PENGROWTH ENERGY TRUST - 5 -
Management’s Discussion and Analysis The following discussion and analysis of financial results should be read in conjunction with: • The MD&A and the audited consolidated financial statements for the years ended December 31, 2002 and 2001; and • The interim unaudited consolidated financial statements as at and for the nine month’s ended September 30, 2003.
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. When converting natural gas to equivalent barrels of oil within this discussion, Pengrowth uses the international standard of 6 thousand cubic feet (mcf) to one barrel of oil equivalent (boe). Production volumes and revenues are reported on a gross basis (before crown and freehold royalties) in accordance with Canadian practice. All amounts are stated in Canadian dollars unless otherwise specified.
Distributable Cash Distributable cash increased by 58% to $73.0 million in the third quarter of 2003, from $46.1 million in the third quarter of 2002. For the nine months ended September 30, 2003, Pengrowth recorded $241.9 million in distributable cash, compared to $127.4 million in the first nine months of 2002. An additional $26.8 million of distributable cash from the first nine months of 2003 was withheld to fund capital expenditures and a balance of $6.5 million remained to be distributed to unitholders in future months. Actual distributions were $0.63 per unit for the third quarter of 2003 compared to $0.52 per unit for the third quarter of 2002, and $2.05 per unit on a year to date basis in 2003 compared to $1.47 per unit for the first nine months of 2002. The increase in distributable cash is attributable mainly to higher commodity prices (Pengrowth’s average per boe selling price was 40% higher in the first nine months of 2003 compared to the same period in the prior year), and a 21% increase in production, offset in part by a reduced payout ratio - commencing with the January 2003 distribution, approximately 10% of cash available for distribution has been withheld to repay debt or fund capital expenditures. The following is a summary of recent monthly distributions and future key dates: Ex-Distribution Date * December 27, 2002 January 30, 2003 February 27, 2003 March 28, 2003 April 29, 2003 May 29, 2003 June 26, 2003 July 29, 2003 August 27, 2003 September 26, 2003 October 29, 2003 November 27, 2003
Record Date December 31, 2002 February 3, 2003 March 3, 2003 April 1, 2003 May 1, 2003 June 2, 2003 June 30, 2003 July 31, 2003 August 29, 2003 September 30, 2003 October 31, 2003 December 1, 2003
Distribution Payment Date January 15, 2003 February 15, 2003 March 15, 2003 April 15, 2003 May 15, 2003 June 15, 2003 July 15, 2003 August 15, 2003 September 15, 2003 October 15, 2003 November 15, 2003 December 15, 2003
Distribution Amount US $ per Trust Unit Amount** $0.20 $0.13 $0.20 $0.13 $0.25 $0.17 $0.25 $0.17 $0.25 $0.18 $0.25 $0.18 $0.21 $0.15 $0.21 $0.15 $0.21 $0.15 $0.21 $0.15 $0.21 $0.16
* To benefit from the monthly cash distribution, unitholders must purchase or hold trust units prior to the ex-distribution date. ** Before applicable withholding taxes.
Net Income Net income for the third quarter of 2003 was $33.0 million compared to $12.5 million for the previous year. The increase is due mainly to higher production and commodity prices compared to the prior year. For the first nine months of 2003, Pengrowth