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Production was 13% higher for the first quarter of 2002 at 41,859 boe per day, as compared to 37,026 boe per day for the first quarter of 2001. First quarter 2002 production was weighted 44% to crude oil, 44% to natural gas and 12% to natural gas liquids.
• Long-term debt at March 31, 2002 was $339.1 million, compared to $345.5 million at year-end 2001, representing a $6.4 million reduction.
• First-quarter 2002 capital spending totaled $11.4 million versus $13.9 million for the same period in 2001 and included $7.9 million allocated to drilling, completions and tie-ins, $2.9 million for facilities and $0.6 million for lease acquisition costs.
• At the end of April, prices for both crude oil and natural gas were higher than first-quarter 2002 averages, which is expected to result in increased distributable income over the near term. Pengrowth’s average realized price declined by 43% to $24.32 per boe in the first quarter of 2002 from $42.90 per boe in the first quarter of 2001.
• Distributable income for the first quarter 2002 decreased 54% from the same period in 2001 to $33.1 million, while distributable income on a per unit basis was 64% lower at $0.41.
• On April 10, 2002 Pengrowth was successfully listed on the New York Stock Exchange (NYSE). The listing is a major milestone in the Trust’s history, potentially expanding access to U.S. capital markets.
Note regarding currency: All figures contained within this report are quoted in Canadian dollars unless otherwise indicated.
Vision Courage Commitment Performance
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Financial and Operating Highlights (thousands, except per unit amounts) Quarter ended March 31
(unaudited) 2002
2001
% Change
INCOME STATEMENT Oil and gas sales Net income Net income per unit Distributable income
$ $ $ $
91,634 442 0.005 33,118
$ $ $ $
142,961 41,908 0.655 72,071
-36% -99% -99% -54%
Distributable income per trust unit Based on weighted average units outstanding Based on actual distributions paid or declared
$ $
0.403 0.410
$ $
1.126 1.140
-64% -64%
63,988
+29%
-7% +9% -2% +28%
Weighted average number of units outstanding
82,266
BALANCE SHEET Working capital Property, plant and equipment and other assets Long-term debt Unitholders' equity
$ (22,663) $1,175,673 $ 339,085 $ 785,387
$ (24,411) $ 1,078,910 $ 346,847 $ 615,340
UNIT TRADING High Low Close Value Volume
$ 16.23 $ 13.25 $ 16.13 $ 165,670 11,395
$ $ $ $
DAILY PRODUCTION Crude oil (barrels) Natural gas (thousands of cubic feet) Natural gas liquids (barrels) Other Total production (BOE) 6:1 PRODUCTION INCREASE (6:1 boe) (year over year) PRODUCTION PROFILE (6:1 conversion) % of total Crude oil Natural gas Natural gas liquids AVERAGE PRICES Crude oil (per barrel) Natural gas (per mcf ) Natural gas liquids (per barrel) Average price per BOE 6:1
$ $ $ $
21.25 18.70 19.85 176,250 8,784
18,510 110,050 5,001 5 41,859
20,433 73,654 4,352 37,026
+13%
+7%
44% 44% 12%
55% 33% 12%
32.62 2.84 22.71 24.32
$ $ $ $
40.35 8.30 40.94 42.90
-6% +30%
-9% +49% +15% +13%
-19% -66% -45% -43%
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3
Management’s Discussion and Analysis NOTE REGARDING FORWARD-LOOKING STATEMENTS This discussion and analysis contains forward-looking statements.These statements relate to future events or our future performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, or the negative of these terms or other comparable terminology.These statements are only predictions. A number of factors, including the business risks discussed below, may cause actual results to vary materially from these estimates. Actual events or results may differ materially. In addition, this discussion contains forward-looking statements attributed to third party industry sources. Readers should not place undue reliance on these forward-looking statements. Distributable Income Distributable income decreased 54% to $33.1 million for the first quarter of 2002, compared to $72.1 million in the first quarter of 2001. Distributable income per unit decreased 64% to $0.41 per trust unit in the first quarter of 2002 compared to $1.14 per trust unit in the first quarter of 2001. Lower distributable income during the quarter is due primarily to lower crude oil and natural gas prices. The following is a summary of recent monthly distributions and future key dates: Ex-Distribution Date *
Record Date
Distribution Payment Date
Distribution Amount per Trust Unit
December 27, 2001 December 31, 2001 January 15, 2002 $ 0.13 January 30, 2002 February 1, 2002 February 15, 2002 0.13 February 27, 2002 March 1, 2002 March 15, 2002 0.13 March 27, 2002 April 1, 2002 April 15, 2002 0.13 April 29, 2002 May 1, 2002 May 15, 2002 0.15 May 30, 2002 June 3, 2002 June 15, 2002 June 26, 2002 June 28, 2001 July 15, 2002 July 29, 2002 July 31, 2002 August 15, 2002 August 28, 2002 August 30, 2002 September 15, 2002 September 26, 2002 September 30, 2002 October 15, 2002 October 29, 2002 October 31, 2002 November 15, 2002 November 28, 2002 December 2, 2002 December 15, 2002 *To benefit from the monthly cash distribution, unitholders must purchase or hold trust units prior to the ex-distribution date.
