/FIRST AND FINAL ADD - TO121 - PrimeWest Energy Trust earnings/
Consolidated Balance Sheet --------------------------- (Unaudited)
(Audited) (millions of dollars) Sep 30, 2004 Dec 31, 2003
-------------------------------------------------------------------------
(Restated - Note 2) ASSETS Current assets Cash and short term
deposits $ - $ 2.5 Accounts receivable 75.2 65.4 Derivative loss
(Note 5) 0.5 - Prepaid expenses 8.9 6.5 Inventory 6.6 2.1
-------------------------------------------------------------------------
91.2 76.5 Cash reserved for site restoration and reclamation 10.4
8.2 Other assets and deferred charges (Note 4) 73.3 1.5 Property,
plant and equipment 2,019.4 1,548.2 Goodwill 68.5 56.1
-------------------------------------------------------------------------
$ 2,262.8 $ 1,690.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY Current liabilities Bank
overdraft $ 1.5 $ - Accounts payable 21.1 26.7 Accrued liabilities
54.3 45.3 Derivative liabilities (Note 5) 26.9 - Accrued
distributions to unitholders 16.9 10.3
-------------------------------------------------------------------------
120.7 82.3 Derivative liabilities (Note 5) 2.4 - Long-term debt
(Note 7) 461.7 250.1 Future income taxes 204.8 313.2 Asset
retirement obligation (Note 6) 46.7 19.7
-------------------------------------------------------------------------
836.3 665.3 UNITHOLDERS' EQUITY Net capital contributions (Note 8)
2,029.8 1,565.9 Convertible unsecured subordinated debentures (Note
8) 240.0 - Capital issued but not distributed 3.8 5.2 Long-term
incentive plan equity 18.9 14.6 Accumulated income 48.6 219.1
Accumulated cash distributions (905.1) (771.6) Accumulated
debenture interest (1.5) - Accumulated dividends (8.0) (8.0)
-------------------------------------------------------------------------
1,426.5 1,025.2
-------------------------------------------------------------------------
$ 2,262.8 $ 1,690.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these financial
statements. Consolidated Statements of Unitholders' Equity
(Unaudited) ---------------------------- For the nine months ended
(millions of dollars) Sep 30, 2004 Sep 30, 2003
-------------------------------------------------------------------------
(Restated - Note 2) Unitholders' equity, beginning of period $
1,019.6 $ 847.2 Adjustment to Unitholders' equity at beginning of
period to adopt: New Asset Retirement Obligation (Note 2) 5.6 - New
Oil and Gas Accounting Standard (Note 2) (233.3) - Net income for
the period 62.8 90.1 Net capital contributions 463.9 253.1
Convertible unsecured subordinated debentures 240.0 - Capital
issued but not distributed (1.4) - Long-term incentive plan equity
4.3 1.8 Cash distributions (133.5) (146.3) Debenture interest
expense (1.5) -
-------------------------------------------------------------------------
Unitholders' equity, end of period $ 1,426.5 $ 1,045.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statements of Cash Flow (Unaudited) Three Months Ended
Nine Months Ended
-------------------------------------------------------------------------
Sep 30, Sep 30, Sep 30, Sep 30, (millions of dollars) 2004 2003
2004 2003
-------------------------------------------------------------------------
(Restated (Restated - Note 2) - Note 2) OPERATING ACTIVITIES Net
income for the period $ 20.2 $ 7.0 $ 62.8 $ 90.1 Add/(deduct):
Items not involving cash from operations Depletion, depreciation
and amortization 50.2 50.7 133.4 153.3 Non-cash general &
administrative 14.1 2.3 7.2 5.9 Non-cash foreign exchange loss
(gain) (9.1) 0.2 (4.4) (5.4) Accretion on asset retirement
obligation 0.5 0.3 1.2 0.9 Future income taxes recovery (22.3)
(8.7) (44.0) (71.1) Unrealized loss on derivatives 14.7 - 28.8 -
-------------------------------------------------------------------------
Cash flow from operations 68.3 51.8 185.0 173.7 Expenditures on
site restoration and reclamation (1.1) (0.4) (2.4) (0.8) Change in
non-cash working capital (3.7) 5.4 (10.5) 0.1
-------------------------------------------------------------------------
63.5 56.8 172.1 173.0
-------------------------------------------------------------------------
FINANCING ACTIVITIES Proceeds from issue of Trust Units, net of
issue costs 290.4 80.1 433.3 240.3 Proceeds from issue of
Debentures, net of issue costs 240.0 - 240.0 - Net cash
distributions to unitholders (41.9) (40.8) (107.0) (137.3)
Increase/(decrease) in bank credit facilities 291.0 (51.0) 206.0
