As filed with the Securities and Exchange Commission on June 15, 2007
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PENGROWTH ENERGY TRUST
(Exact name of Registrant as specified in its charter)
ALBERTA, CANADA 98-0185056
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
Suite 2900, 240 - 4th Avenue S.W.
Calgary, Alberta, Canada T2P 4H4
(403) 233-0224
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(Address and telephone number of Registrant's
principal executive offices)
CT CORPORATION SYSTEM
111 - 8th Avenue
New York, New York 10011
(212) 894-8940
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(Name, address and telephone number of agent for service)
Copies to:
Brad D. Markel Edwin S. Maynard
Bennett Jones LLP Paul, Weiss, Rifkind,
4500 Bankers Hall East Wharton & Garrison LLP
855 - 2nd Street S.W. 1285 Avenue of the Americas
Calgary, Alberta, Canada T2P 4K7 New York, NY 10019-6064
(403) 298-3100 (212) 373-3000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: |X|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED MAXIMUM PROPOSED
CLASS OF SECURITIES AMOUNT TO AGGREGATE PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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Trust Units 5,000,000 Trust Units U.S.$18.75 U.S. $93,750,000 U.S. $2,878.13
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Based on the average of the high and low prices of the Trust Units of the
Trust on June 12, 2007 on the NYSE, and estimated solely for the purpose of
calculating the amount of the registration fee pursuant to Rule 457 under
the Securities Act.
IF AS A RESULT OF STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR TRANSACTIONS, THE
NUMBER OF SECURITIES PURPORTED TO BE REGISTERED ON THIS REGISTRATION
STATEMENT CHANGES, THE PROVISIONS OF RULE 416 SHALL APPLY TO THIS
REGISTRATION STATEMENT.
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PART I
INFORMATION REQUIRED IN THE PROSPECTUS
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PENGROWTH ENERGY TRUST
5,000,000 Trust Units
DISTRIBUTION REINVESTMENT AND TRUST UNIT PURCHASE PLAN
On July 1, 1992, Pengrowth Energy Trust (hereinafter referred to as "we" or
"us" or the "Trust") established a Distribution Reinvestment and Trust Unit
Purchase Plan (the "Plan"). The purpose of the Plan is to provide holders (the
"Unitholders") of the trust units of the Trust ("Trust Units") with a means to
reinvest distributions declared and payable to them as Unitholders into
additional Trust Units.
The Plan was first amended on January 15, 2003 to encourage greater
participation by providing that reinvested distributions would be converted to
Trust Units at a 5% Discount to the prevailing market price. The Plan was
revised on July 27, 2004 to reflect the reclassification of the Trust Units
existing at that time into class A trust units ("Class A Units") and class B
trust units ("Class B Units"). On July 27, 2006 the Plan was further amended to
reflect the consolidation of the Trust's outstanding Class A Units and Class B
Units into Trust Units. Finally, on June 13 we further amended the Plan to
provide, among other things, for the participation in the Plan by registered
holders of Trust Units resident in the United States. Class A Units that were
not consolidated into Trust Units on July 27, 2006 comprise less than 0.1% of
the presently outstanding Trust Units. Holders of Class A Units are not
eligible to participate in the Plan.
A participant in the Plan may obtain additional Trust Units by reinvesting all
of the cash distributions paid on the Trust Units held by the participant net
of withholding taxes, if any, without paying any brokerage commissions or
service charges. Our distributions are paid on the 15th day of each February,
May, August and November in each year, or, if so directed by the board of
directors of Pengrowth Corporation (the "Corporation"), on the 15th day of each
calendar month (the "Distribution Date").
A participant may also make optional cash payments, which will be invested in
Trust Units on the same basis as provided for in the Plan for distributions.
Participants may invest a maximum of Cdn. $1,000 per month (the "Maximum
Contribution Amount") or, for U.S. Participants, U.S.$900 per month or such
other amount as may be determined by the board of directors of the Corporation
(the "Maximum U.S. Contribution Amount") through such optional cash payments.
The purchase price of Trust Units purchased from treasury: (i) with reinvested
distributions of Trust Units; or (ii) from investing optional cash payments, is
calculated based on the 20 day weighted average trading price for the Trust
Units traded on the Toronto Stock Exchange ("TSX") during the period ending on
the day immediately preceding the Distribution Date, less 5%. Our Trust Units
are listed and trade on the TSX under the symbol "PGF.UN" and on the NYSE under
the symbol "PGH". The simple average of the high and low trading prices for the
Trust Units on the TSX for the five days preceding June 13, 2007 was Cdn.
$19.94. The closing prices for our Trust Units on the TSX and on the NYSE on
June 13, 2007 were Cdn. $19.87 and U.S. $18.72, respectively.
The distributions paid by us are dependent on cash flow and are therefore
subject to fluctuations in the quantity of petroleum and natural gas substances
produced, prices received for that production, hedging contract receipts and
payments, currency exchange rates, taxes, our direct expenses, reclamation fund
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contributions, operating costs, debt service charges and general and
administrative expenses. See "Special Note Regarding Forward-Looking
Statements" in this prospectus. See also the section titled "Risk Factors" in
our annual report on Form 40-F for the fiscal year ended December 31, 2006
filed April 2, 2007.
We cannot anticipate proceeds from the issuance of Trust Units pursuant to the
Plan, which will depend upon the market price of our Trust Units, the extent of
Unitholder participation in the Plan and other factors. We will not pay
underwriting commissions in connection with the Plan but will incur costs of
approximately U.S. $239,953 in connection with this offering and will be
responsible for the ongoing administrative costs associated with the operation
of the Plan.
Neither the United States Securities and Exchange Commission (the "SEC") nor
any state securities commission has approved or disapproved of these Trust
Units or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is June 15, 2007.
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION...........................................5
DOCUMENTS INCORPORATED BY REFERENCE...........................................5
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES...................................6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................6
RISK FACTOR...................................................................8
Risk Related To The Plan.............................................8
THE TRUST.....................................................................9
Introduction.........................................................9
The Trust............................................................9
The Corporation......................................................9
The Trust's Subsidiaries............................................10
The Corporation's Subsidiaries......................................10
The Manager.........................................................11
Trust Unit Consolidation............................................11
Capitalization and Indebtedness.....................................11
USE OF PROCEEDS..............................................................12
THE PLAN.....................................................................12
Purpose of the Plan.................................................12
Participation in the Plan...........................................12
Optional Trust Unit Purchases Pursuant to the Plan..................13
Method of Purchase..................................................14
Purchase Price......................................................14
Fractional Trust Units..............................................14
Administration......................................................14
Participants' Accounts and Reports..................................15
Trust Unit Certificates.............................................15
Commissions and Administrative Costs................................15
Responsibilities of the Trust, the Corporation and the Plan Agent...16
Termination of Participation........................................16
Unitholder Voting...................................................16
Amendments, Suspension or Termination of Plan and Plan Agent........16
Notices.............................................................16
Governing Law.......................................................17
INCOME TAX CONSIDERATIONS RELATING TO THE PLAN...............................17
Canadian Federal Income Tax Considerations..........................17
United States Federal Income Tax Considerations.....................19
DESCRIPTION OF THE TRUST UNITS TO BE REGISTERED..............................31
EXPENSES.....................................................................33
INDEMNIFICATION..............................................................34
LEGAL MATTERS................................................................34
EXPERTS......................................................................34
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WHERE YOU CAN FIND MORE INFORMATION
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 SEC's 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 SEC's
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.
This prospectus is part of a registration statement filed with the SEC on Form
F-3 relating to our Plan, together with all amendments and exhibits, of which
this prospectus is a part, under the Securities Act of 1933 (the "Securities
Act"). This prospectus does not contain all of the information set forth in the
registration statement, certain portions of which have been omitted as
permitted by the rules and regulations of the SEC. For further information
about us and the Trust Units you are encouraged to refer to the registration
statement and the exhibits and schedules which are incorporated by reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC are specifically incorporated by
reference into this prospectus:
1. Our Annual Report on Form 40-F for the fiscal year ended December 31, 2006
filed April 2, 2007;
2. The description of the Trust Units as set forth in the Registrant's
registration statement on Form 8-A/A filed on June 15, 2007, and any
further amendment or report filed for the purposes of updating such
description; and
3. Our Reports on Form 6-K filed on April 5, 2007, May 14, 2007 and May 17,
2007.
In addition, all subsequent annual reports filed on Form 40-F with the SEC
prior to the termination of this offering are incorporated by reference into
this prospectus. Also, we may incorporate by reference our future reports on
Form 6-K subsequent to the date of this prospectus and prior to the termination
of this offering by stating in those Forms that they are being incorporated by
reference into this prospectus.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or therein or in any other later filed
document which also is incorporated by reference into this prospectus modifies
or supersedes that statement. Any such statement so modified shall not be
deemed, except as so modified, to constitute a part of this prospectus. Any
such statement so superseded shall be deemed not to constitute a part of this
prospectus.
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Any person receiving a copy of this prospectus, including any beneficial owner,
may obtain without charge, upon written or oral request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents. Requests should be directed to our principal executive offices,
Suite 2900, 240 - 4th Avenue S.W., Calgary, Alberta, Canada T2P 4H4, telephone
number: (800) 223-4122.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
The Trust is a trust formed under, and governed by, the laws of the Province of
Alberta, Canada. Most of the directors and officers of the Corporation, which
is the administrator of the Trust, and most of the experts named in this
prospectus, are residents of Canada or otherwise reside outside the United
States, and all or a substantial portion of their assets and our assets, are
located outside the United States. We have appointed an agent for service of
process in the United States, but it may be difficult for Unitholders who
reside in the United States to effect service within the United States upon
those directors, officers and experts who are not residents of the United
States. It may also be difficult for Unitholders who reside in the United
States to realize in the United States upon judgments of courts of the United
States predicated upon our civil liability and the civil liability of the
directors and officers of the Corporation and experts under the United States
federal securities laws. We have been advised by our Canadian counsel, Bennett
Jones LLP, that a judgment of a United States court predicated solely upon
civil liability under United States federal securities laws would probably be
enforceable in Canada if the United States court in which the judgment was
obtained has a basis for jurisdiction in the matter that would be recognized by
a Canadian court for the same purposes. We have also been advised by Bennett
Jones LLP, however, that there is substantial doubt whether an action could be
brought in Canada in the first instance on the basis of liability predicated
solely upon United States federal securities laws.
