pengrowth factbook 2008

A PROVEN STRATEGY20

YEARSof SUCCESS

P E NG ROWTH E N E RGy TRu sT

A PROVEN STRATEGYFACT BOOK

A Passion for ExcellenceWe are determined to outperform our peers

and provide superior value and returns to our unitholders.

We set ambitious goals and are driven to achieve.

We have the best team members as well as superior oil and gas assets.

Valuing Our PeopleWe invest in our team members, providing opportunities

to develop further and enhance skills.

We enjoy what we do and regularly celebrate our successes.

We consistently recognize and reward achievements and contributions.

Good Corporate CitizensWe are constantly improving our safety,

environment and facility integrity programs.

We are good neighbours, supporting local charities and organizations within the communities in which we operate.

We practice the highest ethical standards and honour our commitments.

Innovative LeadersWe are entrepreneurial taking calculated risks

and seek to continuously improve.

We constantly encourage new idea development and thinking beyond current parameters.

We are the benchmark for our industry and excel in all we do.

These are the attributes that make Pengrowth successful.

Pengrowth Gas Income Fund is incorporated. The Initial Offering in December raised $12.5 million.

Pengrowth Gas Income Fund is listed on the Montreal Exchange.

Pengrowth completes two equity offerings, raising combined proceeds of $65.6 million.

Pengrowth integrates the acquisition of the Judy Creek and Swan Hill properties.

Pengrowth completes property acquisitions totaling $7.9 million.

Pengrowth purchases 21.5 mmboe of established reserves for total consideration of $179.6 million to replace over 175 percent of production.

Pengrowth raises gross proceeds of approximately $155 million through a public offering of 8,165,000 trust units. Pengrowth acquires British Columbia oil and natural

gas assets from Calpine Canada for $346.5 million.

Pengrowth initiates the first cross border offering for a Canadian royalty trust and Pengrowth Energy Trust was listed on the

New York Stock Exchange on April 10.

Pengrowth successfully negotiates the $550.8 million acquisitionof Murphy Oil’s Alberta and Saskatchewan properties, adding

further natural gas and heavy oil assets.

Pengrowth Energy Trust combines with Esprit Energy Trust for a transaction value of $1.1 billion, adding natural gas and coalbed methane potential.

Pengrowth completes the acquisition of the high-quality, light crude oil assets in Carson Creek from ExxonMobil Canada for $475 million.

1988

1992

1994

1996

1998

2000

2004

2006

‘98

2002

First full year of operations for Pengrowth Gas Income Fund.

Pengrowth launches the Pengrowth Rockyview General Hospital Invitational Golf Tournament, which has become the largest single-day fundraising charity golf tournament in Canada.

Pengrowth implements optional distributions in U.S. funds; an industry first.

Pengrowth acquires the Judy Creek and Swan Hill properties, which at the time was the largest oil and gas property acquisition in the history of the Canadian oil patch.

Pengrowth purchases an interest in the Sable Offshore Energy Project (SOEP) for $256 million.

Pengrowth purchases Emera Offshore Energy’s 8.4 percent working interest in the SOEP facilities.

The Pengrowth Nova Scotia Energy Scholarship was initiated with the purpose of enhancing the skills of Nova Scotia students.

Pengrowth acquires Canadian oil and gas properties and undeveloped lands from ConocoPhillips for $1.0 billion. The transaction represented one of the largest

producing property acquisitions in the energy trust sector.

Pengrowth sells $480 million in properties, rationalizing Pengrowth’s property portfolio. This move high graded Pengrowth’s portfolio and reduced the indebtedness required to close the ConocoPhillips transaction.

1989

1991

1995

1997

2001

2005

2007

‘99

2003

34 OIL SANDS38 OPERATIONAL STATISTICAL REVIEW44 COMMUNITY INITIATIVES48 CORPORATE GOVERNANCE53 SUMMARY OF TRUST UNIT TRADING DATA54 HISTORICAL DISTRIBUTIONS55 FIVE YEAR REVIEW60 CORPORATE INFORMATION

2 FINANCIAL HIGHLIGHTS3 OPERATING HIGHLIGHTS4 CHAIRMAN’S MESSAGE10 OPERATIONS18 LIGHT OIL22 HEAVY OIL24 CONVENTIONAL GAS28 SHALLOW & UNCONVENTIONAL GAS32 OFFSHORE GAS

2008

Record cash flow from operations of

$912.5 million in 2008

323.5 million boeproved plus probable reserves

Record oil and gas sales during 2008 of

$1.92 billion

$3.97 billion paid out in distributions to unitholders

since inception in 1988

Strong Management team with a combined average experience of

27 years

591 team members

dedicated to increasing value for unitholders

Pengrowth marks its 20th anniversary by recording a record annual cash flow and completing the largest capital development program in its history.

