The Benchmark of Energy Trusts

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C O M M U N I T Y P A R T N E R S76

C O R P O R A T E P R O F I L EPengrowth Energy Trust is one of the largest energy royalty trusts in North America. The monthlydistribution paid to Pengrowth unitholders represents the net cash flow (after fees and expenses)generated from a large portfolio of well-established Canadian petroleum and natural gas properties.

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We are a Canadian oil and gas producer,

and one of the

largest energy trusts

in North America.

W E L C O M E U N I T H O L D E R S

Information Systems - clockwise from left: Emily Nickle, Clay Radu, John Hulecki, Shane Bradley

Stock Symbol (TSE) PGF.UN2000 Trading Range High $20.35

Low $15.00Close $19.20

2000 Distributable Income $3.785 per unitEligibility RRSPs, RRIFs, RESPs, DPSPsTrust Units Outstanding 63.8 millionAverage Daily Trading Volume 85,600 unitsTotal Enterprise Value(as at December 31, 2000) $1.6 billion

Website www.pengrowth.comE-mail pengrowth@pengrowth.com

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QWhat is an energy royalty trust?

AA royalty trust is a tax advantaged equity investment structuredesigned to accomplish the following:

• To purchase and manage a portfolio of mature producing oil and gas properties on behalf of its unitholders (investors).

• To receive monthly revenue generated from the oil and gas production of these properties and to pay out the net revenue (cash flow) after operations costs and expenses of the trust on a monthly basis.

Royalty

Cash flow

Distributions

Corporation can deduct the royalty paid such that the Corporation is not currently taxable

EnergyTrust has Canadian Oil & GasProperty Expenses (COGPE)which reduces taxable incomethat flows to the unitholder

A portion of the distributions to the unitholders is deemed to be a return of capital and not currently taxable

Pengrowth EnergyTrust

Trust Unitholders

Pengrowth Corporation

Oil & Gas Properties

E N E R G Y T R U S T ’ S S T R U C T U R E - A M O D E L F O R E F F I C I E N T G R O W T H

Marketing and Engineering - clockwise from left: Leslie McCawley, Judith Milne, Nikki Tuveson, Larry Dziuba

C A S H - O N - C A S H Y I E L D S

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5%

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30%

20001999199819971996199519941993199219911990

11-yr Average Yield: 13.3%

14.3

16.5

22.219.7

11.5

14.213.2 13.4

15.3

8.8

10.7

13.7

8.69.8

8.3

10.19.0 8.3

23.7

14.8

25.2

18.6

10.9

13.0

16.912.0

10.6

10.411.5 10.8

10.8

18.3

21.4High Average Low

Current cash-on-cash yield is 19%; 11 year average yield is 13.3%.

Acquisitions - clockwise from left: Tyler Simms, Charles Selby, Paul Jackson, Tom Kelly

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QIs an energy royalty trust

a fixed income investment?

A• No, a royalty trust is characterized as a high-yield investment instrument.• The monthly payout, or cash distribution, is not fixed and is not guaranteed.• The level of cash distributions is largely a function of oil and gas production,

the costs incurred to operate the properties of the trust, and the commodity prices received during the time period. Production, costs and prices fluctuate.

C A S H - O N - C A S H R E T U R N

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5%

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Jan 01Jan 00Jan 99Jan 98Jan 97Jan 96Jan 95Jan 94Jan 93Jan 92Jan 91

CurrentSpreads

Pengrowth Cash-on-Cash Return

10 Year Canada Bonds

90 Day Treasury Bills

13.7%

13.9%

0.0

1.0

2.0

3.0

3.5

2000199919981997199619951994199319921991

1.9

2.3

1.4

1.9

2.4 2.5

3.5 3.4 3.3

2.9

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QIs there more risk associated from investing in an

energy royalty trust than a conventional oil and gas company?

APengrowth’s overall risk profile is generally lower than a conventional oil and gas exploration company:

• Pengrowth focuses on lower risk development drilling opportunities and avoids high risk exploration.

• Pengrowth’s properties have a history of production, a high proportion of proven reserves and predictable future production profiles.

• Pengrowth’s properties produce premium priced light crude oil and natural gas that can withstand swings in commodity prices and continue to generate strong cash flows.

• Pengrowth pays out its net cash flows to unitholders as physical evidence ofsuccess every month.

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1999 20001998199719961995

41.857.4

166.5 160.3176.6 183.0

Natural GasOil and NGLs

The 1997 acquisition of Judy Creek resulted in a large increase in reserves, and growth continued in 2000.

There are approximately 3 barrels of oil equivalent backing each trust unit.

E S T A B L I S H E D R E S E R V E S P E R T R U S T U N I T

( B O E ) ( 6 : 1 )

E S T A B L I S H E D R E S E R V E S

( M M B O E ) ( 6 : 1 )

Joint Venture and Engineering - clockwise from left: Lisa Telang, Neil Walliser, Rob Moriyama, Murray Ellis

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A V E R A G E G A S O L I N E P R I C E S V S P E N G R O W T H D I S T R I B U T I O N S

( C E N T S )

Pengrowth Monthly Cash Distributions (cents)

Canadian Average Regular Gasoline Price (cents/litre)

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Jan 01Jul 00Jan 00Jul 99Jan 99

1113 13

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21.6

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2325 26

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2426

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4043

QMy electric bills keep increasing and every time

I fill my car I pay more for gas.How will investing in Pengrowth help me?

A• Pengrowth’s investors are basically buying a small interest

in a large pool of oil and gas properties and receiving the net cash flow from these properties.

• With a monthly cash payment from Pengrowth, investors canoffset their energy costs.

During periods of rising energy costs, Pengrowth’s monthly distributions increase.

Accounting - clockwise from left: Lianne Bigham, Luan Lam, John McInnes, Kelly Zeeb

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2000199919981997199619951994199319921991

0.750.89

1.011.21 1.31

1.92 2.02

1.53

2.49

3.79

D I S T R I B U T A B L E I N C O M E P E R U N I T

( $ / T R U S T U N I T )

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F I N A N C I A L H I G H L I G H T S

(thousands, except per unit amounts)Year ended December 31 2000 1999 % Change

INCOME STATEMENTOil and gas sales $ 416,228 $ 252,408 +65Distributable income $ 218,340 $ 128,172 +70

Per weighted average unit $ 3.922 $ 2.502 +57Actual distributions paid or declared $ 3.785 $ 2.486 +52

Weighted average number of units outstanding 55,673 51,234 +9UNITS OUTSTANDING AT YEAR END 63,852 53,639 +19

BALANCE SHEETWorking capital $ (44,755) $ (23,178) +93Property, plant, equipment and other assets $ 1,038,823 $ 826,860 +26Long-term debt $ 286,823 $ 230,333 +25Unitholders’ equity $ 641,965 $ 558,590 +15Debt plus equity $ 928,788 $ 788,923 +18

EQUITY MARKET CAPITALIZATION $ 1,225,962 $ 831,410 +47ENTERPRISE VALUE* $ 1,512,785 $ 1,061,743 +42NET ASSET VALUE @ 12% $ 819,298 $ 615,340 +33NET ASSET VALUE PER UNIT $ 12.83 $ 11.47 +12

TRUST UNIT TRADINGHigh $ 20.35 $ 16.75Low $ 15.00 $ 10.50Close $ 19.20 $ 15.50Value $ 394,244 $ 204,125 +93Volume (thousands of units) 21,494 14,457 +49Year-end closing price as a multipleof net asset value at 12% 1.50 1.35 +11

LONG-TERM DEBT AS RATIO OF:Current year’s distributable income 1.3x 1.8x -28Total capitalization:

Debt plus equity at book value 30.9% 29.2% +6Debt plus equity at market value 19.0% 21.7% -12

*Enterprise value equals market value of equity plus long-term debt

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O P E R A T I O N S H I G H L I G H T S

Year ended December 31 2000 1999 % Change

DAILY PRODUCTIONCrude oil (barrels) 17,599 17,570 0Natural gas (thousands of cubic feet) 70,098 61,494 +14Natural gas liquids (barrels) 4,205 3,927 +7Sulphur 94 75 +25Total production (BOE) 6:1 33,581 31,821 +6Total production (BOE) 10:1 28,908 27,721 +4

TOTAL ANNUAL PRODUCTION (mboe) 6:1 12,291 11,615 +6TOTAL ANNUAL PRODUCTION (mboe) 10:1 10,580 10,118 +5

PRODUCTION PROFILECrude oil 52% 55%Natural gas 35% 32%Natural gas liquids 13% 13%

AVERAGE PRICES ($)Crude oil (per barrel) 40.37 26.73 +51Natural gas (per mcf) 4.34 2.48 +75Natural gas liquids (per barrel) 33.56 18.08 +86Average price per BOE 33.87 21.73 +56

ESTABLISHED RESERVESCrude oil (mbbls) 117,519 108,543 +8Natural gas (bcf) 283.2 302.9 -7Natural gas liquids (mbbls) 18,289 17,616 +4Total oil equivalent (mboe) 183,002 176,642 +4

OPERATING COSTS ($)Millions 65.2 57.6 +13Per boe 5.30 4.96 +7

GENERAL AND ADMINISTRATIVE COSTS ($)Millions 7.1 6.0 +19Per boe 0.58 0.51 +14

ACQUISITION COSTS ($)*Millions 179.6 141.8 +27MMboe acquired 21.5 26.7 -19Per boe 8.34 5.31 +57

*Before closing adjustments and acquisition fees

Natural gas has been converted to equivalent barrels of oil at 6:1 unless otherwise stated

P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

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P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

P E R F O R M A N C E S U C C E S S E S

Record distributable income of $3.785 per unit

Record production of 17,599 barrels of oil per day, 4,205 barrels of natural gas liquids per day, and 70 million cubic feet of gas per day

Record commodity prices of $40.37 per barrel for crude oil and $4.34 per thousand cubic feet of natural gas

Over 175 percent of production was replaced by acquisitions in 2000

Subsequent to year-end Pengrowth entered into a proposed property transaction, the successful completion of which will increase the proportion of natural gas production to 41 percent and increase Established reserves to 237 million barrels of oil equivalent (6:1 basis).

Leadership Team - from left: Rob Waters, Vice President, Finance and Chief Financial Officer; Gordon Anderson, Vice President, Treasurer; Lynn Kis, General Manager, Engineering; Henry McKinnon, Vice President, Operations

Review of the Year 20002000 was indeed a favourable year for the

Unitholders of Pengrowth Energy Trust.

OperationsProduction of both crude oil and natural gas reached

record levels, averaging 17,599 barrels per day of oil (a

marginal increase over 17,570 barrels per day in 1999)

and 70.1 million cubic feet of natural gas daily (14

percent over the previous year). Total barrels of oil

equivalent (boe) production on a 6:1 basis increased 6

percent from 31,821 to 33,581 boe per day.

ReservesTotal oil and natural gas reserves also increased by 4

percent from 176.6 million boe at year-end 1999 to

183.0 million boe at December 31, 2000 with an average

reserve life index of 13.2 years (GLJ), as compared with

15.1 years the previous year, reflecting the acquisition of

lower reserve life index properties during the year.

DistributionsMore significantly to our unitholders, distributable

income during the year increased by 70 percent from

$128.2 million or $2.49 per trust unit to $218.3 million

or $3.79 per trust unit, reflecting both the 6 percent

increase in overall production, and more importantly a

56 percent increase in the average price received per boe.

Average price realizations increased from $21.73 per boe

in 1999 to $33.87 per boe in 2000. Prices for crude oil

and natural gas have remained firm to date this year, and

at the time of writing are approximately $44.00 per boe.

Cost Effective Management of the Resource BaseOverall operating costs (prior to solvent

amortization) increased by 13 percent from $57.6

million to $65.2 million, mainly reflecting the new

properties acquired during the year. On a per boe basis,

operating costs increased by 7 percent from $4.96 to

$5.30, which essentially reflected the advent of increased

electric power costs later in the year.

James S. Kinnear, President and Chief Executive Officer

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P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

With a full year of higher electric power costs in

2001, a further increase in operating costs in the range of

$6.00 to $6.50 per barrel of oil equivalent level is now

projected for the current year.

General and administrative costs (G&A) rose by 19

percent from $6.0 million in 1999 to $7.1 million which,

in part, reflects the additional costs of managing newly

acquired properties. On a per boe basis, G&A costs rose

from $0.51 in 1999 to $0.58 in 2000, an increase of 14

percent. However, Pengrowth’s combined G&A costs

and management fees, at $1.14 per boe in 2000 (versus

$0.90 per boe in 1999) remained among the lowest in its

peer group, according to independent financial analysts.

It is one of management’s goals to keep the combined

cost structure in the lowest quartile.

Prudent Development of ReservesDuring 2000, Pengrowth’s capital expenditures

totalled $59.8 million as compared with $17.7 million

the previous year. During 1999, most industry

participants, including Pengrowth, significantly reduced

capital expenditures in response to the steep decline in

crude oil prices to lows in the US$12.00 per barrel range

during the second half of 1998.

Pengrowth’s finding and development (F&D) costs

were $9.28 per boe in 2000, reflecting a trend towards

higher F&D costs generally in the Canadian industry.

Three-year F&D costs averaged $7.98 per boe. The

recycle ratio, which measures the efficiency in which new

reserves are added, was 2.2 times in 2000, and the three-

year average was 1.8 times.

Generally, a recycle ratio of 2.0 or better is

considered favourable, and it is Pengrowth’s goal to

improve on the results of its development programs.

Economic Reserve ReplacementDue to the ongoing depletion of our reservoirs, it is

essential that Pengrowth strive to replace each year’s

production on an annual basis. During 2000, Pengrowth

acquired 21.5 million boe of established reserves, with

an average reserve life index (RLI) of 12.4 years at a

price of $8.34 per boe which replaced over 1.75 times

the current year’s production. Specific acquisitions

included the purchase of the Nipisi Non-Unit interest on

October 3, representing 5.5 million boe (RLI of 10

years), at a price of $9.55 per boe, or $51.6 million. In

December, Pengrowth acquired $128 million in new

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December 31, 2001January 00January 99January 98January 97January 96January 95January 94January 93January 92

PENGROWTH

TSE 300

TSE OIL AND GAS INDEX

P E N G R O W T H v s T S E 3 0 0 A N D O I L A N D G A S P R I C E I N D I C E S S I N C E J A N U A R Y 1 9 9 2

G & A A N D M A N A G E M E N T F E E S

( $ / B O E ; F I R S T 9 M O N T H S O F 2 0 0 0 )

$0

$1

$2

$3

PengrowthTrust 1 Trust 2 Trust 3 Trust 4 Trust 5 Trust 6

0.36

0.54 0.63 0.570.30

0.81

0.71

0.80

1.11 1.161.24

1.37

1.73

2.95

0.450.57 0.53

0.68

1.070.92

2.24

MANAGEMENT FEE PER BOE

G&A PER BOE

Source: RBC Dominion Securities

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reserves (net of asset dispositions) totalling 16.1 million

boe in six producing oil and gas units, (RLI 14 years), at

$7.95 per boe. The purchases met or exceeded

Pengrowth’s target acquisition criteria. The year 2000

acquisitions were similar to 1999 when Pengrowth

acquired 26.7 million boe at an average cost of $5.31 per

boe, replacing approximately two times annual

production in that year. The higher prices paid per boe in

2000 reflected the significant increase in crude oil and

natural gas prices during the year. Over the past five

years, Pengrowth has replaced reserves an average of 3.7

times current production, and it is Pengrowth’s intent to

continue to more than replace annual production each

year through prudent reserve acquisitions.

Pengrowth has steadfastly adhered to its stringent

investment criteria, which has withstood the test of time,

and resulted in above average performance.

Maintaining a Sound Financial ConditionDuring November and December 2000, Pengrowth

concluded the largest equity offering in the Canadian oil

and gas industry, raising a total $155.1 million (gross)

through the issuance of 8.16 million trust units at $19.00

per trust unit. The net proceeds were applied to the

acquisition of the properties referred to in the previous

section. At year-end 2000, Pengrowth’s long-term debt

totalled $286.8 million as compared with $230.3 million

at the previous year-end. Year-end debt divided by 2000

distributable income was 1.3 times as compared with 1.8

times at year-end 1999. However, distributable income

was considerably higher in 2000 as a result of a

significant improvement in oil and natural gas prices

during the year.

All Pengrowth’s present borrowings are bank debt,

syndicated among seven major chartered banks.

Pengrowth may consider the issuance of longer term

debt financing through either private placement or

public markets at an appropriate time in the future. Late

in 2000, Pengrowth began to market various interests in

non-core assets valued at approximately $40-$50

million. Pengrowth’s continuing goal is to maintain

a solid financial structure, financing major acquisitions

with equity issues and employing prudent levels of

debt financing.

Pengrowth has raised over $1 billion in new equity

through eleven public offerings since its inception in

December 1988. As a result of this growth, Pengrowth

now ranks among the top fifteen independent oil and gas

producers in Western Canada, with a market

capitalization exceeding $1.3 billion, providing an

increased level of market liquidity for the investors.

Pengrowth Continues to OutperformThe following graphs from independent research

analysts illustrate that Pengrowth continues to

outperform its peers in the area of production and

reserves per trust unit, reserve replacement and overall

market performance. Pengrowth continues to be the

Benchmark of Energy Trusts.

Our distributions on a per trust unit basis have

grown at a compound rate of 19 percent per year since

the Trust was created in December 1988. Considered on

a total return basis, Pengrowth unitholders have seen

their investment outperform both fixed rate instruments

such as bonds and treasury bills by a wide margin, as

well as the Toronto Stock Exchange’s index of the largest

300 public companies and the Canadian Oil and Gas

Producers Index.

Pengrowth has also been highly competitive as a

business. The Financial Post ranked Pengrowth number

36 out of 500 companies in terms of 1999 profit margin.