We have appointed CT Corporation System, located at 111- 8th Ave, New York, New
York- 10011, as our agent for service of process in the United States in
connection with any investigation or administrative proceeding conducted by the
SEC, and any civil suit or action brought against or involving us in a United
States court arising out of or related to or concerning the offering of Trust
Units under this prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
securities laws, including the "safe harbor" provisions of Canadian securities
legislation and the United States Private Securities Litigation Reform Act of
1995. Forward-looking information is often, but not always, identified by the
use of words such as "anticipate", "believe", "expect", "plan", "intend",
"forecast", "target", "project", "guidance", "may", "will", "should", "could",
"estimate", "predict" or similar words suggesting future outcomes or language
suggesting an outlook. Forward-looking statements in this prospectus include,
but are not limited to, statements with respect to: benefits and synergies
resulting from the Corporation's corporate and asset acquisitions during 2006,
business strategy and strengths, goals, focus and the effects thereof,
acquisition criteria, capital expenditures, reserves, reserve life indices,
estimated production, production additions from the Corporation's 2007
development program, the impact on production of divestitures in 2007,
remaining producing reserves lives, operating expenses, net present values of
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future net revenue from reserves, commodity prices and costs, exchange rates,
the impact of contracts for commodities, development plans and programs, tax
horizons, future income taxes, taxability of distributions, the impact of
proposed changes to Canadian tax legislation or U.S. tax legislation,
abandonment and reclamation costs, government royalty rates and expiring
acreage. Statements relating to "reserves" are deemed to be forward-looking
statements, as they involve the implied assessment, based on certain estimates
and assumptions that the reserves described exist in the quantities predicted
or estimated and can profitably be produced in the future.
Forward-looking statements and information are based on the Corporation's
current beliefs as well as assumptions made by, and information currently
available to, the Corporation concerning anticipated financial performance,
business prospects, strategies, regulatory developments, future oil and natural
gas commodity prices and differentials between light, medium and heavy oil
prices, future oil and natural gas production levels, future exchange rates,
the proceeds of anticipated divestitures, the amount of future cash
distributions paid by the Corporation, the cost of expanding our property
holdings, our ability to obtain equipment in a timely manner to carry out
development activities, our ability to market our oil and gas successfully to
current and new customers, the impact of increasing competition, our ability to
obtain financing on acceptable terms, and our ability to add production and
reserves through our development and exploration activities. Although
management considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect.
By their very nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and risks that predictions,
forecasts, projections and other forward-looking statements will not be
achieved. We caution readers not to place undue reliance on these statements as
a number of important factors could cause the actual results to differ
materially from the beliefs, plans, objectives, expectations and anticipations,
estimates and intentions expressed in such forward-looking statements. These
factors include, but are not limited to: the volatility of oil and gas prices;
production and development costs and capital expenditures; the imprecision of
reserve estimates and estimates of recoverable quantities of oil, natural gas
and liquids; the Corporation's ability to replace and expand oil and gas
reserves; environmental claims and liabilities; incorrect assessments of value
when making acquisitions; increases in debt service charges; the loss of key
personnel; the marketability of production; defaults by third party operators;
unforeseen title defects; fluctuations in foreign currency and exchange rates;
inadequate insurance coverage; compliance with environmental laws and
regulations; changes in tax laws; the failure to qualify as a mutual fund
trust; and the Corporation's ability to access external sources of debt and
equity capital. Further information regarding these factors may be found in
financial statements as at and for the financial year ended December 31, 2007
and the related management's discussion and analysis in the Corporation's
annual information form for the year ended December 31, 2007 and in our most
recent management information circular, quarterly reports, material change
reports and news releases. Copies of the Corporation's Canadian public filings
are available on SEDAR at www.sedar.com. The Corporation's U.S. public filings,
including the Corporation's most recent annual report on Form 40-F as
supplemented by its filings of Form 6-K, are available at www.sec.com and are
incorporated by reference in this prospectus.
We caution that the foregoing list of factors that may affect future results is
not exhaustive. When relying on our forward-looking statements to make
decisions with respect to the Corporation and the Trust, investors and others
should carefully consider the foregoing factors and other uncertainties and
7
potential events. Furthermore, the forward-looking statements contained in this
prospectus are made as of the date of this prospectus and neither the
Corporation nor the Trust undertakes any obligation to up-date 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
law. The forward-looking statements contained in this prospectus are expressly
qualified by this cautionary statement.
RISK FACTORS
Before you decide to participate in the Plan and invest in our Trust Units, you
should be aware of certain material risks in making such an investment. Before
you decide to participate in the Plan and purchase Trust Units, you should
consider carefully such risks together with all risk factors and information
included or incorporated by reference in this prospectus, including the risk
factors set forth in the section titled "Risk Factors" in our annual report on
Form 40-F for the fiscal year ended December 31, 2006 filed April 2, 2007,
which has been incorporated by reference into this prospectus. In addition, you
should consult your own financial and legal advisors before making an
investment.
RISKS RELATED TO THE PLAN
You will not know the price of the Trust Units you are purchasing under the
Plan at the time you authorize the investment or elect to have your dividends
reinvested. The price of our Trust Units may fluctuate between the time you
decide to purchase Trust Units under the Plan and the time of actual purchase.
In addition, during this time period, you may become aware of additional
information that might affect your investment decision.
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THE TRUST
INTRODUCTION
The Trust is an oil and gas royalty trust that was created under the laws of
the Province of Alberta, Canada on December 2, 1988. The purpose of the Trust
is to purchase and hold royalty units ("Royalty Units") and other securities
issued by the Corporation, its majority owned subsidiary, as well as other
investments and to issue Trust Units to members of the public. The Corporation
directly and indirectly acquires, owns and manages working interests and
royalty interests in oil and natural gas properties. The Trust and the
Corporation are managed by Pengrowth Management Limited (the "Manager").
THE TRUST
The Trust is governed by the Trust's amended and restated trust indenture dated
June 11, 2007 between the Corporation and Computershare, as the trustee (the
"Trust Indenture"). Under the Trust Indenture, the Trust has issued Trust Units
to Unitholders who are the beneficiaries of the Trust. Each Trust Unit
represents a fractional undivided beneficial interest in the Trust. Our
Unitholders are entitled to receive monthly distributions in respect of the
royalty ("Royalty") the Corporation pays to the holders of the Royalty Units it
has issued, and in respect of investments that are held directly by us.
The Trust presently holds 90.9% of the outstanding common shares in the capital
of the Corporation ("Common Shares") and 100% of the Royalty Units. In
addition, the Trust holds other permitted investments, including oil and gas
processing facilities and cash. The Trust's share of Royalty income, together
with any lease, interest and other income of the Trust, less general and
administrative expenses, management fees, debt repayment, taxes and other
expenses (provided that there is no duplication of expenses already deducted
from Royalty income), forms the distributable cash of the Trust.
THE CORPORATION
The Corporation was created under the laws of the Province of Alberta, Canada
on December 30, 1987. The name of the Corporation was changed from "Pengrowth
Gas Corporation" to "Pengrowth Corporation" in 1998. The Corporation has 1,100
Common Shares outstanding, 1,000 of which are owned by the Trust and 100 of
which are owned by the Manager.
The Corporation acquires, owns and operates working interests and royalty
interests in oil and natural gas properties directly and indirectly through
subsidiary corporations and partnerships. The Corporation has issued Royalty
Units which entitle the holders thereof to receive a 99% share of the Royalty
income related to the oil and natural gas interests of the Corporation.
The authorized capital of the Corporation includes exchangeable shares which
will have economic and voting rights substantially equivalent to the Trust
Units and which will be exchangeable, on certain conditions, for Trust Units.
Holders of exchangeable shares will not receive dividends or distributions from
the Trust, but will receive additional exchangeable shares in lieu of
distributions. These additional exchangeable shares would be distributed by way
of a stock split. To facilitate voting rights for the exchangeable shares, a
9
special voting unit of the Trust has been authorized which will be entitled at
any meeting of Unitholders to a number of votes equal to the number of
outstanding exchangeable shares (not including exchangeable shares held by the
Trust or its subsidiaries). There are presently no issued or outstanding
exchangeable shares.
THE TRUST'S SUBSIDIARIES
In addition to its interest in the Corporation, the Trust owns all of the
issued and outstanding shares of Esprit Exploration Ltd. The Trust receives
interest on the principal amount of Esprit Exploration Ltd.'s unsecured,
subordinated promissory notes and payments from the net profit interest granted
to the Trust by Esprit Exploration Ltd. The Corporation, Esprit Energy Trust
and Esprit Exploration Ltd. and all its subsidiaries entered into an agency
agreement dated October 2, 2006 whereby the Corporation would provide certain
services to Esprit Energy Trust and Esprit Exploration Ltd. and all of its
subsidiaries. Services generally include, but are not limited to, the provision
of all operating, financial, strategic, legal, regulatory, human resource,
technology, record keeping, record management and general and administrative
services. Esprit Exploration Ltd. was acquired in connection with the strategic
business combination with Esprit Energy Trust on October 2, 2006. Esprit
Exploration Ltd. holds 100% of the issued and outstanding shares of Canadian 88
Energy Resources Corporation. Each of Esprit Exploration Ltd. and Canadian 88
Energy Resources Corporation are created under the laws of the Province of
Alberta, Canada.
THE CORPORATION'S SUBSIDIARIES
The Corporation has a number of subsidiaries and partnership interests arising
from the structure of acquisitions completed by the Trust and the Corporation.
The Corporation owns all of the issued and outstanding shares of Stellar
Resources Limited, which holds a 0.01% partnership interest in each of
Pengrowth Heavy Oil Partnership, Pengrowth Energy Partnership and Crispin
Energy Partnership and acts as the general partner or managing partner, as the
case may be, of each such partnership. The remaining 99.99% partnership
interests in each of the partnerships are held by the Corporation. The
Pengrowth Heavy Oil Partnership and Pengrowth Energy Partnership were acquired
in connection with the acquisition of certain properties from Murphy Oil
Calgary Ltd. in 2004. Crispin Energy Partnership was acquired during 2005 in
connection with the acquisition of Crispin Energy Inc. Each of Stellar
Resources Limited, Pengrowth Heavy Oil Partnership, Pengrowth Energy
Partnership and Crispin Energy Partnership are created under the laws of the
Province of Alberta, Canada.
The Corporation owns all of the issued and outstanding shares of 1268071
Alberta Ltd., which in turn holds 100% of the issued and outstanding shares of
3174792 Nova Scotia Company. 3174792 Nova Scotia Company holds a 99.9%
partnership interest in the Carson Creek Operating Partnership and all of the
issued and outstanding shares of 3174793 Nova Scotia Company. 3174793 Nova
Scotia Company holds the remaining 0.1% interest in the Carson Creek Operating
Partnership and is the managing partner of such partnership. 3174792 Nova
Scotia Company, 3174793 Nova Scotia Company and the Carson Creek Operating
Partnership were acquired in connection with the acquisition of certain
properties from ExxonMobil Canada Energy on September 28, 2006. Each of 1268071
Alberta Ltd. and Carson Creek Operating Partnership are created under the laws
of the Province of Alberta. Each of 3174793 Nova Scotia Company and 3174792
Nova Scotia Company were created under the laws of the Province of Nova Scotia,
Canada.
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The Corporation owns all of the issued and outstanding shares of 1275708
Alberta Ltd., which in turn holds 100% of the issued and outstanding shares of
1265707 Alberta ULC, 1265706 Alberta ULC and 1265702 Alberta ULC. 1265707
Alberta ULC holds a 99.99% partnership interest in 706-707 Partnership. 1265706
Alberta ULC holds the remaining 0.01% partnership interest in, and is the
managing partner of, 706-707 Partnership. 1265702 Alberta ULC holds 100% of the
issued and outstanding shares of 1301253 Alberta Ltd. and a 99.99% partnership
interest in, and is the managing partner of, 702 Partnership. 1301253 Alberta
Ltd. holds the remaining 0.01% partnership interest in the 702 Partnership.