Pengrowth Annual Cash Distributions (cents Canadian)
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Prices Substantially all of the decline in distributable income for the first quarter can be attributed to lower natural gas and crude oil prices. Pengrowth’s average price per BOE of production decreased 43% from $42.90/boe in the first quarter of 2001 to $24.32/boe in the first quarter of 2002. Average Prices C$ 2002 Crude oil (per bbl) Natural gas (per mcf ) Natural gas liquids (per boe) Total per boe (6:1)
Three months ended March 31, 2001 % Change
32.62 2.84 22.71 24.32
WTI Oil Price
AECO Gas Price
($US/bbl)
($C/mcf)
40.35 8.30 40.94 42.90
-19% -66% -45% -43%
Pengrowth’s average crude oil price declined by 19% in the first quarter of 2002 compared to the first quarter of 2001, reflecting a 21% decrease in the WTI benchmark price for crude oil over the same period, after adjustment for the weaker Canadian exchange rate relative to the U.S. dollar in 2002. Pengrowth’s average natural gas price declined by 66% from $8.30 per mcf in the first quarter of 2001 to $2.84 per mcf in the first quarter of 2002. This decrease reflects the decline in North American natural gas prices from the record high prices experienced in the first quarter of 2001.The AECO monthly gas index price fell 69% and the NYMEX Henry Hub gas price index decreased 67% over the same period. Production Total BOE production increased 13% in the first quarter of 2002, compared to the first quarter of 2001. Daily Production 2002 Crude oil (bbls/d) Natural gas (mcf/d) Natural gas liquids (bbls/d) Total boe/d (6:1)
18,510 110,050 5,001 41,859
Three months ended March 31 2001 % Change 20,433 73,654 4,352 37,026
-9% +49% +15% +13%
Pengrowth’s production portfolio in the first quarter of 2002 was weighted 44% towards crude oil, 44% natural gas and the remaining 12% natural gas liquids. Oil production volumes have declined as a result of lower natural production at existing properties, the sale of the Virginia Hills property in January of 2002, and other non-core asset dispositions in the first quarter of 2002.
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Average Daily Production (boe/day)
5
First quarter natural gas production volumes have increased 49% compared to the first quarter of 2001.This increase can be attributed to the acquisition of the Sable Offshore Energy Project in June 2001 and an increased interest in the Kaybob Notikewan Unit effective March 2001. Natural gas liquids volumes increased 15% in the first quarter of 2002 compared to the first quarter of 2001, reflecting the addition of volumes from Sable, offset in part by declines at other properties and greater use of production volumes for re-injection at Judy Creek.