FINANCIAL HIGHLIGHTS

(thousands, except per unit amounts) 2008 2007 % Change

INCOME STATEMENT Oil and gas sales $ 1,919,049 $ 1,722,038 11 Net income $ 395,850 $ 359,652 10 Net income per trust unit $ 1.58 $ 1.47 7 Cash flows from operating activities $ 912,516 $ 800,344 14 Cash flows from operating activities per trust unit $ 3.65 $ 3.26 12 Distributions declared $ 651,015 $ 706,601 (8)Ratio of distributions declared over cash flow from operating activities 71% 88% (17) Distributions declared per trust unit $ 2.590 $ 2.875 (10)Weighted average number of trust units outstanding 250,182 245,470 2 BALANCE SHEET Working capital $ (70,159) $ (189,603) (63) Property, plant and equipment $ 4,251,381 $ 4,306,682 (1)Long-term debt and convertible debentures $ 1,599,418 $ 1,278,266 25 Trust unitholders’ equity $ 2,663,805 $ 2,756,220 (3) Trust unitholders’ equity per trust unit $ 10.40 $ 11.17 (7)Long-term debt and convertible debentures plus equity, at book value $ 4,263,223 $ 4,034,486 6 Number of trust units outstanding at year end 256,076 246,846 4 Equity market capitalization (1) $ 2,394,328 $ 4,349,467 (45) Enterprise value (2) $ 3,993,746 $ 5,627,733 (29)Net asset value @ 10% (3) $ 3,925,616 $ 4,102,748 (4) Net asset value per trust unit @ 10% $ 15.33 $ 16.62 (8) Total capitalization: Long-term debt and convertible debentures as a percentage of total capitalization (at book value) 38% 32% Long-term debt and convertible debentures as a percentage of total capitalization (at market value) 40% 23%

(1) Equity market capitalization equals the total number of trust units outstanding (including Class A trust units) multiplied by the PGF.UN TSX closing price

(2) Enterprise value equals equity market capitalization plus long-term debt and convertible debentures

(3) Present value of future net cash flows from reserves as estimated by GLJ

Note regarding currency: all figures contained within this report are quoted in Canadian dollars unless otherwise indicated.

2 FINANCIAL HIGHLIGHTS | PENGROWTH 2008

OPERATING HIGHLIGHTS

2008 2007 % Change

DAILY PRODUCTION Crude oil (barrels per day) 24,416 26,327 (7)Heavy oil (barrels per day) 8,122 7,168 13 Natural gas (mcf per day) 240,825 266,980 (10)Natural gas liquids (barrels per day) 9,315 9,409 (1)Total production (boe per day) 81,991 87,401 (6)TOTAL PRODUCTION (MBOE) 30,009 31,901 (6)PRODUCTION PROFILE Crude oil 30% 30% Heavy oil 10% 8% Natural gas 49% 51% Natural gas liquids 11% 11% AVERAGE REALIZED PRICES (CDN$) (1) Crude oil (per barrel) $ 77.78 71.88 8 Heavy oil (per barrel) $ 75.77 44.53 70 Natural gas (per mcf) $ 8.19 7.29 12 Natural gas liquids (per barrel) $ 70.67 58.86 20 Average realized price per boe $ 62.76 53.90 16 PROVED PLUS PROBABLE RESERVES Crude oil (mbbls) 121,289 124,188 (3)Heavy oil (mbbls) 27,728 21,792 27 Natural gas (bcf) 852 870 (2)Natural gas liquids (mbbls) 32,442 28,994 12 Total oil equivalent (mboe) 323,463 319,921 1 OPERATING COSTS (2) Millions $ 418.5 $ 406.5 3 Per boe $ 13.95 $ 12.74 10 GENERAL AND ADMINISTRATIVE COSTS Millions $ 58.9 $ 55.9 5 Per boe $ 1.96 $ 1.75 12 MANAGEMENT FEES Millions $ 7.0 $ 6.8 2 Per boe $ 0.23 $ 0.21 10 ACQUISITION COSTS (3) Millions $ 148.2 $ 1,035.9 (86)Proved plus probable reserves acquired (mmboe) 10.0 65.1 (85)Per boe $ 14.82 $ 15.91 (7) (1) Realized prices include realized commodity risk management gains (losses)

(2) Operating costs incurred to earn processing and other income are included

(3) Acquisition costs include value of cash and trust units issued for acquisitions

PENGROWTH 2008 | OPERATING HIGHLIGHTS 3

CHAIRMAN’S MESSAGE

4 CHAIRMAN’S MESSAGE | PENGROWTH 2008


Pengrowth has proactively taken steps to protect the interests of our unitholders during the current period of economic turmoil.

1) We have termed out the majority of our long term debt at fixed rates with fixed terms and staggered maturities.

2) We entered into a three year committed credit facility in June 2008 totaling $1.2 billion with a syndicate of banks, the majority of which are Canadian banks, who have been less adversely affected than other global financial institutions. Available credit under our committed lines exceeded $800 million at year end 2008.

3) We increased our forward sales (hedging) of crude oil and natural gas at fixed prices to reduce price volatility, with the following sales in effect at year end 2008:

2009 2010

Volume Volume Forward Sales Price(Cdn $) (per day) Price(Cdn $) (per day)

Crude Oil $83.99 14,173 bbls $82.70 11,500 bblsNatural Gas $8.06 76,038 mmbtu $8.64 16,587 mmbtu

4) We reduced our development capital budget in 2009 from $388 million in 2008 to $209 million in 2009. With anticipated cost reductions in the service sector this year, it is our intent to do more with less.

5) We adjusted the monthly distributions to unitholders in two steps from Cdn $0.225 per trust unit monthly ($2.70 per trust unit annualized) to Cdn $ 0.10 per trust unit monthly ($1.20 per trust unit annualized).

6) We carefully reviewed all of our costs – both capital and operating, to achieve significant reductions and savings on behalf of our unitholders.

Pengrowth’s reserve base remains solid with many deferred development opportunities and considerable long term potential in our high quality suite of conventional oil and gas assets. Pengrowth’s balance sheet is strong and we believe that the current financial situation will provide excellent opportunities for well managed businesses to pursue attractive opportunities. Pengrowth will continue to manage its operations and finances to position itself opportunistically in the marketplace.

James S. Kinnear Chairman and Chief Executive Officer

To our valued unitholders: 2008 was a strong operational and financial year for Pengrowth, despite late year volatility in the debt and equity markets and the substantial and rapid decline in commodity prices. The present market environment is unlike anything that I have seen in my 40 years in the financial markets in terms of market declines, volatility and the sheer rapidity of change. The changes in financial markets are fundamental and it may well take a significant period of time before a recovery occurs.