Each of 1265702 Alberta ULC, 1265706 Alberta ULC, 1265707 Alberta ULC and
706-707 Partnership were acquired in connection with the acquisition of certain
properties from ConocoPhillips Canada on January 22, 2007.
THE MANAGER
The Manager was created under the laws of the Province of Alberta, Canada on
December 16, 1982. The principal business of the Manager is that of a specialty
fund manager. The Manager currently provides advisory, management, and
administrative services to the Trust and the Corporation. The Manager is also
responsible for the acquisition, development, operation and disposition of oil
and natural gas properties and other related assets on behalf of the
Corporation.
James S. Kinnear, President and a director of the Manager and Chairman,
President, Chief Executive Officer and a director of the Corporation, owns,
directly or indirectly, all of the issued and outstanding voting securities of
the Manager.
TRUST UNIT CONSOLIDATION
On July 27, 2006, the Trust completed the consolidation (the "Consolidation")
of its then outstanding Class A Units, Class B Units and trust units remaining
in the form in existence prior to the reclassification which occurred on July
27, 2004 ("Prior Trust Units") into a single class of Trust Units. The
Consolidation was effected through amendments to the Trust Indenture. The
principal amendments to the Trust Indenture were as follows: (a) the residency
restrictions attached to the Class B Units were removed; (b) the Class B Units
were renamed as Trust Units; (c) the Prior Trust Units were converted to Trust
Units; and (d) the Class A Units were converted to Trust Units, other than the
Class A Units for which an election and declaration of Canadian residency was
provided by the holder thereof. Class A Units for which an election and
declaration of Canadian residency was provided remain outstanding but the terms
thereof have been amended to prohibit the transfer of such Class A Units. Such
outstanding Class A Units may be converted to Trust Units or redeemed for cash,
subject to the terms of the Trust Indenture, at any time and at the discretion
of the holder thereof. As a result, the Class A Units were de-listed from the
TSX, the renamed Class B Units remained listed and posted for trading on the
TSX as Trust Units with a new symbol "PGF.UN", and the Trust Units were
substitutionally listed in place of the Class A Units on the NYSE under the
symbol "PGH".
CAPITALIZATION AND INDEBTEDNESS
The Trust Units are listed on the TSX and the NYSE, and our market
capitalization as of May 31, 2007 was approximately Cdn. $4,885,770,000.
Our total indebtedness as of May 31, 2007 was approximately Cdn.
$1,507,561,000.
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USE OF PROCEEDS
We have no basis for estimating precisely either the number of Trust Units that
may be sold under the Plan or the prices at which such Trust Units may be
issued or acquired. The amount of the proceeds that we may receive will depend
on the number of participants in the Plan, the amount of the monthly
distributions that we pay and the amount invested by participants in additional
Trust Units through the optional cash purchase component of the Plan (see "The
Plan" below). We do not expect the amount of proceeds that we receive to be
material. The net proceeds from the sale of the Trust Units will be principally
used for general corporate purposes.
THE PLAN
PURPOSE OF THE PLAN
The purpose of the Plan is to provide Unitholders with a means to: (i) reinvest
distributions declared and payable to them as Unitholders, net of withholding
taxes, if any, into additional Trust Units without paying any brokerage
commissions or service charges and at a 5% Discount to the average market
price; and (ii) invest optional cash payments by purchasing additional Trust
Units without paying any brokerage commissions or service charges at a 5%
Discount to the average market price.
Distributions are paid to the Unitholders of record ten business days prior to
the Distribution Date or such other dates as the board of directors of the
Corporation may determine (the "Record Date").
We seek to provide a sustainable and predictable stream of distributions;
however the distributions paid by us are dependent on cash flow and are
therefore subject to fluctuations in the quantity of petroleum and natural gas
substances produced, prices received for that production, hedging contract
receipts and payments, currency exchange rates, royalties, taxes, our direct
expenses, reclamation fund contributions, operating costs, debt service charges
and general and administrative expenses. Distributions are set at levels
commensurate with cash flow expectations and internal cash requirements.
PARTICIPATION IN THE PLAN
You are eligible to participate in the Plan if you are a registered or
beneficial holder of at least one Trust Unit, resident in Canada or the United
States and meet the requirements outlined below.
Registered Unitholders are eligible to enroll in the Plan, and may do so by
completing a participation form and sending it to Computershare Trust Company
of Canada (the "Plan Agent") at the address set out in "Notices" below.
Beneficial Unitholders whose Trust Units are not registered in their own names
may participate in this Plan by either: (a) having their Trust Units
transferred into their own names; or (b) by instructing their broker, trust
company, bank or other nominee to participate in the Plan on their behalf while
maintaining the Trust Units in their nominee's account. It is not necessary for
Beneficial Unitholders to remove their Trust Units from their account with a
12
broker or other nominee to enroll in this Plan. You may obtain a participation
form at any time by either providing a written request to the Plan Agent or by
visiting our web site at www.pengrowth.com. If you are a registered Unitholder,
once you have enrolled in the Plan, you will remain enrolled until you
discontinue participation or until we terminate the Plan. See "Amendments,
Suspension or Termination of Plan and Plan Agent" below. Please note that not
all nominees will allow, nor is any nominee required to allow, your
participation in the Plan. If you wish to participate and your nominee does not
allow it, it is your responsibility to either transfer your Trust Units to a
different nominee allowing participation or into your own name and enroll
directly.
Only residents of Canada and the United States are currently allowed to
participate in the Plan. Unitholders resident in other jurisdictions shall be
allowed to participate in the Plan only after we determine that participation
should be made available to those Unitholders taking into account the necessary
steps to comply with the laws relating to the offering and the sale of Trust
Units in the jurisdictions of residence of those Unitholders.
If the Trust Units are registered in more than one name, all registered
Unitholders must sign the participation form. In addition, if your holdings are
registered in different names (e.g. full name on some Trust Unit certificates
and initials and surname on other Trust Unit certificates), a separate
participation form must be completed for each different registration name. If
distributions from all Trust Unit holdings are to be reinvested under one
account, the registration names must be identical.
Any Trust Units acquired outside of the Plan which are not registered in
exactly the same name or manner as Trust Units enrolled in the Plan will not be
automatically enrolled in the Plan. If you purchase additional Trust Units
outside of the Plan, you are advised to contact the Plan Agent to ensure that
all Trust Units you own are enrolled in the Plan.
Your participation in the Plan in respect of the reinvestment of cash
distributions will commence as of the Record Date for any given Distribution
Date following receipt by the Plan Agent of a duly completed participation
form, provided that, the Plan Agent received the form no later than five
business days immediately preceding the Record Date.
If you sell or transfer Trust Units that were previously registered in your
name, the reinvestment of distributions will cease in respect of the Trust
Units that have been sold or transferred. Participation in the Plan will be
terminated upon receipt by the Plan Agent of evidence satisfactory to the Plan
Agent and the Manager of the death of a participant. In such case, a
certificate for the whole Trust Units in the participant's account will be
issued in the name of the estate of the deceased participant along with a
cheque representing payment for any fraction of a Trust Unit in the account and
the return of any uninvested optional cash payments to the estate of the
deceased participant. Requests for issuance of a certificate and/or a payment
for a fractional Trust Unit in the name of an estate must be accompanied by
appropriate documentation.
OPTIONAL TRUST UNIT PURCHASES PURSUANT TO THE PLAN
Additionally, participants are eligible to make cash investments through
optional cash payments which will be invested in Trust Units by the Plan Agent
on the same basis as provided in the Plan for distributions. Participants may
invest up to the Maximum Contribution Amount or the Maximum U.S. Contribution
Amount, as applicable, through such optional cash payments.
13
If you are a registered owner of Trust Units, and wish to invest through
optional cash payments, the Plan Agent should receive the participation form no
later than 5:00 p.m. (E.S.T.) on or before the Distribution Date to which such
distribution relates.
METHOD OF PURCHASE
Under the terms of the Plan, you may direct the Plan Agent to reinvest all cash
distributions, net of withholding taxes, if any, on Trust Units registered or
held in your name to purchase new Trust Units. Cash distributions payable on
Trust Units registered for a participant in the Plan, after deduction of any
applicable withholding tax, will be paid to the Plan Agent and applied
automatically by the Plan Agent on each Distribution Date to the purchase of
Trust Units for that participant. Cash investments will be similarly applied by
the Plan Agent towards purchases of Trusts Units for that participant. The Plan
Agent will credit the additional Trust Units to the participant's or its
nominee's account.
PURCHASE PRICE
The Plan Agent shall purchase Trust Units from treasury at a purchase price per
Trust Unit equal to the weighted average closing price of all Trust Units
traded on the TSX for each of the 20 days immediately preceding the applicable
Distribution Date, less 5%.
FRACTIONAL TRUST UNITS
A participant's pro rata entitlement to Trust Units purchased pursuant to the
Plan may result in the participant holding a fraction of a Trust Unit. The Plan
Agent will pay cash adjustment for any such fractional Trust Unit upon the
withdrawal or termination by the participant of his or her participation in the
Plan or upon termination of the Plan.
ADMINISTRATION
The Trust has entered into an agreement dated June 15, 2007 with the Plan
Agent. The Plan Agent will administer the Plan for the participants. Its
responsibilities include:
o effecting participation in the Plan by participants upon receipt of a duly
completed participation form;
o maintaining an account for each participating Unitholder;
o receiving eligible funds;
o purchasing and crediting the Trust Units accumulated under the Plan to
each participant's account;
o sending statements of accounts to the participants approximately three
weeks after each investment; and
o other duties required by the Plan or necessary or desirable to fulfill the
aims of the Plan.
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PARTICIPANTS' ACCOUNTS AND REPORTS
The Plan Agent will maintain an account for each participating registered
Unitholder in this Plan. A statement of account will be mailed by the Plan
Agent to each participating registered Unitholder approximately three weeks
after each investment, whether monthly or quarterly. This statement will set
out the amount of the cash distributions, net of any withholding tax, paid on
the participant's Trust Units for the relevant period, the total amount of any
optional cash payments received from this participant during the period, the
number of additional Trust Units purchased through this Plan for the period,
the dates of these purchases, the applicable purchase price per Trust Unit and
the updated total number of Trust Units being held for the participant in this
Plan. These statements are a participant's continuing record of the cost of
purchases and should be kept for tax purposes. In addition, each participant
will receive the appropriate information annually for reporting distributions
for tax purposes.
FEDERAL ANTI-TERRORISM AND ANTI-MONEY LAUNDERING LEGISLATION
Federal anti-terrorism and anti-money laundering legislation requires that
participants wishing to make optional cash payments provide certain personal
information. If an optional cash payment is being made, participants will be
required to complete the Optional Cash Purchase - Participant Declaration Form
and submit to the Plan Agent with their completed Enrollment and Authorization
Form.
