ARC Energy AR.xp6March 24 4/2/01 4:14 PM Page 3
MESSAGE TO UNITHOLDERS
Our results for 2000 were outstanding. Not only did ARC once again stand out as one of the top performing royalty trusts, we also rank among the top companies in the oil and gas sector overall. Unitholder distributions in 2000 increased to $2.01 per unit, a 49 percent increase over 1999, and the highest in our history. When combined with the growth in our trading price on the TSE, unitholders realized a total return on investment of 55 percent in 2000. While there is no question these results are exceptional, this is not a stand alone year for ARC. Our results over the past five years have generated a compound annual total return of 20 percent to those unitholders participating in our Dividend Reinvestment Plan. Over the same time period, the oil and gas royalty trust index and TSE oil and gas producers index averaged total annual returns of 13.7 and 7.8 percent, respectively. As important as this performance has been, we are equally proud of the leadership role we have played in the royalty trust sector, particularly with respect to the management of our capital structure and distribution policies. ARC Energy Trust has set standards and introduced innovations that have been widely modeled by other trusts in our industry. The past year marked our fifth year in business. ARC Energy Trust was founded in 1996 and we can now clearly look back at the objectives that were set at inception and measure our performance. Our fundamental objective was, and still remains, to deliver superior returns to our investors which is exactly what we have done. We are widely regarded as a leader in the royalty trust sector as a result of both our financial performance as well as our financial management. We have reacted to the different market cycles with strategies and policies which have resulted in stable distributions at the low end of the commodity price cycle and an exceptionally strong balance sheet at the high end of the cycle. Revisions in 2000 to our distribution policy result in a greater proportion of cash available for distribution to be used to fund capital programs. This will allow us to be less reliant on both debt and new equity in the future while at the same time enhancing the sustainability of ARCâ€™s production and hence distributions. Our financial performance is a function of numerous factors, some of which are outside our control â€“ commodity prices, for example. Our commitment to unitholders is to maintain stability in the areas within our control and to actively manage risk relating to those factors outside of our control. We have assembled a very high quality asset base with tremendous opportunities to continue to deliver superior returns over the long term and through the inevitable market cycles.