suppl
Filed pursuant to General Instruction II.L of Form F-10
File No. 333-137221
This prospectus supplement
(the Prospectus Supplement), together with the short
form base shelf prospectus dated September 15, 2006 to
which it relates (the Prospectus), and each document
incorporated by reference into the Prospectus and this
Prospectus Supplement, constitutes a public offering of these
securities only in those jurisdictions where they may be
lawfully offered for sale and therein only by persons permitted
to sell such securities. No securities regulatory authority has
expressed an opinion about these securities and it is an offence
to claim otherwise.
Information has been
incorporated by reference into the Prospectus and this
Prospectus Supplement from documents filed with securities
commissions or similar authorities in Canada.
Copies of the
documents incorporated therein by reference may be obtained on
request without charge from the Secretary of Pengrowth
Corporation at 2900, 240 4th Avenue S.W.,
Calgary, Alberta T2P 4H4, telephone:
1-800-223-4122,
or by accessing disclosure documents available through the
Internet on the Canadian System for Electronic Document Analysis
and Retrieval (SEDAR) at www.sedar.com. For the purposes of
the Province of Québec, the Prospectus and this Prospectus
Supplement contain information to be completed by consulting the
permanent information record. A copy of the permanent
information record may be obtained from the Secretary of
Pengrowth at the above-mentioned address and telephone
number.
Preliminary Prospectus Supplement
To the Short Form Base Shelf Prospectus dated
September 15, 2006
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New
Issue |
November l ,
2006 |
PENGROWTH ENERGY
TRUST
$ l
20,000,000
Trust Units
We are offering 20,000,000 trust units
(Trust Units) of Pengrowth Energy Trust (the
Trust) at a price of
$ l per
Trust Unit. The offering price for the Trust Units was
determined by negotiation between the Trust and RBC Dominion
Securities Inc., BMO Nesbitt Burns Inc., CIBC World Markets
Inc., Scotia Capital Inc., National Bank Financial Inc., TD
Securities Inc., Merrill Lynch Canada Inc., HSBC Securities
(Canada) Inc., Canaccord Capital Corporation, Raymond James
Ltd., Sprott Securities Inc., Dundee Securities Corporation,
FirstEnergy Capital Corp., Peters & Co. Limited and
Tristone Capital Inc. (collectively, the
Underwriters). We have also granted to the
Underwriters an over-allotment option (the Over-Allotment
Option), exercisable in whole or in part for a period of
30 days from the Closing Date (as defined below), to
purchase up to an additional 15% of that number of
Trust Units issued at the Closing Date at the price per
Trust Unit set out above. See Plan of
Distribution.
Investing in the Trust Units involves
risks. See Risk Factors beginning
on page S-11 of this Prospectus Supplement and page 17
of the accompanying Prospectus.
Neither the United States Securities and Exchange Commission
(SEC) nor any state securities commission has
approved or disapproved of these Trust Units nor passed upon the
accuracy or adequacy of this Prospectus Supplement and the
Prospectus. Any representation to the contrary is a criminal
offence.
The outstanding Trust Units are listed and posted for
trading on the New York Stock Exchange (NYSE) under
the symbol PGH and on the Toronto Stock Exchange
(TSX) under the symbol PGF.UN. On
November 28, 2006, the last trading day prior to the
announcement of this offering, the closing price of the
Trust Units on the NYSE was US$18.01 per
Trust Unit and the closing price of the Trust Units on
the TSX was Cdn$20.65 per Trust Unit. The TSX has
conditionally approved the listing of the Trust Units
offered by this Prospectus Supplement. Listing will be subject
to our fulfillment of all the listing requirements of the TSX on
or before February 26, 2007.
We pay distributions on the 15th day of each month to
Unitholders of record on the 10th business day preceding
payment. Subscribers for Trust Units will be eligible to
receive all distributions commencing January 15, 2007.
Further particulars concerning the attributes of the
Trust Units are set out under Description of
Trust Units in the accompanying Prospectus, which
provides for the issuance from time to time of up to
$2,000,000,000 of Trust Units and/or subscription receipts
over a
25-month
period. Certain proposed Canadian tax measures that, if enacted,
would materially and adversely affect the taxation of the Trust
and significantly affect the tax consequences of investing in
the Trust Units are set out under Recent
Developments in this Prospectus Supplement.
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Price to
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Underwriters
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Net Proceeds
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the
Public(1)
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Fee(1)(2)
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to the
Trust(1)(3)
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Per Trust Unit
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$ l
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$ l
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$ l
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Total
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$ l
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$ l
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$ l
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Notes:
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(1)
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Assuming no exercise of the
Over-Allotment Option. In the event the Over-Allotment Option is
exercised in full, the gross proceeds to the Trust will increase
to
$ l ,
the Underwriters fee will increase to
$ l
and the net proceeds to the Trust from the offering will
increase to
$ l
(before deducting the expenses of this offering).
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(2)
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The Underwriters fee
represents l % of
the offering price of the Trust Units.
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(3)
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Before deducting the expenses of
this offering estimated to be approximately
$ l .
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The Underwriters, as principals, conditionally offer the
Trust Units, subject to prior sale, if, as and when issued
by us and accepted by the Underwriters in accordance with the
conditions contained in the Underwriting Agreement referred to
under Plan of Distribution, and subject to
the approval of certain legal matters by Bennett Jones LLP on
our behalf and by Fraser Milner Casgrain LLP on behalf of the
Underwriters. See Plan of Distribution.
Subscriptions for Trust Units will be received subject to
rejection or allotment in whole or in part and we reserve the
right to close the subscription books at any time without
notice. It is expected that the certificates representing the
Trust Units offered by this Prospectus Supplement will be
available for delivery at closing. The closing of this offering
is anticipated to occur on or about December 7, 2006 or
such other date as may be agreed upon by us and the Underwriters
(the Closing Date), but in any event not later than
December 29, 2006. The Underwriters may over-allot or
effect transactions which stabilize or maintain the market price
for the Trust Units at levels other than those which
otherwise might prevail in the open markets. Such transactions,
if commenced, may be discontinued at any time. See Plan
of Distribution.
Each of RBC Dominion Securities Inc., BMO Nesbitt Burns Inc.,
CIBC World Markets Inc., Scotia Capital Inc., National Bank
Financial Inc., TD Securities Inc. and HSBC Securities (Canada)
Inc. is a subsidiary of a Canadian chartered bank which is one
of our lenders and to which we are currently indebted.
Consequently, we may be considered to be a connected issuer of
such Underwriters for the purposes of securities regulations in
certain provinces. The net proceeds from this offering may
be used to reduce our indebtedness to such banks. See
Relationship between the Trust and the
Underwriters, Use of Proceeds and
Consolidated Capitalization.
We are permitted, under the multi-jurisdictional disclosure
system adopted by the United States, to prepare this Prospectus
Supplement and the accompanying Prospectus in accordance with
Canadian disclosure requirements. You should be aware that such
requirements are different from those of the United States. We
have prepared our financial statements included or incorporated
herein by reference in accordance with Canadian generally
accepted accounting principles, and they are subject to Canadian
auditing and auditor independence standards. Thus, they may not
be comparable to the financial statements of U.S. companies
or trusts. Information regarding the impact upon our financial
statements of significant differences between Canadian and
U.S. generally accepted accounting principles is contained
in the notes to our annual consolidated financial statements
incorporated by reference in the Prospectus.
The SEC permits United States oil and natural gas companies,
in their filings therewith, to disclose only proved reserves net
of royalties and interests of others that geological and
engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing
economic and operating conditions. Canadian securities laws
permit oil and natural gas companies, in their filings with
Canadian securities regulators, to disclose reserves prior to
the deduction of royalties and interests of others, and to
disclose probable reserves. Probable reserves are of a higher
risk and are generally believed to be less likely to be
recovered than proved reserves. Certain reserve information
included herein and in the documents incorporated by reference
herein to describe our reserves, such as probable
reserve information, is prohibited in filings with the SEC by
U.S. oil and natural gas companies.
You should be aware that the purchase, holding or disposition
of the Trust Units may subject you to tax consequences both
in the United States and Canada. This Prospectus Supplement and
the accompanying Prospectus may not describe these tax
consequences fully. You should read the tax discussion in this
Prospectus Supplement and in the Prospectus fully, and obtain
independent tax advice as necessary.
Your ability to enforce civil liabilities under
U.S. federal securities laws may be affected adversely by
the fact that we are formed under the laws of the Province of
Alberta, Canada, most of the officers and directors of the
Corporation (as defined below) and most of the experts named in
this Prospectus Supplement and the Prospectus are residents of
Canada, and virtually all of our assets are located outside the
United States.
You should also be aware that on October 31, 2006, the
Minister of Finance (Canada) announced proposed tax measures
which, if enacted, would materially and adversely change the
manner in which Pengrowth is taxed and would also change the
character of the distributions to you for Canadian federal
income tax purposes (the October 31 Proposals).
It is expected that the October 31 Proposals will apply to
Pengrowth and its Unitholders commencing in 2011. See
Recent Developments Proposed Changes to Tax
Legislation Affecting Pengrowth and its Unitholders
and Risk Factors The
October 31 Proposals, if enacted, are expected to
materially and adversely affect Pengrowth, our Unitholders and
the value of the Trust Units.
S-2
The return on an investment in Trust Units is not
comparable to the return on an investment in a fixed-income
security. The recovery of the initial investment made by a
Unitholder is at risk, and the anticipated return on the
Unitholders investment is based on many performance
assumptions. Although we intend to make distributions of a
portion of our available cash, these cash distributions may be
reduced or suspended. Cash distributions are not
guaranteed. Our ability to make cash
distributions and the actual amount distributed will depend on
numerous factors including, among other things: financial
performance, debt obligations, working capital requirements,
future capital requirements and the timing and application of
the October 31 Proposals, all of which are susceptible to a
number of risks. In addition, the market value of the
Trust Units may decline as a result of many factors,
including our inability to meet our cash distribution targets in
the future and the possibility that the October 31
Proposals could apply to Pengrowth and its Unitholders earlier
than 2011, and that decline may be significant. You should also
consider the particular risk factors that may affect the
industry in which we operate, and therefore the stability of the
distributions you would receive. See Risk
Factors in this Prospectus Supplement and in the
Prospectus. This section also describes our assessment of those
risk factors, as well as potential consequences to you if a risk
should occur.
The after-tax return to Unitholders, for Canadian income tax
purposes, from an investment in Trust Units can be made up
of both a return on, and a return of, capital. That composition
may change over time, thus affecting an investors
after-tax return. Subject to the October 31 Proposals,
returns on capital are generally taxed as ordinary income in the
hands of a Unitholder who is a resident of Canada for purposes
of the Tax Act and are subject to Canadian withholding tax in
the hands of a Unitholder who is not a resident of Canada at the
rate of 25%, unless such rate is reduced under the provisions of
a tax convention between Canada and the jurisdiction of
residence of the Unitholder. Pursuant to the October 31
Proposals, provided that the October 31 Proposals do not
apply to Pengrowth and its Unitholders earlier, commencing in
2011 certain of our distributions which would otherwise have
been taxed, or subject to Canadian withholding tax, as ordinary
income to Unitholders will be characterized and taxed as
dividends to such Unitholders in addition to being subject to
tax at corporate rates at the Trust level and, in the case of a
Unitholder who is not a resident of Canada, such deemed dividend
will be subject to Canadian withholding tax at the rate of 25%,
unless such rate is reduced under the provisions of a tax
convention between Canada and the jurisdiction of residence of
the Unitholder. Returns of capital are, and will be under the
October 31 Proposals, generally tax-deferred for
Unitholders who are resident in Canada for purposes of the Tax
Act (and reduce such Unitholders adjusted cost base in the
Trust Units for purposes of the Tax Act). Returns of
capital to a Unitholder who is not a resident of Canada for
purposes of the Tax Act or is a partnership that is not a
Canadian partnership for purposes of the Tax Act
are, and will be under the October 31 Proposals, subject to
a 15% Canadian withholding tax. Prospective Unitholders should
consult their own tax advisors with respect to the Canadian
income tax considerations in their own circumstances, including
the effect of the October 31 Proposals on a prospective
investment in Trust Units. See
Distributions in the Prospectus.
The Trust Units are not deposits within the
meaning of the Canada Deposit Insurance Corporation Act
(Canada) and are not insured under the provisions of that
Act or any other legislation. Furthermore, we are not a trust
company and, accordingly, are not registered under any trust and
loan company legislation as we do not carry on, or intend to
carry on, the business of a trust company.
S-3
TABLE OF
CONTENTS
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Page
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S-4
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S-6
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S-6
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S-8
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S-9
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S-10
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S-11
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S-12
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S-22
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S-23
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S-24
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S-25
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S-25
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S-25
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S-26
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S-26
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S-28
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S-29
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Schedule A
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Schedules of Revenue, Royalties and Operating Expenses for the
CP Assets for the years ended December 31, 2005 and 2004
and the nine months ended September 30, 2006, together with
the notes thereto and the report of the auditor thereon
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Schedule B
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Pengrowth Pro Forma Financial Statements after giving effect to
the ConocoPhillips Acquisition and the strategic business
combination with Esprit
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Schedule C
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Pengrowth Base Updated Reserves Information (Constant Pricing)
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Schedule D
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ConocoPhillips Properties Reserves Information (Constant Pricing)
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Schedule E
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Pengrowth Pro Forma Reserves Information (Constant Pricing)
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Schedule F
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Pengrowth Base Updated Reserves Information (Strip Pricing)
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Schedule G
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ConocoPhillips Properties Reserves Information (Strip Pricing)
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Schedule H
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Pengrowth Pro Forma Reserves Information (Strip Pricing)
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Schedule I
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Pricing Assumptions
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DEFINITIONS,
ABBREVIATIONS AND OTHER MATTERS
All dollar amounts in this Prospectus Supplement and in the
Prospectus are expressed in Canadian dollars, except where
otherwise indicated. References to $ or
Cdn$ are to Canadian dollars and references to
US$ are to United States dollars.
Unless otherwise indicated, all financial information included
and incorporated by reference in this Prospectus Supplement or
in the Prospectus is determined using Canadian generally
accepted accounting principles, which we refer to as
Canadian GAAP. U.S. GAAP means
generally accepted accounting principles in the United States.
The financial statements incorporated by reference herein and
attached hereto have been prepared in accordance with Canadian
GAAP, which differs from U.S. GAAP. Therefore, our
comparative consolidated financial statements, Esprit Energy
Trusts (Esprit) comparative consolidated
financial statements, and the pro forma consolidated financial
statements after giving effect to the merger with Esprit (which
are all incorporated by reference in the Prospectus) as well as
the comparative financial statements relating to the CP Assets
and the pro forma consolidated financial statements after giving
effect to the ConocoPhillips Acquisition and the merger with
Esprit (which are attached as Schedules to this Prospectus
Supplement) may not be comparable to financial statements
prepared in accordance with U.S. GAAP. You should refer to
the notes to the above financial statements or the respective
reconciliation of the above financial statements to
U.S. GAAP for a discussion of the principal differences
between our financial results calculated under Canadian GAAP and
under U.S. GAAP.
In this Prospectus Supplement and the Schedules hereto, the
following terms shall have the following meanings:
API means American Petroleum Institute;
bbl, bbls,
mbbls and mmbbls refers to
barrel, barrels, thousands of barrels and millions of barrels,
respectively;
S-4
bblpd refers to barrels per day;
boe, mboe and
mmboe refers to barrels of oil equivalent,
thousands of barrels of oil equivalent and millions of barrels
of oil equivalent, respectively;
boepd refers to barrels of oil equivalent per
day;
ConocoPhillips Acquisition has the meaning
ascribed thereto under the heading Recent
Developments ConocoPhillips Acquisition in
this Prospectus Supplement;
Corporation refers to Pengrowth Corporation,
a corporation existing under the laws of the Province of Alberta;
CP Assets has the meaning ascribed thereto
under the heading Recent Developments
ConocoPhillips Acquisition in this Prospectus Supplement;
GLJ means GLJ Petroleum Consultants Ltd.,
independent reserves evaluators;
Gross with respect to production and reserves
refers to the total production and reserves attributable to a
property before the deduction of royalties and, with respect to
land and wells, refers to the total number of acres or wells, as
the case may be, in which Pengrowth has a working interest or a
royalty interest;
Mechanical Update means an update of reserves
information making no adjustment to forecast production and
costs used from a NI
51-101
compliant report other than changing the effective date such
that any forecast production and costs between the NI
51-101
compliant report effective date and the new effective date are
excluded. Items that may have changed and, which are not
reflected in the Mechanical Update, are items such as reserve
additions, changes in operating costs and, to the extent there
may be any, performance changes;
$MM refers to millions of dollars;
mmbtu refers to a million british thermal
units;
mcf , mmcf and
bcf refers to thousands of cubic feet,
millions of cubic feet and billions of cubic feet, respectively;
mmcfpd refers to millions of cubic feet per
day;
NI
51-101
means National Instrument
51-101
Standards of Disclosure for Oil and Gas Activities of the
Canadian Securities Administrators;
Net refers to Pengrowths working
interest share of production or reserves, as the case may be,
after the deduction of royalties, and, with respect to land and
wells, refers to Pengrowths working interest share therein;
NGLs refers to natural gas liquids;
October 31 Proposals has the meaning
ascribed thereto on page S-3 of this Prospectus Supplement;
Pengrowth Interest refers to Pengrowths
working interest and royalty interest share of reserves before
the deduction of royalties;
Probable Reserves refers to those additional
reserves that are less likely to be recovered than Proved
Reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated Proved Reserves plus Probable Reserves;
Proved Reserves refers to those reserves that
can be estimated with a high degree of certainty to be
recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves;
Reserves refers to estimated remaining
quantities of oil and natural gas and related substances
anticipated to be recovered from known accumulations, from a
given date forward, based on: (i) analysis of drilling,
geological, geophysical and engineering data; (ii) the use
of established technology; and (iii) specified economic
conditions which are generally accepted as being reasonable and
shall be disclosed. Reserves are classified according to the
degree of certainty associated with the estimate;
royalty interest refers to an interest in an
oil and gas property consisting of a royalty granted in respect
of production from the property;
Total Proved Plus Probable Reserves means the
aggregate of Proved Reserves and Probable Reserves before the
deduction of royalties; and
Tax Act refers to the Income Tax Act
(Canada), and the regulations promulgated thereunder, as
amended from time to time;
S-5
Trust refers to Pengrowth Energy Trust, an
oil and gas royalty trust existing under the laws of the
Province of Alberta;
Trust Unit refers to a trust unit of the
Trust, but does not include the Class A trust units of the
Trust;
Unitholders refers to the holders of
Trust Units and, to the extent the context requires, the
Class A trust units of the Trust; and
we, us, our
and Pengrowth refer to Pengrowth Energy
Trust and Pengrowth Corporation on a consolidated basis as the
context requires.
working interest refers to the percentage of
undivided interest held by Pengrowth in an oil and gas property.
References in this Prospectus Supplement and the Schedules
hereto to boe, mboe and mmboe may be misleading, particularly if
used in isolation. A conversion ratio of 6 mcf of natural gas to
one barrel of crude oil equivalent is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead.
IMPORTANT
NOTICE ABOUT INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS
This document is in two parts. The first part is this Prospectus
Supplement, which describes the specific terms of the
Trust Units we are offering and adds to and updates certain
information contained in the accompanying Prospectus and the
documents incorporated by reference therein. The second part,
the accompanying Prospectus, gives more general information,
some of which may not apply to the Trust Units we are
offering.
This Prospectus Supplement is deemed to be incorporated by
reference into the accompanying Prospectus solely for the
purposes of the offering of the Trust Units offered hereby.
Other documents are also incorporated by reference or deemed to
be incorporated by reference into the Prospectus. See
Documents Incorporated by Reference in the
Prospectus herein for a list of all documents
incorporated by reference herein and in the Prospectus.
DOCUMENTS
INCORPORATED BY REFERENCE IN THE PROSPECTUS
Information has been incorporated by reference in the Prospectus
from documents filed with securities commissions or similar
authorities in Canada and with the SEC in the United States.