TRUST UNIT CERTIFICATES
Generally, certificates for new Trust Units purchased through the Plan will be
held for participants and reported on the statement of account. This service
protects against loss, theft or destruction of Trust Unit certificates.
However, participants who require a Trust Unit certificate but who do not wish
to terminate participation in the Plan may obtain a certificate for any number
of whole Trust Units held in their account by written request to the Plan
Agent. A certificate will not be issued for a fraction of a Trust Unit.
Plan accounts are maintained in the names in which certificates were registered
with the Trust at the time the participant enrolled in the Plan. Consequently,
certificates for whole Trust Units withdrawn from the Plan will be registered
in exactly the same manner when issued.
Trust Units being held for a participant in the Plan may not be pledged, sold
or otherwise disposed of by a participant. The participant who wishes to do so
must submit a withdrawal request with the Plan Agent. If the withdrawal request
form is not received by the Plan Agent at least five business days before a
Record Date, it will not be processed until after the next investment has been
completed. A withdrawal request form may be obtained from the Plan Agent at the
address provided under "Notices" below. Certificates will generally be issued
to a participant within three weeks of receipt by the Plan Agent of the
withdrawal request. Certificates will not be issued for fractions of a Trust
Unit. Please note that cash distributions on the certificated Trust Units will,
until such Trust Units are sold or otherwise transferred, continue to be
reinvested under this Plan, as will cash distributions on any Trust Units
remaining in the participant's account.
COMMISSIONS AND ADMINISTRATIVE COSTS
There is no charge to participants for reinvesting distributions or for
investing optional cash payments pursuant to this Plan. The Plan Agent's fees
for reinvesting distributions and for investing optional cash payments will be
paid by the Trust. No brokerage charges will be incurred with respect to the
issuance of Trust Units from treasury for reinvesting distributions or for
15
investing optional cash payments. However, Unitholders who enroll in this Plan
through a broker, trust company, bank or other nominee may be subject to fees
in accordance with their agreement with their nominee.
RESPONSIBILITIES OF THE TRUST, THE CORPORATION AND THE PLAN AGENT
Neither we, the Corporation nor the Plan Agent shall be liable for any act done
in good faith or for any good faith omission to act. Participants should
recognize that neither we, the Corporation nor the Plan Agent can assure a gain
or protect against loss as a result of their holding Trust Units.
TERMINATION OF PARTICIPATION
Plan participants may, after electing to participate in the Plan, terminate
their participation in the Plan, in the case of registered Unitholders, by
providing written termination notice to the Plan Agent at least five business
days immediately preceding the Record Date for the next distribution. If the
termination form is not received by the Plan Agent at least five business days
immediately preceding the Record Date to which such distribution relates, your
participation in the Plan will continue in the usual manner and the termination
will be effective for the next distribution.
Upon termination of participation in the Plan, the Plan Agent will as soon as
practicable (and in any event within three weeks of receipt of the termination
notice or within three weeks after the next Distribution Date) settle the
participant's account by transferring the participant's Trust Units to or to
the order of such participant and, if applicable, issue a cheque representing a
cash adjustment for fractional Trust Units.
UNITHOLDER VOTING
For any meeting of Unitholders, you will receive proxy materials in order to
vote all Trust Units held for your account. Your Trust Units will be voted as
you direct or you may vote by proxy or in person at the meeting of Unitholders.
A fractional Trust Unit does not carry the right to vote.
AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN AND PLAN AGENT
The Trust reserves the right to amend, suspend or terminate this Plan at any
time, but such action shall have no retroactive effect which would prejudice
the interests of the participants. Without limiting the generality of the
foregoing, the Trust may suspend or terminate this Plan with respect to the
residents of any jurisdiction in which compliance with applicable securities
laws would be, in the sole judgment of the Manager of the Trust, impracticable
or unduly expensive. Any amendment to this Plan must be pre-cleared by the TSX.
Participants will be sent written notice of any such amendment, suspension or
termination that affects them. If this Plan is terminated by the Trust,
participants will receive a certificate registered in their name for whole
Trust Units being held for them, a cheque in payment for any fraction of a
Trust Unit and the return of any uninvested optional cash payments.
NOTICES
All notices required to be given to participants will be mailed to them at the
address shown on the records of the Plan Agent.
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Written communications to the Plan Agent should be addressed to:
Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, Ontario M5J 2Y1
Canada
Attention: Dividend Reinvestment Department
Toll Free: 1-800-564-6253
Written communications to us should be addressed to:
Pengrowth Energy Trust
c/o Pengrowth Corporation
Suite 2900, 240 - 4th Avenue S.W.
Calgary, Alberta, Canada T2P 4H4
Attention: Investor Relations
Facsimile: 403-294-0051
GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein.
INCOME TAX CONSIDERATIONS RELATING TO THE PLAN
The following summary of tax consequences is of a general nature only and is
not intended to be legal or tax advice to any particular participant. It is the
responsibility of participants in the Plan to consult their own tax advisors
with respect to the tax consequences of participation in the Plan in their
respective country of residence.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax
considerations generally applicable to a participant in the Plan who, for the
purposes of the Income Tax Act (Canada) (the "Tax Act") and any applicable tax
treaty, and at all relevant times, is not resident or deemed to be resident in
Canada, does not use or hold (and is not deemed under the Tax Act to use or
hold) Trust Units in, or in the course of, carrying on a business in Canada,
and is not an insurer who carries on an insurance business in Canada and
elsewhere (a "Non-Resident Unitholder").
This summary is based upon the current provisions of the Tax Act and the
regulations thereunder (the "Regulations"), the current provisions of the
Canada-United States Tax Convention, 1980 (the "Canada-U.S. Tax Treaty") and
our understanding of the current published administrative and assessing
practices of the Canada Revenue Agency. This summary also takes into account
all specific proposals to amend the Tax Act and the Regulations publicly
announced by or on behalf of the Minister of Finance (Canada) prior to the date
hereof (the "Proposed Amendments"). This summary does not otherwise take into
account or anticipate any changes in law, whether by judicial, governmental or
legislative action, or in administrative practice, nor does it take into
17
account provincial or territorial laws of Canada or the tax laws of any foreign
country. No assurances can be given that the Proposed Amendments will be
enacted as proposed, or at all, or that legislative, judicial or administrative
changes will not modify or change the statements expressed herein after the
date of the Plan.
On October 31, 2006, the federal Minister of Finance ("Finance") announced new
proposals (the "October 31 Proposals") that, if enacted, would change the
manner in which certain flow-through entities, referred to as "specified
investment flow-through" entities or "SIFTs", and the distributions from such
entities are taxed. In their current form, the October 31 Proposals will not
apply to SIFTs that were publicly traded on October 31, 2006 ("Grandfathered
SIFTs") until January 1, 2011. However, the October 31 Proposals indicate that
any "undue expansion" of a Grandfathered SIFT between October 31, 2006 and
January 1, 2011 (the "Interim Period"), may cause the application of the
October 31 Proposals to the Grandfathered SIFT to occur before January 1, 2011.
Following the October 31, 2006 announcement, Finance issued a press release on
December 15, 2006 wherein it provided guidelines (the "Normal Growth
Guidelines") as to what would be considered "normal growth" as opposed to
"undue expansion" of a SIFT trust. On December 21, 2006, Finance also released
draft legislation to implement the October 31 Proposals (the "Draft
Legislation") and invited commentary on the technical aspects of the Draft
Legislation prior to January 31, 2007. On March 19, 2007, Finance introduced
Bill C-52 into the Canadian House of Commons, which incorporates the October 31
Proposals. Bill C-52 has received third and final reading in the House of
Commons but is not yet law.
Provided that the Trust is not considered to have undergone an "undue
expansion" during the Interim Period, as set out in the Normal Growth
Guidelines, Bill C-52, if enacted in its current form, will change the manner
in which the Trust and its distributions are taxed beginning January 1, 2011.
More specifically, the Trust will be subject to entity level taxation, which
will reduce the amount of cash available for distribution to the Unitholders.
Based on the proposed rate of entity level taxation, the tax rate on certain
income distributed by the Trust to its Unitholders would approximate the tax
rate applicable to a taxable Canadian corporation. Based on information
released by Finance in conjunction with the October 31 Proposals, the proposed
tax rate in 2011 will be 31.5% which is comprised of an 18.5% federal tax and a
13% tax rate on account of provincial tax. It is assumed, for the purposes of
this summary, that the Trust will not be subject to the October 31 Proposals
until January 1, 2011.
Under the existing provisions of the Tax Act, any distribution of income by the
Trust 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 Unitholder's jurisdiction of
residence. A Non-Resident Unitholder resident in the United States who is
entitled to claim the benefit of the Canada-U.S. Tax Treaty, will generally be
entitled to have the rate of withholding reduced to 15% of the amount of any
income distributed.
Pursuant to the October 31 Proposals, amounts in respect of the Trust's income
payable to Non-Resident Unitholders that are not deductible to the Trust 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 Unitholder's jurisdiction of residence. A Non-Resident
18
Unitholder resident in the United States who is entitled to claim the benefit
of the Canada-U.S. Tax Treaty 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 the Trust, it is expected that the
imposition of tax at the Trust 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.
It is not certain whether the amount by which the fair market value of the
Trust Units received by a Non-Resident Unitholder on a reinvestment of cash
distributions pursuant to the Plan exceeds the amount of the cash reinvested
(that is, the 5% discount) is subject to this 15% withholding tax. In the
event the Trust determines that it is, the Trust will withhold such tax and
remit it to the Canadian government.
As a consequence of these withholding taxes, the amount that may be reinvested
in the Plan by a Non-Resident Unitholder, and the number of Trust Units
received by a Non-Resident Unitholder on a reinvestment of cash distributions,
will be reduced by the amount of the taxes withheld. It is also expected that
the amount of cash distributions available to reinvest in Trust Units will be
reduced by the 31.5% entity level tax applicable to the Trust.
Generally, subject to the comments in the next paragraph with respect to an in
specie redemption of Trust Units, no Canadian taxes will be payable by a
Non-Resident Unitholder in respect of a disposition, whether by way of
redemption or otherwise, by the Non-Resident Unitholder of Trust Units,
provided the Trust Units do not constitute "taxable Canadian property" (within
the meaning of the Tax Act) to the Non-Resident Unitholder. Generally, Trust
Units will not constitute taxable Canadian property to a Non-Resident
Unitholder at a particular time provided the Non-Resident Unitholder, persons
with whom the Non-Resident Unitholder does not deal at arm's length (within the
meaning of the Tax Act), or the Non-Resident Unitholder together with such
persons did not own 25% or more of the issued Trust Units at any time during
the 60 month period that ends at that particular time, and provided further
that the Trust qualifies as a "mutual fund trust" under the Tax Act at the time
of the disposition.
