/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.

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