Copies of the documents incorporated by reference may be
obtained on request without charge from the Secretary of the
Corporation at 2900, 240 4th Avenue S.W.,
Calgary, Alberta T2P 4H4 (telephone:
1-800-223-4122).
For the purpose of the Province of Québec, the Prospectus
and this Prospectus Supplement contain information to be
completed by consulting the permanent information record. A copy
of the permanent information record may be obtained from the
Secretary of the Corporation at the above-mentioned address and
telephone number. These documents are also available through the
internet on the System for Electronic Document Analysis and
Retrieval (SEDAR) which can be accessed at www.sedar.com.
The following documents of the Trust filed with securities
commissions or similar authorities in each of the provinces of
Canada and the SEC are incorporated by reference into the
Prospectus:
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(a)
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the annual information form of the Trust dated March 29,
2006 for the year ended December 31, 2005;
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(b)
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the Information Circular Proxy Statement dated
May 16, 2006 for the annual and special meeting of
Unitholders held on June 23, 2006;
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(c)
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the revised Managements Discussion and Analysis for the
year ended December 31, 2005, which was filed on SEDAR on
September 15, 2006;
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(d)
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the comparative consolidated annual financial statements for the
year ended December 31, 2005, together with the notes
thereto and the report of the auditors thereon;
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(e)
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Managements Discussion and Analysis for the period ended
September 30, 2006;
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(f)
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the comparative consolidated interim financial statements for
the period ended September 30, 2006, together with the
notes thereto;
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(g)
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the comparative consolidated interim financial statements of
Esprit for the period ended September 30, 2006, together
with the notes thereto, which were filed on SEDAR under the
category Other on November 28, 2006;
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(h)
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the material change report dated August 2, 2006 (with
respect to the merger with Esprit);
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S-6
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(i)
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the material change report dated August 8, 2006 (with
respect to the consolidation of the then outstanding
Class A trust units and Class B trust units of the
Trust);
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(j)
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the material change report dated September 8, 2006 (with
respect to the merger with Esprit, including the consolidated
pro forma financial statements of the Trust after giving effect
to the merger with Esprit);
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(k)
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the material change report dated September 18, 2006 (with
respect to the acquisition of certain assets in the Carson Creek
area of Alberta (the Carson Creek
Acquisition));
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(l)
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the material change report dated September 20, 2006 (with
respect to the Carson Creek Acquisition), which amends and
supplements the Prospectus;
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(m)
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the material change report dated October 6, 2006 (with
respect to the closing of our September 28, 2006 offering
of Trust Units);
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(n)
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the material change report dated November 8, 2006 (with
respect to our offer to purchase all of our outstanding 6.5%
convertible extendible unsecured subordinated debentures);
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(o)
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the business acquisition report dated October 31, 2006
(with respect to the merger with Esprit, including the
consolidated pro forma financial statements of the Trust after
giving effect to the merger with Esprit);
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(p)
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the disclosure of the Trusts oil and gas producing
activities prepared in accordance with
SFAS No. 69 Disclosure about Oil and
Gas Producing Activities, which was filed on SEDAR under
the category Other on September 15, 2006;
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(q)
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the reconciliation of the financial statements of the Trust for
the nine months ended September 30, 2006 and for the years
ended December 31, 2005 and 2004 to U.S. GAAP, which
was filed on SEDAR under the category Other on
November 28, 2006;
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(r)
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the reconciliation of the financial statements of Esprit for the
nine months ended September 30, 2006 to U.S. GAAP,
which was filed on SEDAR under the category Other on
November 28, 2006; and
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(s)
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the material change report dated November 29, 2006 (with
respect to the ConocoPhillips Acquisition), which amends and
supplements the Prospectus.
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Any statement in the Prospectus or any document incorporated or
deemed to be incorporated by reference therein, for the purposes
of the offering of the Trust Units offered hereby, shall be
deemed to be modified or superseded to the extent that a
statement contained in this Prospectus Supplement or in any
other subsequently filed document that also is, or is deemed to
be, incorporated by reference in this Prospectus Supplement or
the accompanying Prospectus modifies or supersedes that
statement. The modifying or superseding statement need not state
that it has modified or superseded a prior statement or include
any other information set forth in the document that it modifies
or supersedes. The making of a modifying or superseding
statement is not to be deemed an admission for any purposes that
the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to be incorporated by reference herein
or to constitute a part of this Prospectus Supplement or the
accompanying Prospectus.
To the extent that any document or information incorporated by
reference herein or into the Prospectus is included in any
report on
Form 6-K,
Form 40-F,
Form 20-F,
Form 10-K,
Form 10-Q
or
Form 8-K
(or any respective successor form) that is filed with or
furnished to the SEC, such document or information shall be
deemed to be incorporated by reference as an exhibit to the
registration statement of which this Prospectus Supplement forms
a part. In addition, we may incorporate by reference into this
Prospectus Supplement and the Prospectus information from
documents that we file with or furnish to the SEC pursuant to
Section 13(a) or 15(d) of the United States Securities
Exchange Act of 1934, as amended.
You should rely only on the information contained in or
incorporated by reference in this Prospectus Supplement and the
accompanying Prospectus. We have not, and the Underwriters have
not, authorized anyone to provide you with different or
additional information. We are not, and the Underwriters are
not, making an offer of these Trust Units in any
jurisdiction where the offer is not permitted by law. You should
assume that the information contained in this Prospectus
Supplement and the accompanying Prospectus, as well as
information we previously filed with the SEC and with the
securities commissions in each of the provinces of Canada and
incorporated by reference in the accompanying Prospectus, is
accurate as of its respective date only. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
S-7
FORWARD-LOOKING
STATEMENTS
Certain statements contained in this Prospectus Supplement, the
accompanying Prospectus and the documents incorporated by
reference herein and therein, constitute forward-looking
statements within the meaning of securities laws,
including the safe harbour provisions of the
Securities Act (Ontario), the United States Private
Securities Litigation Reform Act of 1995, section 21E
of the United States Securities Exchange Act of 1934, as
amended, and section 27A of the United States Securities
Act of 1933, as amended. These statements relate to future
events or our future performance. All statements, other than
statements of historical fact, are forward-looking statements.
The use of any of the words anticipate,
continue, estimate, expect,
may, will, project,
should, believe and similar expressions
are intended to identify forward-looking statements. These
statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in our forward-looking
statements. We believe the expectations reflected in those
forward-looking statements are reasonable. However, we cannot
assure you that these expectations will prove to be correct. You
should not unduly rely on forward-looking statements included,
or incorporated by reference, in this Prospectus Supplement or
the Prospectus.
In particular, this Prospectus Supplement, the Prospectus and
the documents incorporated by reference therein contain
forward-looking statements pertaining to the following:
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the use of proceeds from any offering made under this Prospectus
Supplement and the Prospectus;
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the size of our oil and natural gas reserves;
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the performance characteristics of our oil and natural gas
properties;
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oil and natural gas production levels;
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estimated future cash flow;
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estimated future distributions;
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capital expenditure programs and the method and timing of the
financing thereof;
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drilling plans and timing of drilling, recompletion and tie-in
of wells;
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projections of market prices and costs and the related
sensitivities of distributions;
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supply of, and demand for, oil and natural gas;
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weighting of production between different commodities;
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expectations regarding the ability to raise capital and to
continually add to reserves through acquisitions and development;
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expected levels of royalty rates, operating costs, general and
administrative costs, costs of services and other costs and
expenses; and
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treatment under governmental regulatory regimes and tax laws.
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Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of
the risk factors set forth below and elsewhere in this
Prospectus Supplement, the Prospectus or the documents
incorporated by reference therein:
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actions by governmental or regulatory authorities, including
changes in income tax laws or changes in tax laws (including the
application of the October 31 Proposals to Pengrowth and
its Unitholders see Recent
Developments in this Prospectus Supplement) and
incentive programs relating to the oil and gas industry and
royalty trusts;
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volatility in market prices for oil and natural gas;
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liabilities inherent in our oil and gas operations;
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adverse regulatory rulings, orders and decisions;
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uncertainties associated with estimating reserves;
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competition for, among other things, capital, reserves,
undeveloped lands, skilled personnel and access to services;
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fluctuation in foreign exchange or interest rates;
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incorrect assessments of the value of our acquisitions and
exploration and development programs;
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S-8
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stock market volatility and market fluctuations;
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geological, technical, drilling and processing problems and
other difficulties in producing reserves; and
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the other factors discussed under Risk
Factors in this Prospectus Supplement and in the
Prospectus (including the application of the October 31
Proposals to Pengrowth and its Unitholders) and under the
heading Business Risks in our revised
managements discussion and analysis for the year ended
December 31, 2005, as may be updated from time to time in
our interim managements discussion and analysis.
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Statements relating to reserves or
resources are deemed to be forward-looking
statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the resources and
reserves described can be profitably produced in the future.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. When relying on our forward-looking statements
to make decisions with respect to Pengrowth, investors and
others should carefully consider the foregoing factors and other
uncertainties and potential events. Furthermore, the
forward-looking statements contained in this Prospectus
Supplement, the Prospectus, including documents incorporated by
reference therein, are made only as of the date of such document
and Pengrowth does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future
events or otherwise, except as required by applicable securities
laws. The forward-looking statements contained in this
Prospectus Supplement, the Prospectus and the documents
incorporated by reference therein are expressly qualified by
this cautionary statement.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form F-10
relating to the Trust Units, of which this Prospectus
Supplement and the Prospectus form a part. This Prospectus
Supplement does not contain all of the information contained in
the registration statement, certain items of which are contained
in the exhibits to the registration statement as permitted by
the rules and regulations of the SEC. For further information
about Pengrowth and the Trust Units, please refer to the
registration statement.
We file annual and quarterly financial information and material
change reports and other material with the SEC and with the
securities commission or similar regulatory authority in each of
the provinces of Canada. Under the multi-jurisdictional
disclosure system adopted by the United States, documents and
other information that we file with the SEC may be prepared in
accordance with the disclosure requirements of Canada, which are
different from those of the United States. You may read and copy
any document that we have filed with the SEC at the SECs
public reference rooms in Washington, D.C. and Chicago,
Illinois. You may also obtain copies of those documents from the
public reference room of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549 by paying a fee. You should call the
SEC at
1-800-SEC-0330
or access its website at www.sec.gov for further information
about the public reference rooms. You may read and download some
of the documents we have filed with the SECs Electronic
Data Gathering and Retrieval (EDGAR) system at www.sec.gov. You
may read and download any public document that we have filed
with the securities commissions or similar authorities in each
of the provinces of Canada at www.sedar.com.
S-9
CURRENCY
EXCHANGE RATES
The financial statements included or incorporated by reference
in this Prospectus Supplement and the Prospectus are in Canadian
dollars, unless otherwise indicated. The following table sets
forth, for each period indicated, the high and low exchange
rates, the average of such exchange rates during such period,
and the exchange rate at the end of such period, based on the
daily noon rate of exchange as reported by the Federal Reserve
Bank of New York. These rates are set forth as United States
dollars per Cdn$1.00 and are the inverse of the rates quoted by
the Federal Reserve Bank of New York for Canadian dollars per
US$1.00. On November 29, 2006, the noon exchange rate was
Cdn$1.00 equals US$0.8806.
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Nine Months Ended
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Year Ended
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September 30 ($)
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December 31 ($)
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2006
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2005
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2005
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2004
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High
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0.9100
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0.8615
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0.8690
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0.8493
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Low
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0.8528
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0.7872
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0.7872
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0.7158
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Average
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0.8831
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0.8171
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0.8254
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0.7682
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Period Ended
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0.8966
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0.8613
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0.8579
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0.8310
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S-10
RISK
FACTORS
An investment in the Trust Units is subject to various
risks including those risks inherent to the industries in which
we operate. If any of these risks occur, our production,
revenues and financial condition could be materially harmed,
with a resulting decrease in distributions on, and the market
price of, our Trust Units. As a result, the trading price
of our Trust Units could decline, and you could lose all or
part of your investment.
Before deciding whether to invest in any Trust Units,
investors should consider carefully the risks set out below and
in the Prospectus under the heading Risk
Factors and in any documents incorporated by reference
therein.
The October 31 Proposals, if enacted, are expected to
materially and adversely affect Pengrowth, our Unitholders and
the value of the Trust Units.
It is expected that the October 31 Proposals, if enacted in
their currently proposed form, will subject Pengrowth to trust
level taxation beginning on January 1, 2011, which will
materially reduce the amount of cash available for distributions
to our Unitholders. Based on the proposed Canadian federal
income tax and tax rates on account of provincial tax, Pengrowth
estimates that the enactment of the October 31 Proposals
will, commencing on January 1, 2011, reduce the amount of
cash available to Pengrowth to distribute to its Unitholders by
an amount equal to 31.5% multiplied by the amount of the pre-tax
income distributed by Pengrowth. A reduction in the value of the
Trust Units would be expected to increase the cost to
Pengrowth of raising capital in the public capital markets. In
addition, the October 31 Proposals are expected to
substantially eliminate the competitive advantage Pengrowth
currently enjoys compared to corporate competitors in raising
capital in a tax efficient manner, while placing Pengrowth at a
competitive disadvantage compared to industry competitors,
including U.S. master limited partnerships, which will
continue not to be subject to entity-level taxation. The
October 31 Proposals are also expected to make the
Trust Units less attractive as an acquisition currency. As
a result, it may be more difficult for Pengrowth to compete
effectively for acquisition opportunities in the future. There
can be no assurance that Pengrowth will be able to reorganize
its legal and tax structure to reduce the expected impact of the
October 31 Proposals.
In addition, there can be no assurance that Pengrowth will be
able to maintain its grandfathered status under the
October 31 Proposals until 2011. If the Trust is deemed to
have undergone undue expansion during the
transitional period from October 31, 2006 to
December 31, 2010, the October 31 Proposals would
become effective on a date earlier than January 1, 2011.
There can be no assurance that the ConocoPhillips Acquisition
will not constitute undue expansion of Pengrowth. Pengrowth has
received, from the Department of Finance (Canada), a comfort
letter from the Department of Finance (Canada) to the effect
that, subject to certain qualifications, a ConocoPhillips
Acquisition would not be treated as undue expansion under the
October 31 Proposals. However, such comfort letter is
subject to certain qualifications and the contents thereof are
not binding. Any undue expansion of Pengrowth, whether as a
result of the ConocoPhillips Acquisition or otherwise, may
result in the loss of grandfathered status. In any such event,
the adverse effects of the October 31 Proposals would be
accelerated and would materially and adversely affect Pengrowth
and its Unitholders earlier than anticipated. In addition, loss
of grandfathered status could have a material and adverse effect
on the value of the Trust Units. See Recent
Developments Proposed Changes to Canadian Tax
Legislation Affecting Pengrowth and its Unitholders.
No assurance can be given as to the final provisions of any
legislation that may be enacted to implement the October 31
Proposals. The terms of such provisions may differ from those of
the October 31 Proposals described herein, possibly in ways
that would be materially adverse to Pengrowth and the
Unitholders.
Pengrowth may not be able to achieve the anticipated benefits
of the ConocoPhillips Acquisition, and the integration process
may result in the loss of key employees and the disruption of
ongoing business, customer and employee relationships.
Achieving the benefits of the ConocoPhillips Acquisition depends
in part on successfully consolidating functions and integrating
operations, procedures and personnel in a timely and efficient
manner, as well as the ability of Pengrowth to realize the
anticipated growth opportunities and synergies from acquiring
the CP Assets and to achieve certain assumed commodity prices.
The integration of the CP Assets requires the dedication of
substantial management time and resources, which may divert
managements focus and resources from other strategic
opportunities and from operational matters during this process.
The integration process may result in the loss of key employees
and the disruption of ongoing business, customer and employee
relationships that may adversely affect Pengrowths ability
to achieve the anticipated benefits of the ConocoPhillips
Acquisition.
S-11
If the ConocoPhillips Acquisition is not consummated, the
Trust may not be able to find alternative uses of the proceeds
of this offering that will enable it to sustain distributions at
anticipated levels.
This offering is not conditioned upon the consummation of the
ConocoPhillips Acquisition and will close prior to the
consummation of that transaction. The consummation of the
ConocoPhillips Acquisition is subject to a number of conditions.
The Trust believes that these conditions are achievable and that
it is likely that the ConocoPhillips Acquisition will be
consummated. However, if the ConocoPhillips Acquisition is not
consummated, the Trust will have issued additional
Trust Units without an identified use of proceeds to
generate incremental cash flow for distributions on such
Trust Units. No assurance can be given that, if the
ConocoPhillips Acquisition is not consummated, the Trust will be
able to identify uses of proceeds sufficient to sustain
distributions on the Trust Units at anticipated levels.
The ConocoPhillips Acquisition will materially increase our
indebtedness, which may adversely affect our distributions.
To complete the ConocoPhillips Acquisition, in addition to
utilizing the net proceeds of this offering, we will borrow
$647 million pursuant to a bridge credit facility that is
available to us until the date that is 12 months from the
closing of the ConocoPhillips Acquisition (the Bridge
Credit Facility), resulting in a material increase to
Pengrowths indebtedness. See Consolidated
Capitalization. A portion of our cash flow from
operations will be dedicated to the payment of interest on our
indebtedness, including the Bridge Credit Facility and our other
indebtedness, thereby reducing funds available for distribution.
At maturity, Pengrowth must repay or refinance its indebtedness.
Our ability to make scheduled payments of principal and interest
on, or to refinance, our indebtedness will depend on future
operating performance and cash flow, which are subject to
prevailing economic conditions, oil, natural gas and NGLs
pricing, prevailing interest rate levels, and financial,
competitive, business and other factors, many of which are
beyond our control. Variations in exchange rates, interests and
scheduled principal repayments could result in significant
changes in the amount we are required to apply to service our
debt, which may have a material adverse effect on our ability to
pay distributions. Certain covenants in the agreements with our
lenders may also limit the amount of the royalty paid by the
Corporation to the Trust and the distributions paid by us to our
Unitholders. If we become unable to pay our debt service charges
or an event of default otherwise occurs, our lenders may
foreclose on, or sell, our properties. The net proceeds of any
such sale will be allocated firstly, to the repayment of our
lenders and other creditors and only the remainder, if any, will
be payable to the Trust by the Corporation.
RECENT
DEVELOPMENTS
Proposed
Changes to Canadian Tax Legislation Affecting Pengrowth and its
Unitholders
On October 31, 2006, the Minister of Finance (Canada)
announced the October 31 Proposals which, if enacted, would
modify the taxation of certain flow-through entities including
mutual fund trusts and their unitholders. The October 31
Proposals will apply to a specified investment
flow-through (SIFT) trust and will apply a tax
at the trust level on distributions of certain income from such
SIFT trust at a rate of tax comparable to the combined federal
and provincial corporate tax rate. Such distributions will be
treated as dividends to the trust unitholders.
The October 31 Proposals characterize a trust as a SIFT
trust if the trust meets the following criteria: (i) the
trust is resident in Canada; (ii) the units of the trust
are listed on a stock exchange; and (iii) the trust holds
one or more non-portfolio properties.
Non-portfolio property of a trust includes certain Canadian
resource property (which includes property, the value of which
is derived principally from Canadian resource property) and
investments in certain subject entities. An
investment by a trust in a subject entity will be a
non-portfolio property if the investment meets either (or both)
of the following tests:
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The trust holds securities of the entity that have a total fair
market value that is greater than 10% of the entitys
equity value. For this purpose an entitys
equity value is the fair market value of all of the issued and
outstanding shares or interests in the entity.
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The trust holds securities of the entity that, together with all
of the securities that the trust holds of entities affiliated
with the entity, have a total fair market value that is greater
than 50% of the equity value of the trust itself.