(146.0) Increase in senior secured notes - - - 174.0 Increase in
deferred charges - 0.1 - (1.3) Change in non-cash working capital
8.3 (2.5) 9.8 0.5
-------------------------------------------------------------------------
787.8 (14.1) 782.1 130.2
-------------------------------------------------------------------------
INVESTING ACTIVITIES Expenditures on property, plant &
equipment (26.0) (31.4) (79.6) (75.6) Corporate acquisitions (Note
3) - (0.5) (34.8) (200.9) Acquisition of capital assets (767.0)
(0.2) (771.2) (4.0) Proceeds on disposal of property, plant &
equipment 6.3 0.6 11.3 0.8 Equity investment (72.7) - (72.7) -
Increase in cash reserved for future site restoration and
reclamation (0.6) (3.7) (2.2) (6.4) Change in non-cash working
capital (5.3) 5.2 (9.0) 7.9
-------------------------------------------------------------------------
(865.3) (30.0) (958.2) (278.2)
-------------------------------------------------------------------------
(Decrease)/increase in cash for the period (14.0) 12.7 (4.0) 25.0
Cash (bank overdraft) beginning of the period 12.5 9.2 2.5 (3.1)
-------------------------------------------------------------------------
(Bank overdraft)/cash end of the period $ (1.5) $ 21.9 $ (1.5) $
21.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash interest paid $ 1.2 $ 1.2 $ 6.6 $ 6.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash taxes paid $ 0.8 $ 2.6 $ 3.1 $ 3.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statements of Income (Unaudited) Three Months Ended
Nine Months Ended
-------------------------------------------------------------------------
(millions of dollars, except Sep 30, Sep 30, Sep 30, Sep 30, per
Trust Unit amounts) 2004 2003 2004 2003
-------------------------------------------------------------------------
(Restated (Restated - Note 2) - Note 2) REVENUES Sales of crude
oil, natural gas and natural gas liquids $ 127.4 $ 102.3 $ 350.2 $
343.7 Transportation expenses (2.0) (2.1) (5.7) (6.3) Crown and
other royalties, net of ARTC (28.9) (23.1) (78.0) (80.8) Other
income 0.7 0.1 1.3 0.3
-------------------------------------------------------------------------
97.2 77.2 267.8 256.9
-------------------------------------------------------------------------
EXPENSES Operating 21.4 17.2 60.6 58.2 Cash general and
administrative 3.4 3.5 11.1 10.5 Non-cash general and
administrative 14.1 2.3 7.2 5.9 Interest 2.9 4.0 8.9 11.0 Accretion
on asset retirement obligation 0.5 0.3 1.2 0.9 Unrealized loss on
derivatives 14.7 - 28.8 - Foreign exchange loss (gain) (9.0) 0.1
(4.1) (5.4) Depletion, depreciation and amortization 50.2 50.7
133.4 153.3
-------------------------------------------------------------------------
$ 98.2 $ 78.1 $ 247.1 $ 234.4
-------------------------------------------------------------------------
Income before taxes for the period $ (1.0) $ (0.9) $ 20.7 $ 22.5
-------------------------------------------------------------------------
Income and capital taxes 1.1 0.8 1.9 3.5 Future income taxes
recovery (22.3) (8.7) (44.0) (71.1)
-------------------------------------------------------------------------
(21.2) (7.9) (42.1) (67.6)
-------------------------------------------------------------------------
Net income for the period $ 20.2 $ 7.0 $ 62.8 $ 90.1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per Trust Unit - basic $ 0.31 $ 0.15 $ 1.10 $ 2.01 Net
income per Trust Unit - diluted $ 0.31 $ 0.15 $ 1.10 $ 2.00
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Notes to Consolidated Financial Statements For the nine months
ended September 30, 2004 (millions of dollars except per Trust
Unit/share amounts) all amounts are expressed in millions of
Canadian dollars unless otherwise indicated. 1. Significant
Accounting Policies ---------------------------------- These
interim consolidated financial statements of PrimeWest Energy Trust
have been prepared in accordance with Canadian generally accepted
accounting principles. The specific accounting principles used are
described in the annual consolidated financial statements of the
Trust appearing on pages 69 through 91 of the Trust's 2003 annual
report and should be read in conjunction with these interim
financial statements. 2. Changes in Accounting Policies
--------------------------------- Full Cost Accounting The adoption
of AcG-16 modifies how the ceiling test is performed resulting in a
