial
    reporting.
    
	 
	(2) 	
    Pengrowth Corporation presently applies for and
    receives ARC payments once per year which are normally
    distributed along with the May 15 distribution to
    Unitholders. ARC for 1999 of $0.025 per Unit was paid on
    May 15, 2000. ARC for 2000 of $0.008 per unit was paid on
    May 15, 2001. ARC for 2001 of $0.006 was paid on
    May 15, 2002.
    

INDUSTRY CONDITIONS

Introduction

     
The oil and natural gas industry is subject to
extensive controls and regulations imposed by various levels of
government. It is not expected that any of these controls or
regulations will affect the operations of Pengrowth Corporation
in a manner materially different than they would affect other
oil and gas companies of a similar size. All current legislation
is a matter of public record and Pengrowth Corporation is unable
to predict what additional legislation or amendments may be
enacted.

Pricing and Marketing —
Oil

     
In Canada, producers of oil negotiate sales
contracts directly with oil purchasers, with the result that the
market determines the price of oil. The price depends in part on
oil quality, prices of competing fuels, distance to market, the
value of refined products and the supply/ demand balance.

Pricing and Marketing — Natural
Gas

     
In Canada, the price of natural gas sold in
intra-provincial and international trade is determined by
negotiation between buyers and sellers. The price received by a
natural gas producer depends, in part, on the price of competing
natural gas and other fuels, type of natural gas produced,
access to downstream transportation, length of contract term,
weather conditions and the supply/ demand balance.

     
The Governments of Alberta, British Columbia and
Saskatchewan also regulate the volume of natural gas which may
be removed from those Provinces for consumption elsewhere based,
mainly in the case of removals exceeding two years, based on
such factors as reserve availability, transportation
arrangements and market considerations.

29

 

Exports from Canada

     
In order to export oil or natural gas from
Canada, certain approvals are required from the NEB and the
Federal Government. Oil exports may be made pursuant to export
contracts with terms not exceeding one year in the case of light
crude, and not exceeding two years in the case of heavy crude,
provided that an order approving any such export has been
obtained from the National Energy Board (“NEB”). Any
oil export to be made pursuant to a contract of longer duration
requires an exporter to obtain an export licence from the NEB
and the issue of such a licence requires the approval of the
Governor in Council. The approvals required are dependent on the
hydrocarbon substances being exported and the length of the
proposed export arrangement.

Royalties and Incentives

     
In addition to Federal regulation, each Province
in Canada has legislation and regulations which govern land
tenure, royalties, production rates, environmental protection
and other matters. The royalty regime is a significant factor in
the profitability of oil and natural gas production. Royalties
payable on production from lands other than Crown lands are
determined by negotiations between the mineral owner and the
lessee. Crown royalties are determined by government regulation
and are generally calculated as a percentage of the value of the
gross production, and the rate of royalties payable generally
depends in part on prescribed reference prices, well
productivity, geographical location, field discovery date and
the type or quality of the petroleum product produced.

     
From time to time the Federal and Provincial
governments of Canada, have established incentive programs which
have included royalty rate reductions, royalty holidays and tax
credits for the purpose of encouraging oil and natural gas
exploration or enhanced planning projects although the trend is
toward eliminating these types of programs in favour of long
term programs which enhance predictability for producers. Oil
and natural gas royalty holidays and reductions for specific
wells will reduce the amount of Crown royalties paid by
Pengrowth Corporation to the Provincial governments.

Environmental Regulation

     
The oil and natural gas industry in Canada is
currently subject to environmental regulation pursuant to
Federal and Provincial legislation. Environmental legislation
provides for restrictions and prohibitions on releases or
emissions of various substances produced or utilized in
association with certain oil and gas industry operations. In
addition, legislation requires that well and facility sites be
abandoned and reclaimed to the satisfaction of provincial
authorities. A breach of such legislation may result in the
imposition of fines and penalties, the suspension or revocation
of necessary limits and authorizations, restrictions on the
transfer of well and facility sites and civil liability for
pollution damage.

     
In Alberta, environmental compliance has been
governed by the Environmental Protection and Enhancement
Act (Alberta) (“EPEA”) since September 1,
1993. In addition to replacing a variety of older statutes which
related to environmental matters, EPEA also imposes certain new
environmental responsibilities on oil and natural gas operators
in Alberta and in certain instances also imposes greater
penalties for violations. The EPEA permits greater public
involvement in environmental assessment and enforcement.

     
Pengrowth Corporation is committed to meeting its
responsibilities to protect the environment wherever it operates
and anticipates making increased, although not material,
expenditures of both a capital and expense nature as a result of
the increasingly stringent laws relating to the protection of
the environment.

30

 

SELECTED FINANCIAL INFORMATION

Summary of Annual Financial
Information

(Stated in thousands of dollars except per
unit amounts)

Year ended December 31

(Audited)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
			2001		2000		1999		1998		1997
			
		
		
		
		

	
    
    Oil and gas revenue
    

    	 	$	469,929	 	 	$	416,228	 	 	$	252,408	 	 	$	168,782	 	 	$	121,216	 
	
    
    Net Income (Loss)
    

    	 	 	85,150	 	 	 	123,215	 	 	 	50,223	 	 	 	(767	)	 	 	24,529	 
	
    
    Per Unit
    

    	 	 	1.201	 	 	 	2.213	 	 	 	0.98	 	 	 	(0.02	)	 	 	0.87	 
	
    
    Total Assets
    

    	 	 	1,249,339	 	 	 	1,090,483	 	 	 	857,914	 	 	 	765,162	 	 	 	965,281	 
	
    
    Long Term Debt
    

    	 	 	345,456	 	 	 	286,823	 	 	 	230,333	 	 	 	157,662	 	 	 	282,262	 
	
    
    Distributable Income
    

    	 	 	215,787	 	 	 	218,340	 	 	 	128,172	 	 	 	72,117	 	 	 	63,634	 
	
    
    Per Unit
    

    	 	 	3.01	 	 	 	3.79	 	 	 	2.49	 	 	 	1.53	 	 	 	2.02	 

Summary of Quarterly Financial
Information

(Stated in thousands of dollars except per
unit amounts)

Three months ended

(Unaudited)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2001		March 31		June 30		September 30		December 31
	
		
		
		
		

	
    
    Oil and gas revenue
    

    	 	$	142,961	 	 	$	121,043	 	 	$	115,847	 	 	$	91,138	 
	
    
    Distributable Income
    

    	 	 	72,071	 	 	 	63,395	 	 	 	48,324	 	 	 	31,997	 
	
    
    Per Unit
    

    	 	 	1.140	 	 	 	0.830	 	 	 	0.630	 	 	 	0.410	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000		March 31		June 30		September 30		December 31
	
		
		
		
		

	
    
    Oil and gas revenue
    

    	 	$	90,871	 	 	$	91,014	 	 	$	103,550	 	 	$	130,793	 
	
    
    Distributable Income
    

    	 	 	48,571	 	 	 	44,990	 	 	 	53,163	 	 	 	71,616	 
	
    
    Per Unit
    

    	 	 	0.890	 	 	 	0.825	 	 	 	0.960	 	 	 	1.110	 

Notes:

		
	(1) 	
    The per unit amounts for net revenue and net
    income are based on weighted average units outstanding
    calculated on a quarterly basis. The per unit amounts for
    distributable income reflect actual distributions paid and
    payable.
    
	 
	(2) 	
    Certain comparative figures have been restated to
    conform to the presentation adopted in the current year.
    

31

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
OPERATING

RESULTS AND FINANCIAL CONDITION

     
Management’s Discussion and Analysis
relating to Pengrowth Trust’s financial statements for the
fiscal years ended December 31, 2001 and 2000, which are
contained on pages 32 to 43 of Pengrowth Trust’s 2001
Annual Report, are incorporated herein by reference and form an
integral part of this Annual Information Form.

RECENT DEVELOPMENTS AND ANNUAL AND SPECIAL
MEETING APRIL 23, 2002

     Divestment
Activity

     
As part of Pengrowth Corporation’s on going
program of reviewing and rationalizing its portfolio of oil and
natural gas, a number of non core properties were offered for
sale in the first quarter of 2002. On January 17, 2002 the
Virginia Hills property was sold for $4.5 million. On
January 2, 2002, Pengrowth Corporation engaged Kobayashi
and Associates Ltd. as agent to market another four properties:
Minehead, Niton, North Pembina Cardium Unit and Strachan place
(the “Divestment Properties”). This resulted in a
number of bids on the individual properties and one bid on the
total package. One of the three producing wells in Strachan
encountered production problems during the sale process. After
review of several bids, Pengrowth Corporation accepted a
$40.2 million offer in respect to the entire package and
the sale closed on April 30, 2002 with an effective date of
December 31, 2001. Total first quarter production from
these four properties was 412 bpd of oil, 6,065 mcf/d of gas,
and 268 bpd of NGLs for a total of 1,690 boepd. GLJ Established
Reserves as at December 31, 2002 for the Divestment
Properties were 4.4 mmstb of oil, 24 bcf of gas for a total
of 9.7 mmboe. According to GLJ the net present value at 15%
was $38.3 million and $43.4 million at 12%.