Pengrowth was also ranked number 26 with respect to

E S T A B L I S H E D R E S E R V E S P E R T R U S T U N I T

( N O R M A L I Z E D T O S T A R T I N G I N D E X = 1 0 0 )

P R O D U C T I O N P E R T R U S T U N I T

( N O R M A L I Z E D T O S T A R T I N G I N D E X = 1 0 0 )

2000e1999199819971996

Pengrowth Energy Trust

Other Energy Royalty Trusts

175

150

125

100

75 60

80

100

120

140

Q1/02Q1/01Q1/00Q1/99Q1/98Q1/97

Pengrowth Energy Trust

Other Energy Royalty Trusts

Pengrowth Energy Trust has demonstrated superior performance relative to other energy trust units. The figures are basedon a starting index of 100 for each Trust. Source: TD Newcrest Securities.

P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

growth in profits over the five years ended December 31,

1999. The Globe and Mail Report on Business Magazine

ranked Pengrowth number 50 out of 1,000 companies in

terms of growth in revenue over the five year period

ending December 31, 1999. We were also pleased that

our 1999 Annual Report received an Oilweek award for

having the best content among intermediate-sized oil and

gas companies.

Industry Environment Creates OpportunitiesThe ongoing oil and gas industry consolidation

continues in earnest in Canada. In recent months, well

known public mid to large capitalization companies such

as Cabre, Newport, Renaissance, Numac, Startech,

Berkley, Ulster and Place, among others, have been

acquired, leaving the mid-cap market (in the range of $0.5

billion to $2 billion) with very few remaining companies.

Some industry observers believe that the energy trusts may

now represent the new mid-cap market.

The continuing industry consolidation will result in

additional assets becoming available for acquisition and

Pengrowth is poised to continue to add value through its

focused and prudent acquisition program.

Commodity Price Outlook and Hedging ProgramCrude Oil

Crude oil prices rebounded in 2000 to average

US$30.20 during 2000 (Cdn$44.00) as compared with

US$19.30 during 1999 (Cdn$28.00) and Pengrowth’s

realized prices for each year reflected these averages after

allowance for hedging activities.

The OPEC countries have established price targets

for a basket of OPEC crudes in the West Texas

Intermediate (WTI) range of US$24-$30. Current crude

prices are US$28.00 per barrel (Cdn$44.00), towards

the higher end of the suggested OPEC range. There has

been evidence of increased cohesion among the OPEC

countries with respect to crude oil price support;

however the widening U.S. economic slowdown could

affect OPEC’s resolve and prices could weaken from

current levels. Pengrowth has contracted to sell forward

1,000 barrels of oil per day during the balance of 2001

at an average price of Cdn$32.02 per barrel. This

represents approximately 5 percent of Pengrowth’s 2001

estimated oil production.

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P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

C R U D E O I L P R I C E

( W T I U S $ / B B L )

N A T U R A L G A S P R I C E

( C D N $ / G J )

$40

$30

$10

$20

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

ANNUAL AVERAGE

$4

$5

$3

$1

$2

1994 1995 1996 1997 1998 1999 20001993

ANNUAL AVERAGE

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

$12

$14

$16

$18

$20

$22

$24

As atJanuary 1, 1999

As atJanuary 1, 2000

As atJanuary 1, 2001

$26

$28

Months

F O R W A R D P R I C E O F W T I C R U D E O I L

( U S $ / B B L )

The longer-term forward prices remained in a narrow rangeof US$19.00-$21.75 per barrel during 2000.

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P R E S I D E N T ’ S M E S S A G E T O U N I T H O L D E R S

Natural GasCurrent Canadian natural gas prices are approximately

Cdn$7.00 at AECO, significantly higher then the former

Cdn$2.50-$3.00 levels that existed a year ago. While this

is indeed a significant increase, in part it reflects the reality

of the marketplace in which high rates of production

declines in North America are creating a very tight supply

situation in natural gas products. This is particularly true

in an environment of accelerated new gas-fired electric

power generating plant construction, particularly in the

United States. For example, California, which has not

experienced any new electric power plant construction in

the past ten years, is proposing up to 40 new electrical

generating facilities over the next five years, most of which

will be gas-fired.

A similar situation, on perhaps a smaller scale, is also

anticipated in neighbouring Arizona. The advent of

accelerated gas-fired power plant construction will serve to

keep demand growing and higher gas prices will be

required to stimulate new natural gas exploration and

development.

Pengrowth has sold forward approximately 18 percent

of projected 2001 gas production at $2.97 per thousand

cubic feet and about 11 percent of 2002 production at

$2.98 per thousand cubic feet. Further forward sales of gas

are possible, however the current market fundamentals for

natural gas are very favourable.

Pengrowth is also continuing its endeavours to increase

its exposure to the North American natural gas industry,

particularly through its acquisition program. For example,

the proportion of natural gas to Pengrowth’s total boe

sales rose from 32 percent in 1999 to 35 percent in 2000,

and Pengrowth’s goal is to increase this proportion further

in the future.

New Capital MarketsPengrowth is continuing its endeavours to source

equity capital from new sectors within the domestic

market, and also from investors located outside Canada.

Pengrowth has made inquiries regarding the potential for

listing on other world stock exchanges and may consider

these possibilities if it can achieve improved market

liquidity and investor demand.

Building our Human ResourcesWe wish to extend a hearty welcome to the new

Pengrowth team members. Our success is a tribute to all

team members at Pengrowth who have worked diligently

over the years.

Pengrowth’s compensation system has been designed

to reward outstanding individual performance through a

program of trust unit options and a generous bonus

program. These programs have contributed in a positive

and tangible way toward the success of Pengrowth.

During 2000, Carol Donald, Assistant Corporate

Secretary, who had been with the Pengrowth group since

its inception 18 years ago, retired. Pengrowth thanks

Carol for her exceptional contributions, which were

always above and beyond, and wishes her a long and

enjoyable retirement.

Nova ScotiaPotential Sable Island Investment

On February 6, 2001 Pengrowth announced that it had

reached agreement along with Emera Inc. and

PanCanadian Petroleum to acquire the Nova Scotia

government’s 100 percent interest in Nova Scotia

Resources Ltd. for $420 million. Pengrowth’s interest is in

the natural gas and natural gas liquids reserves, which

would involve an investment of $265 million. The

acquisition is subject to rights of first refusal held by the

other co-venturers which include Exxon/Mobil and Shell.

The results of this process may be known in April, 2001.

Pengrowth will provide further information on this project

as it becomes available.

AcknowledgementsI would like to express my sincere thanks to the 158

men and women of Pengrowth who have contributed to

Pengrowth’s success. They have been dedicated, talented

and innovative in searching for new ways to increase

unitholder value.

I also thank our Board of Directors for their guidance

over the past year and our unitholders who stayed the

course through the commodity price cycle and are now

reaping the benefits of our strong performance.

James S. Kinnear,

President and Chief Executive Officer

March 1, 2001

O P E R A T I O N S R E V I E W

0

5

10

15

20

25

30

35

2000199919981997199619951994199319921991

29.731.8

33.6

18.1

11.9

0.4 0.8 1.54.6

6.9

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A V E R A G E A C Q U I S I T I O N P R I C E : P E N G R O W T H v s I N D U S T R Y

( $ / B O E ) ( 1 0 : 1 )

A V E R A G E D A I L Y P R O D U C T I O N

( M B O E ) ( 6 : 1 )

QHow does Pengrowth select

its properties?

AIn general Pengrowth acquires properties with the following characteristics:

• Long reserve life• Relatively high proportion of proven reserves• Lower risk development potential• Low capital spending forecast• Low environmental risk• High netbacks (premium priced products or low royalty/cost structures)

0.00

0.05

0.10

0.15

0.20

0.25

2000199919981997199619951994199319921991

0.23 0.220.19

0.14

0.19

0.080.11

0.07

0.14 0.15

0

2

4

6

8

10

2000199919981997199619951994199319921991

5.91

3.76

5.10

4.21 3.90

6.41

5.335.99

6.72

8.68

4.24

5.08 5.815.05

6.177.32

8.086.92

8.57INDUSTRY*

PENGROWTH

A V E R A G E D A I L Y P R O D U C T I O N P E R T R U S T U N I T

( M B O E ) ( 6 : 1 )

Earth Sciences - clockwise from left: Connie Skimmings, Renee Lee, Glori Cowan, Norm Schultheis

Unitholders have enjoyed a compound averagegrowth rate of 47% per year

*Source: Sayer Securities

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S A S K A T C H E W A N M A N I T O B A

DunveganNipisi

Swan Hills & South Swan Hills

Judy Creek & Judy Creek West

McLeod River

Hanlan

Strachan

Mitsue

Goose River

House Mountain

Minnehik-Buck Lake

Harmattan

Patricia

Enchant

DinosaurMonogram

SteelmanWeyburn

New acquisitions orincreased ownershipExisting property interestsPengrowth operated propertiesPengrowth core areasPengrowth focus area

Edmonton

Calgary

A L B E R T AB R I T I S HC O L U M B I A

Regina

M A J O R H O L D I N G S : W E S T E R N C A N A D A

M A J O R O P E R A T E D P R O P E R T I E S

Judy CreekWorld class, light crude oil propertyNumerous opportunities to maximize value

McLeod RiverMultiple targets with high quality gas reserves

Nipisi Light crude oil property with development upside

EnchantPredictable, low cost operation producing high quality, light crude oil

M A J O R P A R T N E R - O P E R A T E D

P R O P E R T I E S

Swan HillsHigh quality light crude oil reserves

DunveganLiquids-rich gas property with development drillingopportunities

HanlanDeep, sour natural gas reservoir with a large volumeof original gas-in-place

MonogramSweet, dry natural gas from shallow formations

WeyburnWorld’s largest carbon dioxide miscible flood commenced in fourth quarter of 2000

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P R O D U C T I O N : O P E R A T E D v s N O N - O P E R A T E D

( B O E P D )

P E N G R O W T H ’ S M A J O R H O L D I N G S2000

Established Percent Reserve Value at Percent Oil Equivalent Percent 2000 CapitalReserves of Total Life Index 12% Discount of Total Production** of Total Expenditures

(mboe) Reserves (years) ($ thousands) Assets (boepd) Production ($ millions)

Judy Creek BHL Unit 53,822 29.4 14 301,453 27.5 11,582 34.5 27.3Judy Creek West

BHL Unit 12,146 6.6 17 52,035 4.7 1,898 5.7 1.6Weyburn Unit 16,197 8.9 20 66,671 6.1 1,014 3.0 4.8Swan Hills Unit # 1 15,543 8.5 17 70,994 6.5 2,090 6.2 2.1Enchant 7,726 4.2 17 37,825 3.4 1,228 3.7 3.0Dunvegan Gas Unit 6,953 3.8 17 33,921 3.1 1,062 3.2 0.7McLeod River 6,411 3.5 7 65,839 6.0 2,312 6.9 9.2Nipisi Non-Unit* 5,503 3.0 10 38,509 3.5 347 1.0 -Monogram Gas Unit 5,065 2.8 11 45,572 4.2 1,461 4.3 1.6Goose River Unit #1* 4,634 2.5 10 38,940 3.5 - - -Hanlan Swan Hills

Pool Gas Unit # 1 4,421 2.4 10 31,347 2.9 1,455 4.3 0.5Strachan Leduc D-3 Gas

Unit # 1 3,628 2.0 7 26,781 2.4 1,127 3.4 1.3Other Swan Hills 7,126 3.9 17 51,944 4.7 1,115 3.3 2.2Other S.E. Saskatchewan 1,964 1.1 12 10,810 1.0 979 2.9 1.8Other Shallow Gas 5,246 2.9 16 34,099 3.1 986 2.9 0.1Other 26,617 14.5 11 190,611 17.4 4,925 14.7 3.6Totals 183,002 100.0% 13 1,097,351 100.0% 33,581 100.0% 59.8* Recently acquired properties

Crude oil properties designated in green

Natural gas properties designated in black

** Natural gas has been converted to equivalent barrels of oil at 6:1

Operated58%

Non-Operated42%

F O C U S O N J U D Y C R E E KA W O R L D C L A S S A S S E T T H A T P R O V I D E S 5 0 P E R C E N T O F P E N G R O W T H ’ S P R O D U C T I O N

From left: Rod Machula, Henry McKinnon, Ron Shannon

Facility Optimization

Pengrowth has instituted a continuous program of

facilities optimization – projects that improve the

efficiency of the Judy Creek operations. During 2000,

the most significant project was the replacement of a

13,500 horsepower electric-drive compressor with three

surplus gas-drive compressors. As a result, we anticipate

an annual cost reduction of $6.5 million.

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J U D Y C R E E K D E V E L O P M E N T H I G H L I G H T S

Judy Creek A & B PoolsJudy Creek, consisting of two pools, A Pool (100

percent working interest) and B Pool (94.6 percent

working interest), is Pengrowth’s largest property,

accounting for 50 percent of total production during

2000. Since assuming operatorship in 1998,

Pengrowth has successfully reversed production

declines through miscible flooding and infill drilling.

During 2000, seven new solvent injection well

patterns were initiated through a combination of

drilling new wells and converting existing wells to

injection. On the east side of A Pool, solvent injection

commenced at two new well patterns during 2000,

continuing a program that began in 1998. In

preparation for 2001 solvent injection, two horizontal

miscible injection wells had been drilled by year-end

and four new patterns of injection were expanded into

the northwest quadrant of the pool. One new pattern

was drilled at the west side of the unit, becoming active

for the first time since 1998.

Development drilling activities during 2000

included nine successful infill oil wells drilled in the

northwest part of A Pool. These wells will benefit from

both waterflooding and miscible flooding. Oil

production from the northwest infill-drilling program

averaged 480 barrels per day for 2000; by year-end

daily oil production from the new wells exceeded 950

barrels per day.

Development plans in 2001 include drilling two

production wells and one horizontal miscible injection

well. These wells, combined with work performed in

late 2000, will support the start-up of five new

miscible injection patterns during 2001. The feasibility

of supplementing the program with additional

production locations and water injection wells is being

studied.

By utilizing updated 3-D seismic data obtained

during 1999, Pengrowth has identified several

potential new edge well drilling locations along the

edge of A Pool. We expect to drill an edge well during

early 2001, with additional locations dependent on the

results of the well. The successful edge well drilled in

1999 (based on 3-D seismic information) averaged 128

barrels per day during 2000.

Ongoing evaluation and the recent acquisition of

lands adjoining A and B Pools has enabled Pengrowth

to identify several shallow gas drilling opportunities,

including new well locations and the re-entry of

existing wells during 2001.

E L E C T R I C - D R I V E N C O M P R E S S O R

G A S - D R I V E N C O M P R E S S O R

T H E P R O P E R T Y

Judy Creek Gas Plant

T65

T64

R14

T65

T64

R13 R12 R11

R14 R13 R12 R11

PIPELINE RECOMMISSIONED

EXISTING GAS PIPELINE

RECOMMISSIONED

NEW PIPELINE COMPLETED

J U D Y C R E E K P I P E L I N E

J U D Y C R E E K O P E R A T I O N S

R12 R11W5

Judy Creek APool

Judy Creek Gas Plant

Judy Creek BPool

R10

T64

T63

2000 Development2000 development wellsHorizontal injector wellsVertical injector wells

Pengrowth Participation:A Pool 100% WIB Pool 94.6% WI

2001 Development2001 development wellsHorizontal injector wellsEdge well locationsVertical injector wells

Judy Creek

To maximize the natural gas facility utilization, Pengrowth

custom processes third party gas. For example, by

extending our gas gathering system we attracted 9 million

cubic feet per day of gas for custom processing and

increased the possibility of additional tie-ins. This

required the recommissioning of 5.5 miles of suspended

lines and installation of 5 miles of new line.

T H E P E R F O R M A N C E

0

4,000

8,000

12,000

16,000

Jan/01Jul/00Jan/00Jul/99Jan/99Jul/98Jan/98Jul/97Jan/97Jul/96Jan/96Jul/95Jan/95

Ap

ril 1

998

– Pe

ngro

wth

Ass

umes

Op

erat

orsh

ip a

t Ju

dy

Cre

ek

Oct

ober

199

7 –

Clo

sing

of

Jud

y C

reek

Acq

uisi

tion

ReservoirInjected SolventMobilizes Oil

Incremental Oil

Oil ProducerHorizontal SolventInjection Well

T O T A L C R U D E O I L P R O D U C T I O N F R O M J U D Y C R E E K A A N D B P O O L S

( B O P D )

J U D Y C R E E K A P O O L P R O D U C T I O N V O L U M E R E S P O N S E T O D E V E L O P M E N T

( B O P D )

M I S C I B L E F L O O D

Solvents injected into the Judy Creek reservoir through horizontal wells mobilize additional oil and sweep it to producing wells,increasing recovery. The effect of this technology is shown in the graph below by the production increase that began in late 1998.

Drilling infill wells at Judy Creek has added incremental production beyond the miscible flood response.

Jan 97 Jul 97 Jan 98 Jul 98 Jan 99 Jul 99 Jan 00 Jul 00 Dec 00

Base Decline

Miscible Response

Infi l l Producers

12,000

10,000

8,000

6,000

4,000

2,000

0

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QPengrowth has more crude oil than

natural gas property interests.Why?

A • Our approach to creating ongoing value for existing unit-

holders is through the acquisition of quality properties in either commodity.

• We are an opportunistic acquisitor, meaning that we acquireproperties that add value for our investors.

• Crude oil properties may offer more opportunity to maximize recovery through new technologies, as they usually have a longer reserve life and more reserves in place that can be unlocked in the future as technology and ecomomics advance.

• However, some natural gas properties also offer significant value to unitholders, such as McLeod River and Monogram.

Service rig at Judy Creek.