two stage process. The first stage requires the carrying amount of
the cost centers to be tested for recoverability using undiscounted
future cash flows from proved reserves using management's best
estimate of forward indexed prices. When the carrying amount of a
cost center is not recoverable, the second stage of the process
will determine the impairment whereby the cost center would be
written down to its fair value. The second stage requires the
calculation of discounted future cash flows from proved plus
probable reserves. The fair value is estimated using accepted
present value techniques, which incorporate risks and other
uncertainties when determining expected cash flows. PrimeWest has
performed the ceiling test under AcG-16 as of January 1, 2004. The
impairment test was calculated using the consultant's average
prices at January 1 for the years 2004 to 2008 as follows:
Consultant's Average Price Forecasts Year
------------------------------------------------------------------------
2004 2005 2006 2007 2008
------------------------------------------------------------------------
WTI ($U.S./bbl) 29.21 26.43 25.42 25.38 25.51 AECO ($Cdn/Mcf) 5.90
5.33 4.98 4.95 4.92
------------------------------------------------------------------------
------------------------------------------------------------------------
The ceiling test resulted in a before tax impairment of $308.9
million and an after tax impairment of $233.2 million. This write
down was recorded to accumulated income in the first quarter of
2004 with the adoption of AcG-16. Asset Retirement Obligation
Effective January 1, 2004, the Trust retroactively adopted the CICA
Handbook section 3110, "Asset Retirement Obligations". The new
standard requires the recognition of the liability associated with
the future site reclamation costs of tangible long-lived assets.
This liability would be comprised of the Trust's net ownership
interest in producing wells and processing plant facilities. The
liability for future retirement obligations is to be recorded in
the financial statements at the time the liability is incurred. The
asset retirement obligation is initially recorded at the estimated
fair value as a long-term liability with a corresponding increase
to property, plant and equipment. The depreciation of property,
plant and equipment is allocated to expense on the
unit-of-production basis. The liability is increased each reporting
period for the fair value of any new future site reclamation costs
and the corresponding accretion on the original provision. The
accretion is charged to earnings in the period incurred. The
provision will also be revised for any changes to timing related to
cash flows or undiscounted reclamation costs. Actual expenditures
incurred for the purpose of site reclamation are charged to the
asset retirement obligation to the extent that the liability exists
on the balance sheet. Differences between the actual costs incurred
and the fair value of the liability recorded are recognized to
earnings in the period incurred. The Trust previously estimated the
costs of dismantlement, removal, abandonment and site reclamation
on a unit-of-production basis over the remaining life of the
estimated proved reserves. This estimate was charged to earnings
with a corresponding offset to the accumulated site provision
liability on the balance sheet. The adoption of CICA Handbook
section 3110 allows for the cumulative effect of the change in
accounting policy to be recorded to accumulated income with
retroactive restatement of prior period comparatives. At January 1,
2004, this resulted in an increase to the asset retirement
obligation of $19.7 million (2003 - $15.3 million), an increase to
PP&E of $10.6 million (2003 - $9.0 million), a $5.6 million
(2003 - $0.04 million) increase to accumulated income, a decrease
of site restoration provision of $17.8 million (2003 - $6.2
million) and an increase to the future tax liability of $3.1
million (2003 - $(0.03) million). See Note 6 for the reconciliation
of the asset retirement obligation. Implementation of this
accounting standard did not affect the Trust's cash flow or
liquidity. Financial Derivatives Effective January 1, 2004, the
Trust has implemented CICA Accounting Guideline (AcG-13), "Hedging
Relationships", which is effective for fiscal years beginning on or
after July 1, 2003. AcG-13 addresses the identification,
designation, documentation and effectiveness of hedging