 

		
	  	
    NSRVL Transaction

     
Since the issuance and sale of an aggregate of
6,727,500 Trust Units for aggregate gross proceeds of
$86,448,375 under a prospectus of Pengrowth Trust dated
December 10, 2001, Pengrowth Corporation has completed the
purchase of additional petroleum and natural gas rights and
other assets from NSRVL for $27.5 million including
$22.5 million of cash and forgiveness of debt associated
with the West Eagle Property previously sold by Pengrowth to
NSRVL in June, 2001. As a result, the Province of Nova Scotia
has acknowledged that Pengrowth Corporation has no further
obligations under a Share Sale Backstop Agreement including any
obligation to acquire the shares of Nova Scotia Resources
Limited, the parent company of NSRVL. The total net purchase
price of assets acquired from NSRVL in 2001, including the SOEP
Royalty, was approximately $256 million.

     
On February 12, 2002, Pengrowth Trust
announced that GLJ had revised its estimate of the remaining
recoverable Established Reserves in respect of the SOEP Royalty.
As at December 31, 2001, GLJ has estimated the remaining
recoverable Established Reserves to be 206.1 bcf of natural gas
and 9.1 mmbbls of NGLs totalling approximately 43.5 mmboe (6:1).
These reserves are approximately 14% less than the 52.2 mmboe
previously reported as at June 1, 2001, after adjusting for
interim production. Pengrowth Corporation’s share of
reserves equates to total remaining recoverable Established
Reserves for 100% of SOEP of 2.5 tcf which is generally
consistent with the reserves recently reported by the SOEP
coventurers.

     
When Emera had agreed to purchase its undivided
8.4% working interest in SOEP and issued the SOEP Royalty to
Pengrowth Corporation, the SOEP owners (other than NSRVL)
exercised rights of first refusal in respect of an 8.4% interest
in SOEP downstream of Emera’s working interest (the
“ROFR’d Interest”) for $40 million.
Consequently, the formula negotiated with Emera for determining
processing fees may not apply to the ROFR’d Interest. The
SOEP owners, other than Emera, have proposed a processing fee
arrangement in respect of the ROFR’d Interest that is
higher than the processing fee that would have been payable to
Emera under the pre-arranged formula which now applies only to
the SOEP Interest. The difference equates to a net present value
of approximately $20 million (at a discount rate of 15%)
over the full economic life of the SOEP

32

 

Project. Pengrowth Corporation has not agreed to
the proposal and is working toward a lower cost fee structure.

 

		
		
    Special and Annual General Meeting of
    Shareholders

     
At the Special and Annual General Meeting of
Shareholders of Pengrowth Corporation held on April 23,
2002, the following matters were approved:

			
	 	• 	
    The reappointment of KPMG LLP Chartered
    Accountants as auditors of Pengrowth Corporation.
    
	 
	 	• 	
    The appointment of James S. Kinnear and Stanley
    H. Wong as management appointed directors and the appointment of
    Francis G. Vetsch, John B. Zaozirny, Thomas A. Cumming and
    Michael A. Grandin as unitholder nominated directors of
    Pengrowth Corporation. Mr. Grandin, who joined the Board of
    Directors on April 23, 2002, was previously President of
    PanCanadian Energy Corporation (2000), Executive Vice President
    and Chief Financial Officer, Canadian Pacific Limited
    (1998 — 2001) and Vice Chairman and Director, Midland
    Walwyn Capital Inc. (1996 — 1998).
    
	 
	 	• 	
    Extraordinary Resolution consolidating prior
    amendments to the Unanimous Shareholder Agreement, amending the
    Unanimous Shareholder Agreement in respect to the addition of
    Pengrowth Trust as a shareholder, increasing the permitted site
    of the board to eight directors, and approving a Restated
    Unanimous Shareholder Agreement.
    
	 
	 	• 	
    Extraordinary Resolution approving amendments to
    the Articles of Pengrowth Corporation increasing the authorized
    number of directors from seven to eight.
    

     Special
Meeting of Royalty Unitholders

     
At the Special Meeting of Royalty Unitholders of
Pengrowth Corporation held on April 23, 2002, the following
matters were approved:

			
	 	• 	
    Extraordinary Resolution consolidating prior
    amendments to the Royalty Indenture, correcting drafting errors,
    clarifying the right to take petroleum substances in kind,
    clarifying exchange rights for Trust Units, removing borrowing
    restrictions, approving the use of telephonic or electronic
    communications for voting, authorizing the Board of Directors to
    retain up to 20% of gross revenue to pay capital or to pay
    future royalties to stabilize distributions, and approving a
    Restated Royalty Indenture.
    
	 
	 	• 	
    Extraordinary Resolution consolidating prior
    amendments to the Management Agreement and approving an Amended
    and Restated Management Agreement.
    
	 
	 	• 	
    Extraordinary Resolution approving a
    subordination of the rights of Royalty Unitholders to be paid to
    the Royalty by Pengrowth Corporation to the obligation of
    Pengrowth Corporation to repay its primary corporate lenders to
    enhance Pengrowth Corporation’s ability to negotiate with
    its bankers.
    

     Special and
Annual Meeting of Trust Unitholders

     
At the Special and Annual Meeting of the Trust
Unitholders held on April 23, 2002, the following matters
were approved:

			
	 	• 	
    The reappointment of KPMG LLP Chartered
    Accountants as auditors of Pengrowth Trust.
    
	 
	 	• 	
    Extraordinary Resolution permitting the creation
    of a reserve of up to a maximum of 10 million Trust Units
    for issuance upon exercise of Trust Unit options (the
    “Trust Unit Options”) granted under the option plan
    provided that the number of Trust Units issuable upon exercise
    of Trust Unit Options does not exceed 10% of the issued and
    outstanding Trust Units. Ratification was also obtained for the
    issuance of up to 1,325,401 Trust Units issuable upon exercise
    of the Trust Unit Options which were issued subject to Trust
    Unitholder approval.
    
	 
	 	• 	
    Extraordinary Resolution approving the creation
    of a Trust Unit Rights Incentive Plan (“Incentive
    Plan”) pursuant to which rights to acquire Trust Units may
    be granted to the directors, officers,
    

33

 

			
	 		
    employees and special consultants of Pengrowth
    Corporation as designated from time to time by the Board of
    Directors of Pengrowth Corporation and personal holding
    corporations controlled by Registered Retirement Savings Plans
    of any such persons. The aggregate number of Trust Units
    reserved for issuance under the Incentive Plan, together with
    Trust Units reserved for issuance pursuant to the outstanding
    option granted under the Option Plan, will be limited to a
    maximum of 10 million Trust Units provided that the
    aggregate authorized number of Trust Units issuable under both
    plans shall not exceed 10% of the issued and outstanding Trust
    Units. The exercise price of rights granted under the Incentive
    Plan will be based upon the market price of the Trust Units on
    the Toronto Stock Exchange at the date of grant or, at the
    election of the grantee, based upon such market price and the
    Trust Unit distribution level subsequently achieved by Pengrowth
    Trust. The Incentive Plan will provide that the “rights
    exercise price” will be equal to either:
    

		
	 	
    (a) the market price of the Trust Units on
    the date of the grant of the right; or
    
	 
	 	
    (b) if so elected by the holder no later
    than the exercise of the applicable right, the market price of
    the Trust Units on the date of grant of the rights, reduced from
    time to time for each calendar quarter ending after the date of
    grant by the positive amount, if any, equal to:
    

		
	 	     
    (i) the amount by which the aggregate Trust
    Unit distributions made to Unitholders in any calendar quarter
    ending after the date of the grant exceed 2.5% of the value of
    Pengrowth Trust’s oil and gas interests on its balance
    sheet at the beginning of the applicable calendar quarter,
    

		
	 	
    divided by
    

		
	 	     
    (ii) the number of issued and outstanding
    Trust Units as at the beginning of the applicable calendar
    quarter.
    

		
	 	
    The exercise price of the rights will effectively
    allow the holders of rights granted under the Incentive Plan, at
    their election, to indirectly participate in distributions of
    Trust Units that are in excess of 2.5% of the net book value per
    Trust Unit of Pengrowth Trust consolidated oil and gas royalty
    and property interests on a quarterly basis. This aspect of the
    Incentive Plan, which is similar to plans which have been
    adopted by several other oil and gas trusts, is expected to more
    fairly reflect the fundamental structure and objectives of
    Pengrowth Trust and will operate to align the interests of the
    Plan participants with those of Trust Unitholders. The Incentive
    Plan will apply in respect of the 1,325,401 Trust Units
    which were issued subject to Trust Unitholder approval and any
    subsequent issuances of Trust Unit Options or rights.
    

			
	 	• 	
    Extraordinary Resolution approving amendments to
    the Distribution Reinvestment Plan (“DRIP”)
    authorizing the Board of Directors, in its discretion, to permit
    issuances from treasury of Trust Units at up to a 5% discount to
    the prevailing market price per Trust Unit, to consider and
    implement incentives under the DRIP to investment dealers and to
    make such amendments as may be required or desirable to enable
    participants to receive distributions in Trust Units.
    
	 
	 	• 	
    Extraordinary Resolution consolidating prior
    amendments to the Trust Indenture, correcting drafting errors,
    prescribing a specific class of matters for consideration by
    Trust Unitholders which require approval by an Extraordinary
    Resolution of Unitholders, clarifying the powers of Pengrowth
    Corporation as Administrator of Pengrowth Trust, approving the
    use of telephonic or electronic communications for voting and
    approving an Amended and Restated Trust Indenture.
    