J U D Y C R E E K G A S P L A N T C O M P L E X

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O P E R A T E D P R O P E R T I E S

15–1

13–20

8–9

8–14

12–32

5–12

2–16

R16 R15W5 R14

T57

T56

T55

New wells drilled OilGas

2000 Development

Testing8Pengrowth Lands New sections purchased Compressor StationGas Plant

McLeod River

M C L E O D R I V E R : S I G N I F I C A N T N A T U R A L G A S P R O P E R T Y

McLeod RiverPengrowth drilled eight new wells during 2000, with a

working interest in these wells ranging from 25 to 100

percent. Results of the drilling program included two

producing gas wells, two producing oil wells, one

suspended well, one well being tested and two abandoned

wells. Two previously suspended gas wells were also tied-

in and commenced production by year-end 2000. A

compressor station was constructed and brought

onstream in early 2000 to minimize the back-pressure on

several gas wells. Production volumes from the successful

wells partially offset natural production declines. McLeod

River production at year-end 2000 averaged 11 million

cubic feet per day of natural gas and 417 barrels per day

of crude oil and natural gas liquids.

Two new sections of land at 29 and 31-55-15 W5M

were purchased during 2000 that will provide additional

development opportunities in the McLeod River area.

Development plans for 2001 include the drilling of up to

eight new wells and tieing-in five suspended wells.

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2001 Development2 Proposed Drilling Locations

Pengrowth LandsGas Plant

H

D

D

D

T79

T78

R8W5R9W5

9-17

4-29

Nipisi

N I P I S I : N E W C R U D E O I L P R O P E R T Y A C Q U I S I T I O N

NipisiDuring the fourth quarter of 2000, Pengrowth acquired a

working interest in, and became operator of, the Nipisi

non-unit property. This property includes 32 producing

oil wells on 8,800 gross acres and a 100 percent working

interest in an oil battery and a natural gas processing

plant. Pengrowth holds a 95 percent average working

interest in the Nipisi non-unit oil wells. Established

reserves for this property are estimated at 5.5 million

barrels of oil equivalent. At the time of the acquisition,

production was 1,520 barrels of oil equivalent per day,

which includes high quality 40º API crude oil, and

operating costs were $4.44 per barrel of oil equivalent.

Development plans for 2001 include the exploitation

of bypassed pay zones, increased water injection, the

installation of higher capacity pumps and well workovers.

After reviewing the 3-D seismic and examining the

performance of offsetting wells, we have identified two

new infill drilling locations.

H

14-31

5-31

3-30 CC & EE Unit9-15

J & VV OilPool Outline

R16W4R17W4

T14

T13

2000 Development2000 oil wells Pengrowth Participation: 100% WI

2001 Development2001 proposed locations

Enchant

EnchantPengrowth drilled three oil wells during 2000, two of

which were in the J & VV Pool with a working interest of

100 percent. A 55 percent working interest well was

drilled at the CC & EE Unit. Average production during

the year was 1,216 barrels of oil equivalent per day. An

additional three wells for the J & VV Pool are planned

during 2001.

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N O N - O P E R A T E D P R O P E R T I E S

W E Y B U R N : W O R L D ’ S L A R G E S T C O2

M I S C I B L E F L O O D P R O G R A M

WeyburnDuring 2000, Pengrowth increased its working interest

from 5.18 percent to 9.75 percent in this crude oil

property, making it the second largest working

interest holder.

The field was discovered in 1954 and unitized in

1962. The unit has an estimated economic reserve life of

49 years and has produced almost 350 million barrels of

oil, which represents approximately 25 percent of the

1.4 billion barrels of original oil-in-place.

A carbon dioxide (CO2) miscible flood project was

initiated in 2000 with the objective of recovering an

additional 120 million barrels of oil during the next 20

years. The CO2 flood project is a tertiary enhanced

recovery technique that injects carbon dioxide into the

reservoir, mixing it with the remaining oil. The CO2 acts

as a solvent making the oil more mobile by lowering its

viscosity. As the reservoir pressure increases with

continued injection, banks of oil are driven to the

producing wells. This flood is projected to increase the

unit’s oil production from 18,400 barrels per day to

30,000 barrels per day by 2008.

Carbon dioxide is supplied to the Weyburn project

through a 325-kilometre pipeline that was built from

Beulah, North Dakota to Weyburn, Saskatchewan during

1999. PanCanadian Petroleum Limited, the operator of

the unit, receives the injectant at a terminal inside the

southern border of the unit. Injection for the first phase of

the project began in October 2000 and the first

production response is expected by early 2002. An

extension of the flood program is under review and a

royalty rate has been negotiated with the Saskatchewan

Government that will ensure continued economical

development.

Unit Lands

2001 Development

Phase 1A Phase 1B Future

Total wells - 1056includes 193 injectorsand 638 producing oil wells

Pengrowth Participation: 9.75% WI

Weyburn

T6

T7

T13W2 T12T14

T5

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R11 R10 R 9W4

R10 R 9W4

T18

T17

T16

T18

T17

2001 Development40 infill locations expected to be on production bymid-March ’01

Pengrowth Participation: 53.8% WI

Unit Lands

Monogram

MonogramPengrowth holds a 53.82 percent working interest in the

Monogram Gas Unit, near Medicine Hat, Alberta. This

PanCanadian Petroleum Limited operated property produces

sweet, dry natural gas from shallow formations. Presently

374 wells produce a total of 18.4 million cubic feet per

day. Natural gas production was maintained during 2000

through an ongoing well optimization program.

A 40-well development drilling program is scheduled

for completion during March 2001. This drilling program

is based on an analysis of both geological mapping and

well spacing, as well as production decline curve analysis.

The additional wells will accelerate production and

increase overall recovery by accessing reserves in lower

permeability areas of the north-half of the unit. Central

compression facilities were upgraded in Fall 2000 to

accommodate this growth in production and allow for

additional processing of third party gas volumes.

Pengrowth’s total capital costs of the drilling program are

estimated to be $3.2 million, while incremental operating

costs will be approximately $0.12 per thousand cubic

feet, or less than $300 per well per month. The

development program will maintain Monogram’s low

operating costs and high netbacks while providing a

relatively short payout of the investment.

M O N O G R A M : 4 0 - W E L L N A T U R A L G A S P R O G R A M

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N E W A C Q U I S I T I O N S

R7 R6 R5W5 T47

T46

T45

Buck Lake

Minnehik-Buck LakeUnit #1

Unit Lands Pengrowth Participation: 17.9% WI

Minnehik - Buck Lake

M A N I T O B AS A S K A T C H E W A N

Mitsue

Goose River

House Mountain

Minnehik-Buck Lake

Weyburn

Nipisi

New acquisitions

Edmonton

CalgaryRegina

A L B E R T A

N E W P A R T N E R - O P E R A T E D A C Q U I S I T I O N S

M I N N E H I K - B U C K L A K E : N A T U R A L G A S P R O P E R T Y

Pengrowth acquired Established reserves of 21.5 million

barrels of oil equivalent on a 6:1 basis in transactions

totalling $179.6 million during 2000. These acquisitions

replaced over 175 percent of 2000 production at a cost of

$8.34 per barrel of oil equivalent. Eighty-three percent of

the reserves were oil, nine percent were gas and the

remaining eight percent were natural gas liquids. Seven

properties were acquired with an average reserve life index

of 12.4 years. In addition to Nipisi and the increased

interest at Weyburn, assets were also acquired at Minnehik-

Buck Lake, House Mountain (two properties), Goose River

and Mitsue.

Minnehik-Buck LakeThe Minnehik-Buck Lake property, acquired during

December 2000, is producing, net to Pengrowth, 4.3

million cubic feet per day of natural gas from 15 wells.

Pengrowth has a 17.9 percent interest in the Minnehik-

Buck Lake Unit #1 and gas plant, from which third party

gas processing revenue is received. This long-life field,

operated by Penn West Petroleum Ltd., has been producing

since the 1950s and exhibits a low current decline rate.

R11 R10 R9W5

T71

T70

House MountainUnit #2

House MountainUnit #1

2001Development

Pengrowth Participation:Unit #1 12.1% WIUnit #2 7.05% WI

Unit Lands

2001 DevelopmentDual Leg Horizontal ProducerWater Injection Conversion

HouseMountain

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Goose River

A 42.25 percent working interest was acquired in late

2000 in the Goose River Unit #1, a property operated by

Gulf Canada Resources Limited. Pengrowth’s share of

light crude oil production is approximately 1,150 barrels

per day, obtained from 28 producing wells and 17

miscible flood injection wells. Established reserves are

estimated at 4.3 million barrels of oil and NGLs and 2.3

billion cubic feet of gas at the time of acquisition. Future

development plans include an expansion of the miscible

flood program with three or more additional flood

patterns. In addition, fourteen new development well

locations have been identified.

R19 R18W5

T67

T66Goose River BHL

Unit #1

Proposed 3-D Seismic Coverage

Existing 3-D Seismic Coverage

Pengrowth Participation: 42.25% WIUnit Lands

GooseRiver

H O U S E M O U N T A I N A N D G O O S E R I V E R : N E W L I G H T C R U D E O I L P R O P E R T I E S

House Mountain

During December 2000, Pengrowth announced the

acquisition of a 12.1 percent working interest in House

Mountain Unit #1 and a 7.05 percent working interest in

House Mountain Unit #2, both operated by Apache

Canada Ltd. Established reserves were estimated at 4.1

million barrels of oil and natural gas liquids and 340

million cubic feet of natural gas, net to Pengrowth. The

units have undergone a waterflood and together produce

565 barrels per day of light crude oil and 50 mcf per day

of natural gas liquids from 279 wells. A program of drilling

horizontal sidetrack wells and fracture stimulations in

2000 has increased production, improved sweep efficiency

and led to additional reservoir recovery. Production

increases from horizontal well re-entries, reactivations and

waterflood optimizations are expected in 2001.

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O P E R A T I O N S : S T A T I S T I C A L R E V I E W

Reserve ReconciliationThousands of Barrels of Oil Equivalent (mboe)Reserves Proved &

Proved Probable EstablishedDecember 31, 1998 139,659 180,913 160,286Exploration and development* 1,495 2,463 1,990Acquisitions 21,643 31,799 26,712Dispositions (607) (851) (731)Production (11,615) (11,615) (11,615)December 31, 1999 150,575 202,709 176,642Life index (years) 13.1 16.9 15.1December 31, 1999 150,575 202,709 176,642Exploration and development 3,907 3,271 4,269Revisions (4,554) (8,380) (7,147)Acquisitions 16,405 26,653 21,528Production (12,291) (12,291) (12,291)December 31, 2000 154,043 211,962 183,002Life index (years) 11.4 14.9 13.2

*Includes insignificant revisions

Reserve Pricing ForecastPrice Assumptions* Crude Oil Natural Gas Alberta Natural Gas Liquids

Cdn$/US$ WTI @ Light, Sweet Alberta Spec Edmonton EdmontonExchange Cushing @ Edmonton Average Ethane Propane Butane

Rate (US$/bbl) (Cdn$/bbl) (Cdn$/mmbtu) (Cdn$/bbl) (Cdn$/bbl) (Cdn$/bbl)

2001 0.66 27.00 40.25 6.70 23.25 27.00 30.752002 0.66 24.00 35.25 4.85 17.00 24.25 25.252003 0.67 21.00 30.25 4.35 15.25 19.25 20.252004 0.68 21.00 29.75 4.20 14.50 18.75 19.752005 0.69 21.25 29.75 4.20 14.50 18.75 19.752006 0.70 21.75 29.75 4.10 14.25 18.75 19.752007 0.71 22.00 29.75 4.05 14.00 18.75 19.752008 0.72 22.25 29.75 4.05 14.00 18.75 19.752009 0.72 22.50 30.25 4.10 14.25 19.25 20.252010 0.72 23.00 30.75 4.20 14.50 19.75 20.752011 0.72 23.25 31.25 4.25 14.75 20.00 21.252012+ 0.72 +1.5%/yr +1.5%/yr +1.5%/yr +1.5%/yr +1.5%/yr +1.5%/yr

* Gilbert Laustsen Jung Associates Ltd. price assumptions effective January 1, 2001

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Summary of Reserves at December 31, 2000*Estimated Future Net Cash Flow

Gross Interest Reserves Before Income Tax ($ millions)Natural Crude Natural

Gas Oil Gas Liquids Total Discounted at(bcf) (mbbls) (mbbls) (mboe) 10% 12% 15%

Proved

Producing 216.7 71,282 13,191 120,590 $ 918.8 $ 855.4 $ 778.3

Non-Producing 24.8 26,886 2,434 33,453 $ 123.9 $ 101.1 $ 74.5

Total Proved 241.5 98,168 15,625 154,043 $ 1,042.7 $ 956.6 $ 852.9

Probable (50 %) 41.7 19,351 2,664 28,959 $ 162.2 $ 140.8 $ 116.7

Total Established 283.2 117,519 18,289 183,002 $ 1,205.0 $ 1,097.4 $ 969.6

Recycle Ratio

(6 : 1) 2000 1999 1998 1997 1996

Operating netback per boe* $ 20.21 $ 13.14 $ 8.30 $ 10.80 $ 10.42

F&D Costs per boe** $ 9.28 $ 5.70 $ 8.97 $ 4.71 $ 4.27

Recycle Ratio*** 2.2 2.3 0.9 2.3 2.4

* The Operating Netback is calculated by subtracting royalties, operating costs, and injectant amortization from revenue generated by oil and gas sales.

** Finding and Development F&D costs represent the cost of acquiring and developing Established reserves (net of dispositions).

*** The Recycle Ratio is a measure of the efficiency in which new reserves are added. It is defined as the Operating Netback

divided by the F&D Cost.

Net Interest Reserves**Natural Crude Natural

Gas Oil Gas Liquids Total(bcf) (mbbls) (mbbls) (mboe)

ProvedProducing 159.6 59,868 8,904 95,375Non-Producing 18.1 23,698 1,634 28,338

Total Proved 177.7 83,566 10,538 123,713Probable (50%) 30.8 16,411 1,861 23,427Total Established 208.5 99,977 12,399 147,140

*Based on Gilbert Laustsen Jung Associates Ltd. (GLJ) reserve report (the “GLJ Report”) effective December 31, 2000. Natural gas is converted to

equivalent barrels of oil based on 6:1. Natural gas liquids are converted based on 1:1.

Total Proved reserves and Established reserves have increased 4% and 3%, respectively, from December 31, 1999.

** Gross Interest Reserves Net of Royalties

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QPetroleum and natural gas reservoirs naturally deplete as they are produced.How does Pengrowth replace this production if it doesn’t explore for oil and natural gas?

APengrowth replenishes its reserve base through both acquisitions and thedevelopment of existing properties. Pengrowth has purchased over $1 billionin properties in over 40 separate transactions during its twelve year history.

Acquisition Established Acquisition Industry AverageAmount Reserves Price per BOE Acquisition Price

($ million) (mboe) ($/boe) ($/boe)

1988 $ 12.5 2,245 $ 5.56 n/a1989 - - - -1990 - - - -1991 3.7 699 5.91 n/a1992 7.2 1,913 3.76 4.241993 21.6 4,339 5.10 5.081994 49.8 11,824 4.21 5.811995 71.4 18,309 3.90 5.051996 74.9 11,689 6.41 6.171997 528.0 99,143 5.33 7.321998 6.4 698 5.99* 8.081999 141.8 20,893 6.72 6.922000 179.6 20,670 8.68 8.57**

Total $ 1,096.9 192,422 $ 5.69*

*Net of Processing Facilities Value ($2.2 million)

**Source: Sayer Securities Limited, Q4 2000

Natural gas converted to equivalent barrels of oil at 10:1

S U M M A R Y O F A C Q U I S I T I O N S

Operations - clockwise from left: Tania Barkley, Ross Andrews, Jane Peck Hay

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The following discussion and analysis of financial results should be read in conjunction with the audited consolidated

financial statements for the year ended December 31, 2000 and is based on information available to February 20, 2001.

Note Regarding Forward-Looking StatementsThis 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.

2 0 0 0 H I G H L I G H T S

Achieved record distributions to unitholders.

• Distributable income increased 70% to $218 million.

• Distributable income per trust unit increased 52% to $3.785.

Oil and gas sales increased 65% to $416 million.

Production increased 6% to 33,581 boe per day.

Established reserves increased 4% to 183 mmboe.

Purchased 21.5 mmboe of Established reserves in 2000 for total cash consideration of $179.6 million to replace over 175% of production.

Raised gross proceeds of approximately $155 million through a public offering of 8,165,000 trust units at $19.00 per unit in November 2000.

Conversion of Natural Gas to OilIn the past, the practice in the Canadian petroleum and natural gas industry has been to convert natural gas to equivalent

barrels of oil at a ratio of 10 thousand cubic feet (mcf) to 1 barrel (10:1). This conversion rate was supported by the

value of gas within Alberta relative to oil. Over the last 18 months, with increased export pipeline capacity to the U.S.,

Canadian natural gas prices have increased relative to oil prices, and Pengrowth has adopted the international standard

of 6 mcf to 1 barrel (6:1) when converting natural gas to oil within this discussion and analysis.

Subsequent Events - Non-Core Property Dispositions and Acquisitions of Kaybob Notikewin and Sable Offshore Energy ProjectPengrowth continuously evaluates its property portfolio, and in January 2001, announced that it was soliciting offers for

a package of non-core properties that were no longer part of Pengrowth’s strategic direction. The disposition package

represents 8.2 mmboe of Established reserves and current production of approximately 1,300 boe per day of crude oil

and NGLs, with 3.2 mmcf per day of natural gas. Pengrowth expects to close the dispositions in the second quarter of 2001.

On February 2, 2001 Pengrowth announced it had entered into an agreement to purchase an additional 43.5%

working interest in the Kaybob Notikewin Unit for $25.2 million, subject to rights of first refusal (ROFRs). The

acquisition of this natural gas producing property is expected to close in the first quarter of 2001.

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Crude OilNatural Gas

NGLs

On February 6, 2001 Pengrowth reached an agreement, along with two other companies, to acquire Nova Scotia

Resources Limited (NSRL) from the Province of Nova Scotia. The transaction, which is subject to rights of first refusal,

is scheduled to close in the second quarter of 2001. Pengrowth’s portion of the purchase price is $265 million,

representing approximately 63% of the total purchase price for NSRL of $420 million. The acquisition is structured to

provide Pengrowth with a royalty interest, convertible into a working interest, in the natural gas and natural gas liquids

reserves from NSRL’s 8.4% interest in the Sable Offshore Energy Project (the “SOEP Royalty”).