transactions for the purposes of applying hedge accounting. It also
established conditions for applying or discontinuing hedge
accounting. Under the new guideline, hedging transactions must be
documented and it must be demonstrated that the hedges are
sufficiently effective in order to continue accrual accounting for
position hedges with derivatives. The trust is not applying hedge
accounting to its hedging relationships. As of January 1, 2004, the
Trust recorded $6.0 million for the mark-to-market value of the
outstanding hedges as a derivative liability and a $6.0 million
deferred derivative loss, to be realized upon settlement of the
corresponding derivative instrument. The deferred loss at January
1, 2004 was comprised of a $3.9 million loss for crude oil, $2.1
million loss for natural gas, $0.6 million loss for interest rate
swaps and a gain of $0.6 million for electrical power. See Note 5
for the reconciliation of the derivative liability and deferred
derivative loss. 3. Asset and Corporate Acquisitions
----------------------------------- a) On September 2, 2004,
PrimeWest Gas Corp. acquired oil and gas assets from Calpine
Canada. The acquisition was accounted for using the purchase method
of accounting with the net assets acquired and consideration paid
as follows: Net Assets Acquired at Assigned Values ($ millions)
Consideration Paid ($ millions)
-------------------------------------------------------------------------
Petroleum and natural gas assets $ 762.3 Inventory 4.2 Cash $ 747.0
Working capital 2.9 Net closing adjustments (10.3) Asset Retirement
Costs associated with Obligation (27.4) acquisition 5.3
-------------------------------------------------------------------------
$ 742.0 $ 742.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
b) On March 16, 2004, PrimeWest Gas Corp. completed the acquisition
of Seventh Energy Ltd. Subsequent to the acquisition, Seventh
Energy was amalgamated with PrimeWest Gas Corp. The acquisition was
accounted for using the purchase method of accounting with net
assets acquired and consideration paid as follows: Net Assets
Acquired at Assigned Values ($ millions) Consideration Paid ($
millions)
-------------------------------------------------------------------------
Petroleum and natural gas assets $ 46.5 Goodwill 12.4 Working
capital (2.5) Long-term debt assumed (9.9) Office lease obligation
(0.1) Asset retirement obligation (0.5) Cash $ 34.6 Future income
Costs associated with taxes (11.1) acquisition 0.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ 34.8 $ 34.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4. Other Assets and Deferred Charges
------------------------------------ Sep 30, Dec 31, ($ millions)
2004 2003
-------------------------------------------------------------------------
Equity investments $ 72.1 $ 0.2 Deferred charges 1.2 1.3
-------------------------------------------------------------------------
$ 73.3 $ 1.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
On September 2, 2004, PrimeWest Energy Trust acquired 25% of
Calpine Natural Gas Trust. The investment is being recorded using
the equity method of accounting. Consideration Paid ($ millions)
-------------------------------------------------------------------------
Cash $ 78.0 Net closing adjustments (5.3)
-------------------------------------------------------------------------
$ 72.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Investment in Calpine Natural Gas Trust ($ millions)
-------------------------------------------------------------------------
Consideration paid, September 2, 2004 $ 72.7 Equity income - Cash
distributions (1.0)
-------------------------------------------------------------------------
Investment in Calpine Natural Gas Trust, September 30, 2004 $ 71.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
5. Derivative Liabilities ------------------------- Derivative
Liability ($ millions)
-------------------------------------------------------------------------
Derivative Liability, January 1, 2004 $ 6.0 Derivative instruments
settled (19.4) Mark-to-market unrealized loss 42.7
-------------------------------------------------------------------------
Derivative Liability, September 30, 2004 $ 29.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Current Derivative Liability $ 26.9 Long term Derivative Liability
2.4
-------------------------------------------------------------------------