	 
	 	• 	
    Extraordinary Resolution authorizing Pengrowth
    Trust to guarantee all of the obligations, liabilities and
    indebtedness of Pengrowth Corporation to its primary corporate
    lenders and permitting Pengrowth Trust to guarantee the
    obligations of Pengrowth Corporation pursuant to an Amended and
    Restated Preliminary Net Royalty Agreement with Emera Inc. dated
    April 26, 2001 relating to the acquisition of the royalty
    in respect to the Sable Offshore Energy Project.
    

34

 

MARKET FOR SECURITIES

     
The Trust Units of Pengrowth Trust were listed on
the NYSE on April 10, 2002. The outstanding Trust Units of
Pengrowth Trust are now listed and posted for trading on The
Toronto Stock Exchange (“TSX”) and the New York
Stock Exchange (“NYSE”). The trading symbol for the
Trust Units on the TSX is “PGF.UN” and on the NYSE is
“PGH”.

DIRECTORS AND OFFICERS

     
Pengrowth Trust does not have any directors or
officers. The following is a summary of information relating to
the directors and officers respectively of Pengrowth Management,
the manager of Pengrowth Corporation and Pengrowth Trust, and of
Pengrowth Corporation, the administrator of Pengrowth Trust
together with share information for Pengrowth Management.

Directors and Officers of Pengrowth
Management

     
The name, municipality of residence, position
held and principal occupation of each director and officer of
Pengrowth Management are set out below:

	 	 	 	 	 
	Name and Municipality of				
	Residence		Position with Pengrowth Management		Principal Occupation
	
		
		

	
    
    James S. Kinnear
    

    	 	
    President and Director
    	 	
    President,
    
	
    
    Calgary, Alberta
    

    	 	
    (since 1982)
    	 	
    Pengrowth Management Limited
    
	 
	
    
    Gregory S. Fletcher
    

    	 	
    Director
    	 	
    President,
    
	
    
    Calgary, Alberta
    

    	 	
    (since 1988)
    	 	
    Sierra Energy Inc.
    
	 
	
    
    Gordon M. Anderson
    

    	 	
    Vice President, Financial Services
    	 	
    Vice President, Financial Services
    
	
    
    Calgary, Alberta
    

    	 	
    (since 2001)
    	 	
    Pengrowth Management Limited
    
	 	 	
    Vice President,
    	 	 
	 	 	
    Treasurer (1998-2001)
    	 	 
	 	 	
    Treasurer (1995-1998)
    	 	 
	 
	
    
    Charles V. Selby
    

    	 	
    Corporate Secretary
    	 	
    Lawyer, Selby Solicitors
    
	
    
    Calgary, Alberta
    

    	 	
    (since 1993)
    	 	
    Principal, Ikon Strategies Inc.
    

     
Each of the foregoing directors and officers has
had the same principal occupation for the previous five years
except for: Mr. Fletcher who was President, Canadian
Conquest Exploration Inc. (1998-1999), President, Sierra Energy
Inc. (1997-1998) and President, Aztec Resources Ltd.
(1985-1997); and Mr. Anderson who was Vice President
(1998-2001) and Treasurer (1995-1998).

Principal Holders of Shares of Pengrowth
Management

     
James S. Kinnear, Kinnear Financial Consulting
Limited and 585687 Alberta Ltd. (both wholly owned companies of
James S. Kinnear) respectively hold 142,501 common shares
(39.5%), 100,000 common shares (27.7%) and 97,500 common shares
(28.5%) of the issued and outstanding voting securities of
Pengrowth Management. No other shareholder holds in excess of
10% of the issued and outstanding shares of Pengrowth
Management. The directors and senior officers of Pengrowth
Management hold, directly or indirectly, 100% of the issued and
outstanding common shares of Pengrowth Management.

35

 

Directors and Officers of Pengrowth
Corporation

     
The name, municipality of residence, position
held and principal occupation of each director and officer of
Pengrowth Corporation are set out below:

	 	 	 	 	 	 	 	 	 
							Trust Units of
							EnergyTrust
							Controlled or
			Position with				Beneficially
	Name and Municipality of Residence		Pengrowth Corporation		Principal Occupation		Owned(1)
	
		
		
		

	
    James S. Kinnear
    	 	
    President, Director and
    	 	
    President,
    	 	 	3,014,469	(5)
	
    Calgary, Alberta
    	 	
    Chief Executive Officer
    	 	
    Pengrowth Management Limited
    	 	 	 	 
	 	 	
    (since 1988)
    	 	 	 	 	 	 
	 
	
    Francis G. Vetsch(2)(4)
    	 	
    Director
    	 	
    President,
    	 	 	26,500	 
	
    Calgary, Alberta
    	 	
    (since 1988)
    	 	
    Quantex Resources Ltd.
    	 	 	 	 
	 
	
    Stanley H. Wong(4)
    	 	
    Director
    	 	
    President,
    	 	 	36,476	(6)
	
    Calgary, Alberta
    	 	
    (since 1988)
    	 	
    Carbine Resources Ltd. a private
    	 	 	 	 
	 	 	 	 	
    oil and gas producing and
    	 	 	 	 
	 	 	 	 	
    engineering consulting company
    	 	 	 	 
	 
	
    John B. Zaozirny(2)
    	 	
    Director
    	 	
    Counsel,
    	 	 	20,652	 
	
    Calgary, Alberta
    	 	
    (since 1988)
    	 	
    McCarthy Tétrault, Barristers and Solicitors
    	 	 	 	 
	 
	
    Thomas A. Cumming(2)
    	 	
    Director
    	 	
    Business Consultant
    	 	 	500	 
	
    Calgary, Alberta
    	 	
    (since 2000)
    	 	 	 	 	 	 
	 
	
    Michael Grandin
    	 	
    Director (since 2002)
    	 	
    Independent Businessman
    	 	 	Nil	 
	
    Calgary, Alberta
    	 	 	 	 	 	 	 	 
	 
	
    Gordon M. Anderson
    	 	
    Vice President and
    	 	
    Vice President, Financial
    	 	 	30,833	 
	
    Calgary, Alberta
    	 	
    Interim Chief
    	 	
    Services, Pengrowth
    	 	 	 	 
	 	 	
    Financial Officer
    	 	
    Management
    	 	 	 	 
	 	 	
    (since 2001)
    	 	 	 	 	 	 
	 	 	
    Vice President, Treasurer (1997-2001),
    	 	 	 	 	 	 
	 	 	
    Treasurer (1995-1997)
    	 	 	 	 	 	 
	 	 	
    Chief Financial Officer (1991-1998)
    	 	 	 	 	 	 
	 
	
    Henry D. McKinnon
    	 	
    Vice President,
    	 	
    Vice President, Operations
    	 	 	6,696	 
	
    Calgary, Alberta
    	 	
    Operations
    	 	
    Pengrowth Corporation
    	 	 	 	 
	 	 	
    (since 2000)
    	 	 	 	 	 	 
	 
	
    Lyn Kis
    	 	
    Vice President,
    	 	
    Vice President, Engineering
    	 	 	18,691	 
	
    Calgary, Alberta
    	 	
    Engineering
    	 	
    Pengrowth Corporation
    	 	 	 	 
	 	 	
    (since 2001)
    	 	 	 	 	 	 
	 
	
    Charles V. Selby
    	 	
    Corporate Secretary
    	 	
    Lawyer, Selby Solicitors
    	 	 	104,572	 
	
    Calgary, Alberta
    	 	
    (since 1993)
    	 	
    Principal, Ikon Strategies Inc.
    	 	 	 	 
	 
	
    Chris Webster
    	 	
    Treasurer
    	 	
    Treasurer
    	 	 	1,266	 
	
    Calgary, Alberta
    	 	
    (since 2001)
    	 	
    Pengrowth Corporation
    	 	 	 	 
	 
	
    Lianne Bigham
    	 	
    Controller
    	 	
    Controller
    	 	 	102,167	 
	
    Calgary, Alberta
    	 	
    (since 1996)(3)
    	 	
    Pengrowth Corporation
    	 	 	 	 

Note:

		
	(1) 	
    Does not include Trust Units issuable upon the
    exercise of outstanding Trust Unit Options.
    
	 
	(2) 	
    Member of Audit Committee and the Corporate
    Governance Committee.
    
	 
	(3) 	
    Ms. Bigham was appointed an officer in 2001.
    
	 
	(4) 	
    Member of Reserves Committee.
    
	 
	(5) 	
    Comprised of 1,101,090 Trust Units held
    personally, 1,603,433 Trust Units held by Pengrowth Management
    Limited and 309,946 Trust Units held by Kinnear Financial
    Consulting Limited. In addition, Mr. Kinnear exercises
    control over 13,152 Royalty Units which are held by
    Pengrowth Management Limited.
    
	 
	(6) 	
    In addition, Mr. Wong exercises control over
    3,288 Royalty Units held by Carbine Resources Ltd.
    

36

 

     
Each of the foregoing directors and officers has
had the same principal occupation for the previous five years
except for Mr. Cumming who was President of the Alberta
Stock Exchange from 1988 to 1999; Lynn Kis who was General
Manager, Engineering from 1998 to 2001 and Engineering Manager
for Jordan Petroleum from 1994 to 1998; Chris Webster who was
Manager, Operations Accounting from 2000 to 2001 and Team
Leader, Marketing Accounting and Treasury, Union Pacific
Resources Inc. from 1996 to 2000; and Michael Grandin who was
Vice Chairman and Director, Midland Walwyn from 1996 to 1998;
Executive Vice-President and Chief Financial Officer, Canadian
Pacific Limited in 2000 and President, PanCanadian Energy
Corporation in 2001.