PENGROWTH 2008 | CHAIRMAN’S MESSAGE 5

A YEAR OF SOLID PERFORMANCEIn 2008, Pengrowth recorded several notable milestones.

• Cashflowfromoperatingactivitiesincreasedto $912.5 million or $3.65 per trust unit in 2008 from $800.3 million or $3.26 per trust unit in 2007;

• Oilandgassalesreached$1.92billion,anincreaseof 11 percent when compared to 2007 sales of $1.72 billion;

• Successfullyimplementeda$388milliondevelopmentprogram, the largest in our history;

• Fullyearstableproductionaveraged81,991boeperday,within the top end of our initial projected guidance of 80,000 – 82,000 boe per day;

• Totaldistributionsdeclaredsinceinceptionreached$3.97 billion dollars or $39.66 per trust unit, compared with an original investment price of $10.00;

• SuccessfullyclosedtheAccretetransactionwhichcompliments prior acquisitions in the Harmattan area and added 8.4 mmboe of reserves (proved plus probable) and 1,900 boe per day of associated production;

• PurchasedadditionalworkinginterestintheSwanHillsUnit, Carson Creek, and Garrington for $20.5 million;

• ContinuedworkonpotentialSteamAssistedGravityDrainage (SAGD) oil sands pilot at Lindbergh including the filing of an initial application with the Energy Resources Conservation Board (ERCB);

• SuccessfullyraisedU.S.$265millionof10yeardebtat 6.98 percent and CDN $15 million of 10 year debt at 6.61 percent, despite a challenging economic environment.

Remaining committed to our budget metrics outlined at the end of 2007, Pengrowth was well within our forecasted guidance on each metric target disclosed, with the exception of a slight increase in operating costs due to major maintenance at Sable Offshore Energy Project (SOEP). Our budget vs. actual numbers exited the year as follows:

Guidance Actual

Average Daily Production Volume (boe per day) 80,000 – 82,000 81,991 General & Administrative (per boe) $ 2.20 $ 2.19Operating Costs (per boe) $ 13.20 $ 13.95

OIL AND GAS SALES$ THOUSANDS

04 05 06 07

1,722,0381,214,093

1,151,510

815,751

1,919,0491,919,049

08 04 05 06

ANNUAL PRODUCTIONBOE PER DAY

07

87,401

62,821

59,357

53,702

81,99181,991

08

DEVELOPMENT CAPITALEXPENDITURES($MILLIONS)

DRILLING & COMPLETIONSPLANT & FACILITIESGEOLOGICAL, GEOPHYSICAL & LAND

04 05 06 07

283

301

176

161

388

08

CASH FLOW FROMOPERATING ACTIVITIES$ MILLIONS

04 05 06 07

800.30

554.40

618.00404.20

912.52912.52

08

CASH FLOW FROMOPERATING ACTIVITIESPER TRUST UNIT$ PER TRUST UNIT

04 05 06 07

3.26

3.15

3.93

3.03

3.653.65

08

PRODUCTION VOLUMESPER TRUST UNITBOE

04 05 06 07

0.13

0.13

0.14

0.15

0.120.12

08



THE GLOBAL ENERGY ENVIRONMENT 2008 was a year of incredible commodity price volatility. In 2008 crude oil opened the year trading at just under the U.S. $100 mark, soared to an unprecedented high of U.S. $147.27 per barrel in early July only to tumble to a low of U.S. $32.40 per barrel in December, the lowest level since 2004. The average West Texas Intermediate (WTI) crude oil price for 2008 was U.S. $99.65, an increase of 38 percent when compared to U.S. $72.12 for 2007. It is very difficult for the energy industry to respond to such enormous volatility in pricing, however recent recoveries in crude oil prices have provided some evidence that there may be light at the end of the tunnel.

In recent months, the effects of the production reductions announced by OPEC totaling 4.2 million barrels per day are starting to appear in crude oil markets. The WTI price has recently recovered from lows in the U.S. $35 - $40 range to the U.S. $47 - $50 per barrel level. A further strengthening in crude oil prices is certainly possible later this year as world supply/demand balances shift, and capital budgets for new supplies are reduced.

Natural gas prices experienced similar fluctuations. AECO prices experienced a high of Cdn $11.30 gigajoule (gj) in July

but closed the year at Cdn $5.33 per gj . AECO spot gas averaged Cdn $7.70 per gj compared to Cdn $6.27 per gj in 2007. NYMEX gas followed a similar pattern, averaging U.S. $9.04 per mmbtu in 2008 versus U.S. $6.86 per mmbtu in 2007, derived from daily prices surrounding a volatile U.S. $13.69 per mmbtu high versus a U.S. $5.21 per mmbtu low at year end. Natural gas prices certainly remain at relatively low levels in the U.S. $3.75 – $4.00 per mmbtu range particularly due to the advent of significant levels of new production for non conventional gas resources, including shale gas deposits. There have been indications recently that the U.S. unconventional shale gas drilling has declined significantly due to the lower prices and natural gas prices could indeed recover over one to two years.

Extreme volatility was also witnessed in the foreign exchange markets. The Canadian dollar soared to an all-time peak of 1.12 versus the U.S. dollar and held its strength for most of 2008. As substantially all of Pengrowth’s expenses are paid in Canadian dollars the impact of higher U.S. dollar prices was somewhat reduced by higher costs. On the other hand, the Canadian dollar lost its strength commencing with the decline in commodity prices reducing the impact of lower prices upon Pengrowth.