None of these transactions – the non-core disposition package, the acquisition of Kaybob Notikewin, or the

acquisition of the SOEP Royalty, are reflected in Pengrowth’s fiscal 2000 financial results, reserves, or production.

Pengrowth’s 2000 production portfolio was weighted 52% crude oil and 35% natural gas, with the remaining 13% made

up of natural gas liquids and sulphur. Five areas (Judy Creek, Swan Hills, McLeod River, Enchant and Weyburn) accounted for

60% of the total daily production in 2000. The exit production rate for the month of December 2000 was 38,070 boe per day.

With the potential acquisition of Kaybob Notikewin and the SOEP Royalty mentioned earlier, Pengrowth’s

production may become significantly more weighted to natural gas in 2001, with the following proforma profile: 47%

crude oil, 41% natural gas, and 12% natural gas liquids.

Daily Production Volumes2000 1999 % Change

Crude oil (bbls/d) 17,599 17,570 0%Natural gas (mcf/d) 70,098 61,494 14%Natural gas liquids (bbls/d) 4,205 3,927 7%Total daily sales volumes (boepd) 6:1 basis 33,581 31,821 6%Total daily sales volumes (boepd) 10:1 basis 28,908 27,721 4%

P R O F O R M A 2 0 0 1 P R O D U C T I O N P R O F I L E ( 6 : 1 )

I N C L U D I N G S O E P R O Y A L T Y A N D K A Y B O B N O T I K E W I N A C Q U I S I T I O N S

2 0 0 0 P R O D U C T I O N P R O F I L E ( 6 : 1 )

Crude OilNatural Gas

NGLs

RESULTS OF OPERATIONSProductionDaily production increased an average of 6% during 2000. This increase can be attributed mainly to the acquisition of the

Nipisi non-unit properties in October, and the acquisition of the following properties in December: Goose River Unit #1,

Minnehik-Buck Lake Unit #1, Weyburn, and Mitsue Gilwood Sand Unit #1. These acquisitions, combined with the results

of our development program, more than offset the decline in reserves resulting from production.

During the year, production decreased only 3.8% at Pengrowth’s largest property, Judy Creek, where Pengrowth’s

development program of infill drilling and miscible flooding helped to mitigate production declines. Natural gas

production increased mainly due to the full year impact of McLeod River (purchased in October 1999), the purchase

of Minnehik-Buck Lake in December 2000, as well as internal development programs. Several properties, such as

Monogram, Hanlan, and Dunvegan experienced a growth in production in 2000 when compared to last year.

Based on GLJ reserve evaluation report effective January 2001

35%

13%

52%

12%

41%47%

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Pricing and Product MarketingPengrowth’s average crude oil price increased 51% from 1999 levels to average Cdn$40.37 per bbl for 2000. This

increase reflected a 56% increase in the WTI benchmark crude price, from US$19.30 per bbl in 1999 to US$30.20 per

bbl in 2000, tempered by the influence of hedging and foreign exchange. During 2000, demand for crude oil continued

on the strength of world economies. In addition, OPEC demonstrated it could maintain global oil prices through

disciplined production quotas.

Pengrowth markets 88% of its crude oil production on a direct sales basis predominantly on the Pembina and

Rainbow pipeline systems in Alberta. Sales are made to refiners and marketing companies. The remainder of Pengrowth’s

crude oil is sold at the well site.

In 2000, Pengrowth had 4,243 bbls per day, or 24% of its crude oil production hedged at an average price of Cdn$32.97

per bbl. As spot prices exceeded this hedged position, an opportunity cost of $18.1 million or $2.81 per bbl is reflected

in 2000 oil sales.

Pengrowth’s natural gas price increased 75% from $2.48 per mcf in 1999 to $4.34 per mcf in 2000, reflecting an improvement

in the AECO and NYMEX gas price benchmarks of 70% and 71%, respectively in 2000. The strength of the natural gas

market reflected demand from electrical generation, pipeline export capacity to the U.S. and a lack of production replacement

by the industry.

Approximately 50% of Pengrowth’s natural gas is sold to aggregators that provide a basket of fixed and floating

index-based prices, as well as exposure to various regions in the U.S. The aggregators’ prices improved in 2000 as fixed

price contracts expired and were renegotiated at higher prices. The remainder of Pengrowth’s natural gas is sold on a

direct basis with reference to AECO or NYMEX price indices.

During 2000, Pengrowth sold 5.9 bcf, or 23% of its natural gas production through fixed price physical delivery

contracts at an average plant gate price of $3.00 per mcf. As spot prices exceeded this hedged position, an

opportunity cost of $10.6 million or $0.41per mcf (relative to the monthly AECO index) is included in Pengrowth’s

gas sales for 2000.

The price of Pengrowth’s natural gas liquids increased 86% in response to higher crude oil and natural gas prices and

improved markets for products such as condensate and propane.

Oil and Gas SalesPengrowth’s oil and gas sales increased 65% to $416.2 million in 2000.

$ millions 2000 1999 % Change

Crude oil $ 260.0 $ 171.4 52Natural gas 111.4 55.7 100Natural gas liquids 51.6 25.9 99Sulphur 0.5 0.3 67Less GORR royalties (10.1) (5.3) (91)Gas marketing and brokering income 2.8 4.4 (36)Total oil and gas sales $ 416.2 $ 252.4 65

Pengrowth’s Average Realized Prices(Adjusted for Hedging) 2000 1999 % Change

Crude oil ($/bbl) $ 40.37 $ 26.73 51%Natural gas ($/mcf) 4.34 2.48 75%NGL ($/bbl) 33.56 18.08 86%Total oil and gas sales ($/boe) $ 33.87 $ 21.73 56%

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RoyaltiesIn 2000, Crown royalties, freehold royalties and mineral taxes were 19% of oil and gas sales or $77.1 million compared

to 13% of oil and gas sales in 1999 or $33.3 million. Royalties are sensitive to prices and production rates, and

consequently, they vary with the level of oil and gas sales. Pengrowth continues to benefit from Crown royalty credits

with respect to its enhanced oil recovery projects. The royalty rate is expected to increase next year if natural gas and

crude oil prices remain at current levels for the remainder of the year.

Operating ExpensesOperating expenses increased to $65.2 million in 2000 from $57.6 million in 1999. This 13% increase in cost

corresponds to a 6% increase in production volumes as Pengrowth assumed the costs of recently acquired properties.

Net operating costs per boe of production increased from $4.96 per boe to $5.30 per boe reflecting increased well

workovers and optimization activity, plant turnarounds, and higher electricity costs.

Pengrowth’s operating expenses include the administrative costs associated with its Calgary-based operations team.

The net profit from casinghead gas agreements is included in operating expense as these arrangements were intended to

defray the operating costs of the Judy Creek Gas Conservation Plant.

Operating expenses are expected to increase approximately $15-$20 million in 2001 with the full year effect of

recently acquired properties, and an expected doubling of electrical power costs in the Province of Alberta caused by

high natural gas prices and electrical deregulation.

2000 1999

Total royalties, net (000s) $ 77,105 $ 33,264As % of revenue 19% 13%Per boe $ 6.27 $ 2.86

Analysis of Operating Expenses2000 1999

$ thousand $/boe $ thousand $/boe

Direct operating expenses $ 69,578 $ 5.66 $ 61,829 $ 5.32Calgary operations administration 2,956 0.24 1,665 0.14Net profit from casinghead gas (7,339) (0.60) (5,852) (0.50)Total operating expenses $ 65,195 $ 5.30 $ 57,642 $ 4.96As a % of revenue 16% 23%

The extent that higher prices contributed to the increase in revenue is demonstrated below:

Price and Volume Variance Analysis$ millions

1999 Oil and Gas Sales $ 252.4Increase in oil and NGL volumes 2.7Increase in oil and NGL prices 111.8Increase in gas volumes 8.0Increase in gas price 47.7Decrease in gas marketing & brokering (1.6)Increase in GORR royalties (4.8)

2000 Oil and Gas Sales $ 416.2

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Amortization of Injectants for Miscible FloodsInjectants (primarily ethane and methane) are used in miscible floods to stimulate incremental oil recovery. The cost of

injectants purchased from third parties is deferred and amortized against distributable income over the period of

expected future economic benefit, which is currently 30 months. In 2000, $46.8 million of injectants were purchased

from third parties (1999 - $36.8 million) and injectant costs of $32.5 million were expensed and deducted from

distributable income (1999 - $14.0 million). As at December 31, 2000, Pengrowth had injectant costs of $54.1 million

that were deferred, temporarily debt-financed and available for amortization in future periods (1999 - $39.8 million).

The value of Pengrowth’s proprietary injectants is not recorded until they are reproduced from the flood and sold,

although the cost of producing these injectants is included in operating costs. The cost of injectants in 2001 will be

dependent on commodity prices and the scheduling of flood patterns. Pengrowth delayed the start of several flood

patterns in the first quarter of 2001 to sell gas into the premium priced market that existed at the time. The amount of

injectants expensed in 2001 will increase as a result of the amortization policy, however, Pengrowth also expects

continued production from enhanced recovery projects.

InterestAs a result of higher average debt levels and higher interest rates and bank service costs, Pengrowth’s interest expense

increased 60% from $10.9 million in 1999 to $17.4 million in 2000. Distributable income covered interest expense by

12 times in 2000 (1999 - 11 times). Interest costs in 2001 will be dependent on future acquisitions and capital spending,

and the relative amount of debt and equity financing.

During 2000, Pengrowth’s interest costs were entirely based on floating rates with a term of less than one year, as it

was determined that these rates offered the most cost-effective financing strategy. Pengrowth may consider fixing a portion

of its interest rate exposure in 2001, depending on its financing requirements and the forward interest rate market.

General and AdministrativeGeneral and administrative expenses increased from $6.0 million in 1999 to $7.1 million in 2000, reflecting increased

costs required to manage the higher levels of activity and acquired properties. General and administrative costs per boe

increased 14% from $0.51 per boe in 1999 to $0.58 per boe in 2000. Aside from slight pressures on costs due to the

level of activity in the oil and gas industry, Pengrowth does not anticipate any major increases in general and

administrative costs in 2001.

Management FeesManagement fees paid with respect to net operating income were $6.9 million in 2000 compared to $4.5 million in the

previous year. On a unit-of-production basis, the fees increased 44% to $0.56 per boe in 2000 from $0.39 per boe in

1999. This increase reflects the increased operating income during 2000.

Management fees are based on a sliding scale percentage of “net operating income” (generally oil and gas sales and

other income, less royalties, operating costs, solvent amortization and reclamation funding):

Pengrowth StaffAt December 31 2000 1999

Calgary office 33 35Calgary operations 16 7Field 109 112Total 158 154Pengrowth may also use contract or consulting staff to accommodate peak workloads.

Level of Net Operating Income Management Fee

First $50 million 3.5%Next $50 million 3.0%All amounts over $100 million 2.5%

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In addition, the Manager earns a fee on the acquisition of oil and gas properties by Pengrowth based on the following

sliding scale:• 1.0% on the Base Amount. The “Base Amount” is defined as a minimum of $100 million, or the purchase price of

Established reserves acquired to replace reserves in the preceding calendar year. If the reserve replacement amount isgreater than $100 million in any year, then it becomes the minimum Base Amount for the next year;

• 0.5% of the purchase price of any amount above the Base Amount.

Acquisition fees paid to the Manager are capitalized as part of the cost of the acquired properties. There are no fees paid

to the Manager for the disposition of properties.

TaxesTax expense of $1.8 million in 2000 (1999 - $1.2 million) consists of the Federal Large Corporations Tax and the

Saskatchewan Capital Tax and Resource Surcharge.

In determining its taxable income, Pengrowth Corporation deducts royalty payments to unitholders, and historically

this has been sufficient to reduce taxable income to zero.

During the year, Pengrowth Corporation changed its method of accounting for income taxes from the deferral

method to the liability method. This change has been applied retroactively without restating prior periods. As a result of

adopting this new standard, there was no change to the financial statements reported as at December 31, 1999.

The net book value of property, plant and equipment exceeded the cost basis for income tax purposes by

approximately $102 million and a future income tax liability of $45.5 million has been recorded in respect thereof,

principally as a result of the acquisition of oil and gas properties during the year.

Pengrowth Energy Trust’s taxable income is comprised of net royalty income and net income earned from direct

investments, less deductions for Canadian Oil and Gas Property Expense (COGPE). Any taxable income is allocated

annually to unitholders. At December 31, 2000 the trust had unused tax deductions of $10.61 per trust unit. (1999 -

$11.08 per unit).

Pengrowth Energy Trust paid $3.5550 per trust unit as cash distributions during the 2000 calendar year. For

Canadian tax purposes, 44.2% of these distributions, or $1.5719 per unit is a tax deferred return of capital, and 55.8%

or $1.9831 per unit will be taxable to unitholders as other income. The tax deferred return of capital will reduce the

unitholder’s cost base for purposes of calculating a capital gain or loss upon ultimate disposition of the trust units. The

increase in taxability is due to higher commodity prices, increased production, and record distributable income earned

by Pengrowth during the year.

Depending on the level of commodity prices, acquisitions, dispositions, and equity offerings, a portion of the 2001

cash distributions may become taxable in the hands of unitholders for Canadian tax purposes.

Depletion and Ceiling TestDepletion of the property, plant and equipment is provided on the unit-of-production method based on proven reserves,

with the conversion of gas to oil using the relative energy content (6 mcf gas = 1 bbl). The provision for depletion

increased 21% from $73.9 million in 1999 to $89.3 million in 2000 due to a larger depletable asset base and higher

production. The rate of depletion and depreciation also increased from $6.37 per boe in 1999 to $7.26 per boe in 2000.

The rate is expected to remain relatively constant in 2001, however, it can be influenced by Pengrowth’s future

acquisition and development costs.

Pengrowth places a limit on the carrying value of the property, plant and equipment and other assets (the “ceiling

test”). The cost of these assets, less accumulated depletion, is limited to the estimated future net revenue from proved

reserves (based on unescalated prices and costs at the balance sheet date) less estimated future general and administrative

costs, financing costs, and management fees. There was a substantial surplus in the ceiling test at year-end 2000.

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Future Site RestorationAn engineering estimate of the future costs for restoration and abandonment of well sites and facilities is updated

annually. The present value of this cost estimate is amortized over the life of the properties on a unit-of-production basis.

The provision for future site restoration increased from $7.0 million in 1999 to $7.6 million in 2000 as a result of higher

production. The 2001 provision is expected to increase marginally as a result of higher production.

Remediation Expenses and Trust Fund ContributionsPengrowth has established a trust fund for certain remediation obligations of the Judy Creek and Swan Hills properties.

Pengrowth made contributions of $2.5 million to this fund in 2000. Pengrowth also incurred $0.1 million in reclamation

expenditures that were not covered by the trust fund in 2000. In comparison, remediation expenses and trust fund

contributions in 1999 totalled $3.0 million. Pengrowth expects to pay approximately $0.75 million into the remediation

trust fund based on contribution requirements in 2001.

NetbacksNetbacks per Boe of Production (6:1)Year ended December 31 2000 1999

Oil and gas sales $ 33.87 $ 21.73 Crown and freehold royalties (6.28) (2.87)Other income and ARC 1.03 0.54 Operating costs (5.30) (4.96)Amortization of injectants (2.64) (1.20)

Operating netback 20.68 13.24 Interest (1.41) (0.94)General and administrative (0.58) (0.51)Management fees (0.56) (0.39)Capital taxes (0.15) (0.10)Remediation costs and trust contributions (0.21) (0.26)Distributable income per boe $ 17.77 $ 11.04

As illustrated in the chart above, Pengrowth earned distributable income of $17.77 for every barrel of oil equivalent

produced in 2000. This represents a 61% increase over 1999 netbacks.

Acquisitions and DispositionsOn October 3, 2000 Pengrowth closed the acquisition of producing properties in the Nipisi Non-Unit area of Alberta

for consideration of $51.6 million. This acquisition consisted of an average 95% working interest in 32 producing oil

wells and 8,800 gross acres, including a 100% working interest in an oil battery and gas plant. Through this transaction,

Pengrowth acquired Established reserves of 5.5 mmboe and estimated daily production of 1,550 boe per day.

On December 2, 2000 Pengrowth announced the acquisition of producing oil and natural gas properties from an

independent Canadian exploration and production company for cash consideration of $128 million and Pengrowth’s

interest in certain properties (the “sale properties”). The purchased properties (net of the sale properties) will add 16.0

mmboe of Established reserves and an estimated 3,488 boe per day of production in 2001. These properties included

unitized interests in Goose River, House Mountain, Minnehik-Buck Lake, Mitsue Gilwood Sand Unit #1 and Weyburn.

As of the date the year-end financial statements were finalized, the acquisition of the House Mountain Units and the

disposition of the sale properties (of comparable value) had not closed, and certain other ROFRs remained outstanding.

As a result, Pengrowth recorded approximately 80% of the net production and reserves associated with this acquisition

in the month of December 2000.

In total, Pengrowth acquired 21.5 mmboe of Established reserves in 2000, with an average reserve life index of 12.4

years at a price of $8.34 per boe to replace over 175% of the current year’s production.

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Capital ExpendituresPengrowth spent $59.8 million in capital expenditures in 2000, compared with $17.7 million expended during 1999 (net

of acquisitions and dispositions): $45.4 million was spent on development drilling, completions and tie-ins, and $14.4

million was spent on facilities.

At Judy Creek, development drilling included eight successful oil wells and four miscible injection wells. In addition,

facilities expenditures included upgrading three compressors, improving the water injection system, and extension of the

Judy Creek gas gathering pipeline system.

At McLeod River, eight new wells were drilled resulting in two producing gas wells, two producing oil wells, two

suspended wells and two abandoned wells. Pengrowth’s working interests on these wells range from 25% to 100%.

In addition, two previously suspended gas wells were tied-in and producing by the end of 2000, and a field

compressor was installed.