DIRECTORS’ AND OFFICERS’ LIABILITY
INSURANCE

     
Pengrowth Corporation provides directors’
and officers’ liability insurance to its directors and
officers, to pay on behalf of each insured person all loss,
subject to the limits of the policy, for which they become
legally obligated, and for which the insured person is not
indemnified by Pengrowth Corporation. The insurance shall also
pay, on behalf of Pengrowth Corporation, all loss, subject to
the limits of the policy, for which Pengrowth Corporation grants
indemnification to the directors and officers as permitted or
required by law. The cost of the insurance is borne entirely by
Pengrowth Corporation.

INDEBTEDNESS OF DIRECTORS AND
OFFICERS

     
Since the incorporation of Pengrowth Corporation
and the creation of Pengrowth Trust, none of the directors or
officers of Pengrowth Corporation has been indebted to Pengrowth
Corporation or Pengrowth Trust. However, Pengrowth Corporation
has delivered a guarantee to a specified Canadian investment
dealer to support margin loans by certain directors, officers,
employees and special consultants under the terms of the Trust
Unit Margin Purchase Plan (discussed below). To the extent that
the market value of the Trust Units plus accumulated
distributions less interest charges held within the Plan is less
than the amount of the margin loan to any participant at
maturity, the specified Canadian investment dealer shall be
entitled to realize on the guarantee and the participant shall
be required to repay the Corporation his or her pro rata share
of such amount.

LONG TERM INCENTIVE PLANS

 

Trust Unit Option Plan of Pengrowth
Trust

     
In 1992, a Trust Unit Option Plan was created
authorizing the issuance of options to acquire Trust Units less
than 5% of the issued and outstanding capitalization of
Pengrowth Trust at the permitted discount from the trading price
of the Trust Units on the TSX. Options to purchase 100,000 Trust
Units at a price of $5.00 per Trust Unit expiring on
March 23, 1997; options to purchase 100,000 Trust Units at
a price of $5.50 per Trust Unit expiring on February 21,
1998; options to purchase 144,000 Trust Units at a price of
$8.55 per Trust Unit expiring on October 21, 1998; and
options to purchase 169,000 Trust Units at a price of $10.875
per Trust Unit expiring on June 3, 1999, were issued to the
directors, officers and special consultants of Pengrowth
Corporation.

     
In March 1994, the TSX amended its policy in
respect to the issuance of options to provide that an issuer
must stipulate the maximum number of securities which may be
issued under an option plan and that options may only be issued
at the market price of the securities at the date of issuance of
the options.

     
On January 25, 1995, Pengrowth Trust
authorized the issuance of an additional 278,400 Trust Unit
Options at a price of $9.79 per Trust Unit expiring on
January 24, 2000, to directors, officers and special
consultants. At the Special and General Meeting of Unitholders
of Pengrowth Trust held on April 18, 1995, the Unitholders
also approved an amended Trust Unit Option Plan provided in
accordance with amended requirements of the TSX which stipulated
that the maximum number of Trust Units which may be issued under
the plan is 1,181,010 corresponding to approximately 10% of the
issued and outstanding Trust Units of Pengrowth Trust as at
March 1, 1995. Effective October 6, 1995, Pengrowth
Trust authorized the issuance of

37

 

517,000 Trust Unit Options at $13.875 per Trust
Unit expiring on October 6, 2000. Effective
December 29, 1995, Pengrowth Trust authorized the issuance
of 388,000 Trust Unit Options at $15.375 per Trust Unit expiring
on December 29, 2000. At the Special and Annual General
Meeting of Trust Unit Holders held on April 26, 1996, the
Unitholders approved an amendment to the Trust Unit Option Plan
to increase the number of options to 1,722,488 representing
approximately 10% of the issued and outstanding Trust Unit
Options. Effective August 9, 1996, Pengrowth Trust
authorized the issuance of 570,800 Trust Unit options at $15.85
per Trust Unit expiring on August 9, 2001. Effective
December 16, 1996, Pengrowth Trust authorized the issuance
of 12,000 Trust Unit Options at $17.15 per Trust Unit expiring
on December 16, 2001.

     
At the Special and General Meeting of Trust
Unitholders conducted on April 29, 1997, the Unitholders
approved an amendment to the Trust Unit Option Plan to increase
the number of options to 2,304,366 representing approximately
10% of the issued and outstanding Trust Units as of the date of
the meeting. At the Special Meeting of Trust Unitholders held on
September 23, 1997, the Unitholders approved a further
amendment to the Trust Unit Option Plan to increase the number
of Trust Unit Options from a total 2,304,366 Trust Unit Options
(inclusive of options which have been exercised under the Trust
Unit Option (“Option Plan”) to that number which
represents 10% of the issued and outstanding Trust Units
immediately following closing of the acquisition of properties
from Imperial Oil Resources. On October 16, 1997, Pengrowth
Trust authorized the issuance of 594,666 Trust Unit Options at
$20.50 per Trust Unit expiring on October 16, 2002.
Effective December 2, 1997, Pengrowth Trust authorized the
issuance of 1,945,600 Trust Unit Options at $17.50 per Trust
Unit expiring on December 2, 2002.

     
On April 28, 1999, at the Special and Annual
Meeting of Trust Unitholders, the Unitholders approved an
amendment to the Trust Unit Option Plan to permit the creation
of additional Trust Unit Options, at the discretion of the Board
of Directors, to a maximum of 6,000,000 Trust Unit Options
provided that the Board of Directors permitted to create Trust
Unit Options such that the total number of Trust Unit Options
that have been created under the Option Plan do not exceed 10%
of the number of issued and outstanding Trust Units of Pengrowth
Trust (Unitholders previously authorized the creation of the
lesser of 5,000,000 Trust Unit Options or 10% of the Trust Units
outstanding following the acquisition of property from Imperial
Oil Resources). On May 18, 1999, Pengrowth Corporation
notified the TSX of its intention to cause the issuance of an
additional 580,000 Trust Unit Options at a price of $12.75
subject to ratification by the Board of Directors of Pengrowth
Corporation. On November 24, 2000, Pengrowth Corporation
notified the TSX of its intention to cause the issuance of an
additional 732,000 Trust Unit Options at a price of $18.90
subject to ratification by the Board of Directors of Pengrowth
Corporation.

     
On April 26, 2000, at the Special and Annual
Meeting of Trust Unitholders, the Unitholders approved an
ordinary resolution to permit the creation of additional Trust
Options, at the discretion of the Board of Directors, to a
maximum of 7,000,000, subject to the restriction on that number
of Trust Unit Options created under the Option Plan does not
exceed 10% of the issued and outstanding Trust Units.

     
On June 29, 2001, Pengrowth Corporation
notified the TSX of its intention to cause the issuance of
801,237 Trust Unit Options at a price of $17.48 subject to the
ratification by the Board of Directors.

     
As at December 31, 2001, options to purchase
3,106,635 Trust Units were outstanding. These options were held
by directors, officers, employees and special consultants of
Pengrowth Corporation and are exercisable at the prices of
$12.00 to $20.50 per Trust Unit. The options have a weighted
average exercise price of $17.78 and expire at various dates to
August 31, 2006. The officers of Pengrowth Corporation held
options to purchase 859,992 Trust Units and the directors of
Pengrowth Corporation who were not also officers of Pengrowth
Corporation held options to purchase 220,400 Trust Units.

     
At the Special and Annual General Meeting of
Trust Unitholders held on April 23, 2002 (the “2002
Meeting”), the holders of Trust Units approved an
Extraordinary Resolution authorizing the issuance of up to
10 million Trust Units pursuant to the Trust Unit Option
Plan subject to the restriction that the total number of Trust
Unit Options authorized for issuance under the plan shall not
extend 10% of the total issued and outstanding Trust Units. At
the 2002 Meeting, the Trust Unitholders also authorized the
creation of a Trust Unit Right Incentive Plan. (See “Recent
Development — Annual and Special Meeting
April 23, 2002”)

38

 

Trust Unit Purchase Plan

     
At the Special and Annual General Meeting of
Trust Unitholders conducted on April 16, 1995, Trust
Unitholders authorized the terms of a Trust Unit Purchase Plan
(the “Original Plan”). Under the Original Plan, all
salaried persons of Pengrowth Management and Pengrowth
Corporation (the “Permitted Participants”) may
contribute a minimum of 1% and up to 10% of their income derived
from Pengrowth Management and Pengrowth Corporation each year to
purchase Trust Units. Pengrowth Corporation will match the Trust
Units purchased at prevailing market prices through the purchase
of Trust Units on the market or through the issuance of Trust
Units from treasury and the additional Trust Units will vest in
the names of the employees one year from the date of purchase.

     
At the Special and Annual Meeting of Trust
Unitholders conducted on April 29, 1998, Trust Unitholders
approved an amendment to the Trust Unit Purchase Plan (the
“Amended Plan”). Under the Amended Plan, a Permitted
Participant must have completed 12 months of service to be
eligible. Pengrowth Corporation’s contribution vests
immediately under the Amended Plan, but there is a 12 month
restriction on resale of any Trust Units required under the
Amended Plan. At December 31, 2001, the amended Plan held
167,247 Trust Units on behalf of employees of Pengrowth
Corporation.