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Assuming that the detailed legislation relating to the
October 31 Proposals is released and enacted in accordance
with the October 31 Proposals, the implementation of such
proposals would be expected to result in material and adverse
tax
S-12
consequences to Pengrowth and its Unitholders (most particularly
investors that are tax exempt or non-residents of Canada). Such
tax consequences would be materially different than the
consequences described in the Prospectus under the heading
Certain Canadian Income Tax Considerations and would
be expected to materially and adversely affect cash
distributions from Pengrowth. In simplified terms, the principal
Canadian federal income tax considerations arising from the
October 31 Proposals are as follows:
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Status of Pengrowth It is expected that
Pengrowth will be characterized as a SIFT trust and as a result
would be subject to the October 31 Proposals. The
October 31 Proposals are to apply commencing
January 1, 2007 for all SIFT trusts that begin to be
publicly traded after October 31, 2006 and commencing
January 1, 2011 for all SIFT trusts that were publicly
traded on or before October 31, 2006. Subject to the
qualification below regarding the possible loss of the four year
grandfathering period in the case of undue
expansion, it is expected that Pengrowth will not be
subject to the October 31 Proposals until January 1,
2011.
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Taxation of Pengrowth Under the existing
provisions of the Tax Act, Pengrowth can generally deduct in
computing its income for a taxation year any amount of the
income that it distributes to Unitholders in the year and, on
that basis, Pengrowth is generally not liable for any material
amount of tax.
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Pursuant to the October 31 Proposals, commencing
January 1, 2011 (subject to the qualification below
regarding the possible loss of the four year grandfathering
period in the case of undue expansion), Pengrowth
will not be able to deduct certain of its distributed income
(referred to herein as specified income). Pengrowth
will become subject to a distribution tax on such specified
income at a special rate estimated to be 31.5%, being a rate of
tax equivalent to the general federal corporate income tax rate
of 18.5% (such rate may be greater if Pengrowth does not meet
the qualification regarding undue expansion and this
does not qualify for the full four year grandfathering period
prior to 2011) and an additional income tax of 13% on
account of provincial taxes. The October 31 Proposals
characterize specified income to include: (i) income (other
than dividends that Pengrowth could, if it were a corporation,
deduct under the Tax Act) from Pengrowths non-portfolio
properties; and (ii) taxable capital gains from
Pengrowths dispositions of non-portfolio properties.
Pursuant to the October 31 Proposals, the distribution tax
will only apply in respect of distributions of income and will
not apply to returns of capital.
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Taxation of Unitholders Resident in Canada
Under the existing provisions of the Tax Act, a Unitholder that
is a resident of Canada for purposes of the Tax Act is generally
required to include in computing income for a particular
taxation year that portion of the net income of Pengrowth that
is paid or payable to the Unitholder in that taxation year and
such income to the Unitholder will generally be considered to be
ordinary income from property.
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Pursuant to the October 31 Proposals, amounts in respect of
Pengrowths income payable to Unitholders that is not
deductible by Pengrowth will be treated as a taxable dividend
from a taxable Canadian corporation. Dividends received or
deemed to be received by an individual (other than certain
trusts) will be included in computing the individuals
income for tax purposes and will be subject to the proposed
enhanced
gross-up and
dividend tax credit rules under the Tax Act (and proposed
amendments thereto) normally applicable to dividends received
from taxable Canadian corporations. Dividends received or deemed
to be received by a holder that is a corporation will generally
be deductible in computing the corporations taxable
income. Certain corporations, including private corporations or
subject corporations (as such terms are defined in the Tax Act),
may be liable to pay a refundable tax under Part IV of the
Tax Act of 33 1/3% on dividends received or deemed to be
received to the extent that such dividends are deductible in
computing taxable income. Unitholders that are trusts governed
by registered retirement savings plans, registered retirement
income funds, registered education savings plans and deferred
profit sharing plans as defined in the Tax Act (referred to
herein as Exempt Plans) will generally continue not
to be liable for tax in respect of any distributions received
from Pengrowth. Although the October 31 Proposals will not
increase the tax payable by Exempt Plans in respect of dividends
deemed to be received from Pengrowth, it is expected that the
imposition of tax at the Pengrowth level under the
October 31 Proposals will materially reduce the amount of
cash available for distributions to Unitholders.
Returns of capital are, and will be under the October 31
Proposals, generally tax deferred for Unitholders who are
resident in Canada for purposes of the Tax Act and will reduce
such Unitholders adjusted cost base in the
Trust Units for purposes of the Tax Act.
S-13
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Taxation of Unitholders who are Non-Residents of Canada
(Non-Resident Unitholders) Under the
existing provisions of the Tax Act, any distribution of income
by Pengrowth to a Non-Resident Unitholder will be subject to
Canadian withholding tax at the rate of 25% unless such rate is
reduced under the provisions of a convention between Canada and
the Non-Resident Unitholders jurisdiction of residence. A
Non-Resident
Unitholder resident in the United States who is entitled to
claim the benefit of the
Canada-United
States Tax Convention, 1980 (the Canada-US
Convention), will generally be entitled to have the rate
of withholding reduced to 15% of the amount of any income
distributed.
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Pursuant to the October 31 Proposals, amounts in respect of
Pengrowths income payable to Non-Resident Unitholders that
are not deductible to Pengrowth will be treated as a taxable
dividend from a taxable Canadian corporation. Such dividends
will be subject to Canadian withholding tax at a rate of 25%,
unless such rate is reduced under the provisions of a convention
between Canada and the Non-Resident Unitholders
jurisdiction of residence. A Non-Resident Unitholder resident in
the United States who is entitled to claim the benefit of the
Canada-US Convention generally will be entitled to have the rate
of withholding reduced to 15% of the amount of such dividend.
Although the October 31 Proposals may not increase the tax
payable by Non-Resident Unitholders in respect of dividends
deemed to be paid by Pengrowth, it is expected that the
imposition of tax at the Pengrowth level under the
October 31 Proposals will materially reduce the amount of
cash available for distributions to Unitholders.
Returns of capital to a Unitholder who is not a resident of
Canada for purposes of the Tax Act or is a partnership that is
not a Canadian partnership for purposes of the Tax
Act are, and will be under the October 31 Proposals,
subject to a 15% Canadian withholding tax.
Subject to certain limitations set forth in the United States
Internal Revenue Code of 1986, as amended, United States holders
(as such term is defined in the Prospectus) may elect to claim a
foreign tax credit against their United States federal income
tax liability for net Canadian income tax withheld from
distributions received in respect of Trust Units that is
not refundable to the United States holder and for any Canadian
income taxes paid by us. The October 31 Proposals will
apply a tax at the trust level on distributions of certain
income from a SIFT trust. It is unclear whether this tax will
constitute an income tax or a tax imposed in lieu
thereof for purposes of the foreign tax credit rules; if it does
not constitute such a tax it will not be creditable. The
limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. For
taxable years beginning after December 31, 2006, the
portion of our distributions with respect to Trust Units
that represents income for United States federal income tax
purposes will be passive category income or
general category income for purposes of computing
the foreign tax credit allowable to a United States holder. If
the tax at the trust level on distributions of certain income
from a SIFT trust constitutes a creditable tax, the portion of
such distributions that represents income for United States
federal income tax purposes likely would be general
category income for purposes of computing the foreign tax
credit allowable to a United States holder. The rules and
limitations relating to the determination of the foreign tax
credit are complex and prospective purchasers are urged to
consult their own tax advisors to determine whether or to what
extent they would be entitled to such credit. United States
persons that do not elect to claim foreign tax credits may
instead claim a deduction for their share of Canadian income
taxes paid by us or withheld from distributions by us. This
Prospectus Supplement and the accompanying Prospectus may not
describe the United States tax consequences of the purchase,
holding or disposition of the Trust Units fully. You should
read the tax discussion in this Prospectus Supplement and in the
Prospectus fully, and obtain independent tax advice as
necessary.
The October 31 Proposals permit normal growth
for SIFT trusts throughout the transitional period between
October 31, 2006 and December 31, 2010. However,
undue expansion of a SIFT trust could cause the
transitional relief to be revisited, and the October 31
Proposals to be effective at a date earlier than January 1,
2011.
On November 6, 2006, Pengrowth requested a comfort
letter from the Department of Finance (Canada) seeking
clarification on whether the ConocoPhillips Acquisition would
constitute an undue expansion of Pengrowth and thus
potentially reduce the four year grandfathering period with
respect to the application of the October 31 Proposals. On
November 10, 2006, Pengrowth received a response from the
Department of Finance (Canada) (the comfort letter)
that stated, subject to certain reasonable and customary
qualifications, that based upon the advanced state of the
ConocoPhillips Acquisition as at October 31, 2006,
including the payment by Pengrowth of an exclusivity
fee, the ConocoPhillips Acquisition would not be
considered outside the scope of normal growth and thus the
October 31 Proposals would not apply to Pengrowth and its
Unitholders earlier than 2011 solely as a result of the
ConocoPhillips
S-14
Acquisition and related financing transactions. It should be
noted that the comfort letter is subject to Pengrowth being able
to finance the ConocoPhillips Acquisition in substantially the
manner described in Recent Developments
ConocoPhillips Acquisition. The comfort letter also states
that the recommendations in the letter are not binding on the
Minister of Finance (Canada) or Parliament. Pengrowth, in
consultation with its counsel, is of the view that it is
reasonable to rely on the comfort letter in concluding that
under the October 31 Proposals, the ConocoPhillips
Acquisition (including the proposed manner in which such
acquisition will be financed) will not be undue expansion of
Pengrowth. However, no assurance can be given in this regard.
In addition, the October 31 Proposals state that such
proposals may be modified at any time with immediate effect to
counter any structures which frustrate the policy objectives of
the October 31 Proposals.
If enacted, the October 31 Proposals will likely have a
material and adverse impact on Pengrowth and its Unitholders. If
the issuance of Trust Units pursuant to this offering to
finance the ConocoPhillips Acquisition constitutes an undue
expansion of Pengrowth, resulting in the October 31
Proposals being applicable prior to 2011, Pengrowth, its
Unitholders and the value of the Trust Units will be
further adversely and materially affected. In the absence of
legislation implementing the October 31 Proposals, the
implications of the October 31 Proposals are difficult to
fully evaluate and no assurance can be provided as to the extent
and timing of their application to Pengrowth and its
Unitholders. Prospective Unitholders are urged to consult their
own tax advisors having regard to their own particular
circumstances including the impact of the October 31
Proposals on Pengrowth and Unitholders. See Risk
Factors The October 31 Proposals, if enacted,
are expected to materially and adversely affect Pengrowth, our
Unitholders and the value of the Trust Units.
ConocoPhillips
Acquisition
Background
Pengrowth advanced a non-binding expression of interest dated
September 26, 2006 for the CP Assets offered by Tristone
Capital Inc. through a selective auction process. Negotiations
ensued between Burlington Resources Canada Ltd.
(Burlington) and Pengrowth on the terms of a share
purchase and sale agreement to be entered into among the
Corporation, 1275708 Alberta Ltd. (Pengrowth
Subsidiary), a wholly owned subsidiary of the Corporation,
and Burlington relating to the CP Assets (the Share
Purchase Agreement). Pending receipt of financial
information concerning the CP Assets as required by applicable
Canadian securities laws and the resolution of outstanding
issues under the Share Purchase Agreement, Pengrowth and
Burlington entered into an exclusivity agreement on
October 27, 2006 (the Exclusivity Agreement)
whereby Pengrowth paid an exclusivity fee of $30 million to
Burlington in order to negotiate exclusively with Burlington.
The Exclusivity Agreement was extended several times following
the announcement of the October 31 Proposals in order to permit
the parties to negotiate appropriate terms to the Share Purchase
Agreement. The final Share Purchase Agreement was agreed to and
executed on November 28, 2006, at which time Pengrowth paid
a deposit of $73.75 million to Burlington, which, together
with the exclusivity fee, will be applied against payment of the
purchase price at closing of the ConocoPhillips Acquisition.
The Share Purchase Agreement contemplates that Pengrowth
Subsidiary will purchase all of the shares of 1265702 Alberta
ULC, 1265704 Alberta ULC, 1265706 Alberta ULC and 1265707
Alberta ULC (collectively, the CP Subsidiaries)
from Burlington for a purchase price of $1.0375 billion
(the ConocoPhillips Acquisition), subject to
adjustment in respect of working capital, net revenue from the
adjustment date of November 1, 2006 to the closing date,
and interest on the purchase price from November 1, 2006 to
the closing date. Closing of the acquisition is anticipated to
occur on January 18, 2007. Upon closing, Pengrowth will
assume various liabilities including abandonment liability for
the CP Assets, the present value of which is estimated to
be $95 million, assuming a discount rate of 8%. These
liabilities were considered by Pengrowth in the negotiation of
the purchase price.
Summary
of CP Assets
The CP Assets include oil and natural gas producing properties
in the Lethbridge, Southeast Alberta, Fenn Big Valley,
Harmattan, West Central Alberta and Red Earth areas of Alberta
and the Freefight area of Saskatchewan encompassing
approximately 520,000 gross acres (343,000 net) of developed
lands. When completed, the ConocoPhillips Acquisition will
increase our total proved reserves by 51.4 mmboe and total
proved plus probable reserves by approximately 65.8 mmboe
(on a company interest before royalties basis using constant
pricing) and before the divestiture of properties pursuant to
our asset rationalization program. When acquired by the
Pengrowth Subsidiary, the CP Subsidiaries will own and control
Canadian oil and natural gas properties and undeveloped land
which currently produce approximately 21,625 boepd, (before
royalties), comprised of 42% crude oil, 52% natural gas and 6%
NGLs (the
S-15
CP Assets). When completed, the ConocoPhillips
Acquisition is expected to increase Pengrowths overall
current production by approximately 27% to approximately 100,000
boepd (before royalties and before the expected divestiture of
certain properties pursuant to Pengrowths asset
rationalization program. See Recent
Developments Asset Rationalization
Program). The following is a summary description of
the CP Assets:
Lethbridge
|
|
|
|
|
current production of 9.8 mmcfpd of gas
|
|
|
|
high working interest operated production (87% average working
interest)
|
|
|
|
multi-zone shallow gas with large land position (180,000 net
acres)
|
|
|
|
development and down spacing opportunities
|
Southeast
Alberta
|
|
|
|
|
current production of 4,302 bpd of heavy to medium oil,
19.2 mmcfpd of gas and 26 bpd of NGLs
|
|
|
|
large pool infill drilling optimization potential for
Glauconitic and Sunburst oil
|
|
|
|
infill drilling potential for shallow gas
|
|
|
|
lifting costs of $10.79 per boe and 161,000 acres of net land
|
|
|
|
47% average working interest
|
Fenn Big
Valley
|
|
|
|
|
current production of 2,639 boepd (primarily light Nisku oil)
|
|
|
|
stacked multi-zone area: Leduc, Nisku, Mannville, Viking, Belly
River and Edmonton
|
|
|
|
opportunities to exploit Nisku and Leduc as well as Edmonton and
Mannville CBM
|
|
|
|
67% average working interest
|
Harmattan
|
|
|
|
|
current production of 4,668 boepd, 62% natural gas (primarily
from the Elkton)
|
|
|
|
includes non-operated interest in two units (Harmattan Elkton
Unit No. 1 and East Unit No. 2)
|
|
|
|
low risk drilling opportunity
|
|
|
|
41% average working interest
|
West
Central Alberta
|
|
|
|
|
current production of 1,599 boepd of mostly 41 degree API oil
|
|
|
|
operator of two high working interest Swan Hill oil units (Deer
Mountain and Goose River)
|
|
|
|
Montney gas production at Ante Creek
|
|
|
|
infill step out drilling stimulation and evaluation opportunity
|
|
|
|
70% average working interest
|
Red
Earth
|
|
|
|
|
current production of 3,141 boepd comprised of 2,930 bpd of oil
and NGLs, 1.26 mmcfpd of gas
|
|
|
|
oil production is primarily from the Keg River (light sweet
crude)
|
|
|
|
Blue Sky natural gas production at Talbot Lake
|
|
|
|
drilling and optimization opportunities
|
|
|
|
68% average working interest
|
Freefight
|
|
|
|
|
current production of 14.2 mmcfpd of gas
|
|
|
|
Milk River and Second White Specks development opportunities
|
|
|
|
high working interest operated production (98% average working
interest)
|
|
|
|
opportunities for down spacing and step out drilling
|
S-16
Pengrowth anticipates additional exploration and development
opportunities on the diverse portfolio of oil and gas properties
comprising the CP Assets, including infill development
locations, additional coal bed methane opportunities, and the
development of approximately 300,000 net acres of undeveloped
lands.
Description
of Share Purchase Agreement
Conditions Under the Share Purchase Agreement,
it is a mutual condition precedent that all required
governmental approvals (including approvals pursuant to the
Competition Act (Canada) and the Investment Canada
Act (Canada)) be obtained except where such approval shall
have been waived in writing by the applicable government
authority or otherwise lapsed. The conditions precedent to the
obligation of Pengrowth Subsidiary to purchase the shares of the
CP Subsidiaries are that (i) Burlington shall have
performed or complied with all of its covenants in all material
respects, and its representations and warranties of Burlington
shall be true and correct in all material respects and
(ii) no suit, action or other proceeding shall at closing
be pending against Burlington or Pengrowth Subsidiary before any
court or governmental authority seeking to restrain, prohibit,
obtain damages or other relief in connection with consummation
of the purchase and sale of the CP Subsidiaries which would
materially and adversely affect the value of the shares of the
CP Subsidiaries, taken as a whole.
The Share Purchase Agreement also contains conditions precedent
for the benefit of Burlington which provide that: (i) in
all material respects, Pengrowth Subsidiary shall have performed
or complied with all of its covenants; (ii) the
representations and warranties of Pengrowth Subsidiary shall be
true and correct in all material respects; (iii) Pengrowth
Subsidiary shall have tendered or cause to be tendered to
Burlington the purchase price for the shares of the CP
Subsidiaries less the deposit; and (iv) no suit, action or
other proceedings shall at closing be pending against Burlington
or Pengrowth Subsidiary before any court or governmental
authority seeking to restrain, prohibit, obtain damages or other
relief in connection with the consummation of the purchase and
sale of the shares of the CP Subsidiaries which would have
a material adverse effect on the value of the shares of the
CP Subsidiaries.
Representations The Share Purchase Agreement
contains customary representations by Burlington regarding
Burlington, the CP Subsidiaries and the CP Assets. The
representations and warranties of Burlington under the Share
Purchase Agreement shall survive the closing of the purchase of
the shares of the CP Subsidiaries by Pengrowth Subsidiary
for a period of 12 months from the Closing Date, subject to
provincial limitations legislation.
Indemnification The Share Purchase Agreement
also contains customary indemnities by Burlington and Pengrowth
Subsidiary in favour of the other party. Under the Share
Purchase Agreement, Burlington is required to indemnify
Pengrowths Subsidiary from all losses resulting from
breaches of the representations or warranties made by Burlington
or breaches of covenants or agreements made by Burlington in the
Share Purchase Agreement and for all losses incurred as a direct
result of third party claims relating to the CP Assets that
arise from or are related to acts, omissions, events or
circumstances occurring before November 1, 2006 except for
claims or losses that are for the account of Pengrowth
Subsidiary pursuant to the agreement.
The Share Purchase Agreement also requires Pengrowth Subsidiary
to indemnify Burlington from and against any and all losses
resulting from: (i) breaches of the representations or
warranties made by Pengrowth Subsidiary or breaches of covenants
or agreements made by Pengrowth Subsidiary in the Share Purchase
Agreements; (ii) all claims, losses and liabilities
relating to the CP Assets arising from or related to acts,
omissions, events or circumstances occurring after
November 1, 2006 (other than claims for the payment of cost
that are included in the working capital adjustment contemplated
by the Share Purchase Agreement); and (iii) all
environmental liabilities whether occurring before, on or after
November 1, 2006 that arise from or relate to acts,
omissions, events or circumstances, occurring before, on or
after November 1, 2006.