At Weyburn, PanCanadian Petroleum Limited as operator has been drilling infill and injection wells and building

facilities to support a CO2 miscible flood program that commenced in October 2000.

At Enchant, development drilling included three successful oil wells and several workovers. In addition, one well was

converted to water injection to enhance deliverability of the field.

At Swan Hills, capital expenditures included the drilling of one edge well, five well recompletions, the tie-in of two

horizontal injectors to the produced water injection system, and minor facility modifications.

Pengrowth expects to spend approximately $60 million on development and exploitation of existing properties in 2001.

Pengrowth’s financing policy with respect to capital spending is outlined in the section on Financial Resources and Liquidity.

Capital Expenditures Year ended December 31 2000 1999$ millions Development Total Capital Total CapitalProperty Drilling Facilities Expenditures Expenditures

Judy Creek $ 24.3 $ 4.6 $ 28.9 $ 6.9 McLeod River 6.7 2.5 9.2 0.1 Weyburn 2.4 2.4 4.8 1.9 Enchant 3.0 – 3.0 0.1 Swan Hills 1.4 0.7 2.1 0.9 Steelman 1.8 – 1.8 1.1 Monogram 0.5 1.1 1.6 0.7 Strachan 0.6 0.7 1.3 0.5 Niton 0.8 – 0.8 0.1 Dunvegan 0.7 – 0.7 1.0 Others 3.2 2.4 5.6 4.4 Total $ 45.4 $ 14.4 $ 59.8 $ 17.7

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Net Asset ValueIn the following table, Pengrowth’s net asset value is measured with reference to the present value of future net cash flows

from reserves, as estimated by independent reserve engineers, Gilbert Laustsen Jung Associates Ltd. (GLJ), less any

working capital deficiency and long-term debt at year-end.

*Based on GLJ’s report effective December 31, 2000 for Established reserves (proven plus half probable) including the effects of Pengrowth’s

current hedging program.

This calculation of net asset value assumes that existing reserves are produced to the end of their economic life and

are not replaced by acquisitions. Pengrowth has a 12-year history of reserve replacement through successful acquisitions.

The measurement is also sensitive to the price forecasts and the reservoir engineering assumptions used by GLJ.

Financial Resources and LiquidityPengrowth’s long-term debt increased by $56.5 million in fiscal 2000 to $286.8 million at December 31, 2000, largely

as a result of increased acquisitions and capital spending.

Pengrowth currently has $350 million in committed revolving credit facilities and $35 million in demand bank lines

available. Pengrowth intends to pursue an increase in the size of the credit facility in the first quarter of 2001 based on

the additional value of properties acquired in the second half of 2000 and higher commodity prices. Pengrowth also has

an additional credit facility available to fund the acquisition of the SOEP Royalty in the event that additional credit

capacity is required to close the transaction.

December 31, 2000 Present Worth Discounted At($ millions except per unit amounts) 10% 12% 15%

Present value of net cash flows from Established reserves* $ 1,205 $ 1,097 $ 970Current assets less current liabilities (45) (45) (45)Remediation trust fund 6 6 6Distributions payable to unitholders 48 48 48Long-term debt (287) (287) (287)

Net asset value $ 927 $ 819 $ 692Net asset value per trust unit $ 14.52 $ 12.83 $ 10.83

Continuity of Long-Term Debt ($ millions) 2000 1999

Beginning balance: January 1 $ 230 $ 158Less: Proceeds from equity issues (179) (76)Add: Net property acquisitions 182 140

Capital expenditures 60 18Deferred injectants (temporarily debt financed) 14 23

Less: Change in working capital (20) (33)Ending balance: December 31 $ 287 $ 230

Financial Leverage and Coverage2000 1999

Distributable income to interest expense (times) 12 11Long-term debt to distributable income (times) 1.3 1.8Long-term debt to long-term debt plus equity (%) 31% 29%

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Pengrowth’s current policy is to pay out all its cash flow in distributions to unitholders. Capital spending and

acquisitions are generally debt financed and credit capacity is replenished by issuing equity when appropriate.

It is management’s intention to maintain a conservative capital structure, and although it has not been required in

the past, management has the ability to retain a portion of the cash flow to repay debt and/or contribute towards capital

spending in the future.

Price Risk Management ProgramPengrowth has a price risk management program whereby it may fix the price on a portion of its future production to

lock in the value of acquisitions and enhance its capital development program.

Pengrowth currently has a financial swap transaction in place that fixes the price on 1,000 barrels of oil per day for

the year 2001 at an average price of Cdn$32.02 per barrel. With approximately 5% of its crude oil production hedged

for a one-year term, Pengrowth is currently expecting continued strength in crude oil markets. Pengrowth’s hedged

position may change in 2001 depending on the forward price of crude oil, acquisitions, and other market developments

and expectations.

Pengrowth has sales commitments to deliver natural gas at fixed prices in the future, as summarized below:

• 4.8 bcf (13.2 mmcf per day) for 2001 at an average plantgate price of Cdn$2.97 per mcf; and

• 2.8 bcf (7.8 mmcf per day) for 2002 at an average plantgate price of Cdn$2.98 per mcf.

With approximately 18% of its natural gas production sold at a fixed price in 2001 and 11% fixed for 2002, the

majority of Pengrowth’s gas is exposed to the current premium spot market for natural gas. Again, Pengrowth’s hedged

position may change in the future, depending on the forward market for the price of natural gas, acquisitions, and other

market developments and expectations.

Sensitivity AnalysisThe following table estimates the impact that changes to commodity prices, production levels and exchange rates may have

on unitholder distributions. This analysis is based on GLJ forecast prices, production levels, and exchange rates for 2001.

Trust Unit InformationPengrowth had 63,852,198 trust units outstanding at December 31, 2000 compared to 53,639,338 trust units at

December 31, 1999. The weighted number of trust units outstanding during 2000 was 55,672,865.

In November 2000, Pengrowth issued 8,165,000 trust units at $19.00 per unit for gross proceeds of approximately

$155 million through a public offering.

During 2000, Pengrowth also issued 1,915,833 trust units pursuant to the exercise of trust unit options for proceeds

of $29.3 million. In addition, 132,027 trust units were issued pursuant to the Distribution Reinvestment Program for

proceeds of $2.4 million.

Effect on 2001 pertrust unit distributions

Change of US$1.00 per barrel in the price of crude oil $ 0.144Change of Cdn$0.10 per mcf in the price of natural gas $ 0.021Change of $0.01 in the US$/Cdn$ exchange rate $ 0.061Change of 1% in interest rates $ 0.050

10% change in crude oil production $ 0.39210% change in natural gas production $ 0.17210% change in natural gas liquids production $ 0.050

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Business RisksThe amount of distributable income available to unitholders and the value of Pengrowth trust units are subject to

numerous risk factors. As the trust units allow investors to participate in the net cash flow from Pengrowth’s portfolio

of producing oil and natural gas properties, the principal risk factors that are associated with the oil and gas business

include, but are not limited to, the following influences:

• The prices of Pengrowth’s products (crude oil, natural gas, and NGLs) fluctuate due to local and global market

supply and demand, weather patterns, pipeline transportation, political stability.

• Canadian/U.S. exchange rates influence revenues and, to a lesser extent, operating and capital costs.

• Geological and operational risks affect the quantity and quality of reserves and the costs of recovering those reserves.

• Increased activity within the oil and gas sector can increase the cost of goods and services and make it more difficult

to hire and retain professional staff.

• Approximately 42% of Pengrowth’s production is dependent on third party operators and harm to their business

could impact Pengrowth’s results.

• The Alberta government’s deregulation of the electrical power industry and the rising cost of natural gas as a fuel

source for electrical generation have increased electrical costs in the short-term.

• Government royalties, income tax laws, environmental laws and regulatory initiatives impact Pengrowth financially

and operationally.

• Changing interest rates influence borrowing costs and the availability of capital.

• Environmental and safety risks influence the workforce, operating costs and compliance with regulatory standards.

• The ability to replace production depends on Pengrowth’s success in developing existing reserves, acquiring new

reserves, and financing this development and acquisition activity within the context of the capital markets.

Pengrowth seeks to mitigate some of these risks by:

• Fixing the price on a portion of its future crude oil and natural gas production.

• Fixing the Canadian/U.S. exchange rate through financial hedging contracts or by fixing commodity prices in

Canadian dollars.

• Offering competitive incentive-based compensation packages to attract and retain highly qualified and motivated

professional staff.

• Ensuring strong third party operators for partner-operated properties.

• Managing electrical power purchases through the use of physical contracts or financial instruments.

• Adhering to strict investment criteria for acquisitions.

• Acquiring mature production with long life reserves and proven production.

• Performing extensive geological, geophysical, engineering and environmental analysis before committing to capital

development projects.

Trust Unit Trading Volume Value

High Low Close (000s) ($ millions)

2000 1st quarter $ 17.50 $ 15.00 $ 16.90 4,554 $ 74.22nd quarter 19.25 16.50 19.10 6,838 125.73rd quarter 20.35 18.00 19.20 4,790 93.04th quarter 20.30 18.25 19.20 5,312 101.4Year $ 20.35 $ 15.00 $ 19.20 21,494 $ 394.3

1999 1st quarter $ 12.85 $ 10.50 $ 12.85 2,691 $ 31.32nd quarter 14.25 12.55 14.15 3,820 50.63rd quarter 16.75 14.10 15.80 4,154 64.34th quarter 16.00 14.25 15.50 3,792 57.9Year $ 16.75 $ 10.50 $ 15.50 14,457 $ 204.1

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• Geographically diversifying its portfolio.

• Controlling costs to maximize profitability.

• Developing and adhering to policies and practices that protect the environment and meet or exceed the regulations

imposed by the government.

• Developing and adhering to safety policies and practices that meet or exceed regulatory standards.

• Carrying insurance to cover physical losses and business interruption.

Business ProspectsOne of the most influential factors affecting the fortunes of Pengrowth’s investors remains the price of crude oil and

natural gas which continue to be extremely difficult to predict. It is our view that world demand for crude oil will

continue to grow, and the main downside risk to this growth pattern is the threat of a sustained recession in the world

economy. On the supply side, it is becoming more evident that there are only a few OPEC countries with the ability to

increase production, and those countries are becoming more disciplined in managing their production quotas and

maintaining oil prices within a publicly stated price band of U.S. $24-$30 per bbl WTI equivalent. Non-OPEC producers

have experienced years of capital constraints, production declines and a lack of exploration success, and it will take some

time before higher prices attract the capital required to reverse this trend.

We also expect North American natural gas prices to remain strong in 2001. U.S. demand for natural gas continues

to increase in response to a decade of economic expansion and the use of gas for electrical generation. In the meantime,

U.S. gas producers are suffering from capital constraints, reservoir declines, and a lack of exploration success. The

Canadian export capacity problem has been solved with the new Alliance pipeline and expansions at Northern Border

and TransCanada Pipelines. However, the markets are discovering that there is no surplus gas north of the border, and

Canadian producers are battling the same production declines and lack of exploration success as their southern

neighbors. Aside from weather-related factors, the main threat to the North American gas market is the risk of an

economic recession and associated slump in demand, and in the long term, the risk that high gas prices will spark fuel

switching to alternate energy sources such as crude oil, coal, and nuclear energy.

As with most yield-based investments, interest rates have historically had an impact on Pengrowth’s trust unit value.

If North American interest rates continue to decline in response to slowing economies, it could have a positive impact

on the value of Pengrowth’s trust units. In addition, if energy prices maintain their current levels for a sustained period

of time, it is possible that the risk premium placed on energy-based investments such as Pengrowth may gradually

diminish, with potentially positive implications for Pengrowth’s trust unit values.

Pengrowth continues to pursue opportunities to acquire quality oil and gas properties in order to replenish reserves

and increase value to unitholders. We believe there will be further opportunities to acquire mature, long-life properties

as the industry continues to consolidate and rationalize. These opportunities are evidenced by the February 6, 2001

announcement that Pengrowth is acquiring a convertible royalty with respect to the natural gas and NGL reserves

associated with the Province of Nova Scotia’s 8.4% interest in the Sable Offshore Energy Project for $265 million. This

transaction, which is subject to rights of first refusal, offers many attractions to Pengrowth unitholders. It is expected to

be accretive to cash flow, production and reserves per trust unit. It increases Pengrowth’s production weighting to natural

gas. The SOEP Royalty offers relatively constant production for an estimated 10 years, with a reasonable capital

expenditure profile, an Established reserve life index of 20.1 years, and the advantage of natural gas delivered into the

premium-priced Northeastern U.S markets.

The current environment of strong prices also brings increasing costs for production and acquisitions, and it is more

important than ever to maintain discipline towards the business. Pengrowth’s staff has incentives to control costs and

maximize production and Pengrowth will remain disciplined in its capital spending, acquisitions, and efforts to enhance

shareholder value.

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Management’s Responsibility to the Unitholders

The financial statements are the responsibility of the management of Pengrowth Energy Trust. They have been prepared

in accordance with generally accepted accounting principles, using management’s best estimates and judgements, where

appropriate.

Management is responsible for the reliability and integrity of the financial statements, the notes to the financial

statements, and other financial information contained in this report. In the preparation of these statements, estimates

are sometimes necessary because a precise determination of certain assets and liabilities is dependent on future events.

Management believes such estimates have been based on careful judgements and have been properly reflected in the

accompanying financial statements.

Management is also responsible for ensuring the management fulfills its responsibilities for financial reporting and

internal control. The Board is assisted in exercising its responsibilities through the Audit Committee of the Board,

which is composed of three non-management directors. The Committee meets periodically with management and the

auditors to satisfy itself that management’s responsibilities are properly discharged, to review the financial statements

and to recommend approval of the financial statements to the Board.

KPMG LLP, the independent auditors appointed by the unitholders, have audited Pengrowth Energy Trust’s

consolidated financial statements in accordance with generally accepted auditing standards and provided an

independent professional opinion. The auditors have full and unrestricted access to the Audit Committee to discuss

their audit and their related findings as to the integrity of the financial reporting process.

JAMES S. KINNEAR ROBERT J. WATERS

President and Vice President, Finance and

Chief Executive Officer Chief Financial Officer

February 26, 2001

To the Unitholders of Pengrowth Energy Trust

We have audited the consolidated balance sheets of Pengrowth Energy Trust as at December 31, 2000 and 1999 and the

consolidated statements of income and distributable income, unitholders’ equity and cash flows for the years then ended.

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require

that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the

Trust as at December 31, 2000 and 1999 and the results of its operations and its cash flows for the years then ended in

accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from accounting principles

generally accepted in the United States. Application of accounting principles generally accepted in the United States

would have affected results of operations for each of the years in the two year period ended December 31, 2000 and

unitholders’ equity as at December 31, 2000 and 1999, to the extent summarized in note 13 to the consolidated financial

statements.

CHARTERED ACCOUNTANTS

Calgary, Canada

February 26, 2001

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As at December 31 (Stated in thousands of dollars) 2000 1999

ASSETSCURRENT ASSETS

Cash $ 4,533 $ –Marketable securities – 2,592Accounts receivable 33,103 22,910Inventory 8,509 1,767

46,145 27,269

REMEDIATION TRUST FUND (Note 3) 5,515 3,785

PROPERTY, PLANT AND EQUIPMENT AND OTHER ASSETS (Note 4) 1,038,823 826,860

$ 1,090,483 $ 857,914

LIABILITIES AND UNITHOLDERS’ EQUITYCURRENT LIABILITIES

Bank indebtedness $ – $ 1,255Accounts payable and accrued liabilities 40,396 19,948Distributions payable to unitholders 48,010 27,496Due to Pengrowth Management Limited (Note 9) 1,941 1,276Current portion of obligation under capital lease 553 472

90,900 50,447

LONG-TERM DEBT (Note 5) 286,823 230,333

FUTURE SITE RESTORATION COSTS 25,285 18,544

FUTURE INCOME TAXES (Note 8) 45,510 –

TRUST UNITHOLDERS’ EQUITY (Note 6) 641,965 558,590$ 1,090,483 $ 857,914

SUBSEQUENT EVENTS (Note 12)

See accompanying notes to the consolidated financial statements.

Approved on behalf of Pengrowth Energy Trust by Pengrowth Corporation, as Administrator:

Thomas A. Cumming Francis G. Vetsch

Director Director

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Years ended December 31 (Stated in thousands of dollars, except per unit amounts) 2000 1999

REVENUESOil and gas sales $ 416,228 $ 252,408Processing and other income 5,520 3,715Crown royalties (70,111) (29,049)Alberta Royalty Tax Credit 517 1,378Freehold royalties and mineral taxes (6,994) (4,215)

345,160 224,237 Interest and other income 5,788 1,144

NET REVENUE 350,948 225,381

EXPENSESOperating 65,195 57,642Amortization of injectants for miscible floods 32,463 13,964Interest 17,354 10,882General and administrative 7,081 5,972Management fee (Note 9) 6,873 4,490Capital taxes 1,830 1,190Depletion and depreciation 89,253 73,943Future site restoration 7,612 7,038

227,661 175,121

INCOME BEFORE THE FOLLOWING 123,287 50,260

Royalty income attributable to royalty units other than those held by Pengrowth Energy Trust 72 37

NET INCOME 123,215 50,223

Add: Depletion, depreciation and future site restoration 96,865 80,981Alberta Royalty Credit received during year 1,378 1,387

Deduct: Alberta Royalty Credit accrued for year (517) (1,378)Remediation expenses and trust fund contributions (Note 3) (2,601) (3,041)

DISTRIBUTABLE INCOME $ 218,340 $ 128,172

NET INCOME PER UNIT (Note 10) Basic $ 2.213 $ 0.980

Fully Diluted $ 2.194 $ 0.980

DISTRIBUTABLE INCOME PER UNIT (Note 10) Based on weighted average units outstanding $ 3.922 $ 2.502

Based on actual distributions paid or declared $ 3.785 $ 2.486

See accompanying notes to the consolidated financial statements.