Instalment Receipt Purchase Plan

     
On October 15, 1998, Pengrowth Corporation
established an Instalment Receipt Purchase Plan (“IR
Plan”) available to Permitted Participants. Under the IR
Plan, Permitted Participants who had purchased Instalment
Receipts of Pengrowth Trust with their personal funds could
deposit their Instalment Receipts with the IR Plan and finance
the second instalment payment of $8.75 per Trust Unit. Pengrowth
Corporation provided a $5 million letter of credit to an
investment dealer to guarantee amounts owing to the investment
dealer pursuant to the IR Plan. The amount of the letter of
credit may change depending on the market price of the Trust
Units, Pengrowth Trust distributions, and interest rates. On
October 15, 1998, a total of 1,513,185 instalment receipts
were deposited to the IR Plan. The IR Plan participants maintain
personal margin accounts with the investment dealer and are
responsible for all interest costs associated with their
respective margin loans. The IR Plan has been encompassed in and
thereby extended by the Trust Unit Margin Purchase Plan
described below.

Trust Unit Margin Purchase Plan

     
During February, 2000, Pengrowth Corporation
instituted a Trust Unit Margin Purchase Plan which was made
available to Directors, Officers, Employees and Designated
Consultants of Pengrowth Corporation. Participants were
permitted to acquire Trust Units of Pengrowth Trust through
individual margin accounts with a specified Canadian Investment
Dealer which will provide participants with up to 75% margin
supported by a guarantee by Pengrowth Corporation.
Notwithstanding the Pengrowth Corporation guarantee participants
will remain personally liable on any margin loans. The plan also
encompasses the Trust Units acquired and held under the IR Plan
described above. The plan is terminable upon two years notice by
Pengrowth Corporation or by the specified Investment Dealer. The
amount of the guarantee (currently $5 million concurrent
with the IR Plan) may vary on the basis of the interest rates,
Trust Unit distributions and the trading price of the Trust
Units. Costs of administration of the Plan are share equally
between the Participants and Pengrowth Corporation and
Participants share costs amongst themselves on a prorata basis.

Share Appreciation Rights

     
On May 12, 1999, 426,000 Trust Unit Options
granted to the President and Chief Executive Officer of
Pengrowth Corporation were cancelled and replaced with an equal
number of Share Appreciation Rights (“SARs”) which
have the same exercise price, vesting provisions, and expiry
dates as the predecessor options. As at December 31, 2001,
the 426,000 SARs were still outstanding. They are fully vested,
have a weighted average exercise price of $18.39 and expiry
dates ranging from October 15 to December 1, 2002.

     
The SARs grant the right to receive a Payment
Amount equal to any increase in the market price of the 426,000
Trust Units above the exercise price. Pengrowth Trust may, at
its option, satisfy this Payment

39

 

Amount with either a cash payment or the issue of
Trust Units from Treasury based on market prices at the time of
exercise.

Principal Holders of Shares and Royalty Units
of Pengrowth Corporation

     
The common shares of Pengrowth Corporation are
held as to 100 shares by Pengrowth Management and as to 1000
shares by Pengrowth Trust. As at December 31, 2001, 99.97%
of the issued and outstanding Royalty Units of Pengrowth
Corporation were held by Pengrowth Trust.

CORPORATE GOVERNANCE

 

Mandates of the Trustee, Pengrowth Management
and the Board of Directors of Pengrowth Corporation

     
Under the terms of the Trust Indenture, the
Trustee is empowered to exercise those rights and privileges
that could be exercised by a beneficial owner of the assets of
Pengrowth Trust in respect of the administration and management
of Pengrowth Trust. The Trustee is permitted to delegate certain
of the powers and duties of the Trustee to any one or more
agents, representatives, officers, employees, independent
contractors or other persons. However, specific powers are
delegated to Pengrowth Corporation as “Administrator”
under the Trust Indenture and the Trustee has granted broad
discretion to Pengrowth Management to administer and regulate
the day to day operations of Pengrowth Trust. The powers of the
Trustee are also limited through the voting rights of Trust
Unitholders.

     
In accordance with the terms of the Unanimous
Shareholder Agreement, all Royalty Unitholders other than the
Trustee, and all Trust Unitholders are entitled to attend at,
and vote upon, all resolutions brought before meetings of the
shareholders of Pengrowth Corporation on the basis of one vote
for each Unit held. Currently, the Unanimous Shareholder
Agreement also provides that the Board of Directors of Pengrowth
Corporation shall consist of two nominees of Pengrowth
Management and up to six independent directors who are elected
by the Trust Unitholders of Pengrowth Trust. The Board of
Directors meets a minimum of four times each year, once in each
fiscal quarter. In addition, the Board of Directors meets at
other times when matters requiring its approval are raised and
the timing is such that it is not prudent or possible to await a
regularly scheduled quarterly meeting. During 2001, ten
regularly constituted board meetings were held.

Board Independence

     
Four of the six directors are independent
directors. An independent director is defined as one who is
independent of management and is free from any interest or any
business or other relationship which could, or could reasonably
be perceived to, materially interfere with the director’s
ability to act with a view to the best interests of Pengrowth
Corporation, other than interests and relationships arising from
shareholdings.

     
Mr. James S. Kinnear, who is President and
Chief Executive Officer of Pengrowth Corporation as well as
President and Chief Executive Officer of Pengrowth Management,
is a related director. Mr. Stanley H. Wong may be
considered to be a related director as he is Pengrowth
Management’s additional appointee to the Board of Directors
pursuant to the terms of the Unanimous Shareholder Agreement.
However, Mr. Wong is neither engaged by Pengrowth
Management nor by Pengrowth Corporation and receives
remuneration solely in his capacity as a director of Pengrowth
Corporation. The remainder of the directors are independent in
that they have not worked for Pengrowth Corporation (or
Pengrowth Management) nor do they have material contracts with
Pengrowth Corporation (or Pengrowth Management) or receive
remuneration from Pengrowth Corporation (or Pengrowth
Management), other than Trust Unit Options, in excess of
director’s fees payable by Pengrowth Corporation.

Board Approvals and Structure

     
The Board of Directors assumes responsibility for
the strategic direction of Pengrowth Corporation and Pengrowth
Trust through annual consideration of a budget and strategic
plan. Criteria are approved by the Board of Directors for the
acquisition and disposition of oil and natural gas properties
which govern future

40

 

growth and seek to limit risk to Unitholders.
Reliance is placed upon independent engineering, legal and
accounting consultants where appropriate.

     
The Board of Directors responds to
recommendations brought forward by Pengrowth Management’s
representatives to the Board of Directors or by other directors
on material acquisitions and dispositions, operational matters
and other matters impacting Pengrowth Corporation and Trust
Unitholders. As a practical matter, Pengrowth Management defers
to the Board of Directors in respect of all matters which may
have a material impact upon the business and undertaking of
Pengrowth Corporation, the Royalty Unitholders or the Trust
Unitholders.

     
The Board of Directors represents a cross-section
of experience in matters of oil and gas, finance and
directors’ responsibilities. Four of the six members of the
Board of Directors have been directors since the formation of
Pengrowth Corporation and Pengrowth Trust. Thomas A. Cumming has
been a director since April 2000 and Michael A. Grandin was
recently elected a director at the April 23, 2002 Special
and Annual Meeting.

     
In respect of matters such as discussions
concerning the Management Agreement or related party
transactions, representatives of Pengrowth Management disclose
their conflict of interest and absent themselves from
discussions and voting.

 

		
	          1. 	
    Statement of Corporate Governance
    Practices.

     
In February, 1995, The Toronto Stock Exchange
Committee on Corporate Governance in Canada issued its final
report (the “TSX Report”) which included proposed
guidelines for effective corporate governance. These guidelines,
which are not mandatory, deal with the constitution of boards of
directors and board committees, their functions, their
independence from management and other means of addressing
corporate governance practices. The Board of Directors,
Pengrowth Management and senior management consider good
corporate governance to be central to the effective and
efficient operation of Pengrowth Trust and Pengrowth
Corporation. Listed below are the 14 guidelines proposed by the
TSX Report and a brief discussion of the Board of
Directors’ compliance with the guidelines. In fulfilling
its responsibilities, the Board of Directors cooperates with
Pengrowth Management. The Board of Directors has general
corporate authority over the business and affairs of Pengrowth
Corporation and derives its authority in respect to Pengrowth
Trust by virtue of the delegation of powers by the Trustee to
Pengrowth Corporation as “Administrator” in accordance
with the Trust Indenture. Pengrowth Management derives its
authority from the Management Agreement with both Pengrowth
Corporation and Pengrowth Trust. Although overall
responsibilities are shared between the Board of Directors and
Management, in practise, Management defers to the Board of
Directors on all matters material to Pengrowth Corporation and
Pengrowth Trust.

 

		
	          2. 	
    The Board of Directors should explicitly
    assume responsibility for stewardship of Pengrowth Corporation,
    and specifically for adoption of a strategic planning process,
    identification of principal risks, succession planning and
    monitoring, communications policy and integrity of internal
    control and management information systems.

     
The Board of Directors is responsible for the
overall stewardship of Pengrowth Corporation and Pengrowth Trust
and in setting corporate strategy and direction. The Board of
Directors considers management development and succession
programs, strategic business developments such as significant
acquisitions, and financing proposals including the issuance of
trust units and other securities, as well as those matters
requiring Board of Directors approval.