Derivative Liability, September 30, 2004 $ 29.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Derivative Loss ($ millions)
-------------------------------------------------------------------------
Derivative Loss, January 1, 2004 $ 6.0 Derivative instruments
settled that existed on January 1, 2004 or prior (5.5)
-------------------------------------------------------------------------
Derivative Loss, September 30, 2004 $ 0.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
6. Asset Retirement Obligations -------------------------------
Management has estimated the total future asset retirement
obligation based on the Trust's net ownership interest in all wells
and facilities. This includes all estimated costs to dismantle,
remove, reclaim and abandon the wells and facilities and the
estimated time period during which these costs will be incurred in
the future. The following table reconciles the asset retirement
obligation associated with the retirement of oil and gas
properties: Asset Retirement Obligation ($ millions)
-------------------------------------------------------------------------
Asset Retirement Obligation, December 31, 2003 $ 19.7 Liabilities
incurred 0.3 Liabilities settled (2.4) Accretion expense 1.2
Acquisition of capital assets 27.4 Acquisition of Seventh Energy
0.5
-------------------------------------------------------------------------
Asset Retirement Obligation, September 30, 2004 $ 46.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at September 30, 2004, the undiscounted amount of estimated cash
flows required to settle the obligation is $124.6 million. The
estimated cash flow has been discounted using a credit-adjusted
risk free rate of 7.0 percent and an inflation rate of 1.5 percent.
Although the expected period until settlement ranges from a minimum
of 1 year to a maximum of 50 years, the costs are expected to be
paid over an average of 34 years. These future asset retirement
costs will be funded from the cash reserved for site restoration
and reclamation. This cash reserve is currently funded at $0.50 per
BOE from PrimeWest's operating resources. 7. Long-Term Debt
----------------- Sep 30, Dec 31, ($ millions) 2004 2003
-------------------------------------------------------------------------
Bank credit facilities $ 304.0 $ 88.0 Senior secured notes 157.7
162.1
-------------------------------------------------------------------------
$ 461.7 $ 250.1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
8. Unitholders' Equity ---------------------- The authorized
capital of the Trust consists of an unlimited number of Trust
Units. Trust Units Number of Units ($ millions)
-------------------------------------------------------------------------
Balance, December 31, 2003 48,751,883 $ 1,537.9 Issued pursuant to
equity offering 17,700,000 419.5 Issued on exchange of Exchangeable
Shares 775,603 15.9 Issued pursuant to Distribution Reinvestment
Plan 203,282 4.8 Issued pursuant to the Premium Distribution Plan
961,921 23.2 Issued pursuant to Long-Term Incentive Plan 97,103 2.6
Issued pursuant to Optional Trust Unit Purchase Plan 587,663 13.8
-------------------------------------------------------------------------
Balance, September 30, 2004 69,077,455 $ 2,017.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The weighted average number of Trust Units and Exchangeable Shares
outstanding for the three and nine months ended September 30, 2004
were 61,006,757 (2003 - 46,422,055) and 55,590,651 (2003 -
44,767,269) respectively. For purposes of calculating diluted net
income per Trust Unit for the three months ended September 30,
2004, 2,973,749 Trust units issuable pursuant to the conversion of
the Convertible Unsecured Subordinated Debentures Series I and II
and 467,393 Trust Units (2003 - 386,804) issuable pursuant to the
Long-Term Incentive Plan were added to the weighted average number.
For the purpose of calculating diluted net income per Trust unit
for the nine months ended September 30, 2004, 998,485 Trust Units
issuable pursuant to the conversion of the Convertible Unsecured
Subordinated Debentures Series I and II and 467,393 Trust Units
(2003 - 386,804) issuable pursuant to the Long- Term Incentive Plan
were added to the weighted average number. The per unit cash
distribution amounts paid or declared reflects distributions paid
or declared to Trust Units outstanding on the record dates.