In recent months, the effects of the production reductions announced by OPEC totaling 4.2 million barrels per day are starting to appear in crude oil markets. The WTI price has recently recovered from lows in the U.S. $35 - $40 range to the U.S. $47 - $50 per barrel level. A further strengthening in crude oil prices is certainly possible later this year as world supply/demand balances shift, and capital budgets for new supplies are reduced.

NYMEX (U.S. $ PER MMBTU) ANNUAL AVERAGE (U.S. $ PER MMBTU) TRUST UNIT YEAR END CLOSING PRICE (CDN$)CLASS A TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $)CLASS B TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $)

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

U.S

. $ P

ER M

MBT

U

CD

N $

SOURCE: BLOOMBERG

0.0

2.5

5.0

7.5

10.0

12.5

15.0

NATURAL GAS PRICE HISTORY

0

5

10

15

20

25

30

WTI OIL (U.S. $ PER BBL) ANNUAL AVERAGE (U.S. $ PER BBL) TRUST UNIT YEAR END CLOSING PRICE (CDN$)CLASS A TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $)CLASS B TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $)

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

U.S

. $ P

ER M

MBT

U

CD

N $

SOURCE: BLOOMBERG

0

30

60

90

120

150

CRUDE OIL PRICE HISTORY

0

5

10

15

20

25

30



ESTIMATED WEIGHTED AVERAGE DECLINE RATESVERSUS PEER GROUP%

SOURCE: CIBC WORLD MARKETS

0.00

0.05

0.10

0.15

0.20

0.25

0.30

18%

PGF

THE OUTLOOK FOR CRUDE OIL AND NATURAL GAS What we can observe is that the best cure for “low commodity prices” is “low commodity prices”. The extreme price declines have led to slowdowns, suspensions and cancellations of many projects on a global scale. The challenge in the oil and gas business is that we must reinvest to offset declines and depletion. The International Energy Agency (IEA) recently published a study of more than 150 major fields in the world showing annual production declines of 6.7 percent indicating that we need to replace four to five million barrels per day just to stay even. While we do not think that the world is running out of oil, it is certain that these additional supplies will be more difficult and more expensive to obtain as the current deferrals of expected drilling will adversely affect future supply available.

The impact of leveling crude oil production globally is presently being masked by the economy. There has been a significant decline in demand along with the slowing economy worldwide and global analysts foresee a decline in crude oil demand of approximately one million barrels per day during 2009. OPEC production cutbacks are substantially bigger than this effect which could result in a recovering oil market later in 2009. There are also other macroeconomic factors at play. Eighty percent of the world’s crude oil supplies are held by

National Oil Companies who are investing in other sectors of their own economies in response to the world oil crisis rather than investing sufficient capital in the oil and gas industry. With the cutbacks in activity expected in actual inventories globally, the development of much needed production and reserves worldwide will be adversely affected.

In recent months, many of the world’s governments have announced massive stimulation packages creating and injecting enormous quantities of money into their shattered economies. It is possible that this will stimulate economic activity and lead us out of the recession. It will also certainly devalue currencies and lead to a period of future inflation. In this type of environment hard assets, such as oil and gas production required to fuel economic growth will have solid value. We will continue to seek opportunities to acquire high quality, long life assets and position Pengrowth for the future and to continue to deliver superior returns to our unitholders. There is also an opportunity for Pengrowth to be a consolidator within the oil and gas royalty trust sector.

PENGROWTH’S PLAN: EXERCISING PRUDENCE IN AN UNCERTAIN ENVIRONMENT A strong balance sheet and a sustainable business plan are key measures of quality in a volatile economic environment.

3 YEAR COMPOUND ANNUAL RETURN

-20

-10

0

10

20

30

40

50

60

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

-12.5 -539.5

46.3

28

0.1

56.5

32.9

10.519.2

30.116.4

21.333.5

37.111.2 6-16.3

5 YEAR COMPOUND ANNUAL RETURN

-10

0

10

20

30

40

50

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

14.415.4

36

43.8

11.4

19.9

41.2

21.5

12.5

12.234.5

26.1 2222.4

19.1-2.3



PROVED PLUSPROBABLE RESERVESMMBOE

04 05 06 07

320298

219

219

324324

08

PROVED PLUS PROBABLE RESERVES REPLACEMENT%

04 05 06 07169

443

64

244

112112

08

PROVED PLUS PROBABLE RESERVESBOE PER TRUST UNIT

04 05 06 07

1.30

1.22

1.37

1.43 1.26

08

PROVED PLUS PROBABLE ORGANIC RESERVE REPLACEMENT%

04 05 06 07

54

99

40

30

80

08

DEVELOPMENT CAPITALEXPENDITURES AS APERCENT OF CASH FROMOPERATING ACTIVITIES

CASH FLOW FROM OPERATINGACTIVITIES ($ MILLIONS)CAPITAL EXPENDITURES (%)

04 05 06 07

800

554

618

404

913913

08

40%28%

54% 35% 40%

We actively manage our distributions, capital spending and our capital structure to ensure that we maintain excess credit capacity in order to weather the current period of economic turmoil and to continue to take advantage of opportunities to grow.

During 2009, Pengrowth will continue to focus upon our strategic survival plan as outlined on page four. In addition we will be optimizing returns on our capital program while continuing to operate our existing assets effectively. We will seek opportunities to grow through accretive industry consolidations that add to unitholder value and we will seek further significant reductions in operating costs and finding and development costs for 2009. We have identified and are focused upon a number of business opportunities for the balance of the year

Recent months have seen significant softening in global equity and credit markets. Those trusts and corporations with a significant critical mass, a foundation of high quality assets, and a strong balance sheet possess an advantage in this market. Pengrowth possesses these qualities and also has a proven track record to complete and integrate sizable accretive transactions.