 

		
	          3. 	
    A majority of directors should be
    “unrelated” (free from conflicting
    interest).

     
The Board of Directors is presently comprised of
six members, of whom four are independent and unrelated and two
are appointments of Management, one of whom is the President and
Chief Executive Officer of Pengrowth Corporation. The Board is
entitled to appoint eight members. Management is entitled to
appoint two members to the Board of Directors in accordance with
the Management Agreement. The balance are to be appointed by the
Trust Unitholders, provided that the Board of Directors may
appoint a successor to

41

 

a person who ceases to be a director and may,
between annual general meetings, appoint one or more additional
directors of Pengrowth Corporation to serve until the next
annual general meeting, but the number of additional directors
shall not at any time exceed 1/3 of the number of directors who
held office at the expiration of the last annual meeting of
Pengrowth Corporation. If six directors are elected at the
Shareholder Meeting, the directors may, therefore, appoint two
additional directors before the next annual meeting of Pengrowth
Corporation.

 

		
	          4. 	
    Disclose for each director whether he or she
    is related, and how that conclusion was reached.

     
Mr. James S. Kinnear (President, Chief
Executive Officer and director) and Mr. Stanley Wong
(director) are the only related directors by virtue of their
appointment by Pengrowth Management and would also be considered
inside directors. The remainder of the directors are independent
in that they have not worked for Pengrowth Corporation (or
Pengrowth Management) nor do they have material contracts with
Pengrowth Corporation (or Pengrowth Management) or receive
remuneration from Pengrowth Corporation (or Pengrowth
Management), other than Trust Unit Options, in excess of
director’s fees payable by Pengrowth Corporation.

 

		
	          5.  	
    Appointment of a Committee responsible for
    appointment/ assessment of directors.

     
The Corporate Governance Committee is composed of
four directors, all of whom are independent directors. This
Committee’s responsibilities include proposing to the Board
of Directors new nominees to the Board of Directors and
assessing each director’s performance on an ongoing basis.

 

		
	          6.  	
    Implement a process for assessing the
    effectiveness of the Board of Directors, its Committees and
    individual directors.

     
The Corporate Governance Committee is responsible
for assessing the effectiveness of the Board of Directors, its
committees and individual directors. The Corporate Governance
Committee is also responsible for evaluating the performance of
Pengrowth Management and, if necessary, negotiating the
Management Agreement and making recommendations to the Trust
Unitholders as to Pengrowth Management and the terms of the
Management Agreement.

 

		
	          7.  	
    Provide orientation and education programs for
    new directors.

     
Pengrowth Corporation proposes to implement a
formal orientation and education program for new directors.

 

		
	          8.  	
    Consider reducing size of Board of Directors
    with a view to improving effectiveness.

     
A board of directors must have enough directors
to carry out its duties efficiently while presenting a diversity
of views and experiences. The Board of Directors believes that
the present size of six directors will provide sufficient
resources to the board along with the flexibility of appointing
two additional members to the Board of Directors as the Board of
Directors’ needs are reviewed by the Corporate Governance
Committee and suitable candidates are identified.

 

		
	          9.  	
    Review the compensation of directors in light
    of risks and responsibilities.

     
The Corporate Governance Committee will review
the adequacy and form of the compensation of directors and the
compensation to be paid to committee members and to the
“Lead Director”.

42

 

 

		
	          10.  	
    Committees should generally be composed of
    outside directors, a majority of whom are unrelated.

     
The Committees presently established by the Board
of Directors are composed as follows:

	 	 	 	 	 	 	 	 	 
	Committee		Related Directors		Unrelated Directors
	
		
		

	
    
    Audit
    

    	 	 	—	 	 	 	4	 
	
    
    Corporate Governance
    

    	 	 	—	 	 	 	4	 
	
    
    Reserves
    

    	 	 	1	 	 	 	1	 

 

		
	          11.  	
    Appoint a Committee responsible for the
    approach to corporate governance issues.

     
The Corporate Governance Committee is responsible
for corporate governance issues and the implementation of the
guidelines set forth in the TSX Report. In conjunction with
Pengrowth Management, the committee’s duties include:

			
	 	• 	
    hiring officers and other key employees on behalf
    of Pengrowth Corporation;
    
	 
	 	• 	
    planning for the succession of the directors,
    officers and key employees; and
    
	 
	 	• 	
    reviewing the performance of senior management.
    

 

		
	          12.  	
    The Board of Directors should develop position
    descriptions for the Board of Directors and for the Chief
    Executive Officer and the Board of Directors should approve or
    develop corporate objectives which the Chief Executive Officer
    is responsible for meeting.

     
The Board of Directors has proposed guidelines
for Board of Directors responsibilities and has described the
responsibilities of the “Lead Director” of Pengrowth
Corporation. The responsibilities of Pengrowth Management are
set out in the Management Agreement. The Corporate Governance
Committee will set annual performance objectives in discussions
with Pengrowth Management in conjunction with the Board of
Directors’ strategic planning and budgeting processes.

 

		
	          13.  	
    Establish procedures to enable the Board of
    Directors to function independently of management.

     
The Board of Directors derives its authority with
respect to Pengrowth Trust from the duties delegated to
Pengrowth Corporation as “Administrator” by the
Trustee in accordance with the Trust Indenture. The Trustee also
delegates certain powers to Pengrowth Management in accordance
with the terms of the Management Agreement. In practice,
Pengrowth Management defers to the Board of Directors on all
material matters. The Board of Directors is composed of a
majority of independent directors. In matters that require
independence of the Board of Directors, only the independent
directors participate in the decision making and evaluation.

 

		
	          14.  	
    Establish an Audit Committee with a
    specifically defined mandate (all members should be
    non-management directors).

     
The Audit Committee is composed of four
directors, all of whom are independent directors. The mandate of
the Audit Committee is defined in its terms of reference. The
Audit Committee has direct communication with the external
auditors.

 

		
	          15.  	
    Implement a system to enable individual
    directors to engage outside advisors, at Pengrowth
    Corporation’s expense.

     
The charter of the Corporate Governance Committee
permits independent directors to engage outside advisors at
Pengrowth Corporation’s expense. With the approval of the
Corporate Governance Committee, any director is entitled to
retain independent advisors at Pengrowth Corporation’s
expense.

43

 

RISK FACTORS

     
Investors acquiring Trust Units are subject to
the following risk-factors:

Volatility of Crude Oil and Natural Gas
Prices

     
Distributions paid to Trust Unitholders, are
dependent on the prices received for the oil and natural gas
production of Pengrowth Corporation. Crude oil and natural gas
prices have fluctuated widely during recent years and are
determined by supply and demand factors, including weather and
general economic conditions as well as conditions in other oil
producing regions, which are beyond the control of Pengrowth
Management or Pengrowth Trust. Declines in oil or natural gas
prices could have an adverse effect on Pengrowth Trust’s
operations, financial condition and proved reserves. Pengrowth
Corporation has sought to limit the effects of pricing
fluctuations through the purchase of high quality long life oil
and natural gas properties with low associated operating
expenses. Pengrowth Corporation may also mitigate commodity and
foreign exchange risk by fixing the price and/or exchange rate
on a portion of its future production. However petroleum and
natural gas prices can fluctuate widely on a month-to-month
basis in response to a variety of factors that are beyond the
control of Pengrowth Corporation and Pengrowth Trust. These
factors include, among others:

			
	 	• 	
    political conditions in the Middle East;
    
	 
	 	• 	
    worldwide economic conditions;
    
	 
	 	• 	
    weather conditions;
    
	 
	 	• 	
    the supply and price of foreign petroleum and
    natural gas;
    
	 
	 	• 	
    the level of consumer demand;
    
	 
	 	• 	
    the price and availability of alternative fuels;
    
	 
	 	• 	
    the proximity to, and capacity of, transportation
    facilities; and
    
	 
	 	• 	
    the effect of worldwide energy conservation
    measures.
    

Reserves Replacement
(Sustainability)

     
Pengrowth Corporation’s future oil and
natural gas reserves and production, and therefore the cash
flows of Pengrowth Trust, will be dependent upon Pengrowth
Corporation’s success in acquiring additional reserves.
Pengrowth Corporation has sought to purchase primarily unitized
oil and natural gas properties. Without reserve additions
through acquisition or development activities, Pengrowth
Corporation’s reserves and production will decline over
time as reserves are exploited.

     
To the extent that external sources of capital,
including the issuance of additional Trust Units, become limited
or unavailable, Pengrowth Corporation’s ability to make the
necessary capital investments to maintain or expand its oil and
natural gas reserves will be impaired. To the extent that
Pengrowth Corporation is required to use cash flow to finance
capital expenditures or property acquisitions, the level of
distributable income will be reduced.

     
There is strong competition relating to all
aspects of the oil and gas industry. Pengrowth Corporation will
actively compete for reserve acquisitions and skilled industry
personnel with a substantial number of other oil and gas
companies and Royalty Trusts. There can be no assurance that
Pengrowth Corporation will be successful in acquiring additional
reserves on terms that meet Pengrowth Trust’s investment
criteria.