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Years ended December 31 (Stated in thousands of dollars) 2000 1999

CASH PROVIDED BY (USED FOR):OPERATING

Net income $ 123,215 $ 50,223Items not involving cash Depletion, depreciation and future site restoration 96,865 80,981Amortization of injectants 32,463 13,964Purchase of injectants (46,782) (36,846)Expenditures on remediation (871) (1,349)Gain on sale of marketable securities (2,741) –

Funds generated from operations 202,149 106,973

Distributions (197,826) (114,163)Changes in non-cash operating working capital (Note 7) 4,976 (1,880)

9,299 (9,070)

FINANCINGChange in long-term debt 56,571 72,705Proceeds from issue of trust units 178,500 76,014

235,071 148,719

INVESTINGExpenditures on property acquisitions (181,628) (139,825)Expenditures on property, plant and equipment (59,759) (17,742)Change in Remediation Trust Fund (1,730) (1,693)Proceeds on sale of marketable securities 5,333 57 Change in non-cash investing working capital (Note 7) (798) (959)

(238,582) (160,162)

INCREASE (DECREASE) IN CASH 5,788 (20,513)

CASH AND TERM DEPOSITS (BANK INDEBTEDNESS) AT BEGINNING OF YEAR (1,255) 19,258

CASH (BANK INDEBTEDNESS) AT END OF YEAR $ 4,533 $ (1,255)

See accompanying notes to the consolidated financial statements.

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Years ended December 31 (Stated in thousands of dollars) 2000 1999

Unitholders’ equity at beginning of year $ 558,590 $ 560,525

Units issued, net of issue costs 178,500 76,014

Net income for year 123,215 50,223

Distributable income (218,340) (128,172)

TRUST UNITHOLDERS’ EQUITY AT END OF YEAR $ 641,965 $ 558,590

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Years ended December 31, 2000 and 1999(Tabular amounts are stated in thousands of dollars except per unit amounts.)

1. STRUCTURE OF THE TRUSTPengrowth Energy Trust (“EnergyTrust”) is a closed-end investment trust created under the laws of the Province of

Alberta pursuant to a Trust Indenture dated December 2, 1988 (as amended) between Pengrowth Corporation

(“Corporation”) and ComputerShare Investor Services Inc. (formerly Montreal Trust Company of Canada). Operations

commenced on December 30, 1988. The beneficiaries of EnergyTrust are the holders of trust units (the “unitholders”).

EnergyTrust acquires and holds royalty units issued by the Corporation, which entitles EnergyTrust to the net

revenue generated by Corporation’s petroleum and natural gas properties less certain defined charges. In addition,

unitholders are entitled to receive the net cash flows from other investments that are held directly by EnergyTrust.

As at December 31, 2000 EnergyTrust owned 99.9 percent of the royalty units issued by the Corporation.

Pengrowth Management Limited (the “Manager”) is responsible for the management of the business affairs of the

Corporation and the administration of EnergyTrust. The shares of the Corporation are wholly owned by the

Manager, and the Manager is controlled by a director of the Corporation.

Under the terms of the Royalty Indenture, the Corporation is entitled to retain a 1 percent share of royalty income

and all miscellaneous income (the “Residual Interest”) to the extent this amount exceeds the aggregate of debt

service charges, general and administrative expenses, and management fees. In 2000 and 1999, the Corporation was

not eligible to retain this Residual Interest.

2. SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationEnergyTrust’s consolidated financial statements have been prepared in accordance with generally accepted

accounting principles in Canada and they include the accounts of EnergyTrust and the accounts of Corporation

(collectively referred to as “Pengrowth”). All inter-entity transactions have been eliminated. These financial

statements do not contain the accounts of the Manager.

Although there is no legal ownership between EnergyTrust and Corporation, EnergyTrust, through the royalty,

obtains substantially all the economic benefits of Corporation. In addition, the unitholders of EnergyTrust have the

right to elect the majority of the board of directors of Corporation.

Property Plant and EquipmentPengrowth follows the full cost method of accounting for oil and gas properties and facilities whereby all costs of

acquiring such interests are capitalized and depleted on the unit of production method based on proved reserves

before royalties as estimated by independent engineers. Natural gas production and reserves are converted to

equivalent units of crude oil using their relative energy content.

General and administrative costs are not capitalized other than to the extent they are directly related to a successful

acquisition, or to the extent of Pengrowth’s working interest in capital expenditure programs to which overhead fees

can be recovered from partners. Overhead fees are not charged on 100 percent owned projects.

Proceeds from disposals of oil and gas properties and equipment are credited against capitalized costs unless the

disposal would alter the rate of depletion and depreciation by more than 20 percent, in which case a gain or loss on

disposal is recorded.

Pengrowth places a limit on the aggregate carrying value of property, plant and equipment and deferred injectant

costs that may be carried forward for depletion against revenues of future periods (the “ceiling test”). The cost of

these assets less accumulated depletion and depreciation is limited to an amount equal to the estimated future net

revenue from production of proved reserves (based on unescalated prices and costs at the balance sheet date) less

estimated future general and administrative costs, financing costs and management fees.

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Injectant CostsInjectants (mostly ethane and methane) are used in miscible flood programs to stimulate incremental oil recovery.

The cost of injectants purchased from third parties for miscible flood projects is deferred and amortized over the

period of expected future economic benefit which is estimated as 30 months.

InventoryInventories of crude oil, natural gas and natural gas liquids are stated at the lower of cost and net realizable value.

Future Site Restoration CostsProvisions for future site restoration costs are made over the life of the oil and gas properties and facilities using the

unit of production method. Costs are based on engineering estimates considering current regulations, costs and industry

standards. Pengrowth has placed cash in a segregated remediation trust account to fund certain site restoration costs

for the Judy Creek and Swan Hills properties. Contributions to the remediation trust account and remediation

expenditures not funded by the trust account are charged against distributable income in the period incurred.

Income TaxesEnergyTrust is a taxable trust under the Income Tax Act (Canada). No provision has been made for income taxes

by EnergyTrust in these financial statements, as income taxes are the responsibility of the individual unitholders and

EnergyTrust distributes all of its income to its unitholders. In 2000, EnergyTrust allocated $110.4 million in taxable

income or $1.983 per unit to unitholders (1999 - $34.8 million, or $0.674 per unit).

The Corporation follows the tax liability method of accounting for income taxes. The method was adopted in 2000

without restatement of prior years. Under this method, income tax liabilities and assets are recognized for the estimated

tax consequences attributable to differences between the amounts reported in the Corporation’s financial statements

and their respective tax bases, using enacted income tax rates. The effect of a change in income tax rates on future

income tax liabilities and assets is recognized in income in the period that the change occurs. In determining its taxable

income, the Corporation deducts royalty payments to the unitholders. In 2000, net income of the Corporation, after

deducting royalty payments to royalty unitholders, was nil. If the Corporation ever lacked sufficient deductions to

reduce taxable income to nil, the taxes would be deducted from royalty payments to unitholders.

Trust unit compensation plansPengrowth has a number of trust unit compensation plans, the accounting policies for which are described in Note 6.

Forward and Futures ContractsPengrowth uses forward and futures contracts to manage its exposure to commodity price fluctuations. The net

receipts or payments arising from these contracts are recognized in income as a component of oil and gas sales

during the same period as the corresponding hedged position.

Measurement UncertaintyThe amounts recorded for depletion, depreciation and amortization of injectants and the provision for abandonment

costs are based on estimates. The ceiling test calculation is based on estimates of proved reserves, production rates,

oil and natural gas prices, future costs and other relevant assumptions. By their nature, these estimates are subject

to measurement uncertainty and may impact the consolidated financial statements of future periods.

Earnings per unitThe Canadian Institute of Chartered Accountants has approved a new standard for the computation, presentation and

disclosure of earnings per unit. In the fourth quarter of fiscal 2000, Pengrowth retroactively adopted the new standard.

The impact of adopting the new standard on the periods presented is not significant. Under the new standard, the

treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments. Under

the treasury stock method, only “in the money” dilutive instruments impact the diluted calculations.

Comparative figuresCertain comparative figures have been restated to conform to the presentation adopted in the current year.

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3. REMEDIATION TRUST FUNDPursuant to a Purchase and Sale Agreement dated August 15, 1997 between Pengrowth and Imperial Oil Resources

(“Imperial”), a trust was established to fund certain remediation obligations of the Judy Creek and Swan Hills properties.

ComputerShare Investor Services Inc. is the trustee for the Remediation Trust Fund. With respect to the current and

future years, Pengrowth agreed to make a contribution of $1,750,000 on October 15, 2000 and a contribution of

$250,000 per annum for each year subsequent to 2000 to the Remediation Trust Fund. In addition, Pengrowth makes

a monthly trust fund contribution equivalent to $0.10 per boe of production from the Judy Creek properties.

Every five years Pengrowth must deliver a report to Imperial evaluating the assets in the trust fund and the outstanding

remediation obligations, and make recommendations as to whether contribution levels should be changed. If Imperial

does not consent to recommended changes in the contribution level, the matter may be arbitrated.

The following summarizes Pengrowth’s Remediation Trust Fund contributions for 2000 and 1999 and Pengrowth’s

expenditures on remediation activities not covered by the trust fund:

As at December 31, 2000, Pengrowth had a surplus in its ceiling test using year end prices.

Total estimated future site restoration costs are approximately $114 million of which $25.3 million has been accrued

to date.

The Corporation has a $350 million revolving credit facility syndicated among seven financial institutions with an

extendible 364 day revolving period and a five year amortization term period. In addition, it has a $35 million

demand operating line of credit that is currently reduced by outstanding letters of credit in the amount of

approximately $12 million. The facilities are secured by a $500 million first fixed and floating charge debenture on

all of the Corporation’s assets. In addition, EnergyTrust has issued a guarantee and a $200 million debenture granting

a first fixed security interest in the Judy Creek and Swan Hills facilities to the financial institutions in the credit facility.

Interest payable is at the bankers’ acceptance rates plus stamping fees, lenders’ prime lending rates, or U.S. libor rates

plus applicable margins, depending on the form of borrowing by the Corporation. The margins and stamping fees

vary depending on financial statement ratios and can range from 0.50 percent to 1.00 percent. Interest expense for

the year ended December 31, 2000 includes $15,620,843 in cash interest payments (1999- $7,009,058).

2000 1999

Contributions to Remediation Trust Fund $ 2,461 $ 1,757Remediation expenditures not covered by the Trust Fund 140 1,284

$ 2,601 $ 3,041

4. PROPERTY, PLANT AND EQUIPMENT AND OTHER ASSETS2000 1999

Property, Plant and EquipmentProperty, Plant and Equipment, at cost $1,298,096 $1,011,199Accumulated depletion and depreciation (313,391) (224,138)

Net book value of property, plant and equipment $ 984,705 $ 787,061Other Assets

Deferred injectant costs 54,118 39,799Net book value of property, plant and equipment and other assets $1,038,823 $ 826,860

5. LONG-TERM DEBT 2000 1999

Revolving credit facility $ 286,823 $ 229,780Obligation under capital lease 553 1,025Less: current portion of lease obligation (553) (472)

$ 286,823 $ 230,333

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The credit facility will revolve until June 24, 2001, whereupon it is expected to be renewed for a further 364 days,

subject to satisfactory review by the lenders. If the lenders were to convert the facility to a non-revolving term

facility, then amounts outstanding under the facility become repayable in 20 equal quarterly instalments. As at

December 31, 2000, the obligation outstanding under the revolving credit facility is classified as long-term debt as

the lenders have advised management that subject to the Corporation complying with the terms and conditions of

the Credit Agreement, no principal repayments are required in 2001.

6. TRUST UNITSThe authorized capital of Pengrowth is 500,000,000 trust units.

Pursuant to the terms of the Royalty Indenture and the Trust Indenture, there is attached to each royalty unit granted

by the Corporation the right to exchange such royalty unit for an equivalent number of trust units. Computershare,

as Trustee has reserved 18,940 trust units for such future conversion.

Distribution Reinvestment PlanThe Distribution Reinvestment Plan (“DRIP”) entitles unitholders to reinvest cash distributions in additional units

of EnergyTrust. The trust units under the plan may be acquired in the open market at prevailing market prices or

issued from treasury at the weighted average price of all EnergyTrust units traded on the Toronto Stock Exchange

for the 20 trading days preceding a distribution payment date.

Trust Unit Option PlanPengrowth has a trust unit option plan under which employees and directors of the Corporation and the Manager

are eligible to receive options. As options are issued at the market price on date of grant, no compensation expense

is recognized when new options are issued. Under the terms of the plan, up to 10% of the issued and outstanding

trust units to a maximum of 7 million units may be reserved for these option grants. One third of the options vest

on the grant date, one third on the first anniversary of the date of grant, and the remaining third on the second

anniversary. The options expire five years from the date of grant. The exercise price of each option equals the market

price of EnergyTrust’s units on the date of the grant. As at December 31, 2000, options to purchase 2,893,554 trust

units were outstanding (1999 - 4,041,287) that expire at various dates to November 24, 2005.

2000 1999Number Number

Trust Units Issued of units Amount of units Amount

Balance, beginning of year 53,639,338 $ 796,224 47,368,765 $ 720,210Issued for cash 8,165,000 155,135 6,120,000 79,254Less: issue expenses – (8,303) – (5,230)Issued for cash on exercise of stock options 1,915,833 29,299 62,900 776Issued for cash under Distribution

Reinvestment (“DRIP”) Plan 132,027 2,369 87,673 1,214Balance, end of year 63,852,198 $ 974,724 53,639,338 $ 796,224

2000 1999Weighted Weighted

Number Average Number AverageTrust Unit Options of options Exercise price of options Exercise price

Outstanding at beginning of year 4,041,287 $ 16.16 4,075,847 $ 16.79Granted 821,100 18.73 538,400 12.75Exercised (1,915,833) 15.29 (62,900) 12.33Cancelled (53,000) 16.85 (84,060) 18.14Cancelled and replaced with SAR – – (426,000) 18.39Outstanding at year-end 2,893,554 17.45 4,041,287 16.16Exercisable at year-end 2,171,087 17.51 3,468,681 16.58

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The following table summarizes information about trust unit options outstanding at December 31, 2000:

Share Appreciation RightsOn May 12, 1999, 426,000 trust unit options granted to the President and Chief Executive Officer of Pengrowth

were cancelled and replaced with an equal number of Share Appreciation Rights (“SAR’s”) which have the same

exercise price, vesting provisions, and expiry dates as the predecessor options. As at December 31, 2000, the

426,000 SAR’s were still outstanding. They are fully vested, have a weighted average exercise price of $18.39 and

expiry dates ranging from October 15 to December 1, 2002.

The SAR’s grant the right to receive a Payment Amount equal to any increase in the market price of the 426,000

trust units above the exercise price. Pengrowth may, at its option, satisfy this Payment Amount with either a cash

payment or the issue of trust units from treasury based on market prices at the time of exercise. No compensation

expense is recognized for the SAR’s until a cash payment is made.

Trust Unit Savings PlanPengrowth has a trust unit savings plan whereby qualifying employees may contribute from 1 to 10 percent of their basic

annual salary. Employee contributions are invested in EnergyTrust units purchased on the open market. Pengrowth

matches the employees’ contribution, investing in additional trust units purchased on the open market. Pengrowth’s

share of contributions is recorded as compensation expense and amounted to $532,014 in 2000 (1999 - $466,776).

Trust Unit Margin Purchase PlanPengrowth has a plan whereby the Manager, and employees, directors, and certain consultants of Corporation can

purchase trust units and finance up to 75% of the purchase price through an investment dealer, subject to certain

participation limits and restrictions. Participants maintain personal margin accounts with the investment dealer and

are responsible for all interest costs and obligations with respect to their margin loans. The Corporation has

provided a $5 million letter of credit to the investment dealer to guarantee amounts owing with respect to the plan.

The amount of the letter of credit may fluctuate depending on the amounts financed pursuant to the plan. At

December 31, 2000, 1,925,518 trust units were deposited under the plan (1999 - 1,508,985) with a market value

of $37.0 million (1999 - $23.4 million) and a corresponding margin loan of $11.6 million (1999 - $10.7 million).

Options Outstanding Options ExercisableWeighted-

AverageNumber Remaining Weighted- Number Weighted-

Outstanding Contractual Average Exercisable AverageRange of Exercise Prices At 12/31/00 Life Exercise price At 12/31/00 Exercise Price

$12.00 to $14.99 273,468 3.3 years $ 12.69 98,401 $ 12.58$15.00 to $16.99 627,020 1.5 15.87 596,020 15.85$17.00 to $17.99 854,800 2.0 17.50 847,000 17.50$18.00 to $20.50 1,138,266 3.9 19.43 629,666 19.86$12.00 to $20.50 2,893,554 2.7 17.45 2,171,087 $ 17.51

7. CHANGE IN NON-CASH OPERATING WORKING CAPITAL2000 1999

Accounts receivable $ (10,193) $ (2,993)Inventory (6,742) (875)Accounts payable and accrued liabilities 21,246 1,129Due to Pengrowth Management Limited 665 859

4,976 (1,880)

CHANGE IN NON-CASH INVESTING WORKING CAPITAL2000 1999

Accounts payable for purchase of marketable securities and capital accruals $ (798) $ (959)

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8. INCOME TAXESDuring the year, the Corporation changed its method of accounting for income taxes from the deferral method to the

liability method as described in note 2, and has applied this change retroactively without restating prior periods. As a

result of adopting this new standard, there was no change to the financial statements reported as at December 31, 1999.

The net book value of property, plant and equipment exceeded the cost basis for income tax purposes by

$102,040,000 and a future income tax liability of $45,510,000 has been recorded in respect thereof, principally as

a result of the acquisition of oil and gas properties during the year.

In 2000, the Corporation made cash payments of $1,827,000 in respect of capital taxes (1999 - $2,104,000).

9. RELATED PARTY TRANSACTIONSPengrowth Management Limited provides certain services pursuant to a management agreement for which

Pengrowth paid $1,238,000 (1999 - $2,224,365) for acquisition fees and $6,872,570 (1999 - $4,489,706) for a

management fee. The law firm controlled by the corporate secretary received $284,456 (1999-$326,746) for legal

services provided to Pengrowth.