Price Risk Management Program Pengrowth has entered into financial swap transactions that fix the price on: 7,000 mmbtu per day SOEP natural gas until the end of 2004 at an estimated average Goldboro netback price of US$2.77 per mmbtu 5,000 mmbtu per day of SOEP natural gas for the years 2003 and 2004 at an estimated Goldboro netback price of $5.03 per mmbtu (all SOEP pricing subject to variations in transportation costs). 4,000 barrels of oil per day of crude oil, including foreign exchange risk, for the remainder of 2002 at an average price of $36.85 per barrel 6,785 mcf per day of Alberta natural gas for the remainder of 2002 at an average plantgate price of $2.99 per mcf. In the first quarter of 2002, Pengrowth realized a net hedging gain of $0.3 million related to fixed price gas contracts (as compared to monthly AECO average spot prices) and natural gas financial swap contracts. Net hedging gains realized on crude oil price swap transactions were $0.5 million. Interest Rate Swaps Pengrowth has entered into interest rate swaps on $125 million of its long term debt for three year periods ending in November 2004 ($75 million), December 2004 ($25 million) and March 2005 ($25 million), at an average interest rate of 4.09% before stamping fees. The estimated fair value of these interest rate swaps at March 31, 2002 (the amount that Pengrowth would receive to terminate these contracts) was $2.5 million. Net Income Net income for the first quarter of 2002 decreased 99% to $0.4 million compared to $41.9 million for the first quarter of 2001. The majority of the decline is attributable to lower commodity prices in the first quarter of 2002. Operating Costs For the first three months of 2002, operating costs were $27.5 million ($7.31 / boe), compared to $21.6 million ($6.49/boe) for the first three months of 2001. The increase in operating costs is attributable to property acquisitions since the first quarter of 2001, including Kaybob Notikewan in March 2001 and the Sable acquisition in June 2001, offset in part by lower operating costs at many existing properties, due to lower electricity costs in Alberta in 2002 compared to the prior year.
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Injectants for Miscible Flood During the first three months of 2002, Pengrowth purchased $3.3 million of injectants for miscible floods and expensed a related $12.1 million against distributable income. Pengrowth amortizes the cost of injectants purchased from third parties against distributable income over the period of expected future economic benefit, which is currently 30 months. In recent months, amortization has exceeded purchases and the balance of deferred injectant costs is being drawn down. Based on current miscible flood programs and prevailing gas prices, this trend is expected to continue for the remainder of 2002. At March 31, 2002, the balance of unamortized injectant costs was $54.2 million. Disposition of Non-Core Properties As part of Pengrowth’s on going program of reviewing its portfolio of properties, a number of minor properties were offered for sale in the first quarter of 2002. On January 17, Virginia Hills Unit was sold for proceeds of $4.5 million prior to adjustments. Subsequent to quarter end, on April 30, a disposition package including Pengrowth’s interest in Strachan, North Pembina Cardium Unit, Minehead and Niton were sold for total proceeds of $40.2 million, before adjustments. Net proceeds of these dispositions have been applied towards long term debt. Total first quarter production recorded from these four properties was as follows: Oil (bpd) Gas (mcf/d) NGLs (bpd) Total (boepd 6:1)
412 6,065 268 1,690
Financial Resources Pengrowth’s long-term debt at March 31, 2002 was $339.1 million, compared to $345.5 million at December 31, 2001. The decrease in debt is attributable to amortization of injectants and dispositions of non-core properties offset by capital spending: Long-term Debt Continuity Balance at December 31, 2001 Difference between solvent purchases and expenses Dispositions, net of adjustments Capital expenditures, excluding acquisitions Proceeds from the issue of trust units pursuant to option exercises and DRIP Change in working capital and Remediation Trust Fund Balance at March 31, 2002
$ millions $345.5 (8.8) (5.0) 11.4 (0.9) (3.1) $339.1
The ratio of debt to trailing 12-month distributable income at March 31, 2002 was 1.9 times. After the sale of non-core properties on April 30, 2002, as discussed above, this ratio is reduced to approximately 1.7 times. Distributable income covered interest expense by 10 times in the first three months of 2002. Reconciliation of Distributions to Funds Generated from Operations The following table demonstrates Pengrowth’s current policy of distributing all of the funds generated by operations, after adjusting for the manner in which Pengrowth amortizes miscible injectant costs. The practice of amortizing injectant costs over 30 months creates a temporary difference that reverses over time. A comparison of the “Distributions” amount shown on Pengrowth’s Consolidated Statement of Cash Flow to “Funds Generated from Operations” also requires an adjustment for the two-month time lag between when funds are generated by the business and when they are paid to unitholders.