Under the Share Purchase Agreement, written notice of a claim to
an indemnity must be provided within 12 months of the
closing date subject to provincial limitations legislation. Also
under the Share Purchase Agreement, Burlingtons total
liability for breaches of representations, warranties, covenants
and indemnities shall not exceed the base purchase price of
$1.0375 billion, and Burlington shall only be liable for
breaches of representations, warranties, covenants and
indemnities if the aggregate of the losses of Pengrowth
Subsidiary in respect of all such breaches exceeds
$50 million and in that event Burlington shall be liable
for the full amount of all of the losses of Pengrowth Subsidiary
in respect of all such breaches. Pengrowth Subsidiary shall only
be liable for breaches of the representations and warranties in
the Share Purchase Agreement if the aggregate of the losses
incurred by Burlington in respect of all such breaches exceeds
$5 million and in that event Pengrowth Subsidiary shall be
liable for the full amount of all of the losses of Burlington in
respect of all such breaches.
S-17
Financial
Statements
The schedules of revenue, royalties and operating expenses and
notes thereto relating to the CP Assets for the years ended
December 31, 2005 and 2004, together with the report of the
auditors thereon, and the unaudited schedule of revenue,
royalties and operating expenditures for the nine months ended
September 30, 2006 are attached as
Schedule A to this Prospectus Supplement.
The unaudited pro forma consolidated financial statements of
Pengrowth after giving effect to the ConocoPhillips Acquisition,
the strategic business combination with Esprit and this
offering, including a pro forma balance sheet as at
September 30, 2006, a pro forma consolidated statement of
income for the nine months ended September 30, 2006 and a
pro forma consolidated statement of income for the year ended
December 31, 2005 (including a reconciliation of such
statements to United States generally accepted accounting
principles), are attached as Schedule B to this
Prospectus Supplement.
Pro
Forma Description of Pengrowth Following the ConocoPhillips
Acquisition
Negotiations were undertaken by us with ConocoPhillips with a
view to acquiring a combination of high quality oil and natural
gas properties that would enhance Pengrowths interests in
our core properties and would provide potential for both oil and
natural gas exploration and development along with significant
additions to our undeveloped acreage position.
We have developed core competencies in the pursuit of enhanced
oil recovery projects, shallow gas drilling, coal bed methane
projects and the pursuit of value additions through field and
facility optimization. We expect that the transaction will add
significant value to Unitholders and will provide a broad
portfolio of new opportunities.
Upon completion of the ConocoPhillips Acquisition, the following
financial and operational benefits are anticipated to accrue to
Unitholders:
|
|
|
|
|
our overall current production would increase on a pro forma
basis by 27% to approximately 100,000 boepd and our overall
Total Proved Plus Probable Reserves would increase on a pro
forma basis to approximately 359 mmboe (on a company
interest before royalty basis using constant pricing) and before
the divestiture of properties pursuant to the asset
rationalization program;
|
|
|
|
company production weighted 50% to natural gas and 50% to crude
oil and liquids and a reserve life index of approximately
9.8 years on a proved plus probable basis (all using
constant prices and costs);
|
|
|
|
a large and diversified quality asset base with many interests
held in Canadas larger oil and natural gas pools;
|
|
|
|
growth and development opportunities on approximately 375,000
net acres of undeveloped land; and
|
|
|
|
creation of a stronger platform to capitalize on future growth
opportunities through significant acquisitions in North America
and other areas in the world.
|
Reserves
Information
The following table sets forth certain reserves and operational
information with respect to Pengrowth (updated from the
December 31, 2005 information contained in our annual
information form dated March 29, 2006 for the year ended
December 31, 2005), the properties to be acquired pursuant
to the ConocoPhillips Acquisition and Pengrowth on a
pro forma combined basis, as at and for the periods
indicated in the notes thereto, after giving effect to the
ConocoPhillips Acquisition, based on constant price assumptions.
The following information does not reflect the impact of the
divestiture
S-18
of properties pursuant to Pengrowths asset rationalization
program. See Recent Developments Asset
Rationalization Program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pengrowth
|
|
|
ConocoPhillips
|
|
|
Pengrowth
|
|
|
|
Updated(1)
|
|
|
Acquisition(2)
|
|
|
Pro
Forma(3)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (mbbls)
|
|
|
118,765
|
|
|
|
23,683
|
|
|
|
142,448
|
|
Natural gas (bcf)
|
|
|
623
|
|
|
|
164
|
|
|
|
788
|
|
Total
(mboe)(4)
|
|
|
222,623
|
|
|
|
51,086
|
|
|
|
273,709
|
|
Total Proved Plus Probable
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (mbbls)
|
|
|
156,234
|
|
|
|
31,162
|
|
|
|
187,396
|
|
Natural gas (bcf)
|
|
|
824
|
|
|
|
206
|
|
|
|
1,029
|
|
Total
(mboe)(4)
|
|
|
293,497
|
|
|
|
65,449
|
|
|
|
358,946
|
|
Net Present Value of Future Net
Revenue @ 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves ($MM)
|
|
|
3,344
|
|
|
|
682
|
|
|
|
4,026
|
|
Total Proved Plus Probable
Reserves ($MM)
|
|
|
4,142
|
|
|
|
820
|
|
|
|
4,962
|
|
Net Present Value of Future Net
Revenue @ 5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves ($MM)
|
|
|
4,173
|
|
|
|
822
|
|
|
|
4,995
|
|
Total Proved Plus Probable
Reserves ($MM)
|
|
|
5,330
|
|
|
|
1,018
|
|
|
|
6,348
|
|
Undeveloped Land
Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
(net acres)
|
|
|
683,000
|
(5)
|
|
|
377,150
|
|
|
|
1,060,150
|
|
Oil and Natural Gas Wells (net
wells)
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing oil wells
|
|
|
812
|
|
|
|
396
|
|
|
|
1,208
|
|
Producing natural gas wells
|
|
|
1,587
|
|
|
|
1,745
|
|
|
|
3,332
|
|
Average Daily
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
(three months ended
September 30, 2006)
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (bblpd)
|
|
|
39,981
|
|
|
|
10,940
|
|
|
|
50,921
|
|
Natural gas (mmcfpd)
|
|
|
244
|
|
|
|
71
|
|
|
|
315
|
|
Total
(boepd)(4)
|
|
|
80,706
|
|
|
|
22,773
|
|
|
|
103,480
|
|
Notes:
|
|
(1) |
The updated reserve volumes and net present values of future net
revenue for Pengrowth are: (i) effective December 31,
2005, with a Mechanical Update up to November 1, 2006;
(ii) inclusive of the acquisition of properties in Alberta
from Tundra Oil and Gas Limited in March of 2006, the
acquisition of properties in Alberta from ExxonMobil Canada on
September 28, 2006 and the acquisition of properties
pursuant to the strategic business combination with Esprit
(other than the reserve volumes and net present values of future
net revenue associated with Trifecta Resources Inc.) on
October 2, 2006, all of the foregoing effective no earlier
than January 1, 2006 with a Mechanical Update up to
November 1, 2006; (iii) presented on a company
interest basis (working interests and royalty interests) before
the deduction of royalties; and (iv) based upon GLJ
Petroleum Consultants Ltd.s constant prices and costs as
at October 31, 2006 using a 5% and 10% discount rate, all
as contained in the report prepared by GLJ Petroleum Consultants
Ltd. dated November 27, 2006. The reserve volumes and net
present values of future net revenue for Trifecta Resources Inc.
are: (i) based upon Sproule Associates Limited engineering
reports effective March 31, 2006 and May 31, 2006,
with a Mechanical Update up to November 1, 2006;
(ii) presented on a company interest basis (working
interests and royalty interests) before the deduction of
royalties; and (iii) based upon GLJ Petroleum Consultants
Ltd.s constant prices and costs as at October 31,
2006 using a 5% and 10% discount rate, all as contained in the
report prepared by Sproule Associates Limited dated
November 28, 2006. More comprehensive reserves information
is provided in Schedule C attached hereto.
|
Mechanical Update means an update of reserves information making
no adjustment to forecast production and costs used from a
NI 51-101
compliant report other than changing the effective date such
that any forecast production and costs between the
NI 51-101
compliant report effective date and the new effective date are
excluded. Items that may have changed and, which are not
reflected in the Mechanical Update, are items such as reserve
additions, changes in operating costs and, to the extent there
may be any, performance changes.
|
|
(2)
|
The reserve volumes and net present values of future net revenue
for the ConocoPhillips properties are: (i) effective
July 1, 2006 with a Mechanical Update up to
November 1, 2006; (ii) presented on a company interest
basis (working interests and royalty interests) before the
deduction of royalties; and (iii) based upon GLJ Petroleum
Consultants Ltd.s constant prices and costs as at
October 31, 2006 using a 5% and 10% discount rate, all as
contained in the report prepared by GLJ Petroleum Consultants
Ltd. dated November 27, 2006. More comprehensive reserves
information is provided in Schedule D attached
hereto.
|
|
(3)
|
The Pengrowth Pro Forma reserve volumes and net present values
of future net revenue for Pengrowth are the mechanical total of
the Pengrowth Updated and ConocoPhillips Acquisition reports
referred to above. More comprehensive reserves information is
provided in Schedule E attached hereto.
|
|
(4)
|
The abbreviations boe, mboe and
mmboe refers to barrels of oil equivalent,
thousands of barrels of oil equivalent and millions of barrels
of oil equivalent, respectively, on the basis of one boe being
equal to one barrel of oil or natural gas liquids or six mcf of
natural gas; barrels of oil
|
S-19
|
|
|
equivalent may be misleading,
particularly if used in isolation; a conversion ratio of six mcf
of natural gas to one boe is based on an energy equivalency
conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the wellhead;
boepd refers to barrels of oil equivalent per
day.
|
|
|
(5) |
Subject to a farm-out with Apache Canada Limited. The total
farm-out affects approximately 21,090 developed and undeveloped
acres of which less than 40% are undeveloped.
|
The following table sets forth certain reserves and operational
information with respect to Pengrowth (updated from the
December 31, 2005 information contained in our annual
information form dated March 29, 2006 for the year ended
December 31, 2005), the properties to be acquired pursuant
to the ConocoPhillips Acquisition and Pengrowth on a pro forma
combined basis, as at and for the periods indicated in the notes
hereto, after giving effect to the ConocoPhillips Acquisition,
based on strip forecast price assumptions. The Strip Price
forecast has been estimated by GLJ using as a basis the NYMEX
futures strip for light sweet crude oil and natural gas for the
indicated date. The light sweet crude oil contracts require
delivery at Cushing, Oklahoma and the natural gas contracts
require delivery to Henry Hub in Louisiana. GLJ uses
historically derived differentials to estimate the price at the
various points, for the different product types and for the
different crude qualities. These prices are applied to the
various products to calculate the revenue. The following
information does not reflect the impact of the divestiture of
properties pursuant to Pengrowths asset rationalization
program. See Recent Developments Asset
Rationalization Program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pengrowth
|
|
|
ConocoPhillips
|
|
|
Pengrowth
|
|
|
|
Updated(1)
|
|
|
Acquisition(2)
|
|
|
Pro
Forma(3)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (mbbls)
|
|
|
119,624
|
|
|
|
24,527
|
|
|
|
144,151
|
|
Natural gas (bcf)
|
|
|
623
|
|
|
|
162
|
|
|
|
784
|
|
Total
(mboe)(4)
|
|
|
223,386
|
|
|
|
51,449
|
|
|
|
274,835
|
|
Total Proved Plus Probable
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (mbbls)
|
|
|
157,064
|
|
|
|
32,132
|
|
|
|
189,196
|
|
Natural gas (bcf)
|
|
|
823
|
|
|
|
202
|
|
|
|
1,025
|
|
Total
(mboe)(4)
|
|
|
294,197
|
|
|
|
65,770
|
|
|
|
359,967
|
|
Net Present Value of Future Net
Revenue @ 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves ($MM)
|
|
|
3,905
|
|
|
|
826
|
|
|
|
4,731
|
|
Total Proved Plus Probable
Reserves ($MM)
|
|
|
4,848
|
|
|
|
995
|
|
|
|
5,843
|
|
Net Present Value of Future Net
Revenue @ 5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves ($MM)
|
|
|
4,894
|
|
|
|
989
|
|
|
|
5,882
|
|
Total Proved Plus Probable
Reserves ($MM)
|
|
|
6,296
|
|
|
|
1,231
|
|
|
|
7,527
|
|
Undeveloped Land
Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
(net acres)
|
|
|
683,000
|
(5)
|
|
|
377,150
|
|
|
|
1,060,150
|
|
Oil and Natural Gas Wells (net
wells)
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing oil wells
|
|
|
812
|
|
|
|
396
|
|
|
|
1,208
|
|
Producing natural gas wells
|
|
|
1,587
|
|
|
|
1,745
|
|
|
|
3,332
|
|
Average Daily
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
(three months ended
September 30, 2006)
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil and NGLs (bblpd)
|
|
|
39,981
|
|
|
|
10,940
|
|
|
|
50,921
|
|
Natural gas (mmcfpd)
|
|
|
244
|
|
|
|
71
|
|
|
|
315
|
|
Total
(boepd)(4)
|
|
|
80,706
|
|
|
|
22,773
|
|
|
|
103,480
|
|
Notes:
|
|
(1) |
The updated reserve volumes and net present values of future net
revenue for Pengrowth are: (i) effective December 31,
2005, with a Mechanical Update up to November 1, 2006;
(ii) inclusive of the acquisition of properties in Alberta
from Tundra Oil and Gas Limited in March of 2006, the
acquisition of properties in Alberta from ExxonMobil Canada on
September 28, 2006 and the acquisition of properties
pursuant to the strategic business combination with Esprit
(other than the reserve volumes and net present values of future
net revenue associated with Trifecta Resources Inc.) on
October 2, 2006, all of the foregoing effective no earlier
than January 1, 2006 with a Mechanical Update up to
November 1, 2006; (iii) presented on a company
interest basis (working interests and royalty interests) before
the deduction of royalties; and (iv) based upon GLJ
Petroleum Consultants Ltd.s forward strip prices and costs
as at October 31, 2006 using a 5% and 10% discount rate,
all as contained in the report prepared by GLJ Petroleum
Consultants Ltd. dated November 27, 2006. The reserve
volumes and net present values of future net revenue for
Trifecta Resources Inc. are: (i) based upon Sproule
Associates Limited engineering reports effective March 21,
2006 and May 31, 2006, with a Mechanical Update up to
November 1, 2006; (ii) presented on a company interest
basis (working interests and royalty interests) before the
deduction of royalties; and (iii) based upon GLJ Petroleum
Consultants Ltd.s forward strip prices and costs as at
October 31, 2006 using a 5% and
|
S-20
|
|
|
10% discount rate, all as contained
in the report prepared by Sproule Associates Limited dated
November 28, 2006. More comprehensive reserves information
is provided in Schedule F attached hereto.
|
Mechanical Update means an update of reserves information making
no adjustment to forecast production and costs used from a
NI 51-101
compliant report other than changing the effective date such
that any forecast production and costs between the
NI 51-101
compliant report effective date and the new effective date are
excluded. Items that may have changed and, which are not
reflected in the Mechanical Update, are items such as reserve
additions, changes in operating costs and, to the extent there
may be any, performance changes.
|
|
(2)
|
The reserve volumes and net present values of future net revenue
for the ConocoPhillips properties are: (i) effective
July 1, 2006 with a Mechanical Update up to
November 1, 2006; (ii) presented on a company interest
basis (working interests and royalty interests) before the
deduction of royalties; and (iii) based upon
GLJ Petroleum Consultants Ltd.s forward strip prices
and costs as at October 31, 2006 using a 5% and 10%
discount rate, all as contained in the report prepared by
GLJ Petroleum Consultants Ltd. dated November 27,
2006. More comprehensive reserves information is provided in
Schedule G attached hereto.
|
|
(3)
|
The Pengrowth Pro Forma reserve volumes and net present values
of future net revenue for Pengrowth are the mechanical total of
the above referred to Pengrowth Updated and ConocoPhillips
Acquisition reports. More comprehensive reserves information is
provided in Schedule H attached hereto.
|
|
(4)
|
The abbreviations boe,
mboe and mmboe refers to
barrels of oil equivalent, thousands of barrels of oil
equivalent and millions of barrels of oil equivalent,
respectively, on the basis of one boe being equal to one barrel
of oil or natural gas liquids or six mcf of natural gas;
barrels of oil equivalent may be misleading, particularly if
used in isolation; a conversion ratio of six mcf of natural
gas to one boe is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead;
boepd refers to barrels of oil equivalent per
day.
|
|
(5)
|
Subject to a farm-out with Apache Canada Limited. The total
farm-out affects approximately 21,090 developed and undeveloped
acres of which less than 40% are undeveloped.
|
More comprehensive reserves information prepared using constant
pricing and relating to: (i) Pengrowth prior to the
ConocoPhillips Acquisition; (ii) the ConocoPhillips
Acquisition; and (iii) Pengrowth on a pro forma basis after
giving effect to the ConocoPhillips Acquisition, are attached as
Schedules C, D
and E hereto, respectively. More comprehensive
reserves information prepared using strip pricing and relating
to: (i) Pengrowth prior to the ConocoPhillips Acquisition;
(ii) the ConocoPhillips Acquisition; and
(iii) Pengrowth on a pro forma basis after giving effect to
the ConocoPhillips Acquisition, are attached as
Schedules F, G
and H hereto, respectively. The information in
Schedules C through H does not
reflect the impact of the divestiture of properties pursuant to
Pengrowths asset rationalization program. See
Recent Developments Asset Rationalization
Program).
Pricing assumptions relied upon in preparing the foregoing
tables and the information contained in
Schedules C through H are provided
in Schedule I hereto.
Selected
Production Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004(1)
|
|
|
2005(1)
|
|
|
2006(2)
|
|
|
Oil (mbbls)
|
|
|
4,102
|
|
|
|
3,653
|
|
|
|
3,392
|
|
NGLs (mbbls)
|
|
|
616
|
|
|
|
527
|
|
|
|
534
|
|
Natural Gas (mmcf)
|
|
|
27,291
|
|
|
|
27,206
|
|
|
|
25,711
|
|
Notes
|
|
(1)
|
Actual production.
|
|
(2)
|
Actual production from January to June and forecast production
from July to December.
|
We may not be able to achieve the anticipated benefits of the
ConocoPhillips Acquisition, and the integration process may
result in the loss of key employees and the disruption of
ongoing business customer and employee relationships. See
Risk Factors in this Prospectus
Supplement.
Asset
Rationalization Program
Pengrowth intends to pursue a comprehensive asset
rationalization program with respect to its entire portfolio of
oil and natural gas properties. Pengrowth intends to dispose of
assets producing approximately 7,700 boepd from its
existing portfolio of properties, and to dispose of assets
producing approximately 4,300 boepd from the
CP Assets. The assets marked for disposition are located in
non-core areas. The proceeds of these dispositions, if any, will
be used to reduce Pengrowths indebtedness on the bridge
line of credit. To the extent such proceeds are received before
the intended closing date of January 18, 2007, such
proceeds will be invested or used for general corporate or trust
purposes. There can be no assurance that Pengrowth will be
successful in completing the disposition of any assets or the
extent of the proceeds, if any, to be raised by Pengrowth.
S-21
Bridge
Credit Facility
On November 28, 2006 Pengrowth entered into a commitment
letter agreement with a Canadian chartered bank whereby the bank
agreed to provide Pengrowth with a Bridge Credit Facility in the
amount of $1.0375 billion for the purpose of funding the
ConocoPhillips Acquisition. The facility is available by way of
a one time advance no later than January 19, 2007. Amounts
drawn are non-revolving. Amounts drawn on the facility bear
interest at the same rate as under Pengrowths
$950 million syndicated facility, which bears interest at
approximately 5.5%. The total outstanding amount under the
Bridge Credit Facility matures and becomes due and payable
12 months from the closing of the ConocoPhillips
Acquisition. To the extent not required to be applied against
Pengrowths syndicated facility, the proceeds of all
issuances of trust units or other equity (including convertible
debentures), the proceeds of all issuances of public or private
debt, reductions in the purchase price of the CP Assets and the
net proceeds of any asset dispositions following the closing of
the ConocoPhillips Acquisition will reduce the Bridge Credit
Facility. The commitment letter agreement contemplates that the
Bridge Credit Facility will be documented by a credit agreement
substantially similar to Pengrowths existing
$950 million syndicated credit facility. The agreement will
contain customary representations, warranties, and covenants,
including financial covenants consistent with Pengrowths
syndicated facility.