Environmental Concerns

     
The operation of oil and natural gas wells
involves a number of natural hazards which may result in
blowouts, environmental damage or other unexpected or dangerous
conditions resulting in damage to Pengrowth Management and
Pengrowth Corporation and possible liability to third parties.
The oil and natural gas industry is subject to extensive
environmental regulation which provides for restrictions and
prohibitions on releases or emissions of various substances
produced in association with certain oil and natural industry

44

 

operations. In addition, legislation requires
that well and facility sites be abandoned and reclaimed to the
satisfaction of provincial authorities. A breach of such
legislation may result in fines or the issuance of a clean-up
order. See “Industry Conditions — Environmental
Regulation”. Ongoing environmental obligations will be
funded out of Pengrowth Corporation’s cash flow and will
therefore reduce distributable income payable to Trust
Unitholders.

Debt Service

     
At December 31, 2001, Pengrowth Corporation
had a total bank credit facility in the amount of
$450 million. Pengrowth Corporation draws upon this credit
facility from time to time to make acquisitions of oil and
natural gas properties. Variations in interest rates and
scheduled principal repayments could result in significant
changes in the amount required to be applied to debt service
before payment of the Royalty. Certain covenants of the
agreements with Pengrowth Corporation’s corporate lender
may also limit distributions to Pengrowth Trust. There can be no
assurance that the amount of Pengrowth Corporation’s credit
facility will be adequate for the future financial obligations
of Pengrowth Corporation or that additional funds will be able
to be obtained.

     
Pengrowth Corporation’s lending syndicate
has been provided with security over substantially all of the
assets of Pengrowth Corporation. If Pengrowth Corporation
becomes unable to pay its debt service charges or otherwise
commits an event of default such as bankruptcy, the lenders may
foreclose on or sell the properties and the net proceeds of sale
will be allocated firstly, to the repayment of bank debt and the
remainder, after paying all creditors of Pengrowth Corporation,
will be payable to Pengrowth Trust in respect of the Royalty.

Purchase of Reserves

     
The price for petroleum or natural gas interests
will be based on engineering and economic assessments made by
independent engineers. Pengrowth Corporation and Pengrowth Trust
generally rely upon reports prepared by GLJ in making investment
decisions. These assessments include a series of assumptions
regarding such factors as recoverability and marketability of
oil and natural gas, future prices of oil and natural gas and
operating costs, future capital expenditures and royalties and
other government levies which will be imposed over the producing
life of the reserves. Many of these factors are subject to
change and are beyond the control of Pengrowth Management,
Pengrowth Corporation and Pengrowth Trust. In particular,
changes in the prices of, and markets for, oil and natural gas
from those anticipated at the time of making such assessments
will affect the return on, and value of, the Trust Units. In
addition, all such assessments involve a measure of geological
and engineering uncertainty which could result in lower
production and reserves than anticipated.

Changes in Legislation

     
There can be no assurance that income tax laws
and government incentive programs relating to mutual fund trusts
and the oil and natural gas industry, such as the status of
Pengrowth Trust as a “mutual fund trust”, ARC and
resource allowance, will not be changed in a manner which
adversely affects Unitholders.

Investment Eligibility

     
Pengrowth Management will seek to ensure that the
Trust Units are qualified investments for RRSP’s,
RRIF’s and DPSP’s under the Income Tax Act
(Canada), which imposes penalties for the acquisition or holding
of non-qualified or ineligible investments and there is no
assurance that the conditions prescribed for such qualified or
eligible investments will be adhered to at any particular time.

Operational Matters

     
Continuing production from a property, and to
some extent the marketing of production therefrom, are dependent
upon the ability of the operator of the property. To the extent
the operator fails to perform these functions properly, revenue
may be reduced. Payments from production generally flow through
the operator and there is a risk of delay and additional expense
in receiving such revenues if the operator becomes insolvent.

45

 

     
Pengrowth Management and Pengrowth Corporation
will maintain liability insurance, where available, in amounts
consistent with industry standards. Business interruption
insurance may also be purchased for selected facilities, to the
extent such insurance is available. Pengrowth Management and
Pengrowth Corporation may become liable for damages arising from
such events against which they cannot insure, or against which
they may elect not to insure, because of high premium costs or
other reasons. Costs incurred to repair such damage or pay such
liabilities will reduce distributable income.

Experience of the Manager

     
Unitholders are entirely dependent on the
management of Pengrowth Management in respect of administration
of all matters relating to the Royalty and Trust Units for so
long as the Management Agreement, and any renewals of that
agreement, are in force.

Depletion of Reserves

     
Trust Units will have no value when reserves from
the properties of Pengrowth Corporation can no longer be
economically marketed and, as a result, purchasers of, or
subscribers for, Trust Units will have to obtain the return of
capital invested out of cash flow derived from their investments
in the Trust Units.

Limited Purpose Trust

     
Pengrowth Trust is a limited purpose trust which
is dependent upon the operations and assets of Pengrowth
Corporation. Pengrowth Trust’s income will be received from
the production of crude oil and natural gas from its resource
properties and will be susceptible to the risks and
uncertainties associated with the oil and natural gas industry
generally. Since the primary focus is to pursue growth
opportunities through the development of existing reserves and
the acquisition of new properties, Pengrowth Corporation’s
involvement in the exploration for oil and natural gas is
minimal. As a result, if the oil and natural gas reserves
associated with Pengrowth Corporation’s resource properties
are not supplemented through additional development or the
acquisition of additional oil and natural gas properties, the
ability of Pengrowth Corporation to continue to generate cash
flow for distribution to Unitholders may be adversely affected.

Capital Investment

     
The timing and amount of capital expenditures
will directly affect the amount of income for distribution to
Unitholders. Distributions may be reduced, or even eliminated,
at times when significant capital or other expenditures are
made. To the extent that external sources of capital, including
the issuance of additional Trust Units, become limited or
unavailable, Pengrowth Corporation’s ability to make the
necessary capital investments to maintain or expand oil and gas
reserves and to invest in assets, as the case may be, will be
impaired. To the extent that Pengrowth Corporation is required
to use distributable cash flow to finance capital expenditures,
property acquisitions or asset acquisitions, as the case may be,
the level of its distributable income will be reduced.

Investment Eligibility

     
If Pengrowth Trust ceases to qualify as a mutual
fund trust, the Trust Units will cease to be qualified
investments for RRSPs, RRIFs, RESPs and DPSPs (collectively,
“Exempt Plans”). Where at the end of any month an
Exempt Plan holds Trust Units that are not qualified
investments, the Exempt Plan must, in respect of that month, pay
a tax under Part XI.1 of the Income Tax Act (Canada)
equal to 1% of the fair market value of the Trust Units at the
time those Trust Units were acquired by the Exempt Plan. In
addition, where a trust governed by an RRSP or RRIF holds Trust
Units that are not qualified investments, the trust will become
taxable on its income attributable to the Trust Units while they
are not qualified investments. RESPs which hold Trust Units that
are not qualified investments may have their registration
revoked by the Canada Customs and Revenue Agency (formerly
Revenue Canada).

     
If Pengrowth Trust ceases to qualify as a mutual
fund trust, it will be required to pay a tax under
Part XII.2 of the Income Tax Act (Canada). The
payment of Part XII.2 tax by Pengrowth Trust may have

46

 

adverse income tax consequences for certain
Unitholders including non-resident persons and Exempt Plans that
acquire an interest in Pengrowth Trust directly or indirectly
from another Unitholder.

Additional Financing

     
To the extent that external sources of capital,
including the issuance of additional Trust Units, become limited
or unavailable, Pengrowth Corporation’s ability to make the
necessary capital investments to maintain or expand its oil and
gas reserves will be impaired. To the extent that Pengrowth
Corporation is required to use cash flow to finance capital
expenditures or property acquisitions, the level of
distributable income will be reduced.

Competition

     
There is strong competition relating to all
aspects of the oil and gas industry. Pengrowth Corporation will
actively compete for capital, skilled personnel, undeveloped
lands, reserves acquisitions, access to drilling rigs, service
rigs and other equipment, access to processing facilities and
pipeline and refining capacity and in all other aspects of its
operations with a substantial number of other organizations,
many of which may have greater technical and financial resources
than Pengrowth Trust and Pengrowth Corporation. Some of those
organizations not only explore for, develop and produce oil and
natural gas but also carry on refining operations and market
petroleum and other products on a world wide basis and as such
have greater and more diverse resources on which to draw.

Return of Capital

     
Trust Units will have no value when reserves from
Pengrowth Corporation’s properties can no longer be
economically produced or marketed and, as a result, cash
distributions do not represent a “yield” in the
traditional sense as they represent both return of capital and
return on investments. Unitholders will have to obtain the
return of capital invested out of cash flow derived from their
investments in the Trust Units during the period when reserves
can be economically recovered.

Nature of Trust Units

     
The Trust Units do not represent a traditional
investment in the oil and natural gas sector and should not be
viewed by investors as shares in Pengrowth Corporation. The
Trust Units are also dissimilar to conventional debt instruments
in that there is no principal amount owing directly to
Unitholders. The Trust Units represent a fractional interest in
Pengrowth Trust. As holders of Trust Units, Unitholders will not
have the statutory rights normally associated with ownership of
shares of a corporation including, for example, the right to
bring “oppression” or “derivative” actions,
Pengrowth Trust’s assets are Royalty Units and certain
facilities interests, and may also include certain other
investments permitted under the Trust Indenture. The price per
Trust Unit is a function of anticipated distributable income,
the oil and natural gas properties acquired by Pengrowth
Corporation and the ability to effect long-term growth in the
value of Pengrowth Corporation. The market price of the Trust
Units will be sensitive to a variety of market conditions
including, but not limited to, interest rates and the ability of
Pengrowth Corporation to acquire suitable oil and natural gas
properties. Changes in market conditions may adversely affect
the trading price of the Trust Units.