PrimeWest Exchangeable Class A Shares The Exchangeable Shares are
exchangeable into PrimeWest Trust Units at any time up to March 29,
2010 based on an exchange ratio that adjusts each time the Trust
makes a distribution to its unitholders. The exchange ratio, which
was 1:1 on the date that the Exchangeable Shares were first issued,
is based on the total monthly distribution, divided by the closing
unit price on the distribution payment date. The exchange ratio
effective September 15, 2004 was 0.48773:1 and December 31, 2003
was 0.44302:1. Exchangeable Shares No. of shares ($ millions)
-------------------------------------------------------------------------
Balance, December 31, 2003 3,041,124 $ 28.0 Exchanged for Trust
Units (1,725,951) (15.9)
-------------------------------------------------------------------------
Balance, September 30, 2004 1,315,173 $ 12.1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
7.5% Convertible Unsecured Subordinated Debentures (Series I) On
September 2, 2004, PrimeWest issued $150 million of Series I
Convertible Unsecured Subordinated Debentures for net proceeds of
$144 million. The Debentures bear interest at an annual rate of
7.5% payable semi-annually on March 31 and September 30 commencing
March 31, 2005. The Debentures are convertible at any time at the
option of the holder into PrimeWest Trust Units at a conversion
price of $26.50 per Trust Unit prior to maturity on September 30,
2009. The Debentures may be redeemed in whole or in part at the
option of the Trust at a price of $1,050 per Debenture after
September 30, 2007 and on or before September 30, 2008 and at a
price of $1,025 per Debenture after September 30, 2008 and before
maturity. On redemption or maturity the Trust may opt to satisfy
its obligation to repay the principal by issuing PrimeWest Trust
Units. 7.5% Convertible Unsecured Subordinated Debentures (Series
I) ($ millions)
-------------------------------------------------------------------------
Balance, December 31, 2003 $ - Issue of Series I Debentures (net of
issue costs of $6 million) 144.0
-------------------------------------------------------------------------
Balance, September 30, 2004 $ 144.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
7.75% Convertible Unsecured Subordinated Debenture (Series II) On
September 2, 2004, PrimeWest issued $100 million of Series II
Convertible Unsecured Subordinated Debentures for net proceeds of
$96 million. The Debentures bear interest at 7.75% payable
semi-annually at June 30 and December 31 commencing December 31,
2004. The Debentures are convertible at any time at the option of
the debenture holder into PrimeWest Trust units at a conversion
price of $26.50 per Trust unit prior to maturity on December 31,
2011. The Debentures may be redeemed in whole or in part at the
option of the Trust at a price of $1,050 per Debenture after
December 31, 2007 and on or before December 31, 2008, at a price of
$1,025 per Debenture after December 31, 2008 and on or before
December 31, 2009 and at a price of $1,000 per Debenture after
December 31, 2009 and before maturity. On redemption or maturity
the Trust may opt to satisfy its obligation to repay the principal
by issuing PrimeWest Trust Units. 7.75% Convertible Unsecured
Subordinated Debentures (Series II) ($ millions)
-------------------------------------------------------------------------
Balance, December 31, 2003 $ - Issue of Series II Debentures (net
of issue costs of $4 million) 96.0
-------------------------------------------------------------------------
Balance, September 30, 2004 $ 96.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
9. Long-Term Incentive Plan --------------------------- Under the
terms of the Long-Term Incentive Plan, a maximum of 1,800,000 Trust
Units are reserved for issuance pursuant to the exercise of Unit
Appreciation Rights (UARs) granted to employees of PrimeWest.