USE OF
PROCEEDS
Our estimated net proceeds from the sale of the
20,000,000 Trust Units offered by this Prospectus
Supplement, after deducting the Underwriters fee of
$ l
and expenses of this offering estimated to be
$ l
will be approximately
$ l .
If the Over-Allotment Option is exercised in full, the
Underwriters fee will be
$ l
and the net proceeds to us after expenses will be approximately
$ l .
We will use the net proceeds to finance a portion of the
purchase price of the ConocoPhillips Acquisition. In the
interim, such net proceeds will be invested, used for general
corporate or trust purposes or used to reduce outstanding
indebtedness. See Recent Developments. We
believe that the ConocoPhillips Acquisition will be completed as
described in this Prospectus Supplement. However, if contrary to
Pengrowths expectation the ConocoPhillips Acquisition is
not completed for any reason, such net proceeds would be used to
repay indebtedness, to fund capital expenditures and for general
corporate or trust purposes. See Consolidated
Capitalization and Relationship between the
Trust and the Underwriters and Risk
Factors If the ConocoPhillips Acquisition is not
consummated, the Trust may not be able to identify alternate
uses of proceeds of this offering that will enable it to sustain
distributions at anticipated levels.
S-22
CONSOLIDATED
CAPITALIZATION
The following table summarizes our consolidated capitalization
as at September 30, 2006: (i) on an actual basis;
(ii) as adjusted to give effect to the business combination
with Esprit (which closed on October 2, 2006); and
(iii) as further adjusted to give effect to the
ConocoPhillips Acquisition, and the offering of Trust Units
pursuant to this Prospectus Supplement (assuming no exercise of
the Over-Allotment Option) and the application of the net
proceeds of this offering as described under Use of
Proceeds. You should read this table together with our
unaudited comparative consolidated financial statements for
period ended September 30, 2006, which are incorporated by
reference in the Prospectus. See Schedule B to
this Prospectus Supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as at
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
|
|
|
|
Outstanding as at
|
|
|
after giving effect to the
|
|
|
|
|
|
|
September 30, 2006
|
|
|
business combination
|
|
|
|
|
|
|
after giving effect to the
|
|
|
with Esprit, the
|
|
|
|
Outstanding as at
|
|
|
business combination
|
|
|
ConocoPhillips Acquisition
|
|
|
|
September 30, 2006
|
|
|
with Esprit
|
|
|
and this offering
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)(1)(10)
|
|
|
|
(Tabular amounts in 000s except numbers of Trust Units)
|
|
|
Revolving Credit
Facility(2)(3)
|
|
$
|
132,000
|
|
|
$
|
419,470
|
|
|
$
|
419,470
|
|
Bridge Credit
Facility(4)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
649,380
|
(10)
|
Convertible
Debentures(5)
|
|
$
|
|
|
|
$
|
96,295
|
|
|
$
|
96,295
|
|
Long-term Debt
|
|
$
|
327,910
|
|
|
$
|
327,910
|
|
|
$
|
327,910
|
|
trust
units(5)(6)(7)(8)(9)
|
|
$
|
3,040,038
|
|
|
$
|
3,935,982
|
|
|
$
|
4,324,102
|
(10)
|
|
|
|
(184,459,239 trust units
|
)
|
|
|
(219,184,396 trust units
|
)
|
|
|
(239,184,396 trust units
|
)
|
Notes:
|
|
|
|
(1)
|
This table does not reflect the application of proceeds, if any,
from Pengrowths planned asset rationalization program. See
Recent Developments Asset Rationalization
Program.
|
|
|
(2)
|
Our operating bank loans consist of: (i) a syndicated
$950 million extendible revolving term credit facility; and
(ii) a $35 million demand operating line of credit for
working capital purposes. Proceeds from this offering may be
used to retire a portion of this indebtedness. For details, see
Use of Proceeds and Relationship
between the Trust and the Underwriters herein and
Material Debt in the Prospectus.
|
|
|
(3)
|
Upon the closing of the business combination with Esprit on
October 2, 2006, we utilized our credit facilities to repay
all amounts owing under Esprits credit facility, being in
the aggregate $315 million.
|
|
|
(4)
|
The purchase price of the ConocoPhillips Acquisition of Cdn
$1.0375 billion will be partially financed from the net
proceeds of this offering, with the remainder of the purchase
price to be financed though a proposed bridge line of credit to
be provided by a Canadian chartered bank. Amounts drawn on the
bridge line of credit bear interest at approximately 5.5%. The
bridge line of credit is not secured on any assets of Pengrowth,
but Pengrowth is required to use proceeds of any financing or
asset dispositions, including the asset realization program
described under Recent Developments Asset
Rationalization Program, to repay such facility. See
Recent Developments Bridge Credit
Facility.
|
|
|
(5)
|
Upon the closing of the business combination with Esprit, we
assumed the obligations outstanding pursuant to Esprits
$96 million aggregate principal amount of 6.5% convertible
unsecured subordinated debentures due 2010. On November 1,
2006, we made an offer, in accordance with the terms of the
indenture relating to such debentures, to all of the holders
thereof to purchase all outstanding debentures at a purchase
price in cash equal to 101% of the principal amount thereof. In
the event that none of the debentures are tendered pursuant to
the offer, these debentures will be convertible, at the option
of the holders thereof, into approximately 3,750,000
Trust Units.
|
|
|
(6)
|
Our estimated net proceeds from the sale of the 20 million
Trust Units offered by this Prospectus Supplement, after
deducting the Underwriters fee of $20.48 million and
expenses of this offering estimated to be $1 million, will
be approximately $388 million (assuming that the
Over-Allotment Option is not exercised).
|
|
|
(7)
|
On July 27, 2006, we consolidated our issued and
outstanding Class A trust units and Class B trust
units into a single class of trust units, referred to herein as
Trust Units. Pursuant to this consolidation,
all issued and outstanding Class B trust units were renamed
as Trust Units, all issued and outstanding
unclassified trust units were converted to Trust Units and
all issued and outstanding Class A trust units were
converted to Trust Units, except for Class A trust
units for which a declaration of Canadian residency was
provided. As at October 31, 2006, we had
219,290,325 Trust Units issued and outstanding and
12,968 Class A trust units issued and outstanding.
|
|
|
(8)
|
Does not include 3 million Trust Units which may be
issued pursuant to the Over-Allotment Option. See Plan
of Distribution. In the event of the exercise in full
of the Over-Allotment Option, the number of issued and
outstanding Trust Units will increase to 242 million
Trust Units.
|
|
|
(9)
|
Includes 34,725,157 Trust Units issued to holders of Esprit
trust units pursuant to our business combination with Esprit.
|
|
|
(10) |
Assumes 20,000,000 Trust Units are issued at a price of
$20.48 (being the closing price on the TSX on the last trading
date prior to the date of this Preliminary Prospectus
Supplement).
|
S-23
PLAN OF
DISTRIBUTION
Subject to the terms and conditions of an agreement dated
November l ,
2006 (the Underwriting Agreement) among us and each
of the Underwriters, we have agreed to sell and the Underwriters
have severally agreed to purchase on the Closing
Date, l
Trust Units offered under this Prospectus Supplement at a
price of
$ l
per Trust Unit payable to us against delivery of
certificates representing the Trust Units. We have also
granted an Over-Allotment Option to the Underwriters,
exercisable in whole or in part for a period of 30 days
from the Closing Date, to purchase on a pro rata basis up
to an additional 15% of the Trust Units issued at the
Closing Date on the same terms. The Underwriters will be
responsible for the payment of the January 15, 2007
distribution on any Trust Units issued pursuant to the
Over-Allotment Option in the event the Over-Allotment Option is
exercised after the record date therefor and all responsibility
for the payment of such distributions will be for the account of
the Underwriters. The obligations of the Underwriters, under the
Underwriting Agreement, are several and not joint and several
and may be terminated on the occurrence of certain stated
events. Under the Underwriting Agreement, we shall not be
obliged to sell to the Underwriters, nor shall the Underwriters
be obliged to purchase, less than all of the Trust Units
that the Underwriters have agreed to purchase. The Underwriters
are, however, obligated to take up and pay for all such
Trust Units if any of the Trust Units are purchased
under the Underwriting Agreement.
We have agreed to indemnify the Underwriters and their agents,
directors, officers, shareholders and employees against certain
liabilities, including liabilities under the U.S. securities
laws and Canadian securities laws or to contribute to payments
the Underwriters may be required to make because of any of these
liabilities.
The offering price of the Trust Units was determined by
negotiation between us and the Underwriters. We have agreed to
pay a fee to the Underwriters in the amount of
$ l
per Trust Unit purchased under this offering. Assuming no
exercise of the Over-Allotment Option, the Underwriters
fee will be
$ l
and the net proceeds to us will be
$ l
(before deducting the expenses of this offering estimated to be
approximately
$ l ).
In the event the Over-Allotment Option is exercised in full, the
Underwriters fee will be
$ l
and the net proceeds to us will be
$ l
(before deducting the expenses of this offering estimated to be
approximately
$ l ).
The public offering price for the Trust Units offered in
Canada and in the United States is payable in Canadian dollars
only.
Pursuant to rules and policy statements of certain Canadian
provincial securities commissions, the Underwriters may not,
throughout the period of distribution, bid for or purchase
Trust Units for their own account or for accounts over
which they exercise control or direction. The foregoing
restriction is subject to exceptions, on the condition that the
bid or purchase is not engaged in for the purpose of creating
actual or apparent active trading in, or raising the price of,
the Trust Units. These exceptions include bids or purchases
permitted under the Universal Market Integrity Rules for
Canadian Marketplaces administered by Market
Regulation Services Inc. relating to market stabilization
and passive market making activities and a bid or purchase made
for and on behalf of a customer where the order was not
solicited during the period of distribution. Subject to the
foregoing, the Underwriters may over-allot or effect
transactions that stabilize or maintain the market price of the
Trust Units at levels other than those that might otherwise
prevail on the open market. Such transactions, if commenced, may
be discontinued at any time.
The rules of the SEC may limit the ability of the Underwriters
to bid for or purchase Trust Units before the distribution
of the Trust Units if the offering is completed. However,
the Underwriters may engage in the following activities in
accordance with these rules:
|
|
|
|
|
Stabilizing transactions permit bids to purchase the
Trust Units so long as the stabilizing bids do not exceed a
specified maximum.
|
|
|
|
Over-allotment transactions involve sales by the Underwriters of
Trust Units in excess of the number of Trust Units the
Underwriters are obligated to purchase, which creates a
syndicate short position. The Underwriters may close out any
short position by purchasing Trust Units in the open market.
|
|
|
|
Penalty bids permit the representatives to reclaim a selling
concession from a syndicate member when the Trust Units
originally sold by the syndicate member are purchased in a
stabilizing or syndicate covering transaction to cover syndicate
short positions.
|
These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of preventing or mitigating
a decline in the market price of the Trust Units, and may
cause the price of the Trust Units to be higher than would
otherwise exist in the open market absent such stabilizing
activities. As a result, the price of the Trust Units may
be
S-24
higher than the price that might otherwise exist in the open
market. These transactions may be effected on the NYSE, the TSX
or otherwise and, if commenced, may be discontinued at any time.
We have agreed that, subject to certain exceptions, we shall not
issue or agree to issue any equity securities or other
securities convertible into, or exchangeable for, equity
securities prior to 90 days after the Closing Date without
the prior consent of RBC Dominion Securities Inc., on behalf of
the Underwriters, which consent shall not be unreasonably
withheld.
The TSX has conditionally approved the listing of the
Trust Units offered by this Prospectus Supplement. Listing
will be subject to our fulfillment of all the listing
requirements of the TSX on or before February 26, 2007.
This offering is being made concurrently in all of the provinces
of Canada and in the United States pursuant to the
multijurisdictional disclosure system implemented by securities
regulatory authorities in Canada and the United States. The
Trust Units will be offered in the United States or Canada
through the Underwriters either directly or, if applicable,
through their respective U.S. or Canadian registered
broker-dealer affiliates.
Certain Underwriters and their affiliates have performed, and
may in the future perform, various underwriting, financial
advisory, investment banking, commercial lending and other
services in the ordinary course of business with us and our
affiliates for which they receive or will receive customary
compensation. See Relationship between the Trust and
the Underwriters.
RELATIONSHIP
BETWEEN THE TRUST AND THE UNDERWRITERS
Each of RBC Dominion Securities Inc., BMO Nesbitt Burns Inc.,
CIBC World Markets Inc., Scotia Capital Inc., National Bank
Financial Inc., TD Securities Inc. and HSBC Securities (Canada)
Inc. is a subsidiary of a Canadian chartered bank (the
Banks) which is one of our lenders and to which we
are currently indebted. In addition, in connection with the
financing of the ConocoPhillips Acquisition, each of the banks
is expected to be a lender under the Bridge Credit Facility. See
Recent Developments Bridge Credit
Facility. Consequently, we may be considered to be a
connected issuer of such Underwriters for the purposes of
securities regulations in certain provinces. The decision to
offer the Trust Units and the determination of the terms of
the offering were made through negotiations between us and RBC
Dominion Securities Inc., on behalf of the Underwriters. The
Banks did not have any involvement in such decisions or
determination; however, the Banks have been advised of the
offering and the terms thereof. The net proceeds from this
offering may be used to reduce our indebtedness to the Banks.
See Use of Proceeds and Consolidated
Capitalization.
ELIGIBILITY
FOR INVESTMENT
In the opinion of our counsel, Bennett Jones LLP, and in the
opinion of Fraser Milner Casgrain LLP, counsel to the
Underwriters, on the basis of the applicable legislation as in
effect on the date hereof and subject to the qualifications and
assumptions discussed under the heading Certain
Canadian Income Tax Considerations in the accompanying
Prospectus, the Trust Units offered hereby, on the Closing
Date, will be qualified investments under the Tax Act for trusts
governed by registered retirement savings plans, registered
retirement income funds, deferred profit sharing plans and
registered education savings plans. If the Trust ceases to
qualify as a mutual fund trust, the Trust Units will cease
to be qualified investments for the plans referred to above.
Adverse tax consequences may apply to such a plan, or an
annuitant thereunder, if such a plan acquires or holds property
that is not a qualified investment. Although the October 31
Proposals will not modify the eligibility for investment of the
Trust Units for the above-noted plans, it is expected that
the October 31 Proposals will reduce the amount of distributions
on the Trust Units received by such plans commencing in
2011.
LEGAL
MATTERS
Certain legal matters relating to Canadian law will be passed
upon on our behalf by Bennett Jones LLP and on behalf of the
Underwriters by Fraser Milner Casgrain LLP. Certain legal
matters relating to United States law will be passed upon on our
behalf by Paul, Weiss, Rifkind, Wharton and Garrison LLP and on
behalf of the Underwriters by Vinson & Elkins L.L.P.
S-25
INTEREST
OF EXPERTS
As of the date hereof, the partners and associates of Bennett
Jones LLP and Fraser Milner Casgrain LLP, each as a group, own
beneficially, directly or indirectly, less than 1% of the
outstanding Trust Units and Class A trust units, in
the aggregate.
The schedule of revenue, royalties and operating expenses for
the CP Assets for the years ended December 31, 2005 and
2004, which is attached as Schedule A to this
Prospectus Supplement, has been audited by Ernst &
Young LLP, independent auditors of ConocoPhillips Canada, as
indicated in their report dated November 2, 2006 and are
incorporated herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said report.
Information relating to the reserves relating to the CP Assets
and our reserves (other than the reserves information relating
to Trifecta Resources Inc.) included herein under
Recent Developments ConocoPhillips
Acquisition and in the schedules to this Prospectus
Supplement was calculated based on an evaluation of, and reports
on, the crude oil and natural gas reserves conducted and
prepared by GLJ, independent qualified reserves evaluators.
Information relating to the reserves of Trifecta Resources Inc.
included in the schedules to this Prospectus Supplement was
calculated based on an evaluation of, and reports on, the crude
oil and natural gas reserves conducted and prepared by Sproule,
independent qualified reserves evaluators. As of the date
hereof, the directors and officers of GLJ and Sproule, each as a
group, beneficially own, directly or indirectly, less than 1% of
our outstanding Trust Units and Class A trust units,
in the aggregate.
PURCHASERS
STATUTORY RIGHTS
Securities legislation in several of the provinces of Canada
provides purchasers with the right to withdraw from an agreement
to purchase securities. This right may be exercised within two
business days after receipt or deemed receipt of a Prospectus,
the accompanying Prospectus Supplement relating to securities
purchased by a purchaser and any amendment thereto. In several
of the provinces, securities legislation further provides a
purchaser with remedies for rescission, or in some
jurisdictions, damages if the Prospectus, the accompanying
Prospectus Supplement relating to securities purchased by a
purchaser or any amendment contains a misrepresentation or are
not delivered to the purchaser, provided that the remedies for
rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the
purchasers province. The purchaser should refer to any
applicable provisions of the securities legislation of the
purchasers province for the particulars of these rights or
consult with a legal advisor.
S-26
AUDITORS
CONSENT
Consent
of Ernst & Young LLP
We have read the preliminary prospectus supplement to the short
form base shelf prospectus dated September 15, 2006 of
Pengrowth Energy Trust (the Trust) dated
November 29, 2006 (the Prospectus)
related to the sale and issuance of Trust Units of the
Trust. We have complied with generally accepted standards for an
auditors involvement with offering documents.
We consent to the inclusion in the above mentioned Prospectus of
our report to the board of directors of ConocoPhillips Canada
(ConocoPhillips) on the schedules of revenue,
royalties and operating expenses for the properties currently
being offered for sale by ConocoPhillips for the years ended
December 31, 2005 and 2004. Our report is dated
November 2, 2006.
(signed)
Ernst &
Young LLP
Chartered Accountants
Calgary, Canada
November 29, 2006
S-27
CERTIFICATES
OF PENGROWTH
Dated:
November 29, 2006
The short form prospectus, together with the documents
incorporated in the prospectus by reference, as supplemented by
the foregoing, constitutes full, true and plain disclosure of
all material facts relating to the securities offered by the
prospectus and this supplement as required by the securities
legislation of each of the provinces of Canada. For the purposes
of the Province of Québec, this simplified prospectus,
together with documents incorporated herein by reference and as
supplemented by the permanent information record, contains no
misrepresentation that is likely to affect the value or the
market price of the securities to be distributed.
Pengrowth Energy
Trust
By: Pengrowth Corporation as Administrator
|
|
|
(signed)
James S.
Kinnear
James S. Kinnear
President and Chief Executive Officer
|
|
(signed)
Christopher G.
Webster
Christopher G. Webster
Chief Financial Officer
|
On behalf of the Board of Directors
|
|
|
(signed)
Thomas A.
Cumming
Thomas A. Cumming
Director
|
|
(signed)
Wayne K.
Foo
Wayne K. Foo
Director
|
By: Pengrowth Management Limited, as Manager
|
|
|
(signed)
James S.
Kinnear
James S. Kinnear
President
|
|
(signed)
Gordon M.
Anderson
Gordon M. Anderson
Vice President, Financial Services
in the capacity of Chief Financial Officer
|
On behalf of the Board of Directors
(signed) James S.
Kinnear
James S. Kinnear
Director
S-28
CERTIFICATE
OF THE UNDERWRITERS
Dated:
November 29, 2006
To the best of our knowledge, information and belief, the short
form prospectus, together with the documents incorporated in the
prospectus by reference, as supplemented by the foregoing,
constitutes full, true and plain disclosure of all material
facts relating to the securities offered by the prospectus and
this supplement as required by the securities legislation of
each of the provinces of Canada. For the purpose of the Province
of Québec, this simplified prospectus, together with
documents incorporated herein by reference and as supplemented
by the permanent information record, contains no
misrepresentation that is likely to affect the value or the
market price of the securities to be distributed.
RBC Dominion Securities
Inc.
By: (Signed) Gordon M.
Ritchie
BMO Nesbitt Burns Inc.