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Reconciliation of Distributions to Funds Generated From Operations Consolidated Statement of Cash Flow Distributions per Statement of Cash Flow Subtract: Distributions paid in 2002 but earned in 2001 (Distributions payable December 31, 2001) Add: Distributions earned in the first quarter but unpaid at March 31, 2002 (February and March distributions and any balance unpaid) Total Adjusted Distributions for the period (Distributable Income)
7
Three months ended March 31, 2002 $ millions $32.1
Purchase of injectants for miscible floods Amortization of injectants for miscible flood Items included in Distributable Income but not in Net Income (e.g. remediation trust fund contributions in excess of expenses) Funds Generated From Operations
(22.2) 23.2 $33.1 (3.3) 12.1 0.4 $42.3
Capital Spending Capital expenditures for the three months ending March 31, 2002 totaled $11.4 million as compared with $13.9 million for the same period in 2001. Of the $11.4 million, $7.9 million was spent on drilling, completion and tie-ins, $2.9 million was spent on facilities and $0.6 was spent on lease acquisition costs. The majority of these costs were spent on development programs at Judy Creek ($3.4 million) McLeod River ($1.1 million), Sable ($1.0 million), Weyburn ($1.1 million), and Goose River ($1.8 million).
Review of Development Activities First quarter development activities at Pengrowth’s major properties include the following: At Judy Creek: Initiatives were undertaken by field operations to optimize on-site solvent usage and thereby reduce solvent purchases. Shut-off of a high permeability streak in an ‘A’ Pool well increased oil production by 100 bpd. Zonal isolation jobs on two ‘B’ pool wells increased oil production by 82 bpd. Pengrowth is continuing to study CO2 potential for Judy Creek and other Swan Hills properties in which we hold a working interest. Judy Creek – Swan Hills Development Activity
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At McLeod River: Pengrowth drilled, completed and tied in one natural gas well (100% interest). The well came on production on March 28, 2002 and is currently producing 1.5 mmcf/day. One natural gas well was re-completed, resulting in an increase in production of 300 mcf/d, net to Pengrowth. Pengrowth received approval to co-mingle two new wells, which resulted in increased production of 300 mcf/d, net to Pengrowth.
McLeod River - 2001/2002 Drilling Activity
At Nipisi: Received regulatory approval to initiate water injection at a well drilled in 2001; commenced injection in late March. At Enchant: Pengrowth farmed out two LSD’s and one well was drilled at no cost to Pengrowth. Some offsetting acreage was acquired with a partner at the March 6 land sale. Development plans are currently being evaluated. A solution gas pipeline was constructed to an Anadarko facility which will result in reduced processing fees and down time. At Weyburn Unit: The CO2 miscible flood program continued to show positive results during the first quarter of 2002, with incremental oil production from 19 producers in Phase 1A now exceeding 500 barrels per day, net to Pengrowth. The operator is proceeding with the development of Phase 1B which will ultimately encompass 17 injection patterns. The first two injection patterns in Phase 1B are scheduled to commence injection in August and the next two in September, with the associated producers expected to come on stream in September 2002 and January 2003 respectively. During the first quarter, eight horizontal wells were drilled to complete existing waterflood patterns. Each well has been rig released and is anticipated to have oil potential.
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At Goose River: Two new wells which were drilled in the third quarter of 2001 are now tied in and are producing at a combined rate of 360 bbls of oil per day (152 bbls per day net to Pengrowth). Miscible pattern number 3 is performing better than expectations. Sable Update Sable raw gas production averaged 545 mmcf per day (45.8 mmcf per day net to Pengrowth) during the first quarter of 2002. This compares with average raw gas production of 480 mmcf per day (40.3 mmcf per day net) during the first quarter of 2001. Pengrowth has also entered into a contract to supply 25,000 Mmbtu of natural gas to a U.S. based power plant currently under construction. The contract begins upon plant startup which is expected to occur in the Autumn of 2002. 2002 Tax Estimate Update Pengrowth estimates that in the current commodity price environment, approximately 50% of distributions paid in 2002 will be taxable to unitholders, with the remainder of distributions treated as return of capital and thus tax deferred. The taxability may be reduced if Pengrowth makes additional acquisitions and issues new equity during the balance of the year. New Capital Markets On April 10, 2002, Pengrowth Energy Trust successfully listed on the New York Stock Exchange (NYSE).The listing represents a significant milestone in Pengrowth’s history and will serve unitholders by expanding the Trust’s access to U.S. capital markets. Pengrowth units now trade on both the Toronto Stock Exchange (PGF.UN) and the NYSE (PGH). Stock quotes for both exchanges can be obtained on the Pengrowth website at www.pengrowth.com.