If a Non-Resident Unitholder requests a redemption of his or her Trust Units,
the Non-Resident Unitholder may, as a consequence, receive a direct interest in
the royalty, and shares and notes of the Corporation or certain other
subsidiaries of the Trust. The Canadian income tax consequences to a
Non-Resident Unitholder of owning and disposing of such securities are not
described herein. Non-Resident Unitholders are urged to consult their own tax
advisors before requesting a redemption of their Trust Units.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general description of the material United States federal
income tax consequences of the ownership and disposition of Trust Units to a
Unitholder who participates in the Plan. This discussion is based on the
Internal Revenue Code of 1986, as amended (the "Code"), administrative
19
pronouncements, judicial decisions, existing and proposed Treasury regulations,
and interpretations of the foregoing, all as of the date hereof. All of the
foregoing authorities are subject to change (possibly with retroactive effect),
and any such change may result in United States federal income tax consequences
to a Unitholder that are materially different from those described below. No
rulings from the United States Internal Revenue Service (the "IRS") have been
or will be sought with respect to the matters described below, and
consequently, the IRS may not take a similar view of the consequences described
below.
The following discussion does not purport to be a full description of all
United States federal income tax considerations that may be relevant to a
United States holder (as defined below) in light of such Unitholder's
particular circumstances and only addresses Unitholders who hold Trust Units as
capital assets within the meaning of Section 1221 of the Code. Furthermore,
this discussion does not address the United States federal income tax
considerations applicable to Unitholders subject to special rules, such as (i)
persons that are not United States holders, (ii) certain financial institutions
or insurance companies, (iii) real estate investment trusts or regulated
investment companies, (iv) traders in securities that elect to use a
mark-to-market method of accounting or dealers in securities or currencies, (v)
persons holding notes in connection with a hedging transaction, "straddle,"
conversion transaction or a synthetic security or other integrated transaction,
(vi) Unitholders whose "functional currency" is not the United States dollar,
(vii) persons subject to the alternative minimum tax, and (viii) U.S.
expatriates. In addition, except as otherwise indicated, this discussion does
not include any description of any estate and gift tax consequences, or the tax
laws of any state, local or foreign government that may be applicable.
As used herein, the term "United States holder" means a beneficial owner of a
Trust Unit that is (i) an individual citizen or resident of the United States,
(ii) a corporation or other entity taxable as a corporation organized in or
under the laws of the United States or any political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation without regard to the source or (iv) a trust if a United States court
has primary supervision over its administration and one or more United States
persons have the authority to control all substantial decisions of the trust,
or if the trust has a valid election in effect under applicable Treasury
Regulations to be treated as a United States person.
If a partnership (or an entity taxable as a partnership for United States
federal income tax purposes) holds our Trust Units, the United States federal
income tax treatment of a partner generally will depend on the status of the
partner and the activities of the partnership. A United States person that is a
partner of a partnership (or an entity taxable as a partnership for United
States federal income tax purposes) holding our Trust Units should consult its
own tax advisors.
UNITED STATES HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE
APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
CLASSIFICATION OF THE TRUST AS A PARTNERSHIP
We have elected under applicable Treasury Regulations to be treated as a
partnership for United States federal income tax purposes. Although there is no
20
plan or intention to do so, we have the right to elect under applicable
Treasury Regulations to be treated as a corporation for United States federal
income tax purposes, if such election was determined to be beneficial.
A partnership generally is not treated as a taxable entity and incurs no United
States federal income tax liability. Instead, as discussed below, each partner
in an entity treated as a partnership for tax purposes is required to take into
account its allocable share of items of income, gain, loss and deduction of the
partnership in computing its United States federal income tax liability,
regardless of whether cash or other distributions are made. Distributions by a
partnership to a partner are generally not taxable unless the amount of any
cash distributed is in excess of the partner's adjusted basis in its
partnership interest (see "Tax Consequences of Trust Unit Ownership - Treatment
of Distributions"). Each Unitholder will be treated as a partner in the Trust
for United States federal income tax purposes.
Section 7704 of the Code provides that publicly-traded partnerships such as the
Trust will, as a general rule, be taxed as corporations. However, an exception
(the "Qualifying Income Exception") exists with respect to publicly-traded
partnerships of which 90% or more of the gross income for every taxable year
consists of "qualifying income." Qualifying income includes interest (from
other than a financial business), dividends, rents from real property, oil and
gas royalty income, gains from the sale of oil and gas properties, and gains
derived from the exploration, development, mining or production, processing,
refining, transportation or the marketing of oil and gas. Royalty income
received by the Trust from the Corporation should be treated as qualifying
income. The Trust believes that less than 10 percent of its income for the
current year will not be qualifying income and that it has met the qualifying
income exception since it first elected to be treated as a partnership for
United States federal income tax purposes in 1997. The Trust expects that it
will continue to meet the qualifying income exception in 2007 and thereafter.
No assurance can be given that the qualifying income exception will in fact be
met.
POSSIBLE CLASSIFICATION AS A CORPORATION; PFIC RULES
If we fail to meet the Qualifying Income Exception (other than a failure which
is determined by the IRS to be inadvertent and which is cured within a
reasonable time after discovery), we will be treated as if we transferred all
of our assets (subject to liabilities) to a newly formed corporation (on the
first day of the year in which we fail to meet the Qualifying Income Exception)
in return for stock in that corporation, and then distributed that stock to our
owners in liquidation of their interests in us. That deemed transfer and
liquidation would likely be taxable to United States holders. Thereafter, we
would be treated as a corporation for federal income tax purposes. United
States holders would be required to file IRS Form 926 to report the deemed
transfer and any other transfers made to the Trust while it is treated as a
corporation.
If we were treated as a corporation in any taxable year, either as a result of
a failure to meet the Qualifying Income Exception or otherwise, our items of
income, gain, loss and deduction would not be passed through to United States
holders. Instead, United States holders would be taxed upon the receipt of
distributions, either pursuant to the passive foreign investment company
("PFIC") rules discussed below or, if those rules are not applicable (or if the
United States holder makes certain elections pursuant to those rules), as
either taxable dividend income (to the extent of our current or accumulated
earnings and profits calculated by reference to our tax basis in our assets
without regard to the price paid for Trust Units by subsequent United States
21
holders) or (in the absence of earnings and profits) a nontaxable return of
capital (to the extent of the United States holder's tax basis in its Trust
Units) or taxable capital gain (after the United States holder's tax basis in
the Trust Units is reduced to zero). If we were treated as a corporation, it is
possible that we would be considered a PFIC, in which case special rules
(discussed below), potentially quite adverse to United States holders, would
apply.
CONSEQUENCES OF POSSIBLE PFIC CLASSIFICATION
A non-United States entity treated as a corporation for United States federal
income tax purposes will be a PFIC in any taxable year in which, after taking
into account the income and assets of the corporation and certain subsidiaries
pursuant to the applicable "look through" rules, either (1) at least 75 percent
of its gross income is "passive" income (the "income test") or (2) at least 50
percent of the average value of its assets is attributable to assets that
produce passive income or are held for the production of passive income (the
"assets test").
The Trust currently believes that, if classified as a corporation, it would not
be a PFIC. Because PFIC status is fundamentally factual in nature, generally
cannot be determined until the close of the taxable year in question and is
determined annually, no assurance can be given that the Trust, if it were a
corporation, would not be now, and would not be in the future, a PFIC.
If we were classified as a PFIC, for any year during which a United States
holder owns Trust Units, the United States holder will generally be subject to
special rules (regardless of whether we continue to be a PFIC) with respect to
(1) any "excess distribution" (generally, any distribution received by the
United States holder on Trust Units in a taxable year that is greater than 125
percent of the average annual distributions received by the United States
holder in the three preceding taxable years or, if shorter, the United States
holder's holding period for the Trust Units) and (2) any gain realized upon the
sale or other disposition of Trust Units. Under these rules:
o the excess distribution or gain will be allocated ratably over the United
States holder's holding period;
o the amount allocated to the current taxable year and any year prior to the
first year in which we were a PFIC will be taxed as ordinary income in the
current year;
o the amount allocated to each of the other taxable years in the United
States holder's holding period will be subject to tax at the highest rate
of tax in effect for the applicable class of taxpayer for that year; and
o an interest charge for the deemed deferral benefit will be imposed with
respect to the resulting tax attributable to each such other taxable year.
A United States holder would also generally be subject to similar rules with
respect to distributions to us by, and dispositions by us of the stock of, any
direct or indirect subsidiary of the Trust that is also a PFIC.
Certain elections may be available to a United States holder if we were
classified as a PFIC. We will provide United States holders with information
concerning the potential availability of such elections if it determines that
it is or will become a PFIC.
22
The discussion below is based on the assumption that we will be treated as a
partnership for United States federal income tax purposes.
TAX CONSEQUENCES OF PLAN PARTICIPATION
AMOUNT CAPABLE OF INCLUSION IN INCOME
For United States federal income tax purposes, a United States holder who is a
participant in the Plan will be treated as receiving a distribution equal to
the sum of (i) the fair market value as of the Distribution Date of Trust Units
acquired pursuant to the Plan, and (ii) any Canadian taxes which we withhold
with respect to the distribution. Distributions by a partnership to a partner
are generally not taxable unless the amount of any cash distributed is in
excess of the partner's adjusted basis in his partnership interest (see "Tax
Consequences of Trust Unit Ownership - Treatment of Distributions" below).
BASIS AND HOLDING PERIOD
The amount paid for the Trust Units will be added to the adjusted tax basis of
a United States holder in its interest in us. The holding period of Trust Units
generally should begin on the day after the distribution payment date. For a
discussion of basis recovery and the determination of holding periods of Trust
Units if Trust Units are sold, including if a portion of a holder's Trust Units
are sold, see "Disposition of - Recognition of Gain or Loss" below.
TAX CONSEQUENCES OF TRUST UNIT OWNERSHIP
FLOW-THROUGH OF TAXABLE INCOME
Each United States holder will be required to report on its income tax return
its allocable share (based on the percentage of Trust Units owned by that
United States holder) of our income, gains, losses and deductions for the
taxable year of the Trust ending with or within the taxable year of the United
States holder without regard to whether corresponding cash distributions are
received by such United States holder. Consequently, a United States holder may
be allocated income from the Trust even if it has not received a cash
distribution from us.
We intend to make available to each United States holder, within 75 days after
the close of each calendar year, a Substitute Schedule K-1 containing his share
of our income, gain, loss and deduction for the preceding Trust taxable year.
We treat the Royalty between us and the Corporation as a royalty interest for
all legal purposes, including United States federal income tax purposes. The
indenture pursuant to which the Royalty is paid, the royalty indenture
("Royalty Indenture") in some respects differs from more conventional "net
profits" interests as to which the courts and the IRS have ruled, and as a
result the propriety of such treatment is not free from doubt. It is possible
that the IRS could contend, for example, that the Trust should be considered to
have a working interest in the properties of the Corporation. If the IRS were
successful in making such a contention, the United States federal income tax
consequences to United States holders could be different, perhaps materially
worse, than indicated in the discussion herein, which generally assumes that
the Royalty Indenture will be respected as a royalty.
23
TREATMENT OF DISTRIBUTIONS
Distributions by us to a United States holder generally will not be taxable to
the United States holder for federal income tax purposes to the extent of its
tax basis in its Trust Units immediately before the distribution. Cash
distributions in excess of a United States holder's tax basis generally will be
considered to be gain from the sale or exchange of the Trust Units, taxable in
accordance with the rules described under "--Disposition of Trust Units" below.