By: (Signed) Eric L. Toews
CIBC World Markets Inc.
By: (Signed) Brenda A.
Mason
Scotia Capital Inc.
By: (Signed) Craig M.
Langpap
|
|
|
National Bank Financial Inc.
By: (Signed) Robert B. Wonnacott
|
|
TD Securities Inc.
By: (Signed) Alec W.G. Clark
|
Merrill Lynch Canada Inc.
By: (Signed) Aaron Papps
HSBC Securities (Canada)
Inc.
By: (Signed) Rod A.
McIsaac
|
|
|
Canaccord Capital Corporation
By: (Signed) Karl B. Staddon
|
|
Raymond James Ltd.
By: (Signed) Edward J. Bereznicki
|
|
|
|
Sprott Securities Inc.
By: (Signed) Brian K. Petersen
|
|
Dundee Securities Corporation
By: (Signed) Sheldon McDonough
|
|
|
|
|
|
FirstEnergy Capital Corp.
By: (Signed) Hugh R. Sanderson
|
|
Peters & Co. Limited
By: (Signed) Bradley P.D. Fedora
|
|
Tristone Capital Inc.
By: (Signed) Brad Hurtibise
|
S-29
SCHEDULE
A
Schedules of Revenue, Royalties and Operating Expenses for
the CP Assets for the years ended December 31, 2005 and
2004 and the report of the auditors thereon and the nine months
ended September 30, 2006, together with the notes
thereto
AUDITORS
REPORT
To the Board
of Directors of
ConocoPhillips
Canada
At the request of ConocoPhillips Canada
(ConocoPhillips), we have audited the Schedules of
Revenue, Royalties and Operating Expenses for the properties
currently being offered for sale by ConocoPhillips (the
Orion Properties) for the years ended
December 31, 2005 and 2004. This financial information is
the responsibility of management. Our responsibility is to
express an opinion on this financial information based on our
audits.
We conducted our audits in accordance with Canadian generally
accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, the Schedules of Revenue, Royalties and
Operating Expenses present fairly, in all material respects, the
revenue, royalties and operating expenses of the Orion
Properties for the years ended December 31, 2005 and 2004
in accordance with Canadian generally accepted accounting
principles.
(signed) Ernst & Young LLP
Chartered Accountants
Calgary, Canada
November 2, 2006
A-1
ORION
PROPERTIES (CP ASSETS)
SCHEDULES
OF REVENUE, ROYALTIES
AND
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 months ended
|
|
|
12 Months ended
|
|
|
|
September 30
|
|
|
December 31
|
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
2004
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
312,369
|
|
|
|
323,737
|
|
|
|
459,858
|
|
|
|
381,602
|
|
Royalties
|
|
|
48,357
|
|
|
|
51,340
|
|
|
|
76,735
|
|
|
|
64,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,012
|
|
|
|
272,397
|
|
|
|
383,123
|
|
|
|
316,991
|
|
Operating Expenses
|
|
|
73,632
|
|
|
|
74,144
|
|
|
|
101,737
|
|
|
|
90,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
|
|
|
190,380
|
|
|
|
198,253
|
|
|
|
281,386
|
|
|
|
226,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
A-2
NOTES TO
THE SCHEDULES OF REVENUE ROYALTIES AND OPERATING EXPENSES
Years
ended December 31, 2005 and 2004 (audited) and nine month
periods ended
September 30, 2006 and 2005 (unaudited)
The Schedules of Revenue, Royalties and Operating Expenses
include information relating to the operations of certain oil
and gas properties (referred to as the Orion
Properties) to be acquired by an unnamed Purchaser
pursuant to a purchase and sale agreement expected to be
executed on or about November 3, 2006. The Orion Properties
are comprised of packages of properties in the following areas:
West Central Alberta includes Ante Creek, Goose
River and Deer Mountain; Southeast Alberta includes
Bantry and Jenner; Fenn Big Valley; Freefight; Harmattan;
Lethbridge and Red Earth includes Red Earth and
Talbot.
The schedules, prepared from records supplied by the vendor,
include only revenue, royalties and operating expenses directly
related to the Orion Properties. The schedules do not include
any provision for the depletion, depreciation and amortizations,
asset retirement costs, future capital costs, impairment of
unevaluated properties, foreign exchange gain (loss), and
administrative costs for the Orion Properties, since the Orion
Properties form only a part of the consolidated operations of
the vendor.
|
|
2.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
Joint
Operations
Substantially all of the Orion Properties are operated through
joint ventures. The schedules reflect only the vendors
proportionate interest in the properties acquired by the
Purchaser.
Revenue
Recognition
Revenue is recorded when the product is delivered and the title
passes to an external party. Natural gas revenue is recorded
based on a combination of market-based contracts and longer-term
dedicated sales contracts specific to the Orion Properties.
Royalties
Royalties are recorded at the time the product is produced and
sold. Royalties are calculated in accordance with the applicable
regulations and/or the terms of individual royalty agreements.
Operating
Expenses
Operating expenses include amounts incurred on extraction of
product to the surface, gathering, field processing, treating,
compression and mainline transportation to the point of sale
where applicable.
A-3
SCHEDULE
B
PENGROWTH
PROFORMA FINANCIAL STATEMENTS
AFTER GIVING EFFECT TO THE CONOCOPHILLIPS ACQUISITION AND
THE STRATEGIC BUSINESS COMBINATION WITH ESPRIT
COMPILATION
REPORT ON PRO FORMA FINANCIAL STATEMENTS
The Board of Directors of Pengrowth Corporation, as
Administrators of Pengrowth Energy Trust
We have read the accompanying unaudited pro forma consolidated
balance sheet of Pengrowth Energy Trust as at September 30,
2006 and unaudited pro forma consolidated statements of income
for the nine months then ended and for the year ended
December 31, 2005, and have performed the following
procedures:
|
|
|
|
1.
|
Compared the figures in the columns captioned Pengrowth
Energy Trust to the unaudited consolidated financial
statements of the Trust as at September 30, 2006 and for
the nine months then ended, and the audited consolidated
financial statements of the Trust for the year ended
December 31, 2005, respectively, and found them to be in
agreement.
|
|
|
2.
|
Compared the figures in the columns captioned Esprit
Energy Trust to the unaudited consolidated financial
statements of Esprit Energy Trust as at September 30, 2006
and for the nine months then ended, and the audited consolidated
financial statements of Esprit Energy Trust for the year ended
December 31, 2005, respectively, and found them to be in
agreement.
|
|
|
3.
|
Compared the figures in the columns captioned
ConocoPhillips Properties to the unaudited schedules
of revenue, royalties and operating expenses for the properties
currently being offered for sale by ConocoPhillips for the nine
months ended September 30, 2006, and the audited schedules
of revenue, royalties and operating expenses for the properties
currently being offered for sale by ConocoPhillips for the year
ended December 31, 2005, respectively, and found them to be
in agreement.
|
|
|
4.
|
Made enquiries of certain officials of the Trust who have
responsibility for financial and accounting matters about:
|
|
|
|
|
(a)
|
the basis for determination of the pro forma adjustments; and
|
|
|
(b)
|
whether the pro forma financial statements comply as to form in
all material respects with the published requirements of
Canadian securities legislation.
|
The officials:
|
|
|
|
(a)
|
described to us the basis for determination of the pro forma
adjustments, and
|
|
|
(b)
|
stated that the pro forma financial statements comply as to form
in all material respects with the published requirements of
Canadian securities legislation.
|
|
|
|
|
5.
|
Read the notes to the pro forma financial statements, and found
them to be consistent with the basis described to us for
determination of the pro forma adjustments.
|
|
|
6.
|
Recalculated the application of the pro forma adjustments to the
aggregate of the amounts in the columns captioned
Pengrowth Energy Trust, Esprit Energy
Trust and ConocoPhillips Properties,
Esprit Adjustments, ConocoPhillips
Adjustments and Other Adjustments, as
applicable, as at September 30, 2006 and for the nine
months then ended, and for the year ended December 31,
2005, and found the amounts in the column captioned Pro
Forma Pengrowth Energy Trust to be arithmetically correct.
|
A pro forma financial statement is based on management
assumptions and adjustments which are inherently subjective. The
foregoing procedures are substantially less than either an audit
or a review, the objective of which is the expression of
assurance with respect to managements assumptions, the pro
forma adjustments, and the application of the adjustments to the
historical financial information. Accordingly, we express no
such assurance.
The foregoing procedures would not necessarily reveal matters of
significance to the pro forma financial statements, and we
therefore make no representation about the sufficiency of the
procedures for the purposes of a reader of such statements.
Chartered Accountants
Calgary, Canada
November 28, 2006
B-1
COMMENTS
FOR UNITED STATES READERS ON DIFFERENCES BETWEEN
CANADIAN AND UNITED STATES REPORTING STANDARDS
The above report, provided solely pursuant to Canadian
requirements, is expressed in accordance with standards of
reporting generally accepted in Canada. To report in conformity
with United States standards on the reasonableness of the pro
forma adjustments and their application to the pro forma
consolidated financial statements requires an examination or
review substantially greater in scope than the review we have
conducted. Consequently, we are unable to express any opinion in
accordance with standards of reporting generally accepted in the
United States with respect to the compilation of the
accompanying unaudited pro forma financial information.
Chartered Accountants
Calgary, Canada
November 28, 2006
B-2
Pengrowth
Energy Trust
Pro Forma Consolidated Balance Sheet
As at September 30, 2006
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pengrowth
|
|
|
Esprit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Energy
|
|
|
Energy
|
|
|
Esprit
|
|
|
ConocoPhillips
|
|
|
Other
|
|
|
|
|
|
Pengrowth
|
|
|
|
Trust
|
|
|
Trust
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
|
Energy Trust
|
|
|
ASSETS
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
928
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
928
|
|
Accounts receivable
|
|
|
105,116
|
|
|
|
37,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,044
|
|
|
|
37,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,189
|
|
UNREALIZED
MARK-TO-MARKET
GAIN ON COMMODITY CONTRACTS
|
|
|
16,637
|
|
|
|
|
|
|
|
10,601
|
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)
|
|
|
27,238
|
|
OTHER ASSETS
|
|
|
19,434
|
|
|
|
3,386
|
|
|
|
(3,386
|
)
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)
|
|
|
19,434
|
|
LONG TERM INVESTMENTS
|
|
|
26,990
|
|
|
|
|
|
|
|
(19,990
|
)
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)
|
|
|
7,000
|
|
GOODWILL
|
|
|
315,666
|
|
|
|
175,494
|
|
|
|
(39,327
|
)
|
|
|
183,053
|
|
|
|
|
|
|
|
2
|
(d)(f)
|
|
|
634,886
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
2,556,802
|
|
|
|
842,061
|
|
|
|
527,852
|
|
|
|
1,251,144
|
|
|
|
|
|
|
|
2
|
(d)(f)
|
|
|
5,177,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,041,573
|
|
|
$
|
1,058,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,009,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
UNITHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
124,600
|
|
|
$
|
39,912
|
|
|
$
|
37,409
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
2
|
(d)(f)
|
|
$
|
206,921
|
|
Distributions payable to unitholders
|
|
|
92,252
|
|
|
|
10,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,307
|
|
Due to Pengrowth Management Limited
|
|
|
4,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,418
|
|
Other liabilities
|
|
|
24,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,843
|
|
|
|
49,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
338,219
|
|
CONTRACT LIABILITIES
|
|
|
9,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,683
|
|
CONVERTIBLE DEBENTURES
|
|
|
|
|
|
|
94,134
|
|
|
|
2,161
|
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)(e)(h)
|
|
|
96,295
|
|
LONG-TERM DEBT
|
|
|
459,910
|
|
|
|
287,470
|
|
|
|
|
|
|
|
1,037,500
|
|
|
|
(388,120
|
)
|
|
|
2
|
(f)(g)
|
|
|
1,384,880
|
|
ASSET RETIREMENT OBLIGATIONS
|
|
|
229,793
|
|
|
|
26,395
|
|
|
|
11,412
|
|
|
|
95,221
|
|
|
|
|
|
|
|
2
|
(d)(f)
|
|
|
362,821
|
|
FUTURE INCOME TAXES
|
|
|
207,979
|
|
|
|
127,724
|
|
|
|
1,015
|
|
|
|
296,476
|
|
|
|
|
|
|
|
2
|
(d)(f)
|
|
|
633,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,153,208
|
|
|
|
585,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,825,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRUST UNITHOLDERS
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust Unitholders capital
|
|
|
3,040,038
|
|
|
|
628,015
|
|
|
|
267,929
|
|
|
|
|
|
|
|
388,120
|
|
|
|
2
|
(d)(h)
|
|
|
4,324,102
|
|
Contributed surplus
|
|
|
5,393
|
|
|
|
10,853
|
|
|
|
(10,853
|
)
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)
|
|
|
5,393
|
|
Equity component of convertible
debentures
|
|
|
|
|
|
|
2,088
|
|
|
|
(1,883
|
)
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)(e)
|
|
|
205
|
|
Deficit
|
|
|
(1,157,066
|
)
|
|
|
(168,560
|
)
|
|
|
168,560
|
|
|
|
|
|
|
|
|
|
|
|
2
|
(d)
|
|
|
(1,157,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,888,365
|
|
|
|
472,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,172,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,041,573
|
|
|
$
|
1,058,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,009,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Pro Forma Consolidated Financial
Statements.
B-3
Pengrowth
Energy Trust
Pro Forma Consolidated Statement of Income
Nine Months Ended September 30, 2006
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma
|
|
|
|
Pengrowth
|
|
|
Esprit Energy
|
|
|
ConocoPhillips
|
|
|
Esprit
|
|
|
ConocoPhillips
|
|
|
Other
|
|
|
|
|
Pengrowth
|
|
|
|
Energy Trust
|
|
|
Trust
|
|
|
Properties
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
Energy Trust
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales
|
|
$
|
863,185
|
|
|
$
|
244,277
|
|
|
|
312,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,419,831
|
|
Processing and other income
|
|
|
10,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,524
|
|
Royalties, net of incentives
|
|
|
(168,435
|
)
|
|
|
(55,742
|
)
|
|
|
(48,357
|
)
|
|
|
(375
|
)
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
(272,909
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
705,274
|
|
|
|
188,535
|
|
|
|
264,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,157,446
|
|
Interest and other income
|
|
|
2,085
|
|
|
|
1,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REVENUE
|
|
|
707,359
|
|
|
|
189,878
|
|
|
|
264,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,160,874
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
170,768
|
|
|
|
42,872
|
|
|
|
73,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,272
|
|
Transportation
|
|
|
5,299
|
|
|
|
1,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,144
|
|
Amortization of injectants for
miscible floods
|
|
|
25,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,263
|
|
Interest
|
|
|
19,340
|
|
|
|
12,568
|
|
|
|
|
|
|
|
217
|
|
|
|
28,220
|
|
|
|
|
|
|
3(c)
|
|
|
60,345
|
|
General and administrative
|
|
|
25,246
|
|
|
|
18,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,247
|
|
Management fee
|
|
|
10,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,557
|
|
Foreign exchange gain
|
|
|
(8,997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,997
|
)
|
Depletion and depreciation
|
|
|
222,396
|
|
|
|
79,891
|
|
|
|
|
|
|
|
51,335
|
|
|
|
118,062
|
|
|
|
7,048
|
|
|
3(b)
|
|
|
478,732
|
|
Accretion
|
|
|
11,721
|
|
|
|
1,319
|
|
|
|
|
|
|
|
949
|
|
|
|
5,713
|
|
|
|
|
|
|
3(e)
|
|
|
19,702
|
|
Unrealized gain on commodity
contracts
|
|
|
(16,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,637
|
)
|
Other expenses
|
|
|
6,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
471,098
|
|
|
|
156,496
|
|
|
|
73,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
912,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE TAXES AND NON
CONTROLLING INTEREST
|
|
|
236,261
|
|
|
|
33,382
|
|
|
|
190,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
248,104
|
|
INCOME TAX EXPENSE (REDUCTION)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
11
|
|
|
|
569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
580
|
|
Future
|
|
|
(22,743
|
)
|
|
|
(20,012
|
)
|
|
|
|
|
|
|
(15,120
|
)
|
|
|
9,980
|
|
|
|
|
|
|
3(d)
|
|
|
(47,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22,732
|
)
|
|
|
(19,443
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE NON-CONTROLLING
INTEREST
|
|
|
258,993
|
|
|
|
52,825
|
|
|
|
190,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
295,419
|
|
NON-CONTROLLING INTEREST
|
|
|
|
|
|
|
465
|
|
|
|
|
|
|
|
(465
|
)
|
|
|
|
|
|
|
|
|
|
3(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
258,993
|
|
|
$
|
52,360
|
|
|
$
|
190,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
295,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER TRUST UNIT
(Note 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.61
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
1.60
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Pro Forma Consolidated Financial
Statements.
B-4
Pengrowth
Energy Trust
Pro Forma Consolidated Statement of Income
Year Ended December 31, 2005
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma
|
|
|
|
Pengrowth
|
|
|
Esprit Energy
|
|
|
ConocoPhillips
|
|
|
Esprit
|
|
|
ConocoPhillips
|
|
|
Other
|
|
|
|
|
Pengrowth Energy
|
|
|
|
Energy Trust
|
|
|
Trust
|
|
|
Properties
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
Trust
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales
|
|
$
|
1,151,510
|
|
|
$
|
290,283
|
|
|
$
|
459,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,901,651
|
|
Processing and other income
|
|
|
15,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,091
|
|
Royalties, net of incentives
|
|
|
(213,863
|
)
|
|
|
(67,645
|
)
|
|
|
(76,735
|
)
|
|
|
(500
|
)
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
(358,743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
952,738
|
|
|
|
222,638
|
|
|
|
383,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,557,999
|
|
Interest and other income
|
|
|
2,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REVENUE
|
|
|
955,334
|
|
|
|
222,638
|
|
|
|
383,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,560,595
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
218,115
|
|
|
|
47,149
|
|
|
|
101,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
367,001
|
|
Transportation
|
|
|
7,891
|
|
|
|
2,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,340
|
|
Amortization of injectants for
miscible floods
|
|
|
24,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,393
|
|
Interest
|
|
|
21,642
|
|
|
|
8,340
|
|
|
|
|
|
|
|
290
|
|
|
|
37,627
|
|
|
|
|
|
|
3(c)
|
|
|
67,899
|
|
General and administrative
|
|
|
30,272
|
|
|
|
10,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,962
|
|
Plan of Arrangement and other
|
|
|
|
|
|
|
849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
849
|
|
Management fee
|
|
|
15,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,961
|
|
Foreign exchange gain
|
|
|
(6,966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,966
|
)
|
Depletion and depreciation
|
|
|
284,989
|
|
|
|
74,784
|
|
|
|
|
|
|
|
60,878
|
|
|
|
136,708
|
|
|
|
24,233
|
|
|
3(b)
|
|
|
581,592
|
|
Accretion
|
|
|
14,162
|
|
|
|
1,198
|
|
|
|
|
|
|
|
1,827
|
|
|
|
7,618
|
|
|
|
|
|
|
3(e)
|
|
|
24,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610,459
|
|
|
|
145,459
|
|
|
|
101,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,126,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE TAXES AND NON
CONTROLLING INTEREST
|
|
|
344,875
|
|
|
|
77,179
|
|
|
|
281,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,759
|
|
INCOME TAX EXPENSE (REDUCTION)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
6,273
|
|
|
|
1,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,394
|
|
Future
|
|
|
12,276
|
|
|
|
(822
|
)
|
|
|
|
|
|
|
(18,120
|
)
|
|
|
26,420
|
|
|
|
|
|
|
3(d)
|
|
|
19,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,549
|
|
|
|
299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,148
|
|
NET INCOME BEFORE
NON CONTROLLING INTEREST
|
|
|
326,326
|
|
|
|
76,880
|
|
|
|
281,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
406,611
|
|
NON CONTROLLING INTEREST
|
|
|
|
|
|
|
2,428
|
|
|
|
|
|
|
|
(2,428
|
)
|
|
|
|
|
|
|
|
|
|
3(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
326,326
|
|
|
$
|
74,452
|
|
|
$
|
281,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
406,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER TRUST UNIT
(PNote 16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.08
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
2.07
|
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Pro Forma Consolidated Financial
Statements.