2009 DEVELOPMENT PLAN Pengrowth is prudently monitoring our strategically focused development plan. Placing the utmost importance on balance sheet strength, Pengrowth has recently provided guidance on our capital development program which is expected to total $209 million, a decrease of approximately 46 percent when compared to 2008.

Pengrowth’s development projects for 2009 have been chosen based on timing, maturity and economics, from a portfolio of projects totaling over $600 million.

In 2009 development capital will be allocated as follows:

• 40percenttowardslightoilprojectsincludingtheSwanHills area, Fenn Big Valley and Weyburn;

• 30percentonshallowgasinSouthernAlbertaandCoalbed methane (CBM) development mainly in the Twining, Mikwan and Three Hills areas;

• 20percentonconventionalgasprojectsmainlyinOlds,the recently acquired Accrete properties in Harmattan and the Carson Creek Gas Unit;

• 5percentonheavyoilprojectsincludingBodo,Cosineand Jenner; and

• 5percentontheoffshoregasproject,SOEP

INDUSTRY AVERAGE RESERVE ACQUISITION COSTPRICE PER BOE *SOURCE SAYER SECURITIES

04 05 06 07

16.36

20.5316.2713.44

16.7716.77

08

INDUSTRY AVERAGE PRODUCTION ACQUISITION COSTPRICE PER BOE*SOURCE SAYER SECURITIES

04 05 06 07

53,233

67,25855,97839,046

57,99557,995

08

UNITHOLDERS EQUITYPER TRUST UNIT$

04 05 06 07

11.17

12.50

9.23

9.56

10.40

08



Pengrowth’s 2009 drilling and completions program is estimated at approximately $126 million which includes the drilling of an estimated 656 gross wells (370 net wells) with 55 percent of capital targeted towards crude oil and liquids projects and 45 percent targeted towards natural gas projects.

ACKNOWLEDGEMENTSI would like to thank Mr. Kirby L. Hedrick who retired from his position on our board of directors effective January 1, 2009. Mr. Hedrick joined the board of directors in April 2005 and has made many important and valuable contributions to Pengrowth’s growth and development.

Pengrowth is pleased to welcome Daniel J. Pigeon to the Pengrowth leadership team. Daniel joined Pengrowth as Vice-President, Investor Relations effective November 3, 2008. He has a strong career in the financial arena, with more than 20 years of professional leadership experience in strategic financial planning, capital structuring and financing and enterprise-wide risk assessment management.

The Management Agreement that has governed Pengrowth Corporation and Pengrowth Energy Trust since the inception of the Trust will expire at the end of June, 2009. Pengrowth will be operating under an ordinary corporate governance structure from that time forward and I am pleased with the confidence

that the board has expressed in me in my continuing role as Chairman and Chief Executive Officer.

I would like to offer my sincere appreciation to our entire Pengrowth team for their efforts in 2008 and into 2009. I look forward to continuing to work with all team members in striving towards providing unitholders with continued solid returns and superior value. Lastly, I wish to thank our unitholders who have supported Pengrowth over the years. Throughout these very challenging economic times, we will continue to keep your interests at the forefront and seek to preserve the strength of the Trust such that we may continue to add value on your behalf. Despite the current challenging situation we are very optimistic about the opportunities before us and the medium and long term prospects for Pengrowth. Thank you for your continuing trust in our endeavours.

Best Regards,

James S. Kinnear Chairman and Chief Executive Officer

AVERAGE COSTDEBT CAPITAL%

04 05 06 07

5.6

5.7

4.6

5.1

5.55.5

08

LONG TERM DEBT/CASH FLOWS FROM OPERATING ACTIVITIESTIMES* LONG TERM DEBT EXCLUDES CONVERTIBLE DEBENTURES

04 05 06 07

1.5

1.1

0.6

0.9

1.71.7

08

LONG TERM DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION BASEDON BOOK VALUE

TOTAL CAPITALIZATION ($MILLIONS)LONG TERM DEBT ($MILLIONS)LONG TERM DEBT/TOTAL CAPITALIZATION**BOOK CAPITALIZATION

04 05 06 07

3,959

3,654

1,844

1,808

19% 20% 17%

30%36%

4,188

08

LONG TERM DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION BASEDON MARKET VALUE

TOTAL CAPITALIZATION INCLUDING UNITHOLDERS’ EQUITY AT MARKET VALUE ($MILLIONS)LONG TERM DEBT ($MILLIONS)LONG TERM DEBT/TOTAL CAPITALIZATION**MARKET CAPITALIZATION

04 05 06 07

5,553

5,470

4,358

3,669

9% 8% 11% 21%

39%

3,919

08

DISTRIBUTIONS$/UNIT

04 05 06 07

2.88

3.002.822.63

2.592.59

08

Throughout these very challenging economic times, we will continue to keep your interests at the forefront and seek to preserve the strength of the Trust such that we may continue to add value on your behalf.