Current Outlook As at the end of April, both crude oil and natural gas prices have increased over the average prices seen in the first quarter of 2002. As at April 30, 2002 WTI at Cushing closed trading at $US27.29, compared to the first quarter average of US$21.67. Similarly Henry Hub natural gas closed trading at $US3.80 per Mmbtu, compared to the first quarter average of $US2.33. This recent recovery in crude oil and natural gas prices is expected to result in increased distributable income over the near term.
James S. Kinnear President and Chief Executive Officer Pengrowth Energy Trust May 2, 2002
For further information, please contact: Dan Belot, Manager, Investor Relations, Calgary Telephone: (403) 233-0224 Facsimile: (403) 294-0051 Toll Free: 1-800-223-4122 Sally Elliott, Investor Relations, Toronto Telephone: (416) 362-1748 Facsimile: (416) 362-8191 Toll Free: 1-888-744-1111 Website: http://www.pengrowth.com E-mail: pengrowth@pengrowth.com
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Consolidated Balance Sheets (Stated in thousands of dollars) As at
As at
March 31
December 31
2002
ASSETS CURRENT ASSETS Cash Marketable securities (Note 6) Accounts receivable Inventory
$
REMEDIATION TRUST FUND PROPERTY, PLANT AND EQUIPMENT AND OTHER ASSETS
LIABILITIES AND UNITHOLDERS' EQUITY CURRENT LIABILITIES Bank indebtedness Accounts payable and accrued liabilities Distributions payable to unitholders Due to Pengrowth Management Limited Current portion of Long-Term Debt (Note 3)
LONG-TERM DEBT (Note 3) FUTURE SITE RESTORATION COSTS TRUST UNITHOLDERS' EQUITY (Note 4)
See accompanying notes to the consolidated financial statements.
$
2001
(unaudited)
(audited)
1,666 31,219 437 33,322
$3,797 27,859 2,687 34,343
6,658
6,470
1,175,673
1,208,526
$1,215,653
$1,249,339
2,537 29,862 23,245 341 28,000 83,985
$
31,359 22,207 523 54,089
311,085
345,456
35,196
32,591
785,387
817,203
$ 1,215,653
$ 1,249,339
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Consolidated Statements of Income and Distributable Income (Stated in thousands of dollars) (Unaudited) Three Months ended March 31
2002
REVENUES Oil and gas sales Processing and other income Crown royalties Alberta Royalty Tax Credit Freehold royalties and mineral taxes
$
Interest and other income NET REVENUE EXPENSES Operating Amortization of injectants for miscible floods Interest General and administrative Management fee Capital taxes Depletion and depreciation Future site restoration
INCOME BEFORE THE FOLLOWING Royalty Income Attributable to royalty units other than those held by Pengrowth Energy Trust NET INCOME Add: Depletion, depreciation and future site restoration Deduct: Alberta Royalty Credit accrued for period Remediation expenses and trust fund contributions DISTRIBUTABLE INCOME
91,634 1,687 (11,968) 125 (1,411) 80,067 427 80,494
2001
$ 142,961 1,677 (27,030) 125 (2,519) 115,214 159 115,373
27,525 12,178 3,038 2,230 1,396 403 30,447 2,829 80,046
21,633 10,685 4,839 2,177 2,829 479 28,810 1,991 73,443
448
41,930
6
22
442
41,908
33,276 (125) (475)
30,801 (125) (513)
$
33,118
$
72,071
Basic
$
0.005
$
0.655
Diluted
$
0.005
$
0.640
DISTRIBUTABLE INCOME PER UNIT (Note 4) Based on weighted average units outstanding
$
0.403
$
1.126
Based on actual distributions paid or declared
$
0.410
$
1.140
NET INCOME PER UNIT (Note 4)
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Cash Flow (Stated in thousands of dollars) (Unaudited) Three Months ended March 31
2002
2001
442
$ 41,908
CASH PROVIDED BY (USED FOR): OPERATING Net income Items not involving cash Depletion, depreciation and future site restoration Amortization of injectants Purchase of injectants Expenditures on remediation Funds generated from operations
$
Distributions Changes in non-cash operating working capital (Note 5)
FINANCING Change in long-term debt Proceeds from issue of trust units
INVESTING Expenditures on property, plant and equipment Proceeds on property dispositions Change in Remediation Trust Fund Marketable securities Change in non-cash investing working capital (Note 5) Deposit on acquisition Expenditures on property acquisitions
30,801 10,685 (18,087) (300) 65,007
(32,080) (10,742) (486)
(74,848) (8,127) (17,968)
(6,371) 860 (5,511)
59,900 3,538 63,438
(11,390) 4,954 (188) (1,666) 7,953
(337)
(13,916) (211) (48) (12,130) (22,027) (48,332)
(6,334)
(2,862)
3,797
4,533
–
-
–
DECREASE IN CASH CASH AND TERM DEPOSITS AT BEGINNING OF PERIOD CASH AND TERM DEPOSITS (BANK INDEBTEDNESS) AT END OF PERIOD See accompanying notes to the consolidated financial statements.