B-5
Pengrowth
Energy Trust
Notes To Pro Forma Consolidated Financial Statements
(Unaudited)
As at and for the nine months ended September 30, 2006 and
for the year ended December 31, 2005
(Tabular amounts are stated in thousands of dollars except per
trust unit amounts)
The accompanying unaudited pro forma consolidated balance sheet
as at September 30, 2006 and the pro forma consolidated
statements of income for the nine months ended
September 30, 2006 and the year ended December 31,
2005 have been prepared for inclusion in the prospectus
supplement relating to the offering of trust units of Pengrowth
Energy Trust (Pengrowth).
On October 2, 2006 Pengrowth and Esprit Energy Trust
(Esprit) completed the previously announced business combination
(the Esprit Combination). As a result of the
combination, approximately 35,514,327 Pengrowth trust units were
issued to Esprit unitholders, including 789,170 Pengrowth trust
units issued to Pengrowth Corporation which were exchanged with
and immediately cancelled by Pengrowth. Esprit became a wholly
owned subsidiary of Pengrowth on October 2, 2006.
On November 28, 2006 Pengrowth and Burlington Resources
Canada Ltd., a wholly-owned subsidiary of ConocoPhillips,
entered into a share purchase and sale agreement with
ConocoPhillips Canada to acquire all the issued and outstanding
shares of various companies which have interests in oil and
natural gas assets in Alberta and Saskatchewan (CP Assets) for
consideration of $1.0 billion.
The pro forma financial statements have been prepared by
management in accordance with Canadian generally accepted
accounting principles. The pro forma consolidated balance sheet
gives effect to the transaction and assumptions described herein
as if they occurred as at the date of the balance sheet. The pro
forma consolidated statements of income give effect to the
transactions and assumptions described herein as if they
occurred at the beginning of the respective periods. In the
opinion of management, the pro forma consolidated financial
statements include all the necessary adjustments for the fair
presentation of the ongoing entity. In preparing these pro forma
consolidated financial statements, no adjustments have been made
to reflect the possible operating synergies and administrative
cost savings that could result from combining the operations of
Pengrowth, Esprit and the CP Assets. The pro forma consolidated
financial statements may not be indicative of the results that
actually would have occurred if the events reflected therein had
been in effect on the dates indicated or of the results which
may be obtained in the future.
The accounting principles used in the preparation of the pro
forma consolidated financial statements are consistent with
those used in the unaudited interim consolidated financial
statements of Pengrowth as at and for the nine months ended
September 30, 2006 and the audited consolidated financial
statements of Pengrowth as at and for the year ended
December 31, 2005. The pro forma consolidated financial
statements have been prepared from information derived from, and
should be read in conjunction with, the audited consolidated
financial statements of Esprit and Pengrowth as at and for the
year ended December 31, 2005 , the audited schedule of
revenue, royalties and operating costs of the CP Assets for the
year ended December 31, 2005, the unaudited consolidated
financial statements of Esprit and Pengrowth as at and for the
nine months ended September 30, 2006 and the unaudited
schedule of revenue, royalties and operating costs of the CP
Assets for the nine months ended September 30, 2006.
|
|
2.
|
PRO FORMA
TRANSACTIONS, ASSUMPTIONS AND ADJUSTMENTS (AS AT
SEPTEMBER 30, 2006)
|
The unaudited pro forma consolidated balance sheet gives effect
to the following transactions, assumptions and adjustments:
|
|
|
|
|
(a) Through the Esprit Combination, the assets of Esprit
were acquired by Pengrowth on the basis of 0.53 units of
Pengrowth for each Esprit unit.
|
|
|
|
(b) For the purposes of the purchase price determination
for Esprit, Pengrowth has used a unit price of $25.80 per unit,
being the weighted average market price of Pengrowth
Trust Units on the five days surrounding the announcement
of the Esprit Combination.
|
|
|
|
(c) On September 30, 2006 Esprit had approximately
67,008,164 Trust Units outstanding, including 1,489,000 Esprit
units held by Pengrowth. Pengrowth issued approximately
35,514,327 trust units to Esprit unitholders on October 2,
2006, including approximately 789,170 units issued to Pengrowth
and immediately cancelled.
|
|
|
|
(d) The Esprit transaction has been accounted for using the
purchase price method with the allocation as follows:
|
|
|
|
|
|
Consideration:
|
|
|
|
|
Pengrowth trust units issued
|
|
$
|
895,944
|
|
Esprit units purchased for cash
|
|
|
19,990
|
|
Acquisition costs
|
|
|
5,042
|
|
|
|
|
|
|
|
|
$
|
920,976
|
|
|
|
|
|
|
Allocated as follows:
|
|
|
|
|
Property, plant and equipment
|
|
$
|
1,369,913
|
|
Goodwill
|
|
|
136,167
|
|
Deferred hedging gain
|
|
|
10,601
|
|
Bank debt
|
|
|
(287,470
|
)
|
Convertible debentures
|
|
|
(96,500
|
)
|
Asset retirement obligations
|
|
|
(37,807
|
)
|
Future income taxes
|
|
|
(128,739
|
)
|
Working capital acquired, including
liabilities incurred by Esprit prior to closing of $32,367
|
|
|
(45,189
|
)
|
|
|
|
|
|
|
|
$
|
920,976
|
|
|
|
|
|
|
The allocation of the purchase price is based on preliminary
estimates of fair value and may be revised as additional
information becomes available.
B-6
(e) The convertible debentures, including the equity
component for the conversion feature, have been recorded at
their estimated fair value.
|
|
|
|
|
(f) The ConocoPhillips transaction has been accounted for
using the purchase price method with the allocation as follows:
|
|
|
|
|
|
Consideration:
|
|
|
|
|
Cash
|
|
$
|
1,037,500
|
|
Acquisition Costs
|
|
|
5,000
|
|
|
|
|
|
|
|
|
$
|
1,042,500
|
|
|
|
|
|
|
Allocated as follows:
|
|
|
|
|
Property, plant and equipment
|
|
$
|
1,251,144
|
|
Goodwill
|
|
|
183,053
|
|
Asset retirement obligations
|
|
|
(95,221
|
)
|
Future income taxes
|
|
|
(296,476
|
)
|
|
|
|
|
|
|
|
$
|
1,042,500
|
|
|
|
|
|
|
The allocation of the purchase price is based on preliminary
estimates of fair value and may be revised as additional
information becomes available.
|
|
|
|
|
(g) the acquisition will be financed through a bridge
credit facility with the net proceeds from the issuance of trust
units pursuant to the prospectus supplement (note 2(h))
used to reduce the amount of borrowings under the bridge credit
facility.
|
|
|
|
(h) The issuance of 20 million trust units under the
prospectus supplement at $20.48 per trust unit (based on
November 27, 2006 closing price on the TSX) for
consideration of $388 million (net of underwriters
fees and issue costs of approximately $22 million).
|
|
|
3.
|
PRO FORMA
TRANSACTIONS, ASSUMPTIONS AND ADJUSTMENTS (FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2006 AND THE YEAR ENDED
DECEMBER 31, 2005)
|
The unaudited pro forma consolidated statements of income for
the nine month period ended September 30, 2006 and for the
year ended December 31, 2005 give effect to the
transactions and adjustments referred to in note 2
effective January 1, 2006 and January 1, 2005
respectively, and the following:
|
|
|
|
|
(a) Pengrowth has claimed the maximum credit available
under the Alberta Royalty Tax Credit (ARTC) program;
therefore, royalties have been adjusted to remove ARTC claimed
by Esprit.
|
|
|
|
(b) Depletion and depreciation expense has been increased
to reflect the pro forma adjustment to the carrying value of
property, plant and equipment and other assets. The depletion
rate has been adjusted based on the combined reserves and
production of Pengrowth, Esprit the CP Assets.
|
|
|
|
(c) Interest expense has been increased to reflect the
additional interest on the $650 million of debt incurred to
finance the acquisition of the CP Assets. Pengrowth has
estimated the net present value of the consolidated pro forma
asset retirement obligations at $363 million, based on a
total future liability of $1,193 million, in current
dollars.
|
|
|
|
(d) The provision for future income taxes has been
decreased to give effect to the pro forma adjustments.
|
|
|
|
(e) The accretion expense has been increased to reflect the
additional asset retirement obligations from the acquisitions of
Esprit and the CP assets. Pengrowth has estimated the net
present value of the consolidated pro forma asset retirement
obligations at $363 million, based on a total future
liability of $1,193 million, in current dollars.
|
|
|
|
(f) As described in note 2, the allocation of the
purchase price is based on preliminary estimates of fair value
and may be revised as additional information becomes available.
For purposes of preparing the unaudited pro forma consolidated
statement of income, no assumptions were made in testing for
impairment of goodwill.
|
|
|
|
(g) In conjunction with the Esprit Combination, the
exchangeable shares of Esprit were exchanged for Esprit trust
units prior to the combination. As a result, there are no
non-controlling interest holders in Esprits subsidiaries.
|
|
|
4.
|
PRO FORMA
TRUST UNITS OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
Number of Weighted Average
|
|
|
|
Trust Units
|
|
For the nine months ended September 30, 2006
|
|
Basic
|
|
|
Diluted
|
|
|
Trust units held by Pengrowth
unitholders
|
|
|
160,753
|
|
|
|
161,401
|
|
Pengrowth trust units issued to
Esprit unitholders
|
|
|
34,725
|
|
|
|
34,725
|
|
Pengrowth trust units issuable on
conversion of convertible debt
|
|
|
|
|
|
|
3,750
|
|
Pengrowth trust units pursuant to
prospectus supplement
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,478
|
|
|
|
219,876
|
|
|
|
|
|
|
|
|
|
|
B-7
|
|
|
|
|
|
|
|
|
|
|
Number of Weighted Average
|
|
|
|
Trust Units
|
|
For the year ended December 31, 2005
|
|
Basic
|
|
|
Diluted
|
|
|
Trust units held by Pengrowth
unitholders
|
|
|
157,127
|
|
|
|
157,914
|
|
Pengrowth trust units issued to
former Esprit unitholders
|
|
|
34,725
|
|
|
|
34,725
|
|
Pengrowth trust units issuable on
conversion of convertible debt
|
|
|
|
|
|
|
3,750
|
|
Pengrowth trust units pursuant to
prospectus supplement
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
211,852
|
|
|
|
216,389
|
|
|
|
|
|
|
|
|
|
|
In calculating diluted net income per unit, interest and
accretion on convertible debentures of $4.7 million was
added back to net income for the nine months ended
September 30, 2006 and interest and accretion on
convertible debentures of $2.9 million was added back to
net income for the year ended December 31, 2005.
|
|
5.
|
APPLICATION
OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
|
The application of United Stated generally accepted accounting
principles (US GAAP) would have the following
effect on the pro forma consolidated statements of income:
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
September 30, 2006
|
|
|
December 31, 2005
|
|
|
Net Income per pro forma statement
of income
|
|
$
|
295,419
|
|
|
$
|
406,611
|
|
Net income adjustments under US
GAAP(1)
|
|
|
29,131
|
|
|
|
15,087
|
|
|
|
|
|
|
|
|
|
|
Net Income under US GAAP
|
|
$
|
324,550
|
|
|
$
|
421,698
|
|
Other comprehensive income
adjustments under US
GAAP(1)
|
|
|
18,854
|
|
|
|
(25,470
|
)
|
|
|
|
|
|
|
|
|
|
Net income and comprehensive income
under US GAAP
|
|
$
|
343,404
|
|
|
$
|
396,228
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
|
|
(1)
|
These adjustments reflect those made in the September 30,
2006 and December 31, 2005 US GAAP reconciliation of
Pengrowth and, where applicable, Esprit. There are no difference
between Canadian GAAP and US GAAP as it pertains to the
schedules of revenue, royalties and operating costs of the CP
Assets.
|
The application of US GAAP would have the following effect on
the pro forma consolidated balance sheet, as at
September 30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Increase
|
|
|
Pro Forma
|
|
|
|
Cdn GAAP
|
|
|
(Decrease)(1)
|
|
|
US GAAP
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
142,261
|
|
|
$
|
212
|
|
|
$
|
142,473
|
|
Current portion of unrealized
foreign exchange gain
|
|
|
|
|
|
|
457
|
|
|
|
457
|
|
Deferred charges
|
|
|
19,434
|
|
|
|
(159
|
)
|
|
|
19,275
|
|
Property, plant and equipment and
other assets
|
|
|
5,177,859
|
|
|
|
(175,546
|
)
|
|
|
5,002,313
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of unrealized
hedging loss
|
|
|
|
|
|
|
1,800
|
|
|
|
1,800
|
|
Convertible debentures
|
|
|
96,295
|
|
|
|
205
|
|
|
|
95,500
|
|
TRUST UNITHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive
income
|
|
$
|
|
|
|
$
|
701
|
|
|
$
|
701
|
|
Equity component of convertible
debentures
|
|
|
205
|
|
|
|
(205
|
)
|
|
|
|
|
Deficit
|
|
|
(1,157,066
|
)
|
|
|
177,537
|
|
|
|
(979,529
|
)
|
Note:
|
|
|
|
(1)
|
These adjustments reflect those
made in the September 30, 2006 US GAAP reconciliation of
Pengrowth and, where applicable, Esprit.
|
B-8
SCHEDULE
C
PENGROWTH UPDATED RESERVES INFORMATION
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of November 1, 2006
(using constant prices and costs as at October 31, 2006)
CONSTANT PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
64,585
|
|
|
|
55,077
|
|
|
|
9,465
|
|
|
|
8,462
|
|
|
|
529.4
|
|
|
|
414.6
|
|
Proved Developed Non-Producing
|
|
|
425
|
|
|
|
358
|
|
|
|
74
|
|
|
|
63
|
|
|
|
34.4
|
|
|
|
26.9
|
|
Proved Undeveloped
|
|
|
19,737
|
|
|
|
16,104
|
|
|
|
1,589
|
|
|
|
1,336
|
|
|
|
59.3
|
|
|
|
44.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
84,747
|
|
|
|
71,539
|
|
|
|
11,128
|
|
|
|
9,861
|
|
|
|
623.1
|
|
|
|
486.1
|
|
Probable Reserves
|
|
|
27,541
|
|
|
|
22,677
|
|
|
|
3,244
|
|
|
|
2,809
|
|
|
|
200.4
|
|
|
|
154.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
112,287
|
|
|
|
94,215
|
|
|
|
14,372
|
|
|
|
12,670
|
|
|
|
823.6
|
|
|
|
641.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS LIQUIDS
|
|
|
TOTAL OIL EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
19,272
|
|
|
|
13,737
|
|
|
|
181,555
|
|
|
|
146,373
|
|
Proved Developed Non-Producing
|
|
|
753
|
|
|
|
524
|
|
|
|
6,993
|
|
|
|
5,434
|
|
Proved Undeveloped
|
|
|
2,866
|
|
|
|
2,020
|
|
|
|
34,074
|
|
|
|
26,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
22,890
|
|
|
|
16,281
|
|
|
|
222,623
|
|
|
|
178,702
|
|
Probable Reserves
|
|
|
6,659
|
|
|
|
4,774
|
|
|
|
70,444
|
|
|
|
55,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
29,573
|
|
|
|
21,028
|
|
|
|
294,204
|
|
|
|
235,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Natural gas has been converted to barrels of oil equivalent on
the basis of six mcf of natural gas being equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
CONSTANT PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES
|
|
|
|
DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
4,555.9
|
|
|
|
3,427.8
|
|
|
|
2,781.8
|
|
|
|
2,364.5
|
|
|
|
2,071.7
|
|
Proved Developed Non-Producing
|
|
|
184.9
|
|
|
|
143.0
|
|
|
|
117.8
|
|
|
|
100.8
|
|
|
|
88.4
|
|
Proved Undeveloped
|
|
|
870.6
|
|
|
|
602.8
|
|
|
|
444.1
|
|
|
|
341.6
|
|
|
|
271.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
5,611.4
|
|
|
|
4,173.5
|
|
|
|
3,343.7
|
|
|
|
2,806.8
|
|
|
|
2,431.1
|
|
Probable Reserves
|
|
|
1,943.7
|
|
|
|
1,156.3
|
|
|
|
798.7
|
|
|
|
601.8
|
|
|
|
478.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
7,555.1
|
|
|
|
5,329.8
|
|
|
|
4,142.5
|
|
|
|
3,408.6
|
|
|
|
2,909.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C-1
SCHEDULE
D
CONOCOPHILLIPS PROPERTIES RESERVES INFORMATION
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of November 1, 2006
(using constant prices and costs as at October 31, 2006)
CONSTANT
PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
13,188
|
|
|
|
11,897
|
|
|
|
5,326
|
|
|
|
4,957
|
|
|
|
140.6
|
|
|
|
120.7
|
|
Proved Developed Non-Producing
|
|
|
284
|
|
|
|
246
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2.7
|
|
|
|
2.1
|
|
Proved Undeveloped
|
|
|
1,476
|
|
|
|
1,112
|
|
|
|
313
|
|
|
|
263
|
|
|
|
21.1
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
14,948
|
|
|
|
13,255
|
|
|
|
5,639
|
|
|
|
5,220
|
|
|
|
164.4
|
|
|
|
141.9
|
|
Probable Reserves
|
|
|
5,126
|
|
|
|
4,466
|
|
|
|
1,575
|
|
|
|
1,414
|
|
|
|
41.3
|
|
|
|
35.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
20,074
|
|
|
|
17,722
|
|
|
|
7,214
|
|
|
|
6,635
|
|
|
|
205.7
|
|
|
|
177.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS
|
|
|
TOTAL OIL
|
|
|
|
LIQUIDS
|
|
|
EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
2,911
|
|
|
|
2,058
|
|
|
|
44,865
|
|
|
|
39,021
|
|
Proved Developed Non-Producing
|
|
|
51
|
|
|
|
31
|
|
|
|
786
|
|
|
|
628
|
|
Proved Undeveloped
|
|
|
134
|
|
|
|
90
|
|
|
|
5,435
|
|
|
|
4,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
3,096
|
|
|
|
2,179
|
|
|
|
51,086
|
|
|
|
44,299
|
|
Probable Reserves
|
|
|
778
|
|
|
|
542
|
|
|
|
14,365
|
|
|
|
12,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
3,874
|
|
|
|
2,721
|
|
|
|
65,449
|
|
|
|
56,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
(1) Natural gas has been converted to barrels
of oil equivalent on the basis of six mcf of natural gas being
equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
CONSTANT PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES
|
|
|
|
DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
921.6
|
|
|
|
747.5
|
|
|
|
632.1
|
|
|
|
550.3
|
|
|
|
489.3
|
|
Proved Developed Non-Producing
|
|
|
20.3
|
|
|
|
14.4
|
|
|
|
11.0
|
|
|
|
8.8
|
|
|
|
7.4
|
|
Proved Undeveloped
|
|
|
97.3
|
|
|
|
60.0
|
|
|
|
39.2
|
|
|
|
26.4
|
|
|
|
18.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
1,039.2
|
|
|
|
821.8
|
|
|
|
682.3
|
|
|
|
585.5
|
|
|
|
514.7
|
|
Probable Reserves
|
|
|
311.1
|
|
|
|
196.2
|
|
|
|
137.3
|
|
|
|
102.8
|
|
|
|
80.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
1,350.3
|
|
|
|
1,018.0
|
|
|
|
819.6
|
|
|
|
688.4
|
|
|
|
595.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D-1
SCHEDULE
E
PENGROWTH PRO FORMA RESERVES
INFORMATION(1)
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of November 1, 2006
(using constant prices and costs as at October 31, 2006)
CONSTANT PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
77,773
|
|
|
|
66,975
|
|
|
|
14,791
|
|
|
|
13,419
|
|
|
|
670.0
|
|
|
|
535.2
|
|
Proved Developed Non-Producing
|
|
|
709
|
|
|
|
604
|
|
|
|
74
|
|
|
|
63
|
|
|
|
37.1
|
|
|
|
29.0
|
|
Proved Undeveloped
|
|
|
21,213
|
|
|
|
17,216
|
|
|
|
1,903
|
|
|
|
1,599
|
|
|
|
80.4
|
|
|
|
63.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
99,695
|
|
|
|
84,794
|
|
|
|
16,767
|
|
|
|
15,082
|
|
|
|
787.6
|
|
|
|
628.0
|
|
Probable Reserves
|
|
|
32,667
|
|
|
|
27,143
|
|
|
|
4,819
|
|
|
|
4,223
|
|
|
|
241.7
|
|
|
|
190.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
132,362
|
|
|
|
111,937
|
|
|
|
21,587
|
|
|
|
19,305
|
|
|
|
1,029.3
|
|
|
|
818.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS LIQUIDS
|
|
|
TOTAL OIL EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
22,183
|
|
|
|
15,795
|
|
|
|
226,420
|
|
|
|
185,394
|
|
Proved Developed Non-Producing
|
|
|
804
|
|
|
|
555
|
|
|
|
7,780
|
|
|
|
6,062
|
|
Proved Undeveloped
|
|
|
3,000
|
|
|
|
2,110
|
|
|
|
39,509
|
|
|
|
31,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
25,986
|
|
|
|
18,460
|
|
|
|
273,708
|
|
|
|
223,001
|
|
Probable Reserves
|
|
|
7,463
|
|
|
|
5,344
|
|
|
|
85,239
|
|
|
|
68,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
33,449
|
|
|
|
23,803
|
|
|
|
358,944
|
|
|
|
291,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Natural gas has been converted to barrels of oil equivalent on
the basis of six mcf of natural gas being equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
CONSTANT PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES
|
|
|
|
DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
5,477.5
|
|
|
|
4,175.2
|
|
|
|
3,413.9
|
|
|
|
2,914.7
|
|
|
|
2,561.0
|
|
Proved Developed Non-Producing
|
|
|
205.2
|
|
|
|
157.3
|
|
|
|
128.8
|
|
|
|
109.6
|
|
|
|
95.7
|
|
Proved Undeveloped
|
|
|
967.9
|
|
|
|
662.8
|
|
|
|
483.3
|
|
|
|
368
|
|
|
|
289.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
6,650.6
|
|
|
|
4,995.3
|
|
|
|
4,026.0
|
|
|
|
3,392.4
|
|
|
|
2,945.8
|
|
Probable Reserves
|
|
|
2,254.8
|
|
|
|
1,352.5
|
|
|
|
936.0
|
|
|
|
704.6
|
|
|
|
559.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
8,905.4
|
|
|
|
6,347.8
|
|
|
|
4,962.0
|
|
|
|
4,097.0
|
|
|
|
3,505.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Pro forma, assuming completion of the ConocoPhillips Acquisition.