Payouts under the plan are based on total unitholder return,
calculated using both the change in the Trust Unit price as well as
cumulative distributions paid. The plan requires that a hurdle
return of 5% per annum be achieved before payouts accrue. UARs have
a term of up to six years and vest equally over a three-year
period, except for the members of the Board, whose UARs vest
immediately. The Board of Directors has the option of settling
payouts under the plan in PrimeWest Trust Units or in cash. To
date, all payouts under the plan have been in the form of Trust
Units. As at Sep 30, 2004
-------------------------------------------------------------------------
UARs Current issued & UARs return per Total Trust Unit Year of
Grant outstanding vested UARs equity dilution
-------------------------------------------------------------------------
1999 grants 38,111 38,111 $ 37.64 $ 1.4 53,731 2000 grants 110,985
110,985 18.12 2.0 75,300 2001 grants 335,332 296,083 9.22 3.1
97,190 2002 grants 839,876 585,151 7.98 6.7 143,058 2003 grants
975,828 388,187 5.80 4.2 82,826 2004 grants 1,371,235 163,912 $
2.40 1.5 15,288
-------------------------------------------------------------------------
Total grants 3,671,367 1,582,429 $ 18.9 467,393
-------------------------------------------------------------------------
-------------------------------------------------------------------------
10. Cash Distributions ---------------------- Three Months Ended
Nine Months Ended
-------------------------------------------------------------------------
(millions of dollars, except Sep 30, Sep 30, Sep 30, Sep 30, per
Trust Unit amounts) 2004 2003 2004 2003
-------------------------------------------------------------------------
(Restated (Restated - Note 2) - Note 2) Net income for the period
Add back (deduct) amounts to reconcile to distribution: $ 20.2 $
7.0 $ 62.8 $ 90.1 Depletion, depreciation and amortization 50.2
50.7 133.4 153.3 Cash retained from cash available for distribution
(16.2) (4.0) (46.9) (20.2) Contribution to reclamation fund (1.7)
(4.1) (4.6) (7.2) Non-cash general and administrative 14.1 2.3 7.2
5.9 Unrealized loss on derivatives 14.7 - 28.8 - Non-cash foreign
exchange loss (gain) (9.1) 0.2 (4.4) (5.4) Accretion on asset
retirement obligation 0.5 0.3 1.2 0.9 Future income taxes recovery
(22.3) (8.7) (44.0) (71.1)
-------------------------------------------------------------------------
$ 50.4 $ 43.7 $ 133.5 $ 146.3
-------------------------------------------------------------------------
Cash Distributions to Trust Unitholders $ 50.4 $ 43.7 $ 133.5 $
146.3
-------------------------------------------------------------------------
Cash Distributions per Trust Unit $ 0.83 $ 0.96 $ 2.40 $ 3.36
-------------------------------------------------------------------------
Trading Performance For the quarter ended Sep 30/04 Jun 30/04 Mar
31/04 Dec 31/03 Sep 30/03
-------------------------------------------------------------------------
TSX Trust Unit prices ($ per Trust Unit) High 26.70 26.80 28.35
28.15 26.80 Low 23.29 22.18 22.70 23.40 25.19 Close 26.70 23.25
26.65 27.56 25.19
-------------------------------------------------------------------------
Average daily traded volume 259,219 187,767 256,922 202,661 149,148
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the quarter ended Sep 30/04 Jun 30/04 Mar 31/04 Dec 31/03 Sep
30/03
-------------------------------------------------------------------------
NYSE Trust Unit prices ($U.S. per Trust Unit) High 21.16 20.44
22.14 21.48 19.29 Low 17.65 16.00 17.31 18.67 18.08 Close 21.16
17.43 20.31 21.27 18.68
-------------------------------------------------------------------------
Average daily traded volume 329,862 279,882 469,694 243,921 151,813
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Number of Trust Units outstanding including Exchangeable Shares
(millions of units) 69.7 56.8 50.87 50.10 49.52
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Distribution paid per Trust Unit $0.83 $0.75 $0.82 $0.96 $0.96
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For Investor Relations inquiries, please contact: George Kesteven
Diane Zuber Manager, Investor Relations Investor Relations Advisor
403-699-7367 403-699-7356 Toll-free: 1-877-968-7878 E-mail: END
FIRST AND FINAL ADD DATASOURCE: PrimeWest Energy Trust CONTACT:
George Kesteven, Manager, Investor Relations, (403) 699-7367; Diane
Zuber, Advisor, Investor Relations, (403) 699-7356, Toll-free:
1-877-968-7878; E-mail: ; To request a free copy of this
organization's annual report, please go to http://www.newswire.ca/
and click on reports@cnw.
Copyright