BASIS OF TRUST UNITS
A United States holder's initial tax basis for its Trust Units will be the
amount paid for the Trust Units. That basis will be increased by its share of
our income and decreased (but not below zero) by distributions to it from us,
by the United States holder's share of our losses and deductions, and by its
share of our expenditures that are not deductible in computing our taxable
income and are not required to be capitalized. See "--Disposition of Trust
Units--Recognition of Gain or Loss".
LIMITATIONS ON DEDUCTIBILITY OF LOSSES
There are limitations on the ability of a United States holder to deduct any
Trust losses under the basis limitation rules, the at-risk rules and the
passive loss rules. Special passive loss rules apply to a publicly traded
partnership such as the Trust.
It is not anticipated that we will generate losses. Nevertheless, should losses
result, United States holders should consult their own tax advisors as to the
applicability to them of such loss limitations.
LIMITATIONS ON INTEREST DEDUCTIONS
The deductibility of a non-corporate taxpayer's "investment interest expenses"
is generally limited to the amount of such taxpayer's "net investment income."
Investment interest expense includes (i) interest on indebtedness properly
allocable to property held for investment and (ii) the portion of interest
expense incurred to purchase or carry an interest in a passive activity to the
extent attributable to portfolio income. The computation of a United States
holder's investment interest expense will take into account interest on any
margin account borrowing or other loan incurred to purchase or own Trust Units.
Net investment income includes gross income from property held for investment
and amounts treated as portfolio income pursuant to the passive loss rules less
deductible expenses (other than interest) directly connected with the
production of investment income, but generally does not include gains
attributable to the disposition of property held for investment.
FOREIGN TAX CREDITS
Subject to certain limitations set forth in the Code, United States holders may
elect to claim a credit against their United States federal income tax
liability for net Canadian income tax withheld from distributions received in
respect of the Trust Units that is not refundable to the United States holder.
United States holders will also be entitled to claim a foreign tax credit for
any Canadian income taxes paid by us. 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, distributions will be
"passive category income" or "general category income" for purposes of
computing the foreign tax credit allowable to a United States holder (United
24
States holders with tax years beginning before January 1, 2007 should consult
their own tax advisors regarding applicable limitations). The October 31
Proposals, if enacted, would 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 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.
TAX TREATMENT OF TRUST OPERATIONS
ACCOUNTING METHOD AND TAXABLE YEAR
We use the year ending December 31 as its taxable year and have adopted the
accrual method of accounting for United States federal income tax purposes.
DEPLETION
Under the Code, a United States holder may deduct in its United States federal
income tax return a cost depletion allowance with respect to the Royalty Units
issued by the Corporation to the Trust. United States holders must compute
their own depletion allowance and maintain records of the adjusted basis of the
Royalty Units for depletion and other purposes. We, however, intend to furnish
each United States holder with information relating to this computation.
Cost depletion is calculated by dividing the adjusted basis of a property by
the total number of units of oil or gas expected to be recoverable therefrom
and then multiplying the quotient by the number of units of oil and gas sold
during the year. Cost depletion, in the aggregate, cannot exceed the initial
adjusted basis of the property. In this connection, we intend to utilize a tax
election, known as a Section 754 election and discussed below, which will allow
purchasers of Trust Units to be entitled to depletion deductions based upon
their purchase price for the Trust Units.
The depletion allowance must be computed separately by each United States
holder for each oil and gas property, within the meaning of Section 614 of the
Code. The IRS is currently taking the position that a net profits interest
carved from multiple properties is a single property for depletion purposes.
The Royalty Indenture burdens multiple properties. Accordingly, we intend to
take the position that the properties subject to the Royalty Indenture
constitute a single property for depletion purposes and the income from the net
profits interest will be royalty income qualifying for an allowance for
depletion. We anticipate that we would change this position if it should be
determined that a different method of computing the depletion allowance is
required by law.
DEPRECIATION
The tax basis of the various depreciable assets of the Trust will be used for
purposes of computing depreciation and cost recovery deductions and,
ultimately, gain or loss on the disposition, of such assets.
25
VALUATION OF OUR PROPERTIES
Certain of the United States federal income tax consequences of the ownership
and disposition of Trust Units will depend in part on our estimates of the
relative fair market value of our assets. Although we may consult from time to
time with professional appraisers regarding valuation matters, we will make
many of the relative fair market value estimates. These estimates are subject
to challenge and will not be binding on the IRS or the courts. If the estimates
of fair market value are later found to be incorrect, the character and amount
of items of income, gain, loss or deductions previously reported by United
States holders might change, and United States holders might be required to
adjust their tax liability for prior years and incur interest and penalties
with respect to those adjustments.
SECTION 754 ELECTION
We have made the election permitted by Section 754 of the Code. That election
is irrevocable without the consent of the IRS. The election generally requires
us, in the case of a sale of the Trust Units in the secondary market, to adjust
the purchaser's tax basis in the assets of the Trust pursuant to Section 743(b)
of the Code to reflect the purchaser's purchase price of its Trust Units. The
Section 743(b) adjustment belongs to the purchaser and not to other partners.
A Section 754 election is advantageous if the purchaser's tax basis in its
Trust Units is higher than its share of the aggregate tax basis to the Trust of
the assets of the Trust immediately prior to the purchase. In such a case, as a
result of the election, the purchaser would have a higher tax basis in its
share of the assets of the Trust for purposes of calculating, among other
things, depletion and depreciation. Conversely, a Section 754 election is
disadvantageous if the purchaser's tax basis in such Trust Units is lower than
its share of the aggregate tax basis of the assets of the Trust immediately
prior to the transfer. Thus, the fair market value of the Trust Units may be
affected either favorably or adversely by the election.
DISPOSITION OF TRUST UNITS
RECOGNITION OF GAIN OR LOSS
Gain or loss will be recognized on a sale of Trust Units equal to the
difference between the amount realized and the United States holder's tax basis
for the Trust Units sold. Gain or loss recognized by a United States holder on
the sale or exchange of Trust Units will generally be taxable as capital gain
or loss, and will be long-term capital gain or loss if such United States
holder's holding period of the Trust Units exceeds one year. In the case of a
non-corporate United States holder, any such long-term capital gain will be
subject to tax at a reduced rate.
A portion of any amount realized on a sale or exchange of Trust Units (which
portion could be substantial) will be separately computed and taxed as ordinary
income under Section 751 of the Code to the extent attributable to the
recapture of depletion or depreciation deductions. Ordinary income attributable
to depletion deductions and depreciation recapture could exceed net taxable
gain realized upon the sale of the Trust Units and may be recognized even if
there is a net taxable loss realized on the sale of the Trust Units. Thus, a
United States holder may recognize both ordinary income and a capital loss upon
a taxable disposition of Trust Units. Certain limitations apply to the
deductibility of capital losses.
26
The IRS has ruled that a person who acquires interests in an entity, such as
the Trust, which is treated as a partnership for United States federal income
tax purposes in separate transactions at different prices must combine those
interests and maintain a single adjusted tax basis. Upon a sale or other
disposition of less than all of those interests, a portion of that tax basis
must be ratably allocated to the interests sold and retained using an
"equitable apportionment" method. Although the ruling is unclear as to how the
holding period of these interests is determined once they are combined,
regulations allow a seller of such an interest who can identify the interest
sold with an ascertainable holding period to elect to use that holding period.
Thus, according to the ruling, a United States holder will be unable to select
high or low basis Trust Units to sell as would be the case with corporate stock
but, according to the regulations, may designate Trust Units sold for purposes
of determining the holding period of the Trust Units sold. A United States
holder electing to use this approach must consistently use that approach for
all subsequent sales and exchanges of Trust Units. It is not clear whether the
ruling applies to the Trust because, similar to corporate stock, interests in
the Trust are readily ascertainable and are evidenced by separate certificates.
A United States holder considering the purchase of additional Trust Units or
the sale of Trust Units purchased in separate transactions should consult its
own tax advisor regarding the application of this ruling and the regulations.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES
In general, in reporting tax information for United States holders our taxable
income and losses will be determined annually, will be prorated on a monthly
basis and will be subsequently apportioned among the United States holders in
proportion to the number of Trust Units owned by each of them on the first
business day of the month (the "allocation date"). However, gain or loss
realized on a sale or other disposition of Trust assets other than in the
ordinary course of business, and other extraordinary items, will be allocated
among the United States holders on the allocation date in the month in which
that gain or loss is recognized.
NOTIFICATION REQUIREMENTS
A United States holder that sells or exchanges Trust Units is required to
notify us in writing of that sale or exchange within 30 days after the sale or
exchange and in any event by no later than January 15 of the year following the
calendar year in which the sale or exchange occurred. We are required to notify
the IRS of that transaction and to furnish certain information to the
transferor and transferee. However, these reporting requirements do not apply
with respect to a sale by an individual who is a citizen of the United States
and who effects the sale or exchange through a broker. Additionally, a
transferor and a transferee of Trust Units will be required to furnish
statements to the IRS, filed with its income tax return for the taxable year in
which the sale or exchange occurred, that allocates the consideration paid for
the Trust Units. This information will be provided by the Trust. Failure to
satisfy these reporting obligations may lead to the imposition of substantial
penalties.
CONSTRUCTIVE TERMINATION
The Trust will be considered to have been terminated for United States Federal
income tax purposes if there is a sale or exchange of 50% or more of the total
Trust Units within a 12-month period. A termination of the Trust will result in
a decrease in tax depreciation available to the United States holders
27
thereafter and in the closing of its taxable year for all United States
holders. In the case of a United States holder reporting on a taxable year
other than a fiscal year ending December 31, the closing of the Trust's taxable
year may result in more than 12 months' taxable income or loss of the Trust
being includable in its taxable income for the year of termination. New tax
elections would have to be made by the Trust, including a new election under
Section 754 of the Code. Adverse tax consequences could ensue if we were unable
to determine that the termination had occurred. Finally, a termination of the
Trust could result in taxation of the Trust as a corporation if the Qualifying
Income Exception was not met in the short taxable years caused by termination.
See "--Classification of the Trust as a Partnership."
TREATMENT OF TRUST UNIT LENDING AND SHORT SALES
The special rules of the Code that apply to securities lending transactions do
not, by their terms, apply to interests in a partnership. Accordingly, a United
States holder whose Trust Units are loaned to a "short seller" to cover a short
sale of Trust Units may be considered as having disposed of ownership of those
Trust Units. If so, it would no longer be a partner with respect to those Trust
Units during the period of the loan and may recognize gain or loss from the
disposition. As a result, during this period, any Trust income, gain, deduction
or loss with respect to those Trust Units would not be reportable by the United
States holder and any cash distributions received by the United States holder
with respect to those Trust Units would be fully taxable as ordinary income.
United States holders desiring to assure their status as owners of Trust Units
and avoid the risk of gain recognition resulting from the application of these
rules should modify any applicable brokerage account agreements to prohibit
their brokers from borrowing or loaning their Trust Units.