33,276 12,178 (3,336) (224) 42,336
$
(2,537)
$
1,671
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Consolidated Statements of Trust Unitholders’ Equity (Stated in thousands of dollars) (Unaudited) Three Months ended March 31
2002
2001
$ 817,203
$ 641,965
Units issued, net of issue costs
860
3,538
Net income for period
442
41,908
Unitholders' equity at beginning of period
Distributable income TRUST UNITHOLDERS' EQUITY AT END OF PERIOD
(33,118)
(72,071)
$ 785,387
$ 615,340
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Notes to Consolidated Financial Statements (Unaudited) MARCH 31, 2002 (Tabular amounts are stated in thousands of dollars except per unit amounts)
1. SIGNIFICANT ACCOUNTING POLICY The interim consolidated financial statements of Pengrowth Energy Trust and Pengrowth Corporation (collectively referred to as “Pengrowth”) have been prepared by management in accordance with accounting principles generally accepted in Canada. The interim consolidated financial statements have been prepared following the same accounting policies and methods of computation as the consolidated financial statements for the fiscal year ended December 31, 2001. The disclosures provided below are incremental to those included with the annual consolidated financial statements. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in Pengrowth’s annual report for the year ended December 31, 2001.
2. CHANGE IN ACCOUNTING POLICY Effective January 1, 2002, Pengrowth adopted the new standard on accounting for options or similar unit based compensation. Pengrowth prospectively adopted the new standard. For options or similar instruments granted to non-employees, an amount equal to the grant date fair value of the instrument will be recorded as a charge to earnings over the vesting period, if any. For options granted to employees of Pengrowth, the standard provides that Pengrowth may elect not to use this fair value method but to disclose the impact of the fair value method on a pro forma basis. There was no impact on these financial statements of adopting the new standard, as Pengrowth did not grant any additional options during the three months ended March 31, 2002. The new standard also requires recognition of compensation cost with respect to Stock Appreciation Rights granted to employees. No compensation cost results from application of the above provisions for the three months ended March 31, 2002 or for the year ended December 31, 2001.
3. LONG-TERM DEBT Pengrowth has a $415 million revolving credit facility syndicated among nine financial institutions with an extendible 364 day revolving period and a three year amortization term period. In addition, it has a $35 million demand operating line of credit. Total borrowing capacity is reduced by outstanding letters of credit in the amount of approximately $9 million. On June 15, 2002, the amount of letters of credit outstanding will increase by $25 million. In September 2001, the Canadian Institute of Chartered Accountants issued further guidance on the classification of the current portion of long-term debt obligations. Under this guidance the current portion of the 364 day revolving facility is the amount that would be required to be paid in the next twelve months if the facility was not renewed by the lenders. The facility is scheduled for review by the syndicate in June 2002, whereupon it is expected to be renewed for a further 364 days, subject to satisfactory review by the syndicate.