OPERATIONS OPERATIONS

10 OPERATIONS | PENGROWTH 2008

OPERATIONS

PENGROWTH 2008 | OPERATIONS 11

HEAVY OIL PRODUCTIONBBLS PER DAY

04 05 06 07

7,168

4,964

5,623

3,558

8,1428,142

08

HEAVY OIL AVERAGEREALIZED PRICE$ PER BBL

04 05 06 07

44.53

42.2633.32

32.45

75.7775.77

08

LIGHT CRUDE OIL PRODUCTIONBBLS PER DAY

04 05 06 07

26,32721,821

20,799

20,817

24,39824,398

08

LIGHT CRUDE OILAVERAGE REALIZED PRICE$ PER BBL* AFTER COMMODITY RISK MANAGEMENT

04 05 06 07

71.88

66.8558.89

43.21

77.7877.78

08

04 05 06

AVERAGE DAILYPRODUCTIONBOE PER DAY

07

87,401

62,821

59,357

53,702

81,99181,991

08

TOTAL AVERAGEREALIZED PRICE$ PER BOE* AFTER COMMODITY RISK MANAGEMENT

04 05 06 07

53.90

52.88

53.0241.33

62.7662.76

08

NATURAL GASPRODUCTIONMCF PER DAY

04 05 06 07

266,980

175,578

161,056

144,227

240,823240,823

08

NATURAL GAS AVERAGEREALIZED PRICE$ PER MCF* AFTER COMMODITY RISK MANAGEMENT

04 05 06 07

7.29

7.22

8.76

6.80

8.198.19

08

WHO ARE WEThroughout Pengrowth’s first 20 years, our strategy has been to provide unitholders with superior total returns, by making accretive acquisitions and financing these acquisitions with a prudent combination of debt and equity. Once an acquisition has been completed, we employ our expertise and experience into efficiently integrating new property acquisitions with the existing assets and applying technical expertise to optimize production and further develop the properties to maximize recovery. These acquisitions fuel our organic growth program.

Cash flow from operations is used to pay distributions to our unitholders, effectively maintain our asset base and pursue attractive development opportunities. This enables Pengrowth to offset normal production declines.

Pengrowth’s Operations Team is composed of multi-disciplinary groups whose main responsibility is to unlock value in our oil and gas reserves. This is achieved by optimizing our mature assets through efficient operations, development activities, step out, and exploration drilling. Over the past three years, the Operations Team has continued to build a high quality technical team of highly skilled geologists, geophysicists, production and reservoir engineers, trained to execute our

development plan. Their primary function is to utilize their strong values and technical expertise to identify opportunities that can replace production each year.

In 2008 Pengrowth continued to revise its performance assessment improvement process. Performance was improved through a program of clear accountabilities and expectations and goals and measurements were centered on achieving the following strategic objectives:

• ContinuingGrowth–enhancevaluethoughaccretiveacquisitions and organic growth

• RewardUnitholder–prudentlysustainarelativelyhigh-payout ratio

• FinancialPrudence–sustainbalancesheetintegrity

• ContinuousImprovement–constantlyraisethebaronoperational performance

• GrowOurResources–developourpeople,competencies and systems to meet growth targets

• ImplementNewTechnology–levertechnicalexperienceto increase recovery factors and enhance development

OPERATIONS

LIGHT OIL

Production 2008 (boe per day) 29,992

Percentage of Total 2008 Production (%) 36.6%

Proved plus Probable Reserves (mboe) 140,322

Percentage of Total Reserves 43.4%

HEAVY OIL





CONVENTIONAL GAS





Tables may have rounding differences

SHALLOW & UNCONVENTIONAL GAS





OFFSHORE GAS





OIL SANDS*

Production 2008 (boe per day) 0




* Pilot project (under development)

BC

ABSK

NSHALIFAXHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARYCALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN

FORTST. JOHN

LLOYDMINSTERRED DEER

EDMONTON

LIGHT OILHEAVY OIL AND OIL SANDSCONVENTIONAL GASSHALLOW GAS & UNCONVENTIONAL GASOFFSHORE GASEXPLORATION


OPERATIONS


WHERE WE OPERATE Pengrowth presently operates in the Western Canadian Sedimentary Basin (WCSB), along with an 8.4 percent, non-operating interest in SOEP off the coast of Nova Scotia. Pengrowth controls approximately 900,000 acres of undeveloped land, which is the foundation of our organic development plan, providing future drilling opportunities and limited lower risk exploration opportunities.

The premium nature of our assets and our highly-skilled and innovative workforce sets us apart from our peers in the Canadian energy trust sector.

WHAT WE DO In 2008, Pengrowth deployed and executed a $388 million dollar capital development program, our largest capital development program ever. It included a number of projects associated with property acquisitions in 2006 and 2007. This underscores Pengrowth’s ability to complete and integrate strategic acquisitions and, in-turn, realize additional value on behalf of unitholders through targeted development of acquired assets.

Additional operational highlights include the continued infill drilling and CO2 pilot, utilizing Enhanced Oil Recovery (EOR) technology at Judy Creek, with encouraging results to date. An

application with the ERCB for our pilot scale SAGD project at Lindbergh was completed. Pengrowth spent $17.9 million on our CBM development which has grown significantly over the past three years. Land and seismic expenditures totaled $34.3 million, a portion of which was allocated to the Horn River Basin, a new area of considerable long-term interest for Pengrowth.

Pengrowth’s production of 81,991 boe per day in 2008 was weighted approximately 50/50 towards liquids production (light oil, heavy oil and natural gas liquids) and natural gas production. In 2008, including the impact of commodity risk management contracts, Pengrowth realized an average price of $62.76 per boe and a combined netback of $34.78 per boe. This was a 14 percent increase from the previous year’s combined operating netback.

Pengrowth’s development program (including revisions) added 17.6 mmboe of total proved reserves and 23.9 mmboe of proved plus probable reserves. This resulted in finding and development costs of $16.27 per boe and finding, development and acquisition costs of $15.47 per boe on a proved plus probable basis, excluding changes in future development capital. Pengrowth replaced approximately 80 percent of our 2008 production on a proved plus probable basis, and overall replaced 112 percent of our proved plus

NET ASSET VALUE AT 10%PER TRUST UNIT

04 05 06 07

16.62

15.42

17.73

11.17

15.3315.33

08

FINDING AND DEVELOPMENT COSTS$ PER BOE

06 07 3 YearAverage

16.29

15.2013.25

16.2716.27

08

OPERATING NETBACKS$ PER BOE

04 05 06 07

30.40

29.59

32.54

24.51

34.7834.78

08

OPERATING COSTS$ PER BOE

04 05 06 07

12.74

11.8010.078.13

13.9513.95

08

OPERATIONS


probable reserves in 2008 when acquisitions are added to the development program.