|
E-1
SCHEDULE
F
PENGROWTH UPDATED RESERVES INFORMATION
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS PER GLJS AND SALS EVALUATION
as of November 1, 2006
(using strip prices and costs as at October 31, 2006)
STRIP PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
64,626
|
|
|
|
55,620
|
|
|
|
10,047
|
|
|
|
8,710
|
|
|
|
528.7
|
|
|
|
413.9
|
|
Proved Developed Non-Producing
|
|
|
463
|
|
|
|
395
|
|
|
|
82
|
|
|
|
70
|
|
|
|
34.5
|
|
|
|
27.0
|
|
Proved Undeveloped
|
|
|
19,737
|
|
|
|
16,248
|
|
|
|
1,787
|
|
|
|
1,499
|
|
|
|
59.4
|
|
|
|
44.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
84,827
|
|
|
|
72,263
|
|
|
|
11,917
|
|
|
|
10,279
|
|
|
|
622.6
|
|
|
|
485.5
|
|
Probable Reserves
|
|
|
27,565
|
|
|
|
23,164
|
|
|
|
3,186
|
|
|
|
2,652
|
|
|
|
200.2
|
|
|
|
154.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
112,392
|
|
|
|
95,428
|
|
|
|
15,103
|
|
|
|
12,930
|
|
|
|
822.8
|
|
|
|
640.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS LIQUIDS
|
|
|
TOTAL OIL EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
19,256
|
|
|
|
13,714
|
|
|
|
182,045
|
|
|
|
147,032
|
|
Proved Developed Non-Producing
|
|
|
760
|
|
|
|
531
|
|
|
|
7,055
|
|
|
|
5,487
|
|
Proved Undeveloped
|
|
|
2,865
|
|
|
|
2,019
|
|
|
|
34,283
|
|
|
|
27,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
22,880
|
|
|
|
16,264
|
|
|
|
223,386
|
|
|
|
179,729
|
|
Probable Reserves
|
|
|
6,688
|
|
|
|
4,801
|
|
|
|
70,809
|
|
|
|
56,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
29,569
|
|
|
|
21,065
|
|
|
|
294,196
|
|
|
|
236,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Natural gas has been converted to barrels of oil equivalent on
the basis of six mcf of natural gas being equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
STRIP PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
5,410.1
|
|
|
|
4,011.4
|
|
|
|
3,241.5
|
|
|
|
2,755.1
|
|
|
|
2,417.8
|
|
Proved Developed Non-Producing
|
|
|
203.3
|
|
|
|
155.6
|
|
|
|
128.3
|
|
|
|
110.3
|
|
|
|
97.2
|
|
Proved Undeveloped
|
|
|
1,065.5
|
|
|
|
727.0
|
|
|
|
534.9
|
|
|
|
413.3
|
|
|
|
330.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
6,678.9
|
|
|
|
4,894.0
|
|
|
|
3,904.7
|
|
|
|
3,278.7
|
|
|
|
2,845.6
|
|
Probable Reserves
|
|
|
2,497.3
|
|
|
|
1,402.3
|
|
|
|
943.4
|
|
|
|
703.0
|
|
|
|
557.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
9,176.2
|
|
|
|
6,296.2
|
|
|
|
4,848.1
|
|
|
|
3,981.7
|
|
|
|
3,402.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-1
SCHEDULE
G
CONOCOPHILLIPS
PROPERTIES RESERVES INFORMATION
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS PER GLJS EVALUATION
as
of November 1, 2006
(using strip prices and costs as at October 31, 2006)
STRIP PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
13,405
|
|
|
|
12,095
|
|
|
|
5,940
|
|
|
|
5,551
|
|
|
|
137.8
|
|
|
|
118.1
|
|
Proved Developed Non-Producing
|
|
|
286
|
|
|
|
247
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2.7
|
|
|
|
2.1
|
|
Proved Undeveloped
|
|
|
1,477
|
|
|
|
1,113
|
|
|
|
334
|
|
|
|
284
|
|
|
|
21.0
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
15,168
|
|
|
|
13,455
|
|
|
|
6,273
|
|
|
|
5,834
|
|
|
|
161.5
|
|
|
|
139.2
|
|
Probable Reserves
|
|
|
5,192
|
|
|
|
4,526
|
|
|
|
1,639
|
|
|
|
1,476
|
|
|
|
40.3
|
|
|
|
34.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
20,360
|
|
|
|
17,981
|
|
|
|
7,912
|
|
|
|
7,310
|
|
|
|
201.8
|
|
|
|
174.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OIL
|
|
|
|
NATURAL GAS LIQUIDS
|
|
|
EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
2,901
|
|
|
|
2,050
|
|
|
|
45,214
|
|
|
|
39,372
|
|
Proved Developed Non-Producing
|
|
|
51
|
|
|
|
32
|
|
|
|
787
|
|
|
|
629
|
|
Proved Undeveloped
|
|
|
134
|
|
|
|
90
|
|
|
|
5,448
|
|
|
|
4,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
3,086
|
|
|
|
2,171
|
|
|
|
51,449
|
|
|
|
44,663
|
|
Probable Reserves
|
|
|
774
|
|
|
|
540
|
|
|
|
14,321
|
|
|
|
12,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
3,860
|
|
|
|
2,711
|
|
|
|
65,770
|
|
|
|
56,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Natural gas has been converted to barrels of oil equivalent on
the basis of six mcf of natural gas being equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
STRIP PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES
|
|
|
|
DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
1,103.6
|
|
|
|
900.1
|
|
|
|
765.2
|
|
|
|
669.1
|
|
|
|
597.3
|
|
Proved Developed Non-Producing
|
|
|
24.1
|
|
|
|
16.7
|
|
|
|
12.7
|
|
|
|
10.3
|
|
|
|
8.6
|
|
Proved Undeveloped
|
|
|
115.4
|
|
|
|
71.7
|
|
|
|
48.2
|
|
|
|
34.0
|
|
|
|
24.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
1,243.2
|
|
|
|
988.5
|
|
|
|
826.1
|
|
|
|
713.4
|
|
|
|
630.5
|
|
Probable Reserves
|
|
|
391.5
|
|
|
|
242.6
|
|
|
|
168.6
|
|
|
|
126.1
|
|
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
1,634.6
|
|
|
|
1,231.1
|
|
|
|
994.7
|
|
|
|
839.4
|
|
|
|
729.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G-1
SCHEDULE
H
PENGROWTH PRO FORMA RESERVES
INFORMATION(1)
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS PER GLJS AND SALS EVALUATION
as of November 1, 2006
(using strip prices and costs as at October 31, 2006)
STRIP PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND GAS RESERVES
|
|
|
|
LIGHT AND
|
|
|
HEAVY
|
|
|
NATURAL
|
|
|
|
MEDIUM OIL
|
|
|
OIL
|
|
|
GAS
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(bcf)
|
|
|
(bcf)
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
78,031
|
|
|
|
67,715
|
|
|
|
15,987
|
|
|
|
14,261
|
|
|
|
666.5
|
|
|
|
532.0
|
|
Proved Developed Non-Producing
|
|
|
749
|
|
|
|
642
|
|
|
|
82
|
|
|
|
70
|
|
|
|
37.2
|
|
|
|
29.0
|
|
Proved Undeveloped
|
|
|
21,214
|
|
|
|
17,361
|
|
|
|
2,121
|
|
|
|
1,783
|
|
|
|
80.4
|
|
|
|
63.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
99,995
|
|
|
|
85,718
|
|
|
|
18,190
|
|
|
|
16,113
|
|
|
|
784.1
|
|
|
|
624.8
|
|
Probable Reserves
|
|
|
32,757
|
|
|
|
27,690
|
|
|
|
4,825
|
|
|
|
4,128
|
|
|
|
240.5
|
|
|
|
1189.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
132,752
|
|
|
|
113,409
|
|
|
|
23,015
|
|
|
|
20,240
|
|
|
|
1,024.6
|
|
|
|
814.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS
|
|
|
TOTAL OIL
|
|
|
|
LIQUIDS
|
|
|
EQUIVALENT
BASIS(1)
|
|
|
|
Pengrowth
|
|
|
|
|
|
Pengrowth
|
|
|
|
|
RESERVES CATEGORY
|
|
Interest
|
|
|
Net
|
|
|
Interest
|
|
|
Net
|
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
|
|
(mboe)
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
22,157
|
|
|
|
15,764
|
|
|
|
227,259
|
|
|
|
186,403
|
|
Proved Developed Non-Producing
|
|
|
811
|
|
|
|
563
|
|
|
|
7,842
|
|
|
|
6,116
|
|
Proved Undeveloped
|
|
|
2,999
|
|
|
|
2,109
|
|
|
|
39,731
|
|
|
|
31,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
25,966
|
|
|
|
18,435
|
|
|
|
274,835
|
|
|
|
224,391
|
|
Probable Reserves
|
|
|
7,462
|
|
|
|
5,341
|
|
|
|
85,130
|
|
|
|
68,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
33,429
|
|
|
|
23,776
|
|
|
|
359,966
|
|
|
|
293,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Natural gas has been converted to barrels of oil equivalent on
the basis of six mcf of natural gas being equal to one boe.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUES OF FUTURE NET REVENUE
|
|
|
|
STRIP PRICES AND COSTS
|
|
|
|
BEFORE INCOME TAXES
|
|
|
|
DISCOUNTED AT (%/YEAR)
|
|
RESERVES CATEGORY
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
|
|
20%
|
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
|
($MM)
|
|
Proved Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Producing
|
|
|
6,513.8
|
|
|
|
4,911.5
|
|
|
|
4,006.7
|
|
|
|
3,424.2
|
|
|
|
3,015.1
|
|
Proved Developed Non-Producing
|
|
|
227.4
|
|
|
|
172.3
|
|
|
|
141.1
|
|
|
|
120.5
|
|
|
|
105.8
|
|
Proved Undeveloped
|
|
|
1,180.9
|
|
|
|
798.7
|
|
|
|
583.0
|
|
|
|
447.3
|
|
|
|
355.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Reserves
|
|
|
7,922.0
|
|
|
|
5,882.5
|
|
|
|
4,730.8
|
|
|
|
3,992.1
|
|
|
|
3,476.1
|
|
Probable Reserves
|
|
|
2,888.8
|
|
|
|
1,644.9
|
|
|
|
1,112.0
|
|
|
|
829.1
|
|
|
|
656.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proved Plus Probable Reserves
|
|
|
10,810.8
|
|
|
|
7,527.4
|
|
|
|
5,842.8
|
|
|
|
4,821.2
|
|
|
|
4,132.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
(1) |
Pro forma, assuming completion of the ConocoPhillips Acquisition.
|
H-1
SCHEDULE
I
PRICING ASSUMPTIONS
SUMMARY OF PRICING ASSUMPTIONS RESERVES INFORMATION
as of October 31, 2006
CONSTANT PRICES AND COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL
|
|
|
NATURAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI
|
|
|
Edmonton
|
|
|
Cromer
|
|
|
Hardisty
|
|
|
GAS
|
|
|
NGLx(1)
|
|
|
|
|
|
|
Cushing
|
|
|
Par Price
|
|
|
Medium
|
|
|
Heavy
|
|
|
AECO Gas
|
|
|
|
|
|
|
|
|
Pentanes
|
|
|
EXCHANGE
|
|
YEAR(3)
|
|
Oklahoma
|
|
|
400
API
|
|
|
29.30
API
|
|
|
120
API
|
|
|
Price
|
|
|
Propane
|
|
|
Butane
|
|
|
Plus
|
|
|
RATE(2)
|
|
|
|
($US/bbl)
|
|
|
($Cdn/bbl)
|
|
|
($Cdn/bbl)
|
|
|
($Cdn/bbl)
|
|
|
($Cdn/mmbtu)
|
|
|
($Cdn/bbl)
|
|
|
($Cdn/bbl)
|
|
|
($Cdn/bbl)
|
|
|
($US/Cdn)
|
|
|
2006(4)
|
|
|
58.73
|
|
|
|
61.72
|
|
|
|
49.20
|
|
|
|
25.45
|
|
|
|
7.21
|
|
|
|
43.20
|
|
|
|
52.46
|
|
|
|
62.07
|
|
|
|
0.8907
|
|
Notes:
|
|
(1)
|
FOB Edmonton.
|
|
(2)
|
The exchange rate used to generate the benchmark reference
prices in this table.
|
|
(3)
|
Information provided as at November 1, 2006.
|
|
(4)
|
This forecast represents the constant price forecast used by GLJ.
|
NYMEX
(October 31, 2006) FORWARD STRIP PRICING UNTIL
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIGHT CRUDE OIL
|
|
|
HEAVY
|
|
|
NGLs
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI
|
|
|
Edmonton
|
|
|
CRUDE OIL
|
|
|
AT EDMONTON
|
|
|
|
|
|
|
Exchange
|
|
|
|
|
|
Cushing
|
|
|
Par Price
|
|
|
Heavy
|
|
|
|
|
|
|
|
|
Pentanes
|
|
|
|
|
Year
|
|
Rate
|
|
|
Inflation
|
|
|
Oklahoma
|
|
|
40 API
|
|
|
at Hardisty
|
|
|
Propane
|
|
|
Butane
|
|
|
Plus
|
|
|
Sulphur
|
|
|
|
$US/$Cdn
|
|
|
%
|
|
|
$US/bbl
|
|
|
$Cdn/bbl
|
|
|
$Cdn/bbl
|
|
|
$Cdn/bbl
|
|
|
$Cdn/bbl
|
|
|
$Cdn/bbl
|
|
|
$Cdn/lt
|
|
|
2006
|
|
|
0.8868
|
|
|
|
0.0
|
|
|
|
58.73
|
|
|
|
65.21
|
|
|
|
37.96
|
|
|
|
41.71
|
|
|
|
48.21
|
|
|
|
66.46
|
|
|
|
28.00
|
|
2007
|
|
|
0.9037
|
|
|
|
2.0
|
|
|
|
64.59
|
|
|
|
70.48
|
|
|
|
41.48
|
|
|
|
45.23
|
|
|
|
52.23
|
|
|
|
71.98
|
|
|
|
18.50
|
|
2008
|
|
|
0.9046
|
|
|
|
2.0
|
|
|
|
67.46
|
|
|
|
73.58
|
|
|
|
44.58
|
|
|
|
47.08
|
|
|
|
54.33
|
|
|
|
75.08
|
|
|
|
7.00
|
|
2009
|
|
|
0.9142
|
|
|
|
2.0
|
|
|
|
67.06
|
|
|
|
72.36
|
|
|
|
44.61
|
|
|
|
46.36
|
|
|
|
53.61
|
|
|
|
73.86
|
|
|
|
7.00
|
|
2010
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
65.79
|
|
|
|
70.12
|
|
|
|
43.87
|
|
|
|
44.87
|
|
|
|
51.87
|
|
|
|
71.62
|
|
|
|
8.00
|
|
2011
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
64.58
|
|
|
|
68.81
|
|
|
|
44.06
|
|
|
|
44.06
|
|
|
|
50.81
|
|
|
|
70.31
|
|
|
|
9.50
|
|
Thereafter
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS
|
|
|
|
Exchange
|
|
|
|
|
|
|
|
|
Sable
|
|
|
Alberta Spot
|
|
|
Alberta Spot
|
|
Year
|
|
Rate
|
|
|
Inflation
|
|
|
Henry Hub
|
|
|
Plant-gate
|
|
|
Plant-gate
|
|
|
@AECO-C
|
|
|
|
$US/$Cdn
|
|
|
%
|
|
|
$US mmbtu
|
|
|
$Cdn/mmbtu
|
|
|
$Cdn/mmbtu
|
|
|
$Cdn/mmbtu
|
|
|
2006
|
|
|
0.8868
|
|
|
|
0.0
|
|
|
|
7.53
|
|
|
|
7.59
|
|
|
|
7.31
|
|
|
|
7.52
|
|
2007
|
|
|
0.9037
|
|
|
|
2.0
|
|
|
|
7.86
|
|
|
|
8.58
|
|
|
|
7.82
|
|
|
|
8.04
|
|
2008
|
|
|
0.9046
|
|
|
|
2.0
|
|
|
|
8.08
|
|
|
|
8.09
|
|
|
|
7.72
|
|
|
|
7.94
|
|
2009
|
|
|
0.9142
|
|
|
|
2.0
|
|
|
|
7.75
|
|
|
|
7.52
|
|
|
|
7.41
|
|
|
|
7.62
|
|
2010
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
7.38
|
|
|
|
6.83
|
|
|
|
6.81
|
|
|
|
7.02
|
|
2011
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
6.92
|
|
|
|
6.60
|
|
|
|
6.57
|
|
|
|
6.78
|
|
Thereafter
|
|
|
0.9254
|
|
|
|
2.0
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
|
|
+2%/YEAR
|
|
Note:
|
|
(1) |
The Strip Price forecast has been estimated by GLJ using as a
basis the NYMEX futures strip for light sweet crude oil and
natural gas for the indicated date. The light sweet crude oil
contracts require delivery at Cushing, Oklahoma and the natural
gas contracts require delivery to Henry Hub in Louisiana. GLJ
uses historically derived differentials to estimate the price at
the various points, for the different product types and for the
different crude qualities. These prices are applied to the
various products to calculate the revenue.
|
I-1