4. TRUST UNITS The authorized capital of Pengrowth is 500,000,000 trust units. Trust Units Issued
March 31, 2002 Number of units Amount
Balance, beginning of period Issued for cash Less: issue expenses Issued for cash on exercise of stock options Issued for cash under Distribution Reinvestment (“DRIP”) Plan Balance, end of period
December 31, 2001 Number of units Amount
82,240,069 – – 14,800
$ 1,280,599 – – 186
63,852,198 17,622,500 – 628,828
$ 974,724 311,974 (18,727) 10,060
48,096 82,302,965
674 $ 1,281,459
136,543 82,240,069
2,568 $ 1,280,599
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15
The per unit amounts for net income and distributable income are based on weighted average units outstanding for the period. The weighted average units outstanding for the three months ended March 31, 2002 were 82,266,485 units (March 31, 2001 – 63,988,090 units). In computing diluted net income per unit, 24,162 units were added to the weighted average number of units outstanding during the period ended March 31, 2002 (March 31, 2001– 360,978) for the dilutive effect of employee stock options. The per unit amount of distributions paid or declared reflect actual distributions paid or declared based on units outstanding at the time. Trust Unit Option Plan As at March 31, 2002, options to purchase 2,940,293 trust units were outstanding (December 31, 2001 – 3,106,635) that expire at various dates to August 31,2006. Trust Unit Options
Outstanding at beginning of period Granted Exercised Cancelled Outstanding at period-end Exercisable at period-end
March 31, 2002 Number of Weighted Options Average Exercise Price 3,106,635 $ 17.78 (14,800) 12.55 (151,542) 17.38 2,940,293 17.82 2,124,212 17.77
December 31, 2001 Number of Weighted Options Average Exercise Price 2,893,554 $ 17.45 905,979 17.66 (628,828) 16.00 (64,070) 18.98 3,106,635 17.78 2,238,406 17.69
Amendments to the trust unit option plan were approved by trust unitholders at the annual meeting of Pengrowth unitholders on April 23, 2002. The maximum number of units which may be reserved for option grants has been increased from 7 million to 10 million, provided that the number of options granted does not exceed 10 per cent of issued and outstanding trust units. The expiry date for all issued and unexercised options, and any options subsequently granted under the plan, has been increased from five years to seven years.
5. CHANGE IN NON-CASH OPERATING WORKING CAPITAL Accounts receivable Inventory Accounts payable and accrued liabilities Due to Pengrowth Management Limited
March 31, 2002 $ (3,360) 2,250 (9,450) (182) $ (10,742)
March 31, 2001 $ (5,029) (3,791) 832 (139) $ (8,127)
March 31, 2002 $ 3,933 4,020 $ 7,953
March 31, 2001 (48) -$ (48)
CHANGE IN NON-CASH INVESTING WORKING CAPITAL Accounts payable for capital accruals Deposit on disposition of properties
The cash payments made for taxes for the quarter ending March 31, 2002 were $355,000 (March 31, 2001 - $430,000) and for interest were $3,403,500 (March 31, 2001 – $9,002,000).
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6. FINANCIAL INSTRUMENTS Interest Rate Risk As at March 31, 2002, Pengrowth had entered into interest rate swaps on $125 million of its long term debt for periods of three years ending November 30, 2004 ($75 million), December 31, 2004 ($25 million) and March 4, 2005 ($25 million) at an average interest rate of 4.09% (before stamping fees). The estimated fair value of the interest rate swaps has been determined based on the amount that Pengrowth would receive or pay to terminate the contracts at period end. At March 31, 2002, the amount that Pengrowth would receive to terminate the interest rate swaps is $2,517,000. Forward and Futures Contracts Pengrowth has a price risk management program whereby the commodity price associated with a portion of its future production is fixed. Pengrowth sells forward a portion of its future production through a combination of fixed price sales contracts with customers and commodity swap agreements with financial counterparties. The forward and futures contracts are subject to market risk from fluctuating commodity prices and exchange rates, however gains or losses on the contracts are offset by changes in the value of Pengrowth’s production. As at March 31, 2002, Pengrowth had fixed the price applicable to future production as follows: Financial Swap Contracts Crude Oil
2002 2003 2004
Volume (bbl/d) 4,000 -
Natural Gas Price C$/bbl $36.89 -
Volume (MMbtu/d) 7,000 7,000 7,000
Fixed Price US/MMbtu $3.90 $3.90 $3.90
As well, Pengrowth has natural gas fixed price sales contracts which fixed the price on 6,785 mcf/d for 2002 at a price of $2.99 Cdn/mcf. The estimated fair value of the crude oil financial swap contracts and the natural gas fixed price sales contracts have been determined based on the amounts Pengrowth would receive or pay to terminate the contracts at period-end. At March 31, 2002 the amount Pengrowth would pay to terminate the crude oil and natural gas contracts would be $4,708,000 and $1,614,000, respectively. Fair Value of Financial Instruments The carrying value of financial instruments included in the balance sheet, other than bank debt and marketable securities, approximate their fair value due to their short maturity. The fair value of the marketable securities at March 31, 2002 was $1,902,000 (March 31, 2001 – nil). The fair value of the Remediation Trust Fund was $6,656,000 (March 31, 2001 – $5,759,000).