Unitholder Limited Liability

     
The Trust Indenture provides that no Unitholder
will be subject to any personal liability in connection with
Pengrowth Trust or its obligations and affairs, and the
satisfaction of claims of any nature arising out of or in
connection therewith is only to be made out of Pengrowth
Trust’s assets. Additionally, the Trust Indenture states
that no Unitholder is liable to indemnify or reimburse the
Trustee for any liabilities incurred by the Trustee with respect
to any taxes payable by or liabilities incurred by Pengrowth
Trust or the Trustee, and all such liabilities will be
enforceable only against, and will be satisfied only out of,
Pengrowth Trust’s assets. Notwithstanding the foregoing
statements in the Trust Indenture, because of uncertainties in
the law relating to investment trusts such as Pengrowth Trust,
there is a risk that a Unitholder could be held personally liable

47

 

for obligations of Pengrowth Trust to the extent
that claims are not satisfied by Pengrowth Trust. It is intended
that the operations of Pengrowth Trust will be conducted, upon
the advice of counsel, in such a way and in such jurisdictions
as to avoid as far as possible any material risk of liability on
the Unitholders for claims against Pengrowth Trust. In any
event, it is considered that the risk of any personal liability
of Unitholders in Canada is minimal, particularly where the
beneficiaries are not controlling the day-to-day activities of
the trust and there is no direct contact between the
beneficiaries of the trust and parties who contract with the
trust, each of which conditions is satisfied in the case of
Pengrowth Trust and its Unitholders.

Conflict of Interest

     
Pengrowth Management provides all of the
advisory, management and administrative needs of Pengrowth Trust
and Pengrowth Corporation. In exchange for those services,
Pengrowth Management earns a management fee from Pengrowth
Trust, which is based in part on net production revenue of
Pengrowth Corporation. This arrangement may create an incentive
for Pengrowth Management to maximize the net production revenue
of Pengrowth Corporation, rather than maximizing its net income,
which is the primary basis for calculating distributions
available to Unitholders. In addition, there may be other
situations in which the interests of Pengrowth Management will
conflict with those of the Unitholders. Pengrowth Management may
acquire petroleum and natural gas properties on behalf of
persons other than the Unitholders and may therefore act in
contradiction to or competition with the interests of
Unitholders. Pengrowth Management may manage and administer such
additional properties, as well as enter into other types of
energy related management and advisory activities. Any expenses
which Pengrowth Management incurs in relation to the business of
Pengrowth Corporation and Pengrowth Trust are flowed through to
Pengrowth Corporation so there may not be an incentive to
minimize those expenses.

SOEP Property Risks

     
SOEP properties are offshore and Pengrowth
Corporation has had no prior experience with offshore projects.
Moreover, they are in an earlier stage of development than most
of Pengrowth Corporation’s previous acquisitions have been
and have not been in production for an extended period of time.
As a result, the SOEP properties may present challenges and
risks that Pengrowth Corporation has not faced in the past.
Furthermore, because of the early stage of development and
relatively brief production period of these properties, some
events, which could materially adversely affect Pengrowth
Corporation’s interests, may occur.

Marketability

     
The marketability of Pengrowth Corporation’s
production depends in part upon the availability, proximity and
capacity of gas gathering systems, pipelines and processing
facilities. Canadian Federal and Provincial as well as
U.S. Federal and State regulation of oil and gas production
and transportation, general economic conditions, and changes in
supply and demand all could adversely affect Pengrowth
Corporation’s ability to produce and market petroleum and
natural gas. If market factors dramatically change, the
financial impact on Pengrowth Corporation could be substantial.

CONFLICTS OF INTEREST

     
There may be situations in which the interests of
Pengrowth Management will conflict with those of the
Unitholders. Pengrowth Management may acquire oil and natural
gas properties on behalf of persons other than the Unitholders.
Pengrowth Management may manage and administer such additional
properties, as well as enter into other types of energy-related
management and advisory activities. Thus neither Pengrowth
Management, nor its management, will carry on their full-time
activities on behalf of Unitholders and, when acting on behalf
of others, may at times act in contradiction to or competition
with the interests of Unitholders.

     
In resolving such conflicts, decisions will be
made on a basis consistent with the objectives and funds of each
group of interested parties and the time limitations on
investment of such funds, all consistent with the duty of
Pengrowth Management to deal fairly and in good faith with each
such group of persons. In the event

48

 

that the interests of Pengrowth Management are in
conflict with those of Unitholders, Pengrowth Management is
obliged to make decisions acting in good faith, having regard to
the best interests of Unitholders and in manner that would not
contravene its fiduciary obligations to Unitholders.

     
Oil and natural gas properties may occasionally
be made available for purchase in areas where Pengrowth
Management’s clients hold interests. In such circumstances,
Pengrowth Management shall provide each of its clients,
including Pengrowth Corporation, with the opportunity to
participate in the acquisition of such properties.

     
Although Pengrowth Management provides advisory
and management services to Pengrowth Corporation and Pengrowth
Trust, the Board of Directors of Pengrowth Corporation
supervises the management of the business and affairs of
Pengrowth Corporation and Pengrowth Trust. The board makes
significant operational decisions and all decisions relating to
(i) the issuance of additional Trust Units,
(ii) material acquisitions and dispositions of properties,
(iii) material capital expenditures, (iv) borrowing,
and (v) the payment of distributable income.

     
Properties will not be acquired from officers or
directors of Pengrowth Management or persons not at arm’s
length with such persons at prices which are greater than fair
market value, nor will properties be sold to officers or
directors of Pengrowth Management or persons not at arm’s
length with such persons at prices which are less than fair
market value in each case as established by an opinion of an
independent financial advisor and approved by the independent
members of the Board of Directors of Pengrowth Corporation.
There may be circumstances where certain transactions may also
require the preparation of a formal valuation and the
affirmative vote of Unitholders in accordance with the
requirements of Ontario Securities Commission Policy
No. 9.1.

     
Circumstances may arise where members of the
Board of Directors of Pengrowth Corporation serve as directors
or officers of corporations which are in competition to the
interests of Pengrowth Corporation and the Pengrowth Trust. No
assurances can be given that opportunities identified by such
board members will be provided to Pengrowth Corporation and
Pengrowth Trust.

49

 

ADDITIONAL INFORMATION

     
Additional information, including Pengrowth
Management’s remuneration and the principal holders of
Pengrowth Trust Units, is contained in Pengrowth Trust’s
Information Circular dated March 15, 2002, which relates to
the Special and Annual Meeting of Trust Unitholders and the
Annual General Meeting of Shareholders of Pengrowth Corporation,
which were held on April 23, 2002. Additional financial
information is contained in Pengrowth Trust’s comparative
financial statements for the years ended December 31, 2001
and 2000 which are included in Pengrowth Trust’s Annual
Report for the year ended December 31, 2001.

     
Pengrowth Trust will provide to any person or
company upon request:

		
	 	     
    (a) when the securities of Pengrowth Trust
    are in the course of a distribution pursuant to a short form
    prospectus or a preliminary short form prospectus has been filed
    in respect of a proposed distribution of its securities;
    

		
	 	     
    (i) one copy of Pengrowth Trust’s
    latest annual information form, together with one copy of any
    document, or the pertinent pages of any document, incorporated
    therein by reference;
    
	 
	 	     
    (ii) one copy of the consolidated financial
    statements of Pengrowth Trust for the most recently completed
    financial year in respect of which such financial statements
    have been issued together with the report of the auditor
    thereon, and one copy of any unaudited interim consolidated
    financial statements of Pengrowth Trust subsequent to the
    financial statements for its most recent financial year;
    
	 
	 	     
    (iii) one copy of the information circular
    of Pengrowth Trust in respect of the most recent annual meeting
    of Unitholders of Pengrowth Trust which involved the election of
    directors of Pengrowth Corporation; and
    
	 
	 	     
    (iv) one copy of any other documents which
    are incorporated by reference into the preliminary short form
    prospectus or the short form prospectus; or
    

		
	 	     
    (b) at any other time, a copy of the
    documents referred to in clauses (a) (i), (ii) and
    (iii) above, provided that Pengrowth Trust or Pengrowth
    Corporation may require a payment of a reasonable charge from
    such a person or company who is not a security holder of
    Pengrowth Trust where the documents are furnished under this
    clause (b).
    

     
For additional copies of the Annual Information
Form and the materials listed in the preceding paragraphs please
contact:

	 	 	 	 	 	 	 
	
    Calgary Head Office	 	
    Toronto Investor Relations
	
    Suite 700, 112 Fourth Avenue SW
    	 	
    1200, 141 Adelaide Street West
    
	
    Calgary, Alberta T2P 0H3
    	 	
    Toronto, Ontario M5H 3L5
    
	
    
    Telephone:
    

    	 	
    (403) 233-0224
    	 	
    Telephone:
    	 	
    (416) 362-1748
    
	 	 	
    1-800-223-4122
    	 	 	 	
    1-888-744-1111
    
	
    
    Fax:
    

    	 	
    (403) 294-0051
    	 	
    Fax:
    	 	
    (403) 362-8191
    
	 	 	
    Website: www.pengrowth.com
    
	 	 	
    email:   pengrowth@pengrowth.com
    

50

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