The Corporation has provided a $5 million letter of credit to an investment dealer to guarantee amounts owing to

the investment dealer. See note 6 - Trust Unit Margin Purchase Plan.

10. AMOUNTS PER UNITThe per unit amounts for net income and distributable income are based on weighted average units outstanding for

the year. The weighted average units outstanding for 2000 were 55,672,865 units (1999 - 51,233,796 units). In

computing fully diluted net income per unit, 354,331 units were added to the weighted average number of units

outstanding during the year ended December 31, 2000 (1999 - nil) 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.

Distributions are declared payable during the month following the month in which the distributions were earned.

Distributions are paid to unitholders on the 15th day of the second month after the distributions are earned. As at

December 31, 2000 there was a balance of $700,188 or $0.0110 per unit that had been earned but had not yet been

paid or declared (1999 - $139,090 or $0.0026 per unit).

11. FINANCIAL INSTRUMENTSInterest Rate RiskAs at December 31, 2000 Pengrowth was exposed to floating interest rates with respect to its long-term debt and it

had no fixed interest rate borrowings extending beyond one year.

Foreign Currency Exchange RiskPengrowth is exposed to foreign currency fluctuations as crude oil and natural gas prices received are referenced to

U.S. dollar denominated prices. Pengrowth has mitigated some of this exchange risk by entering into fixed Canadian

dollar crude oil price swaps as outlined below.

Credit RiskA portion of Pengrowth’s accounts receivable are with joint venture partners in the oil and gas industry and are

subject to normal industry credit risks. Purchasers of Pengrowth’s petroleum and natural gas products are subject

to an internal credit review designed to mitigate the risk of non-payment. The use of commodity price swap

agreements involves a degree of credit risk that Pengrowth manages through its credit policies which are designed

to limit eligible counterparties to those with “A” credit ratings or better.

Forward and Futures ContractsPengrowth 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.

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As at December 31, 2000, Pengrowth had fixed the price applicable to future production as follows:

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 year-end. At

December 31, 2000 the amount Pengrowth would pay to terminate the crude oil and natural gas contracts would

be $2,127,700 and $39,366,300, respectively.

Fair value of financial instrumentsThe 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 Remediation Trust Fund

was $5,544,077 (1999 - $3,789,797). The fair value of the marketable securities at December 31, 1999 was

$4,205,000. The carrying value of bank debt approximates fair value as it bears interest at floating rates.

12. SUBSEQUENT EVENTSOn February 2, 2001 Pengrowth announced it had entered into an agreement to purchase an additional 43.5%

working interest in the Kaybob Notikewin Unit for $25.2 million. The acquisition of this natural gas producing

property is expected to close in the first quarter of 2001.

On February 6, 2001 Pengrowth reached an agreement, along with two other companies, for the acquisition of

Nova Scotia Resources Limited (“NSRL”) from the Government of the Province of Nova Scotia. The transaction,

which is subject to rights of first refusal, is scheduled to close in the second quarter of 2001. The purchase price to

Pengrowth is $265 million, representing approximately 63% of the total purchase price for NSRL of $420 million.

The acquisition is structured to provide Pengrowth with the natural gas and natural gas liquids reserves from NSRL’s

8.4% interest in the Sable Offshore Energy Project (“SOEP”). Pengrowth has arranged a credit facility to fund this

acquisition in the event that additional credit capacity is required to close the transaction.

13. RECONCILIATION OF FINANCIAL STATEMENTS TO UNITED STATES GENERALLY ACCEPTEDACCOUNTING PRINCIPLESThe significant differences between Canadian generally accepted accounting principles (“Canadian GAAP”) which,

in most respects, conforms to generally accepted accounting principles in the United States (“U.S. GAAP”), as they

apply to Pengrowth, are as follows:

(a) Under U.S. GAAP, the carrying value of petroleum and natural gas properties and related facilities, net of future or

deferred income taxes, is limited to the present value of after tax future net revenue from proven reserves, discounted

at 10 percent (based on prices and costs at the balance sheet date), plus the lower of cost and fair value of unproven

properties. Under Canadian GAAP, this “ceiling test” is calculated without application of a discount factor. At

December 31, 1998 and 1997 the application of the full cost ceiling test under U.S. GAAP resulted in a write-down

of capitalized costs of $328.6 million and $49.8 million, respectively. At December 31, 2000 and 1999, the

application of the full cost ceiling test under U.S. GAAP did not result in a write-down of capitalized costs.

Where the amount of a ceiling test writedown under Canadian GAAP differs from the amount of the write-down

under U.S. GAAP, the charge for depletion, depreciation, and amortization will differ in subsequent years.

(b) Under U.S. GAAP, the provision for abandonment costs is recorded as a reduction of capital assets.

(c) Under U.S. GAAP, interest and other income would not be included as a component of Net Revenue.

Crude Oil Natural GasVolume Price Volume Plantgate Price(bbls/d) Cdn$/bbl (mcf/d) Cdn$/mcf

2001 1,000 $ 32.02 13,179 $ 2.972002 – – 7,762 $ 2.98

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Under the provisions of SFAS 123 the pro forma disclosures above include only the effects of stock options granted

by Pengrowth subsequent to December 31, 1996. During this initial phase-in period, the pro-forma disclosures as

required by SFAS 123 are not representative of the effects on reported income for future years as options vest over

several years and additional awards are generally made each year.

The weighted average fair market value of options granted in 2000 and 1999 was $0.26 and $0.40 per option

respectively. The fair value of each option granted was estimated on the date of grant using the Modified Black-

Scholes option-pricing model with the following assumptions for 2000 and 1999 respectively: risk-free interest rate

of 5 percent for both years, dividend yield of 19.0 and 12.7 percent, volatility of 16 and 22 percent, normalized

dilution of 7 percent and liquidity discount of 10 percent for both years, and expected life of five years in both years.

APB 25 also requires recognition of compensation cost with respect to Stock Appreciation Rights granted to

employees. Application of provisions of APB 25 result in a compensation cost of $510,000 for the year ended

December 31, 2000 for U.S. GAAP purposes. No compensation cost resulted from application of the above

provisions for the year ended December 31, 1999.

(e) Marketable securities held by Pengrowth are classified as available-for-sale in accordance with definitions of SFAS

115. Under provisions of this Statement, available-for-sale securities are reported at the fair value, with unrealized

holding gains and losses included in comprehensive income and reported as a separate component of unitholders’

equity until realized.

(f) SFAS 130 requires the reporting of comprehensive income in addition to net earnings. Comprehensive income

includes net income plus other comprehensive income; specifically, all changes in equity of a company during a

period arising from non-owner sources.

(d) SFAS 123, “ Accounting for Stock-based Compensation”, establishes financial accounting and reporting standards

for stock-based employee compensation plans as well as transactions in which an entity issues its equity instruments

to acquire goods or services from non-employees. As permitted by the SFAS 123, Pengrowth has elected to continue

to follow the intrinsic value method of accounting for stock-based compensation arrangements, as provided for in

Accounting Principles Board Opinion 25 (“APB 25”). Since all options were granted with an exercise price equal

to the market price at the date of the grant, no compensation cost has been charged to income. Had compensation

cost for Pengrowth’s stock options been determined based on the fair market value at the grant dates of the awards

consistent with methodology prescribed by SFAS 123, “Accounting for Stock-Based Compensation”, Pengrowth’s

net income and net income per unit for years ended December 31, 2000 and 1999 would have been the pro forma

amounts indicated below:

Years ended December 31, 2000 1999

Net Income:As Reported $ 150,654 $ 78,741Pro forma 150,498 78,275

Net Income per unit:As Reported $ 2.71 $ 1.54Pro forma $ 2.70 $ 1.53

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CONSOLIDATED STATEMENTS OF INCOME AND DISTRIBUTABLE INCOMEThe application of U.S. GAAP would have the following effect on net earnings as reported:Stated in thousands of Canadian Dollars, except per unit amounts

Years ended December 31, 2000 1999

Net income for the year, as reported $ 123,215 $ 50,223

Adjustments net of taxDepletion and depreciation (a) 27,949 28,518Compensation cost (d) (510) -

Net income for the year - U.S. GAAP $ 150,654 $ 78,741

Other comprehensive income:Unrealized (realized) gain on available-for-salesecurities (e)(f) (1,613) 1,576

Comprehensive income - U.S. GAAP $ 149,041 $ 80,317

Net income per unit - U.S. GAAP - Basic $ 2.71 $ 1.54

- Diluted $ 2.67 $ 1.54

(g) Statement of Financial Accounting Standards No. 133, “Accounting for Derivative instruments and Hedging

Activities” (SFAS 133), was issued in June 1998 by the Financial Accounting Standards Board. SFAS 133 establishes

new accounting and reporting standards for derivative instruments and for hedging activities. This statement

requires an entity to establish, at the inception of a hedge, the method it will use for assessing the effectiveness of

the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Those

methods must be consistent with the entity’s approach to managing risk. SFAS 133 is effective for all fiscal years

beginning after June 15, 2000. Pengrowth will implement the standards set out in SFAS 133 for the fiscal year

commencing January 1, 2001. If it were adopted at December 31, 2000, an amount of $2.1 million would be

recorded as a liability in respect of the fair value of a crude oil hedge outstanding at year end with a corresponding

reduction in other comprehensive income. This amount would be amortized against crude oil sales over the

remaining term of the hedge.

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CONSOLIDATED BALANCE SHEETSThe application of U.S. GAAP would have the following effect on the Balance Sheets as reported:Stated in thousands of Canadian DollarsDecember 31, 2000

As Increase Reported (Decrease) U.S. GAAP

AssetCapital assets (a)(b) $ 1,038,823 (347,187) $ 691,636

$ (347,187)

Liabilities:Provision for abandonment costs (b) $ 25,285 $ (25,285) $ -Other (d) - 510 510

Unitholders’ equity:Trust Unitholders’ Equity (a) 641,965 (322,412) 319,553

$ (347,187)

December 31, 1999

Assets:Marketable Securities (e) $ 2,592 $ 1,613 $ 4,205Capital assets (a)(b) 826,860 (368,395) 458,465

$ (366,782)

Liabilities:Provision for abandonment costs (b) $ 18,544 $ (18,544) $ -

Unitholders’ equity:Other comprehensive income (e)(f) - 1,613 1,613Trust Unitholders’ Equity (a) 558,590 (349,851) 208,739

$ (366,782)

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ADDITIONAL DISCLOSURES REQUIRED UNDER U.S. GAAPThe components of accounts receivable are as follows:

December 31,2000 1999

Trade $ 27,716 $ 15,931Prepaids 2,795 3,256Other 2,592 3,723

$ 33,103 $ 22,910

The components of accounts payable and accrued liabilities are as follows:December 31,

2000 1999

Accounts payable $ 29,573 $ 12,422Accrued liabilities 10,823 7,526

$ 40,396 $ 19,948

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H I S T O R I C A L C A S H D I S T R I B U T I O N S

Distribution Date 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991

January 15 $ 0.250 0.11 0.14 0.15 0.08 0.07 0.06 0.19 – -February 15 0.260 0.13 0.22 0.31 0.13 0.18 0.10 0.14 0.12 0.21March 15 0.300 0.13 0.11 0.15 0.08 0.07 0.06 0.05 – –April 15 0.290 0.15 0.11 0.22 0.09 0.07 0.06 0.05 – –May 15 0.325 0.22 0.24 0.24 0.23 0.22 0.16 0.18 0.26 0.48June 15 0.240 0.16 0.11 0.21 0.20 0.16 0.13 0.05 0.04 –July 15 0.260 0.19 0.11 0.15 0.20 0.08 0.06 0.05 0.04 –August 15 0.300 0.22 0.11 0.15 0.16 0.08 0.07 0.05 0.04 0.12September 15 0.280 0.21 0.11 0.17 0.10 0.08 0.07 0.24 0.04 –October 15 0.300 0.22 0.11 0.11 0.16 0.14 0.13 0.06 0.04 –November 15 0.380 0.25 0.11 0.11 0.10 0.08 0.07 0.06 0.05 0.03December 15 0.370 0.23 0.17 0.14 0.14 0.12 0.15 0.06 0.05 –

Total $ 3.555 2.22 1.65 2.11 1.67 1.35 1.12 1.18 0.68 0.84

Cumulative Total $ 17.585 14.03 11.81 10.16 8.05 6.38 5.03 3.91 2.73 2.05

0

10

20

30

40

50

60

11 Year10 Year9 Year8 Year7 Year6 Year5 Year4 year3 Year2 Year1 Year

49%

56%

19% 19% 20%

25%23%

32% 32%

27%23%

H I S T O R I C A L R E T U R N S

A V E R A G E A N N U A L C O M P O U N D R A T E O F R E T U R N T O D E C E M B E R 3 1 , 2 0 0 0

2000 1999 1998 1997 1996 1995 1994 1993 1992 1991

High ($) 20.35 16.75 18.45 22.45 19.00 15.88 12.38 11.75 6.50 7.00

Low ($) 15.00 10.50 10.00 15.00 14.50 9.25 10.50 5.13 4.00 4.55

Close ($) 19.20 15.50 11.00 18.00 17.00 15.38 10.63 11.00 5.75 5.00

Volume (thousands) 21,494 14,457 12,079 10,545 11,582 8,892 4,459 3,757 277 144

U N I T T R A D I N G

F I V E Y E A R R E V I E W

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PENGROWTH ENERGY TRUSTCONSOLIDATED FINANCIAL RESULTSYears ended December 31Stated in thousands of dollars except per unit amounts

2000 1999 1998 1997 1996

Gross oil and gas revenue $ 416,228 252,408 168,782 121,216 77,656Crown royalties 70,111 29,049 18,247 15,569 11,404Freehold royalties and mineral taxes 6,994 4,215 3,032 4,177 4,533Operating costs 65,195 57,642 56,505 34,200 19,400Amortized injectant costs 32,463 13,964 5,330 - -General and administrative 7,081 5,972 5,446 2,758 2,063Management fee 6,873 4,490 2,891 2,389 1,583Interest expense 17,354 10,882 15,997 3,494 2,759Capital taxes 1,830 1,190 927 1,367 17Depletion, depreciation and future site restoration 96,865 80,981 75,174 38,863 22,619

Net Income 123,215 50,223 (767) 24,529 16,599Per unit 2.21 0.98 (0.02) 0.87 0.84

Distributable income 218,340 128,172 72,117 63,634 38,822Per unit 3.79 2.49 1.53 2.02 1.92

Total assets 1,090,483 857,914 765,162 965,281 224,858Per unit 17.08 15.99 16.15 20.41 9.77

Long term debt 286,823 230,333 157,662 282,262 5,400Per unit 4.49 4.29 3.33 5.97 0.23

Unitholders' equity 641,965 558,590 560,525 632,786 194,835Per unit 10.05 10.41 11.83 13.38 8.47

Net asset value* 819,298 615,340 502,538 770,418 241,775Per unit 12.83 11.47 10.61 16.29 10.51

Return on average equity 20.5% 9.0% -0.1% 5.9% 10.2%

Cash flow return on average equity 36.4% 22.9% 12.1% 15.4% 23.8%

Average cost of debt capital 6.8% 6.2% 5.7% 4.2% 5.6%

*Based on Established (proved plus 50% of probable) reserves discounted at 12% before income taxes.

