PENGROWTH CORPORATION UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004

PENGROWTH CORPORATION CONSOLIDATED BALANCE SHEETS (Stated in thousands of dollars)

ASSETS CURRENT ASSETS Cash and term deposits Accounts receivable Inventory

$

As at March 31 2004

As at December 31 2003

(unaudited)

(audited)

251,077 64,745 1,057

$

64,154 65,070 699

316,879

129,923

REMEDIATION TRUST FUNDS

7,690

7,392

DEFERRED CHARGES (Note 6)

5,070

5,544

289,143

276,865

OTHER ASSETS

LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities Due to royalty unitholders Due to Pengrowth Energy Trust (Note 4) Due to Pengrowth Management Limited Note payable

$

618,782

$

419,724

$

54,028 65,706 190,532 1,255 10,000

$

54,152 59,960 1,122 10,000

321,521

125,234

35,000

35,000

262,260

259,300

Issued - 1,100 Common shares

1

1

Contributed surplus

-

189

NOTE PAYABLE LONG TERM DEBT (Note 3) SHAREHOLDER'S EQUITY Capital stock Authorized - Unlimited number of common shares without par value

SUBSEQUENT EVENTS (Note 10) $ See accompanying notes to the consolidated financial statements

618,782

$

419,724

PENGROWTH CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS THREE MONTHS ENDED MARCH 31 (Stated in thousands of dollars) (Unaudited) 2004

2003 (restated see Note 2)

REVENUES Oil and gas sales Processing and other income Interest and other income Crown royalties net of reimbursement Freehold and other royalties Freehold mineral taxes

$

164,323 2,985 425 (5,959) (913) (150)

$

202,801 2,855 82 (327) (1,304) (1,190)

160,711

202,917

30,864 5,204 2,170 4,177 5,847 2,754 2,371 2,210 529

39,482 9,863 2,411 3,653 3,745 3,763 750 621 564

56,126

64,852

Income before unitholder royalty

104,585

138,065

Unitholder royalty granted pursuant to Royalty Indenture

(99,363)

(127,315)

EXPENSES Operating Amortization of injectant costs Facilities lease expense Interest General and administrative Management fee Foreign exchange loss (Note 7) Remediation expenses and trust fund contributions Capital taxes

Royalty Accrued NET INCOME, BEING RETAINED EARNINGS AT END OF PERIOD

See accompanying notes to the consolidated financial statements

(5,222)

$

-

-

$

10,750

PENGROWTH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW THREE MONTHS ENDED MARCH 31 (Stated in thousands of dollars) (Unaudited) 2004

2003 (restated see Note 2)

CASH PROVIDED BY (USED FOR): OPERATING Net income Amortization of injectant costs Purchase of injectants Unrealized foreign exchange loss (Note 7) Royalty accrued Trust unit based compensation Amortization of deferred charges (Note 6)

$

Change in non-cash operating working capital (Note 8)

FINANCING Increase in long term debt Loan from Pengrowth Energy Trust (Note 4) Sale of royalty interests

INVESTING Expenditures on property, plant and equipment Expenditures on property acquisitions Change in Remediation Trust Funds Proceeds from sale of marketable securities Change in non-cash investing working capital (Note 8)

Change in cash and term deposits Cash and term deposits at beginning of period CASH AND TERM DEPOSITS AT END OF PERIOD

See accompanying notes to the consolidated financial statements

$

5,204 (7,259) 2,960 5,222 1,107 474

$

10,750 9,863 (9,475) 54 -

994

6,602

8,702

17,794

190,532 8,908

(9,275) 6,394

199,440

(2,881)

(24,862) (787) (298) 4,728

(18,503) (1,973) (9) 273 453

(21,219)

(19,759)

186,923

(4,846)

64,154

8,292

251,077

$

3,446

PENGROWTH CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004 (Tabular amounts are stated in thousands of dollars)

1. SIGNIFICANT ACCOUNTING POLICY The interim consolidated financial statements of Pengrowth Corporation (“Corporation”) 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 financial statements for the fiscal year ended December 31, 2003. The financial statements do not contain the accounts of the Manager or the accounts of Pengrowth Energy Trust (“EnergyTrust”). 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 for the year ended December 31, 2003.

2. CHANGE IN ACCOUNTING POLICY Prior period comparative balances have been restated due to a change in accounting policy described in Note 3 of the consolidated financial statements for the fiscal year ended December 31, 2003. As a result of the change in accounting policy, net income for the three months ended March 31, 2003 decreased by $54,000.

3. LONG TERM DEBT

U.S. dollar denominated debt: $150 million senior unsecured notes at 4.93 percent due April 2010 $50 million senior unsecured notes at 5.47 percent due April 2013 Unrealized foreign exchange gain on translation

As at March 31, 2004

As at December 31, 2003

$ 217,680

$ 217,680

72,560 (27,980) $ 262,260

72,560 (30,940) $ 259,300

4. DUE TO PENGROWTH ENERGY TRUST The loan payable to Pengrowth Energy Trust is unsecured, non-interest bearing and payable on demand.