7. SUBSEQUENT EVENT On April 30, 2002 Pengrowth sold oil and gas properties for gross proceeds of $40.2 million.
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Corporate Information DIRECTORS OF PENGROWTH CORPORATION Thomas A. Cumming Business Consultant James S. Kinnear President, Pengrowth Management Limited Francis G. Vetsch President, Quantex Resources Ltd. Stanley H. Wong President, Carbine Resources Ltd. John B. Zaozirny Counsel, McCarthy Tetrault Michael A. Grandin Corporate Director Director Emeritus Thomas S. Dobson President, T.S. Dobson Consultant Ltd. OFFICERS OF PENGROWTH CORPORATION James S. Kinnear President and Chief Executive Officer Gordon M. Anderson Vice President and Interim Chief Financial Officer Henry D. McKinnon Vice President, Operations Lynn Kis Vice President, Engineering Charles V. Selby Corporate Secretary Chris Webster Treasurer Lianne Bigham Controller TRUSTEE Computershare Trust Company of Canada BANKERS Bank Syndicate Agent: Royal Bank of Canada AUDITORS KPMG LLP ENGINEERING CONSULTANTS Gilbert Laustsen Jung Associates Ltd.
PENGROWTH AND A STRONG COMMUNITY Pengrowth Management Limited believes in enhancing the community where our employees live and work. Pengrowth supports causes and institutions both financially and through volunteer efforts and is proud of these associations and partnerships with many community-building non-profit organizations. Pengrowth has a substantial investment in our community and although 100 percent of the costs are attributed to Pengrowth Management, Pengrowth Energy Trust unitholders benefit through the visibility associated with these vital partnerships. STOCK EXCHANGE LISTINGS The Toronto Stock Exchange Symbol PGF.UN The New York Stock Exchange Symbol PGH PENGROWTH ENERGY TRUST Head Office Suite 700, 112 – 4 Avenue S.W. Calgary, Alberta T2P 0H3 Canada Telephone: (403) 233-0224 Toll-Free: 1 800 223-4122 Facsimile: (403) 265-6251 Email: pengrowth@pengrowth.com Website: http://www.pengrowth.com
INVESTOR RELATIONS For investor relations enquiries, please contact: Dan Belot, Manager Investor Relations Telephone: (403) 213-8650 Toll-Free: 1 800 223-4122 Facsimile: (403) 294-0051 Email: danielb@pengrowth.com OR
Sally Elliott, Investor Relations, Toronto Telephone: (416) 362-1748 Toll-Free: 1-888-744-1111 Facsimile: (416) 362-8191 ABBREVIATIONS bbl barrel bcf billion cubic feet boe* barrels of oil equivalent boe per day* barrels of oil equivalent per day lt long.tonnes mbbls thousand barrels mmbbls million barrels mboe* thousand barrels of oil equivalent mmboe* million barrels of oil equivalent mcf thousand cubic feet mmcf million cubic feet mcf per day thousand cubic feet per day mmcf per day million cubic feet per day Pengrowth Energy Trust (EnergyTrust) Pengrowth Corporation (Corporation) *6 mcf of gas = 1 barrel of oil
Toronto Office Suite 1200, 141 Adelaide Street W. Toronto, Ontario M5H 3L5 Canada Telephone: (416) 362-1748 Toll-Free: 1 888 744-1111 Facsimile: (416) 362-8191 Halifax Office Purdy’s Wharf Business Centre 407 – 1959 Upper Water Street Halifax, NS B3J 3N2 Canada Telephone: (902) 425-8778 Facsimile: (902) 425-7887