The Code also contains provisions affecting the taxation of certain financial
products and securities, including interests in entities such as the Trust, by
treating a taxpayer as having sold an "appreciated" interest, one in which gain
would be recognized if it were sold, assigned or otherwise terminated at its
fair market value, if the taxpayer or related persons enter into an offsetting
notional principal contract, or a futures or forward contract with respect to
the interest on substantially identical property. Moreover, if a taxpayer has
previously entered into a short sale, an offsetting notional principal contract
or a futures or forward contract with respect to the interest, the taxpayer
will be treated as having sold that portion if the taxpayer or a related person
then acquires the interest or substantially identical property. The Secretary
of Treasury is authorized to issue regulations that treat a taxpayer that
enters into transactions or positions that have substantially the same effect
as the preceding transactions as having constructively sold the financial
position.
DISPOSITION OF TRUST UNITS BY REDEMPTION
The tax consequences of a redemption of Trust Units are complex and depend in
part upon whether some or all of a United States holder's Trust Units are
redeemed. The tax consequences of a redemption of all of a United States
holder's Trust Units should generally be the same as discussed above under
"Disposition of Trust Units - Recognition of Gain or Loss." United States
holders contemplating a redemption of some or all of their Trust Units should
consult their tax advisors.
28
UNIFORMITY OF TRUST UNITS
Because we cannot match transferors and transferees of Trust Units, we must
maintain uniformity of the economic and tax characteristics of the Trust Units
to a purchaser of these Trust Units. In the absence of such uniformity, the
Trust may be unable to comply completely with a number of federal income tax
requirements.
A lack of uniformity, however, can result from a literal application of some
Treasury regulations. If any non-uniformity was required by the Service, it
could have a negative impact on the value of the Trust Units.
TAX-EXEMPT ORGANIZATIONS
Employee benefit plans (including individual retirement accounts ("IRAs") and
other retirement plans) and most other organizations exempt from federal income
tax (each, a "TEO") are subject to federal income tax on unrelated business
taxable income ("UBTI"). Because we expect substantially all income of the
Trust to be royalty income, rents from real property or interest, none of which
is UBTI, a TEO should not be taxable on any income generated by ownership of
the Trust Units except as described in the next paragraph. However, the Royalty
Indenture is in several respects an unusual royalty indenture, for which there
is no clear United States income tax guidance. It is possible that the IRS
could contend that some or all of our income under the Royalty Indenture does
not qualify as royalty income, but should instead be treated as UBTI. In
addition, the classification of certain facilities owned by us as real property
or personal property is a determination subject to uncertainty. If such
facilities were determined to be personal property for United States federal
income tax purposes, the rent derived therefrom would be UBTI to a TEO.
Prospective purchasers of Trust Units that are TEOs are encouraged to consult
their tax advisors regarding the foregoing.
If the Trust finances with indebtedness an acquisition of any property to be
held to produce income, income derived from such property in whole or in part
will be UBTI to a TEO. Furthermore, if a TEO acquires Trust Units with
indebtedness, then a portion of any interest, rents from real property and
royalty income received by the TEO attributable to the Trust Units will be
treated as UBTI and thus will be taxable to a TEO.
ADMINISTRATIVE MATTERS
TRUST INFORMATION RETURNS
We are currently not required to file a United States federal income tax
return, since we have no gross income derived from sources within the United
States or gross income which is effectively connected with the conduct of a
trade or business within the United States. However, the IRS may require a
United States holder to provide statements or other information necessary for
the IRS to verify the accuracy of the reporting by the United States holder on
its income tax return of any items of our income, gain, loss, deduction, or
credit. If we were to file a United States tax return in future tax years, the
filing would change the manner in which we provide tax information to the
United States holders and special procedures would also apply to an audit of
such tax return by the IRS.
29
REGISTRATION AS A TAX SHELTER
The Code requires that "tax shelters" be registered with the Secretary of the
Treasury. The temporary Treasury Regulations interpreting the tax shelter
registration provisions of the Code are extremely broad. It is arguable that
the Trust is not subject to the registration requirement on the basis that it
will not constitute a tax shelter. However, we have registered as a tax shelter
with the Secretary of the Treasury because of the absence of assurance that we
will not be subject to tax shelter registration and in light of the substantial
penalties which otherwise might be imposed if we failed to register and it were
subsequently determined that registration was required. The IRS has issued the
Trust the following tax shelter registration number: 99068000003.
You must report this registration number to the IRS, if you claim any
deduction, loss, credit, or other tax benefit or report any income by reason of
your investment in the Trust. You must report the registration number (as well
as the name, and taxpayer identification number of the Trust) on Form 8271. The
Trust's taxpayer identification number is 98-0185056. Form 8271 must be
attached to the return on which you claim the deduction, loss, credit, or other
tax benefit or report any income of the Trust. A United States holder who fails
to disclose the tax shelter registration number on his return, without
reasonable cause for that failure, will be subject to a $250 penalty for each
failure.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN THE
TRUST OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED BY
THE IRS.
A United States holder who sells or otherwise transfers Trust Units must
furnish the tax shelter registration number to the transferee. The penalty for
failure of the transferor of a Trust Unit to furnish the registration number to
the transferee is $100 for each such failure.
REPORTABLE TRANSACTIONS
Under Treasury Regulations, certain taxpayers participating directly or
indirectly in a "reportable transaction" must disclose such participation to
the IRS. The scope and application of these rules is not completely clear. An
investment in the Trust may be considered participation in a "reportable
transaction" if, for example, the Trust recognizes certain significant losses
in the future and the Trust does not otherwise meet certain applicable
exemptions. If an investment in the Trust constitutes participation in a
"reportable transaction," the Trust and each United States holder may be
required to file IRS Form 8886 with the IRS, including attaching it to their
United States federal income tax returns, thereby disclosing certain
information relating to the Trust to the IRS. In addition, the Trust may be
required to disclose Trust reportable transactions and to maintain a list of
Unitholders and to furnish this list and certain other information to the IRS
upon its written request. United States holders are urged to consult their own
tax advisors regarding the applicability of these rules to their investment in
the Trust.
FOREIGN PARTNERSHIP REPORTING
A United States holder who contributes more than US$100,000 to the Trust (when
added to the value of any other property contributed to the Trust by such
person or a related person during the previous 12 months) in exchange for Trust
Units, may be required to file Form 8865, Return of United States Persons With
30
Respect to Certain Foreign Partnerships, in the year of the contribution. There
may be other circumstances in which a United States holder is required to file
Form 8865.
DESCRIPTION OF THE TRUST UNITS TO BE REGISTERED
The Trust Units to be offered by this prospectus will be offered to our
Unitholders pursuant to participation in the Plan. The Trust Units are
currently listed on the TSX under the symbol "PGF.UN" and the NYSE under the
symbol "PGH".
Meetings of Unitholders may be called on at least 21 and not more than 50 days
notice and may be called at any time by the Trust or by Computershare, as
trustee, upon written request of Unitholders holding in the aggregate not less
than five percent of the aggregate number of Trust Units then outstanding. At
all meetings of the Unitholders each Unitholder is entitled to one vote in
respect of each Trust Unit. Unitholders may attend and vote at all meetings of
the Unitholders either in person or by proxy and a proxy holder need not be a
Unitholder. Two persons present in person and either holding personally or
representing as proxies at least five percent of the aggregate number of Trust
Units then outstanding constitute a quorum for the transaction of business at
all such meetings. Except as otherwise provided in the Trust Indenture, matters
requiring the approval of the Unitholders must be approved by extraordinary
resolution.
The Trust Units are redeemable by Computershare, as trustee, on demand by a
Unitholder, when properly endorsed for transfer and when accompanied by a duly
completed and properly executed notice requesting redemption, at a redemption
price equal to the lesser of: (i) 95 percent of the average closing price of
the Trust Units on the market designated by the board of directors of the
Corporation for the ten days after the Trust Units are surrendered for
redemption; and (ii) the closing price of the Trust Units on such market on the
date the Trust Units are surrendered for redemption. The redemption right
permits Unitholders to redeem Trust Units for maximum proceeds of Cdn. $25,000
in any calendar month provided that such limitation may be waived at the
discretion of the board of the Corporation. Redemptions in excess of the cash
limit must be satisfied by way of a distribution IN SPECIE of a pro rata share
of Royalty Units and other assets, excluding facilities, pipelines or other
assets associated with oil and natural gas production, which are held by the
Trust at the time the Trust Units are to be redeemed. The price of the Trust
Units, as applicable, for redemption purposes is based upon the closing trading
price of the Trust Units.
31
The following table sets forth the price ranges of the Class A Units and the
Class B Units on the NYSE and the TSX through July 27, 2006, being the date of
the Consolidation, and the price range of the Trust Units on the TSX and the
NYSE after the Consolidation. For more information about the Consolidation,
please see "The Trust--Trust Unit Consolidation".
PRIOR TO THE JULY 27, 2004 RECLASSIFICATION
TSX NYSE
----------------------- ---------------------
Trust Units Trust Units
HIGH LOW HIGH LOW
---- --- ---- ---
Cdn.$ Cdn.$ U.S.$ U.S.$
2002
Full Year.................. 17.00 13.01 10.90 8.40
2003
Full Year.................. 22.22 13.39 17.00 9.05
2004
Up to July 27, 2004........ 21.25 15.55 16.60 11.50
BETWEEN THE JULY 27, 2004 RECLASSIFICATION AND JULY 27, 2006 CONSOLIDATION
TSX NYSE
---------------------------------- ----------------
Class A Units Class B Units Class A Units
HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- ---
Cdn.$ Cdn.$ Cdn.$ Cdn.$ U.S.$ U.S.$
2004
From July 27, 2004............. 26.33 19.10 20.04 17.51 21.25 14.40
2005
First Quarter.................. 28.29 22.15 19.90 16.10 22.95 18.10
Second Quarter................. 27.90 23.95 19.01 16.37 22.74 19.05
Third Quarter.................. 30.10 26.30 21.26 18.25 25.75 21.50
Fourth Quarter................. 29.80 23.64 23.38 17.27 25.57 20.00
Full Year...................... 30.10 22.15 23.38 16.10 25.75 18.10
2006
First Quarter.................. 28.96 24.96 24.50 20.71 25.15 21.50
Second Quarter................. 28.50 24.20 26.05 22.41 25.00 21.85
Third Quarter (Up to July 27).. 28.25 24.95 27.25 24.90 24.95 21.84
AFTER THE JULY 27, 2006 CONSOLIDATION
TSX NYSE
----------------------- ---------------------
Trust Units Trust Units
HIGH LOW HIGH LOW
---- --- ---- ---
Cdn.$ Cdn.$ U.S.$ U.S.$
2006
From July 28 to Sept. 30................... 26.11 21.02 23.50 18.84
Fourth Quarter............................. 22.69 16.81 20.25 14.77
Full Year.................................. 22.69 16.81 23.50 14.77
2007
First Quarter.............................. 20.85 18.62 17.96 15.81
Monthly price range for the last six months
December, 2006............................. 20.50 18.99 17.75 16.50
January, 2007.............................. 20.55 18.62 17.41 15.81
February, 2007............................. 20.85 19.50 17.96 16.67
March, 2007................................ 20.37 18.71 17.59 15.95
April, 2007................................ 19.83 18.82 17.74 16.45
May, 2007.................................. 20.62 19.00 19.05 17.18
June, 2007 (through June 14, 2007)......... 20.50 19.68 19.29 18.50
32
EXPENSES
The expenses in connection with the issuance and distribution of the Trust
Units being offered are as follows:
Securities and Exchange Commission Registration Fee......... U.S. $ 2,878.00
Legal Fees and Expenses..................................... $ 83,050.00
Stock Exchange Listing Fees................................. $ 140,000.00
Blue Sky Fees and Expenses.................................. $ 0
Other....................................................... $ 14,025.00
Total....................................................... U.S. $ 239,953.00
* Estimated
33
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Trust pursuant
to the applicable provisions of the Business Corporations Act (Alberta) or our
by-laws, the Trust has been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
LEGAL MATTERS
The validity of the Trust Units being offered by this prospectus will be passed
upon for us by Bennett Jones LLP, Calgary, Alberta. Bennett Jones LLP has, in
addition, reviewed the statements made herein as to matters of Canadian tax law
and as to the enforceability in Canada of liabilities under the federal
securities laws of the United States. The statements made in this prospectus as
to matters of United States tax law have been reviewed for us by Paul, Weiss,
Rifkind, Wharton & Garrison LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated into this registration
statement by reference to our annual report on Form 40-F for the fiscal year
ended December 31, 2006, have been so incorporated in reliance upon the report
of KPMG, LLP, independent chartered accountants, as experts in auditing and
accounting.