DEDICATED TO HEALTH AND SAFETY Pengrowth continued to show progress in the area of health and safety in 2008. This was accomplished through the development of clear goals and initiatives and by actively involving our team members and contractors in the process. We remain committed to protecting the health and safety of our team members, our neighbours and the general public by focusing on key safety management system elements.

To ensure compliance and ongoing improvement in our safety program, an internal audit of Pengrowth’s safety management system was conducted in the fourth quarter of 2008. The audit was a maintenance requirement of our Alberta Partnerships Certificate of Recognition program and is designed to ensure that our safety management system continues to function as intended. Safety opportunities identified from the audit will be the focus of our ongoing continuous improvement work in 2009.

Emergency response preparedness continues to be primary for Pengrowth. Safety for both team members and the public is maintained by ensuring that emergency response plans are in place and updated regularly. Most importantly, ongoing emergency response exercises and drills are conducted with area operations, leadership and regulatory agencies in order to ensure that personnel understand their responsibilities in the case of an unplanned event.

Ensuring our team members have access to the most current information related to critical work procedures is a major component of our safety management system and contributes to team member competence in performing designated tasks.

Ongoing safety training also helps ensure that our team members have the skills they need to work safely. In 2008 we provided our supervisors and managers with incident investigation training, giving them the necessary tools to conduct an effective investigation. Conducting a thorough incident investigation and implementing effective actions to prevent reoccurrence is the key to effective incident management. As driving is one of the highest risk activities

SAFETY PERFORMANCEEMPLOYEE LOST TIMEINJURY FREQUENCYEMPLOYEE LOST TIME INJURIESPER 200,000 HOURS WORKED

040302010099 05 06 07

00.870.88

0.70

0.39

0.191.01

0.240.48

08

TEAM MEMBERS

04 05 06 07

289

312

461

568

591591

08

As in previous years, we remain committed to protecting the health and safety of our team members, our neighbours and the general public by focusing on key safety management system elements.

OPERATIONS


we perform, our driving behaviour and our hands-on training programs were initiated in 2008 and will continue in 2009.

For the benefit of our contractors, we continued to implement safety forums in our operational areas in 2008. The theme of our 2008 safety forums was Safety Leadership which encouraged all owners and supervisors to take an active role in team member safety and raising awareness. The forums also allowed for safety information sharing and providing contractors with any required changes to our work practices, procedures and standards.

Success in managing health and safety is dependent on engaging our team members and contractors in the process and raising their safety awareness. We will continue to implement the recommendations identified from our internal audits and from the feedback received from all team members involved in our operations.

COMMITTED TO OUR ENVIRONMENTAL RESPONSIBILITIES Pengrowth is committed to corporate and industry excellence in environmental performance and stewardship. We remain dedicated to responsible operatorship, minimization of environmental impacts and compliance with provincial and federal legislation and other requirements within the jurisdictions in which we operate.

Consistent with previous years, Pengrowth continues to be an active participant in the Environment, Health, Safety and Social Stewardship Program initiated by the Canadian Association of Petroleum Producers (CAPP). In 2008, Pengrowth received CAPP’s highest level of recognition in support of our achievements. The Platinum Level of recognition from CAPP requires our commitment to continuously improve our health, safety and environmental management practices including a thorough external audit of our activities. During 2008, Pengrowth spent approximately $32.7 million on an active well abandonment and site restoration program under which Pengrowth continued to assess and remediate sites impacted by historical operations. Late in 2008 an external environmental

audit was conducted and we plan to implement action items from key findings in 2009.

Pengrowth currently operates two facilities that are impacted by the Alberta climate change regulations. Collectively these facilities have reduced emissions by 15 percent from the base line emissions (2007 data), exceeding the current provincial requirements. Pengrowth is assessing its alternative options required to meet future greenhouse gas emission requirements. This will be achieved by conducting fugitive emission audits on selected facilities as well as performing facilities process optimization. Pengrowth monitors and tracks facility emissions in order to meet requirements in such programs as the National Pollutant Release Inventory, Federal Greenhouse Gas Reporting Program, Alberta Specified Gas Reporting program and the CAPP Benzene Emissions Report requirements.

Pengrowth team members are essential to the execution of our environmental mandate. Facility inspections were conducted throughout the year by Pengrowth personnel as well as by regulators. These inspections improve overall environmental awareness, reduce flared and vented volumes and reduce environmental incidents at operated facilities.

For 2009, Pengrowth will continue an active well abandonment program and will continue to constantly monitor and inspect operations.

INVESTED IN OUR COMMUNITIES Pengrowth will continue to develop good stakeholder relations with all communities affected by our operations. We aim to build relationships based on trust and respect so that team members, their families and all local residents can share in a healthy and safe environment.

Pengrowth undertakes a consultation program in communities which includes open houses, government briefings, media relations and project-specific websites. The programs can also include specific workshops with municipal governments, community groups, First Nations and key community opinion leaders.

In 2008, Pengrowth received CAPP’s highest level of recognition in support of our achievements. The Platinum Level of recognition from CAPP requires our commitment to continuously improving our health, safety and environmental management practices including a thorough external audit of our activities.