5. FAIR VALUE OF UNIT BASED COMPENSATION EnergyTrust has unit based compensation plans under which directors, officers, employees and special consultants of the Corporation and the Manager are eligible to receive trust unit options and rights. The fair value of rights incentive options granted during the three months ended March 31, 2004 was estimated as 15 percent of the exercise price at the date of grant using a modified Black-Scholes option pricing model with the following assumptions: risk-free rate of 3.9 percent, volatility of 22 percent, expected life of five years and adjustments for the estimated distributions and reductions in the exercise price over the life of the right incentive option. For trust unit options and rights granted in 2002, Corporation has elected to disclose the pro forma effect on net income had compensation expense been recorded using the fair value method. The following is the pro forma effect on net income: Three months ended March 31, 2003 March 31, 2004 Net income Compensation cost related to options granted in 2002 Compensation cost related to rights granted in 2002 Pro forma net income (loss)

$

$

(305) (305)

$ 10,750 (94) (330) $ 10,326

6. DEFERRED CHARGES As at March 31, 2004 Imputed interest on note payable (net of accumulated amortization of $397) U.S. debt issue costs (net of accumulated amortization of $281)

As at December 31, 2003

$ 3,210

$

3,607

1,860 $ 5,070

$

1,937 5,544

7. FOREIGN EXCHANGE LOSS Three months ended March 31, 2004 March 31, 2003 Unrealized foreign exchange loss on translation of U.S. dollar denominated debt Realized foreign exchange losses (gains)

$ 2,960 (589) $ 2,371

$

750 $ 750

The U.S. dollar denominated debt is translated into Canadian dollars at the exchange rate in effect at the balance sheet date. Foreign exchange gains and losses are included in income.

8. OTHER CASH FLOW DISCLOSURES Change in Non-Cash Operating Working Capital

Accounts receivable Inventory Accounts payable and accrued liabilities Due to royalty unitholders Due to Pengrowth Management Limited

March 31, 2004 $ 325 (358) (4,852) 5,746 133 $ 994

March 31, 2003 $ (19,680) 185 611 25,336 150 $ 6,602

Change in Non-Cash Investing Working Capital

Accounts payable for capital accruals

March 31, 2004 $ 4,728

March 31,2003 $ 453

Cash Payments

Cash payments made for taxes Cash payments made for interest

March 31, 2004 $ 523 $ 343

March 31,2003 $ 485 $ 4,846

9. FINANCIAL INSTRUMENTS Foreign Exchange Risk The Corporation entered into a foreign exchange swap which fixed the Canadian to U.S. dollar exchange rate at Cdn$1.55 per U.S.$1 on U.S.$750,000 per month effective 2003 and 2004. This swap has mitigated a portion of the exchange risk on U.S. dollar denominated gas sales. The estimated fair value of the foreign exchange swap has been determined based on the amount Corporation would receive or pay to terminate the contract at period-end. At March 31, 2004, the amount Corporation would receive to terminate the foreign exchange swap would be Cdn$1,567,000. Forward and Futures Contracts The Corporation has a price risk management program whereby the commodity price associated with a portion of its future production is fixed. The Corporation 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. As at March 31, 2004, Corporation had fixed the price applicable to future production as follows: Crude Oil:

Remaining Term 2004 Financial: April 1, 2004 – Dec 31, 2004

Volume (bbl/d)

10,500

Reference Point

Price Per bbl

WTI (1)

$38.78 Cdn

Reference Point

Price Per mmbtu

Natural Gas:

Remaining Term

Volume (mmbtu/d)

2004 Financial: April 1, 2004 – Dec 31, 2004 April 1, 2004 – Dec 31, 2004 April 1, 2004 – Dec 31, 2004

8,000 7,000 948

Tetco M3 (1) Transco Z6 AECO

$7.39 Cdn $3.90 U.S. $6.70 Cdn

2005 Financial: Jan 1, 2005 – Dec 31, 2005

1,000

Tetco M3 (1)

$8.22 Cdn

(1) Associated CDN$ / U.S.$ foreign exchange rate has been fixed.

The estimated fair value of the financial crude oil and natural gas contracts have been determined based on the amounts Corporation would receive or pay to terminate the contracts at period-end. At March 31, 2004, the amount Corporation would pay to terminate the financial crude oil and natural gas contracts would be $16,060,000 and $9,997,000, respectively. Pengrowth entered into an agreement to purchase 5 megawatts of electricity at a price of $53.00 per megawatt hour, effective February 1, 2004 to December 31, 2004. Fair Value of Financial Instruments The carrying value of financial instruments included in the balance sheet, other than long term debt, the note payable and remediation trust funds, approximate their fair value due to their short maturity. The fair value of the remediation trust funds at March 31, 2004 was $7,783,000 (December 31, 2003 – $7,479,000). The fair value of the U.S. dollar denominated debt at March 31, 2004 was approximately $268,836,000 based on the changes in the fair value of the underlying U.S. Treasury Bill that was originally used as the basis for determining the coupon rate for each of Corporation’s notes. The fair value of the note payable at March 31, 2004 approximates its carrying value net of the imputed interest included in deferred charges.

10. SUBSEQUENT EVENTS Acquisition of Oil and Gas Properties On April 8, 2004, the Corporation announced it had entered into an agreement with a subsidiary of Murphy Oil Corporation (“Murphy”) to acquire certain oil and natural gas assets in Alberta and Saskatchewan for $550 million before adjustments. The acquisition will be effective April 1, 2004 and is expected to be completed in late May 2004. The Corporation anticipates it will finance the acquisition on closing through cash and term deposits on hand, and a committed bridge credit facility. Reclassification of Trust Units EnergyTrust received Trust Unitholder approval to reclassify the trust unit capital into Class A and Class B units at the Annual and Special Meeting of Trust Unitholders on April 22, 2004. The reclassification will be implemented at a date to be determined and announced by the Board of Directors upon receipt of regulatory approval and satisfaction of other conditions as described in the Information Circular and Proxy Statement and the related Supplemental Information in Respect of the Information Circular and Proxy Statement.