C R U D E O I L P R I C E - A V E R A G E A N N U A L

( C D N $ / B B L )

N A T U R A L G A S P R I C E - A V E R A G E A N N U A L

( C D N $ / M C F )

$0

$1

$2

$3

$4

$5

20001999199819971996

1.731.94 1.78

2.48

4.34

$0

$10

$20

$30

$40

$50

20001999199819971996

27.7926.26

19.65

26.73

40.37

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F I V E Y E A R R E V I E W

PENGROWTH ENERGY TRUSTOPERATING RESULTSYears ended December 31Natural gas has been converted to equivalent barrels of oil at 6:1 unless otherwise stated

2000 1999 1998 1997 1996

Daily productionOil (bbls) 17,599 17,570 16,695 7,650 4,681Gas (mcf) 70,098 61,494 57,707 51,355 36,972Natural gas liquids (bbls) 4,205 3,927 3,342 1,856 964Oil equivalent (boe) 6:1 33,581 31,821 29,741 18,140 11,862Oil equivalent (boe) 10:1 28,908 27,721 25,894 14,716 9,397

Total Annual Production (mboe) 6:1 12,291 11,615 10,856 6,621 4,342Total Annual Production (mboe) 10:1 10,580 10,118 9,451 5,371 3,439

Average priceOil (per bbl) $ 40.37 26.73 19.65 26.26 27.79Gas (per mcf) $ 4.34 2.48 1.78 1.94 1.73Natural gas liquids (per bbl) $ 33.56 18.08 11.71 19.67 21.03Oil equivalent (per boe) 6:1 $ 33.87 21.73 15.55 18.31 17.89Oil equivalent (per boe) 10:1 $ 39.34 24.95 17.84 22.78 22.63

Property acquisitions ($millions) $ 179.6 141.8 6.4 528.0 74.9Capital expenditures ($millions) $ 59.8 17.7 34.9 17.5 10.3

Reserves (Established)Reserves acquired in the year (mmboe) 21.5 26.7 0.7 100.5 18.1Reserves at year-end (mmboe) 183.0 176.6 160.3 166.5 57.4Acquisition cost per boe $ 8.34 5.31 6.02 5.25 4.15

STOCK MARKET DATATrading volume (thousands of units) 21,494 14,457 12,079 10,545 11,582Trading value ($ thousands) $ 394,244 204,125 164,628 192,697 192,712Market capitalization:

Units outstanding (thousands) 63,852 53,639 47,369 47,288 23,015Year end unit price $ 19.20 15.50 11.00 18.00 17.00Total capitalization ($ thousands) $ 1,225,962 831,410 521,056 851,183 391,254

Trust unit price:High $ 20.35 16.75 18.45 22.45 19.00Low $ 15.00 10.50 10.00 15.00 14.50Close $ 19.20 15.50 11.00 18.00 17.00

Cash-on-cash return:Yearly high price 18.6% 14.8% 8.3% 9.0% 10.1%Yearly low price 25.2% 23.7% 15.3% 13.4% 13.2%

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T H E P E N G R O W T H T E A M : C A L G A R Y

Janice Young, Sally Elliott, Richard Ballantine

Tracey Parsons, Lynn Campbell

Micheline Bird, Leah Mullenix

Wendy Noonan, Kate Langejans

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T H E P E N G R O W T H T E A M : C A L G A R Y

Kathy Fidyk, Teena Keswick

Gail Anson, Lise Pitt, Julie Lefler

Jim Ham, Shanda Hoar

Erik Chico, John Halbauer

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T H E P E N G R O W T H T E A M : C A L G A R Y

Chris Webster, Bruce Malcolm, Myra Valencerina

Mike Evans, Kern Shepherd, Devin Sundstrom

Cyndy Mercier, Leslie Harris, Dawna Gibb

Faryal Khawaja, David Kinnear

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Robert Azim, Dale Babiak, Norm Bachand

Jen Barton, David Beeson, Keith Black,

Dave Bradley, Warren Bready, Rod Carew

Duane Carlson, Rob Collins, Duane Constantinoff

Nigel Cook, Darcy Cornelssen, Kevin Cote

Donald Craig, Rob Cramer, Deb Danyluk

Len Danyluk, Alan Doucette, Geoff Duff

Greg Ewasiuk, Jean Feckley, Garry Fisher

Terry Fong, Brian Fuglerud, Randy Fuglerud

Rose Gardipy, Dianna Gaumont, Bernie Gaumont

Phil Gauthier, Roy Gertz, Garry Givens

Phil Goldsney, Elaine Grant, Richard Grant

Jim Greer, Kevin Gunning, Jerry Haddock

Jeff Harasym, Conrad Harty, John Hestermann

Doug Hiemstra, Eric Hoek, Frank Horvath

Grant Huber, Khai Huynh, Craig Johnson

Dale Johnson, Don Kallis, Trevor Keddie

Bob Kemp, Nathan Kirby, Pat Kletzel

Francis Kripal. Sam Kuric, Greg Lawrence

Randy Lawrie, Martin Littke, Rod Machula

Randy Marriott, Terry Martin, Patti McCabe

Eric McCabe, David McConnell, Robbie McKinnon

Gavin McLaren, Pete Mierau, Phyllis Morissette

Chad Musselwhite, Peter Neudorf, Joe Oleksow

Rob Paterson, Lonnie Patten,David Peachman

Brad Pearson, Roger Pechanec, Dennis Perin

Kevin Pollock, Eric Pratt, Kevin Prodaniuk

Gord Rau, Brian Read, Jeffrey Richard

Lori Rock, Robert Rock, Terry Romaniuk

Phil Semmler, Ron Shannon, Mitch Sharp

Stu Slager, Dean Soucy, Randy Steele

Mario Struik, Linda Struik, John Tawiah

Perry Teplyske, Darren Tetlock, Joyce Tonsi

Randy Trofimuk, Rob Vanloenen, Doug Wakaruk

Ron Webster, Jim Whaley, Jeff Whatmore

Ann Whitaker-Jackman, Ken Workman

T H E P E N G R O W T H T E A M : J U D Y C R E E K O P E R A T I O N S

Randy Fuglerud, Richard Grant

Terry Martin, Jen Barton

Craig Johnson, Terry Fong

Randy Steele, Jim Greer

Bob Rock, Mario Struik

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B O A R D O F D I R E C T O R S

Thomas A. Cumming, BA.Sc., P.Eng. joined Pengrowth Corporation's Board of

Directors in April 2000, having held the position of President and C.E.O of the

Alberta Stock Exchange from 1988 to 1999. His career also includes 25 years with a

major Canadian bank both nationally and internationally. He currently serves as a

Director of the Calgary Chamber of Commerce; Calgary Research & Development

Authority; Calgary YMCA Foundation; and Director, Alberta Capital Market

Foundation.

James S. Kinnear, President, C.E.O. and Director, Pengrowth Corporation.

Mr. Kinnear graduated from the University of Toronto in 1969 with a B.Sc. degree

and received a C.F.A. designation in 1979. In 1982 he founded Pengrowth

Management Limited and in 1988 created Pengrowth Energy Trust. Prior to 1982 he

was research director and partner with a securities firm in Montreal and previously

worked as a securities analyst in Toronto and London, England.

Francis G. Vetsch, B.Sc., P.Eng., is President of Quantex Resources Ltd. and is the

former President of Tripet Resources and Chairman of Chauvco Resources Ltd. In his

earlier career he served as President and CEO of Alberta Eastern Gas Ltd. for six

years and Vice-President, Operations of Atlantic Richfield Canada for six years.

Stanley H. Wong, B.Sc., P.Eng., is President of Carbine Resources Ltd., a private oil

and gas producing and engineering consulting company. He was Senior Engineer with

Hudson's Bay Oil & Gas for 10 years and employed by Total Petroleum for 15 years

where he was Chief Engineer and later became Manager of Special Projects. He is

currently a Director of Cavell Energy Corporation.

John B. Zaozirny, Q.C., B.Comm., LL.B., LL.M., is Counsel to McCarthy Tetrault of

Calgary, was Minister of Energy and Natural Resources for the Province of Alberta

from 1982 to 1986, and currently serves on the Board of numerous Canadian and

international corporations. He is also a Governor of The Business Council of British

Columbia and a Senior Associate of Cambridge Energy Research Associates.

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James S. Kinnear, President, C.E.O. and Director

James S. Kinnear, President, C.E.O. and Director, Pengrowth Corporation.

Mr. Kinnear graduated from the University of Toronto in 1969 with a B.Sc. degree

and received a C.F.A. designation in 1979. In 1982 he founded Pengrowth

Management Limited and in 1988 created Pengrowth Energy Trust. Prior to 1982 he

was research director and partner with a securities firm in Montreal and previously

worked as a securities analyst in Toronto and London, England.

Robert J. Waters, Vice-President Finance and Chief Financial Officer

Mr. Waters previously worked as the Treasurer with a senior multinational oil and

gas exploration and production company and prior to that was a manager with a

major Canadian chartered accounting firm. Mr. Waters is a Chartered Accountant

with a Masters of Business Administration degree from York University.

Gordon M. Anderson, Vice-President, Treasurer

Mr. Anderson joined Pengrowth in 1990 as Chief Accountant following a ten year

career specializing in oil and gas audit, accounting and tax. Mr. Anderson is a Certified

General Accountant holding a B.Comm. degree from the University of Calgary.

Henry D. McKinnon, Vice-President, Operations

Mr. McKinnon previously worked for 20 years in field operations with several multi-

national petroleum companies. He assumed responsibility for coordinating the

transition of operations at Judy Creek and continues to be the liaison with field

operations. Mr. McKinnon graduated in 1975 from the University of Manitoba with

a B.Sc. in Mechanical Engineering.

Lynn Kis, General Manager, Engineering and Joint Interest Operations

Ms. Kis has over 20 years experience in the Petroleum Engineering field, contributing

her diverse talents in reservoir and project engineering to acquiring, developing and

fully exploiting properties for major oil and gas companies in western Canada. Ms.

Kis graduated from the University of Wales with a B.Sc. (Hons) Applied Science and

continued with post graduate studies at the University of Calgary.

Charles V. Selby, Corporate Secretary

Mr. Selby is both a Lawyer and Professional Engineer, holding B.Sc. (Hons) and LL.B.

degrees. He operates an independent legal practice which specializes in securities, oil

and gas and international financial transactions. Mr. Selby was employed as a

petroleum engineer in the energy sector prior to practicing law.

O F F I C E R S A N D S E N I O R M A N A G E M E N T

P E N G R O W T H I N T H E C O M M U N I T Y

Pengrowth believes in supporting the communitywhere their employees live and work. A strong andhealthy community enriches society and relies uponcompanies such as Pengrowth to support its causesand institutions both financially and with volunteers.

One of the most exciting initiatives undertaken in2000 was Pengrowth Management's role in ensuringthe continuation of professional hockey in Calgary.Pengrowth Management, Manager of PengrowthEnergy Trust, became the building sponsor ofCalgary's premier hockey facility. Now known as thePengrowth Saddledome, this landmark building is thecenter of many world-class entertainment events. In

addition to the Saddledome title sponsorship,Pengrowth purchases and donates Calgary Flameshockey tickets to southern Alberta charitable groups.The ticket donation program has enriched the lives ofover 4000 individuals, many of them youngsters, fromcharitable organizations including Big Brothers, BigSisters, schools and hockey programs.

Nine years ago, Pengrowth Management created theRockyview General Hospital Invitational GolfTournament. This annual event has become thelargest one-day charitable tournament in WesternCanada, raising over $1.4 million since its inception.Funds raised help purchase vital hospital equipment

Communitypartners

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for cardio-diagnostics, the operating room, hearthealth and the gastro-intestinal unit. The tournamentvolunteers also committed themselves to purchasingan emergency room tracking system that is the first ofits kind in the world. When fully installed, the systemis expected to reduce emergency room waiting timesby up to 20% while increasing the efficiency of pro-fessionals in the emergency room. There is over-whelming support and dedication from thePengrowth team who donate their time to serve onthe committee and volunteer at this widely appreciat-ed annual event.

Stephen Ames and Alberta Premier Ralph Kleinparticipated in the 2000 Rockyview GeneralHospital Invitational Golf Tournament.

Pengrowth Management believes inmaking a significant contribution to thecommunity. While the costs are borneentirely by Pengrowth Management,the recognition of these efforts isshared with Pengrowth Energy Trust.

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C O R P O R A T E I N F O R M A T I O N

DIRECTORS OF PENGROWTH CORPORATION

Thomas A. CummingBusiness Consultant

James S. KinnearPresident, Pengrowth Management Limited

Francis G. VetschPresident, Quantex Resources Ltd.

Stanley H. WongPresident, Carbine Resources Ltd.

John B. ZaozirnyCounsel, McCarthy Tetrault

Director Emeritus

Thomas S. DobsonPresident, T.S. Dobson Consultant Ltd.

OFFICERS OF PENGROWTH CORPORATION

James S. KinnearPresident and Chief Executive Officer

Robert J. WatersVice-President, Finance and Chief Financial Officer

Gordon M. AndersonVice-President, Treasurer

Henry D. McKinnonVice-President, Operations

Charles V. SelbyCorporate Secretary

TRUSTEEMontreal Trust Company of Canada(Computershare Investors Services Inc.)

BANKERSBank Syndicate Agent: Royal Bank of Canada

AUDITORSKPMG LLP

ENGINEERING CONSULTANTSGilbert Laustsen Jung Associates Ltd.

STOCK EXCHANGE LISTINGSThe Toronto Stock ExchangeSymbol PGF.UN

PENGROWTH ENERGY TRUSTHead OfficeSuite 700, 112 - 4 Avenue S.W.Calgary, Alberta T2P 0H3 CanadaTelephone: (403) 233 0224Toll-Free: 1 800 223 4122Facsimile: (403) 265 6251Email: pengrowth@pengrowth.comWebsite: http://www.pengrowth.com

Toronto Investor Relations OfficeSuite 1200, 141 Adelaide Street W.Toronto, Ontario M5H 3L5 CanadaTelephone: (416) 362 1748Toll-Free: 1 888 744 1111Facsimile: (416) 362 8191

ABBREVIATIONSbbl barrelmbbls thousand barrelsmmbbls million barrelsbpd barrels per daybopd barrels of oil per dayboe* barrels of oil equivalentmboe* thousand barrels of oil equivalentmmboe* million barrels of oil equivalentboepd* barrels of oil equivalent per daymcf thousand cubic feetmcf/d thousand cubic feet per daymmcf million cubic feetmmcf/d million cubic feet per daybcf billion cubic feetPengrowth Energy Trust (EnergyTrust)Pengrowth Corporation (Corporation)*6 mcf of gas = 1 barrel of oil

ANNUAL GENERAL MEETINGThe annual general meeting of the unitholders ofPengrowth Energy Trust will be held in the McMurrayRoom, Calgary Petroleum Club, Calgary, Alberta onWednesday, April 25, 2001 at 3:00 pm. Unitholderswho are unable to attend are urged to complete, signand mail their proxies to ensure their units will bevoted at the meeting.

Printed in Canada by Quebecor World Calgary.Designed and produced by Merlin Creative Group Inc.Photography by Ian Tomlinson.

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M E A S U R I N G P E N G R O W T H ’ S V A L U E C R E A T I O N A N D E N H A N C E M E N T A C T I V I T I E S

RESERVE LIFE

ACQUISITIONS OF ADDITIONAL RESERVESRESERVES AND DISTRIBUTABLE

INCOME PER TRUST UNIT

Pengrowth receives cash flow from its portfolio of oil and gas producing properties. As a result of the continuing program of prudent acquisitions, Pengrowth Energy Trust demonstrates accretion for its unitholdersas the accompanying illustration shows.

$25

$20

$15

$10

$5

$0

TRUST UNIT PRICE RANGENET ASSET VALUE PER UNIT*BOOK VALUE PER UNIT**NEW TRUST UNIT ISSUE PRICES

$5.50

$7.75

$10.50 $11.65

$15.80

$21.25

$12.95

1992 1993 1994 1995 1996 1997 1998 1999 2000

$19.00

*NAV calculation at December 31, 2000 is $12.83 based on Established reserves (proved plus 50% probable) discounted at 12% cash flow before income taxes.

$0

$1.00

$2.00

$3.00

$4.00

200019991998199719961995199419931992199119901989

CASH TAXABLEDEEMED RETURN OF CAPITAL

1.67

0.480.73 0.84

0.68

1.18 1.121.35

2.222.11

1.65

3.55

AVERAGE COMPOUND GROWTH RATE OF 20% PER YEAR AS A RESULT OF THE CONTINUING PROGRAM OF PRUDENT ACQUISITIONS

$0

$5

$10

$15

$20

$25

20001999199819971996199519941993199219911990

0

5

10

15

20

25

20001999199819971996199519941993199219911990

6.25

5.00 5.75

11.0010.63

15.38

17.00

18.00

11.0015.50

19.20

0.2 0.1 0.3

3.8 4.5

8.9

11.610.5

12.1

14.5

21.5TRADING PRICE RANGEHIGH/LOW WITH CLOSE IN ORANGE

T R U S T U N I T P R I C E R A N G E v s B O O K V A L U E , N E T A S S E T V A L U E , N E W I S S U E P R I C E S

( C D N $ )

T R U S T U N I T P R I C E R A N G E

( C D N $ )

T R U S T U N I T T R A D I N G V O L U M E

( M I L L I O N S O F U N I T S )

A N N U A L C A S H D I S T R I B U T I O N S P E R T R U S T U N I T

( C D N $ )

I L L U S T R A T I O N O F A C C R E T I V E A C Q U I S I T I O N S

C O R P O R A T E I N F O R M A T I O N

DIRECTORS OF PENGROWTH CORPORATION

Thomas A. CummingBusiness Consultant

James S. KinnearPresident, Pengrowth Management Limited

Francis G. VetschPresident, Quantex Resources Ltd.

Stanley H. WongPresident, Carbine Resources Ltd.

John B. ZaozirnyCounsel, McCarthy Tetrault

Director Emeritus

Thomas S. DobsonPresident, T.S. Dobson Consultant Ltd.

OFFICERS OF PENGROWTH CORPORATION

James S. KinnearPresident and Chief Executive Officer

Robert J. WatersVice-President, Finance and Chief Financial Officer

Gordon M. AndersonVice-President, Treasurer

Henry D. McKinnonVice-President, Operations

Charles V. SelbyCorporate Secretary

TRUSTEEMontreal Trust Company of Canada(Computershare Investors Services Inc.)

BANKERSBank Syndicate Agent: Royal Bank of Canada

AUDITORSKPMG LLP

ENGINEERING CONSULTANTSGilbert Laustsen Jung Associates Ltd.

STOCK EXCHANGE LISTINGSThe Toronto Stock ExchangeSymbol PGF.UN

PENGROWTH ENERGY TRUSTHead OfficeSuite 700, 112 - 4 Avenue S.W.Calgary, Alberta T2P 0H3 CanadaTelephone: (403) 233 0224Toll-Free: 1 800 223 4122Facsimile: (403) 265 6251Email: pengrowth@pengrowth.comWebsite: http://www.pengrowth.com

Toronto Investor Relations OfficeSuite 1200, 141 Adelaide Street W.Toronto, Ontario M5H 3L5 CanadaTelephone: (416) 362 1748Toll-Free: 1 888 744 1111Facsimile: (416) 362 8191

ABBREVIATIONSbbl barrelmbbls thousand barrelsmmbbls million barrelsbpd barrels per daybopd barrels of oil per dayboe* barrels of oil equivalentmboe* thousand barrels of oil equivalentmmboe* million barrels of oil equivalentboepd* barrels of oil equivalent per daymcf thousand cubic feetmcf/d thousand cubic feet per daymmcf million cubic feetmmcf/d million cubic feet per daybcf billion cubic feetPengrowth Energy Trust (EnergyTrust)Pengrowth Corporation (Corporation)*6 mcf of gas = 1 barrel of oil

ANNUAL GENERAL MEETINGThe annual general meeting of the unitholders ofPengrowth Energy Trust will be held in the McMurrayRoom, Calgary Petroleum Club, Calgary, Alberta onWednesday, April 25, 2001 at 3:00 pm. Unitholderswho are unable to attend are urged to complete, signand mail their proxies to ensure their units will bevoted at the meeting.

Printed in Canada by Quebecor World Calgary.Designed and produced by Merlin Creative Group Inc.Photography by Ian Tomlinson.

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The Benchmark of Energy Trusts

Head OfficeSun Life Plaza - East TowerSuite 700, 112 - 4th Avenue S.W.Calgary, Alberta T2P 0H3 CanadaWebsite: http://www.pengrowth.com