Certain information relating to our reserves incorporated by reference into
this prospectus has been calculated by us and audited and opined on, as at
December 31, 2006, by GLJ Petroleum Consultants Ltd., independent petroleum
engineering consultants retained by us, and has been so included in reliance on
the opinion and report of GLJ Petroleum Consultants Ltd., given upon the
authority of said firm as experts in reserve engineering. The partners of GLJ
Petroleum Consultants Ltd., as a group beneficially own, directly or
indirectly, less than 1% of our Trust Units.
34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 124 of the Business Corporations Act (Alberta) provides as follows:
124(1) Except in respect of an action by or on behalf of the corporation or
body corporate to procure a judgment in its favour, a corporation may indemnify
a director or officer of the corporation, a former director or officer of the
corporation or a person who acts or acted at the corporation's request as a
director or officer of a body corporate of which the corporation is or was a
shareholder or creditor, and the director's or officer's heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by the
director or officer in respect of any civil, criminal or administrative action
or proceeding to which the director or officer is made a party by reason of
being or having been a director or officer of that corporation or body
corporate, if
(a) the director or officer acted honestly and in good faith with a view to the
best interests of the corporation, and
(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, the director or officer had reasonable grounds
for believing that the director's or officer's conduct was lawful.
(2) A corporation may with the approval of the Court indemnify a person
referred to in subsection (1) in respect of an action by or on behalf of the
corporation or body corporate to procure a judgment in its favour, to which the
person is made a party by reason of being or having been a director or an
officer of the corporation or body corporate, against all costs, charges and
expenses reasonably incurred by the person in connection with the action if the
person fulfills the conditions set out in subsection (1)(a) and (b).
(3) Notwithstanding anything in this section, a person referred to in
subsection (1) is entitled to indemnity from the corporation in respect of all
costs, charges and expenses reasonably incurred by the person in connection
with the defence of any civil, criminal or administrative action or proceeding
to which the person is made a party by reason of being or having been a
director or officer of the corporation or body corporate, if the person seeking
indemnity
(a) was substantially successful on the merits in the person's defence of the
action or proceeding,
(b) fulfills the conditions set out in subsection (1) (a) and (b), and
(c) is fairly and reasonably entitled to indemnity.
(3.1) A corporation may advance funds to a person in order to defray the costs,
charges and expenses of a proceeding referred to in subsection (1) or (2), but
if the person does not meet the conditions of subsection (3) he or she shall
repay the funds advanced.
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(4) A corporation may purchase and maintain insurance for the benefit of any
person referred to in subsection (1) against any liability incurred by the
person
(a) in the person's capacity as a director or officer of the corporation,
except when the liability relates to the person's failure to act honestly and
in good faith with a view to the best interests of the corporation, or
(b) in the person's capacity as a director or officer of another body corporate
if the person acts or acted in that capacity at the corporation's request,
except when the liability relates to the person's failure to act honestly and
in good faith with a view to the best interests of the body corporate.
(5) A corporation or a person referred to in subsection (1) may apply to the
Court for an order approving an indemnity under this section and the Court may
so order and make any further order it thinks fit.
(6) On an application under subsection (5), the Court may order notice to be
given to any interested person and that person is entitled to appear and be
heard in person or by counsel.
The by-laws of the Corporation and the Manager, respectively, provide that they
will indemnify the indemnified persons designated in Section 124(1) of the
Business Corporations Act (Alberta) of the Corporation and the Manager,
respectively, in the manner contemplated by the Business Corporations Act
(Alberta).
As contemplated by Section 124(4) of the Business Corporations Act (Alberta),
the Corporation has purchased insurance against potential claims against the
directors and officers of the Corporation and against loss for which the
Corporation may be required or permitted by law to indemnify such directors and
officers.
Pursuant to the Amended and Restated Management Agreement (the "Management
Agreement") dated as of May 12, 2003 among the Corporation, the Trust,
Computershare Trust Corporation of Canada and the Manager, the Manager and
these persons having served as a director, officer or employee thereof shall be
indemnified by the Corporation (out of its assets and out of the royalty
provided for in the Amended and Restated Royalty Indenture dated as of July 27,
2006 between the Corporation and Computershare Trust Corporation of Canada, as
trustee) for all liabilities and expenses arising from or in any matter related
to the Management Agreement, so long as the party seeking such indemnification
shall not be adjudged liable for or guilty of willful misfeasance, bad faith,
gross negligence or reckless disregard of duty to the Corporation or the Trust,
and shall not be adjudged to be in breach of any material covenants and duties
of the Manager under the Management Agreement.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
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ITEM 9. EXHIBITS
4.1 Form of Amended and Restated Trust Indenture (filed as Exhibit 3.1 to
the Registrant's registration statement on Form 8-A/A filed on June
15, 2007)
5.1 Opinion of Bennett Jones LLP as to the legality of the Trust Units
being registered
8.1 Opinion of Bennett Jones LLP regarding Canadian tax matters
(contained in Exhibit 5.1)
8.2 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP regarding
U.S. tax matters
23.1 Consent of KPMG LLP
23.2 Consent of GLJ Petroleum Consultants Ltd.
23.3 Consent of Bennett Jones LLP (contained in Exhibit 5.1)
23.4 Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (contained in
Exhibit 8.2)
24.1 Power of Attorney (included on the signature pages to this
registration statement)
ITEM 10. UNDERTAKINGS
a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
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changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the Plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, THAT:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply
if the registration statement is on Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section
do not apply if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to Rule
424(b) that is part of the registration statement.
(C) PROVIDED FURTHER, HOWEVER, THAT PARAGRAPHS (A)(1)(I) AND
(A)(1)(II) DO NOT APPLY IF THE REGISTRATION STATEMENT IS FOR AN OFFERING OF
ASSET-BACKED SECURITIES ON FORM S-1 OR FORM S-3, AND THE INFORMATION REQUIRED
TO BE INCLUDED IN A POST-EFFECTIVE AMENDMENT IS PROVIDED PURSUANT TO ITEM
1100(C) OF REGULATION AB.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Item 8.A of Form 20-F at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, PROVIDED that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Section 210.3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with or
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furnished to the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
(5) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of 314
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. PROVIDED,
HOWEVER, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. PROVIDED, HOWEVER, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to
a purchaser with a time of contract of sale prior to such first use, supersede
or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
II-5
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to deliver
or cause to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security holders that
is incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Calgary, Province of Alberta, Canada on 15th day of June, 2007.
PENGROWTH ENERGY TRUST
By: PENGROWTH CORPORATION,
AS ADMINISTRATOR
By: /s/ Christopher G. Webster
------------------------------
Name: Christopher G. Webster
Title: Chief Financial Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints each of James S. Kinnear, Charles V. Selby and
Christopher G. Webster, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) and supplements to this registration statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each acting alone, full power and authority
to do and perform each and every act and thing requisite or necessary to be
done, as fully to all intents and purposes as they might or could do
themselves, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them acting alone, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of which
shall be deemed an original, but which taken together shall constitute one
instrument.
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Pursuant to the requirements of the Securities Act, this registration statement
has been signed below by the following persons in the capacities and on the
dates indicated:
-------------------------------------------------------------------------------
SIGNATURE TITLE DATE
-------------------------------------------------------------------------------
/s/ James S. Kinnear President, Chairman and Chief June 15, 2007
------------------------- Executive Officer
James S. Kinnear
/s/ Christopher G. Webster Chief Financial Officer June 15, 2007
------------------------- (Principal Financial Officer)
Christopher G. Webster
/s/ Doug C. Bowles Director June 15, 2007
-------------------------
Doug C. Bowles
/s/ John B. Zaozirny Director June 15, 2007
-------------------------
John B. Zaozirny
/s/ Stanley H. Wong Director June 15, 2007
-------------------------
Stanley H. Wong
/s/ Thomas A. Cumming Director June 15, 2007
-------------------------
Thomas A. Cumming
/s/ Michael S. Parrett Director June 15, 2007
-------------------------
Michael S. Parrett
/s/ A. Terence Poole Director June 15, 2007
-------------------------
A. Terence Poole
/s/ Kirby L. Hedrick Director June 15, 2007
-------------------------
Kirby L. Hedrick
/s/ Wayne K. Foo Director June 15, 2007
-------------------------
Wayne K. Foo
/s/ D. Michael G. Stewart Director June 15, 2007
-------------------------
D. Michael G. Stewart
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AUTHORISED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act, the
undersigned has signed this registration statement solely in the capacity of
the duly authorized representative of the Registrant in the United States on
June 15, 2007.
PENGROWTH ENERGY TRUST
By: /s/ Kirby L. Hedrick
------------------------
Name: Kirby L. Hedrick
Title: Director
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INDEX TO EXHIBITS
EXHIBITS
4.1 Form of Amended and Restated Trust Indenture (filed as Exhibit 3.1 to
the Registrant's registration statement on Form 8-A/A filed on June
15, 2007)
5.1 Opinion of Bennett Jones LLP as to the legality of the Trust Units
being registered
8.1 Opinion of Bennett Jones LLP regarding Canadian tax matters
(contained in Exhibit 5.1)
8.2 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP regarding
U.S. tax matters
23.1 Consent of KPMG LLP
23.2 Consent of GLJ Petroleum Consultants Ltd.
23.3 Consent of Bennett Jones LLP (contained in Exhibit 5.1)
23.4 Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (contained in
Exhibit 8.2)
24.1 Power of Attorney (included on the signature pages to this
registration statement)
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