OPERATIONS


Pengrowth utilizes an adaptive management approach to consultation, incorporating the flexibility to add or change initiatives as needs are identified. Pengrowth’s operations have environmental, social and economic impacts so it is essential to establish an open door policy that consistently fosters two-way communication.

A PROVEN STRATEGY Pengrowth’s core operational expertise is in conventional oil and gas production, enhanced oil recovery, shallow gas drilling and CBM development. We are highly experienced in conventional operations and the application of new technologies to enhance the value of long life proven assets.

The portfolio of properties acquired and held by Pengrowth primarily consists of long life, oil and gas producing properties with established production profiles.

The following is a discussion of each of Pengrowth’s proven commodities and a look at the metrics of key producing fields within each category.

We aim to build relationships based on trust and respect so that team members, their families and all local residents can share in a healthy and safe environment.

OPERATIONS


PRINCIPAL PROPERTIES Company Interest as of December 31, 2008 P+P Value Pengrowth Percent Reserve Before Tax Percent 2008 P+P of Total Life at 10% of Total 2008 Oil 2008 Gas 2008 NGL 2008 Total Development Field Reserves Reserves Index Discount Assets Production Production Production Production Capital

(mboe) (%) (years) ($ millions) (%) (bbls per day) (mmcf per day) (bbls per day) (boe per day) ($ millions)

LIGHT OIL Judy Creek 39,073 12.1% 11.0 881.8 15.8% 6,801 4.3 2,247 9,759 25.4Weyburn 22,205 6.9% 23.6 392.0 7.0% 2,589 0.0 0 2,589 19.5Swan Hills 18,103 5.6% 19.1 256.9 4.6% 2,025 1.7 263 2,570 15.1Carson Creek 15,649 4.8% 13.4 264.7 4.7% 2,069 3.4 271 2,910 10.8Fenn Big Valley 6,413 2.0% 9.0 107.1 1.9% 863 7.3 66 2,152 15.2Deer Mountain 6,066 1.9% 21.0 96.8 1.7% 606 0.1 66 691 16.0Other 32,813 10.1% 9.5 659.1 11.8% 7,788 6.5 445 9,321 67.4Sub-Total 140,322 43.4% 12.7 2,658.3 47.6% 22,740 23.3 3,357 29,992 169.3

HEAVY OIL Bodo 7,544 2.3% 11.5 119.6 2.1% 1,580 2.0 0 1,917 4.9Jenner 7,112 2.2% 6.5 179.4 3.2% 3,049 0.4 6 3,121 9.2Tangleflags 5,394 1.7% 7.1 78.8 1.4% 2,505 0.4 0 2,571 3.0Other 4,628 1.4% 7.2 67.7 1.2% 1,008 4.2 0 1,716 24.6Sub-Total 24,678 7.6% 7.8 445.4 8.0% 8,142 7.1 6 9,325 41.7

CONVENTIONAL GAS Olds 24,766 7.7% 17.3 315.8 5.7% 0 18.4 685 3,755 12.9Harmattan 19,124 5.9% 10.0 298.2 5.3% 322 16.1 1,226 4,226 11.1Dunvegan 6,139 1.9% 10.1 89.6 1.6% 40 7.7 407 1,727 4.3Quirk Creek 5,878 1.8% 10.7 78.6 1.4% 0 3.6 223 822 7.7Carson Creek 5,231 1.6% 6.5 109.6 2.0% 0 4.7 689 1,477 13.6McLeod River 3,664 1.1% 8.4 69.0 1.2% 42 5.3 198 1,129 0.4Kaybob 3,519 1.1% 13.9 49.8 0.9% 0 4.5 38 781 2.7Blackstone 3,399 1.1% 10.5 40.0 0.7% 0 5.6 0 941 0.1Other 17,214 5.3% 7.6 300.1 5.4% 571 28.1 319 5,577 30.4Sub-Total 88,934 27.5% 10.4 1,350.8 24.2% 975 94.0 3,786 20,434 83.3

SHALLOW GAS Three Hills/Twining 12,364 3.8% 9.9 238.6 4.3% 405 11.3 359 2,648 13.5Coalbed Methane 8,300 2.6% 10.6 135.0 2.4% 0 11.0 3 1,839 17.9Monogram 8,032 2.5% 8.7 163.4 2.9% 0 14.1 0 2,350 18.1Jenner 7,893 2.4% 11.5 122.6 2.2% 21 12.1 3 2,039 1.6Lethbridge 3,291 1.0% 9.0 56.7 1.0% 0 6.8 0 1,142 0.3Other 14,091 4.4% 10.5 222.0 4.0% 256 26.2 108 4,738 21.2Sub-Total 53,971 16.7% 10.1 938.3 16.8% 683 81.6 473 14,755 72.6

OFFSHORE GAS Sable Offshore Energy Project 9,213 2.8% 3.7 184.0 3.3% 0 34.8 1,693 7,485 1.4Sub-Total 9,213 2.8% 3.7 184.0 3.3% 0 34.8 1,693 7,485 1.4

OIL SANDS Lindbergh 6,345 2.0% - 4.6 0.1% 0 0.0 0 0 20.0Subtotal 6,345 2.0% - 4.6 0.1% 0 0.0 0 0 20.0

TOTAL 323,463 100.0% 10.6 5,581.5 100.0% 32,539 240.8 9,315 81,991 388.3

* Table may have rounding differences

* P+P refers to proved + probable

18 LIGHT OIL | PENGROWTH 2008

LIGHT OIL

Pengrowth’s asset base includes interests in six of the nine largest original-oil-in-place (OOIP) reservoirs in the WCSB. These properties primarily produce light, sweet oil as we employ EOR techniques including water floods, hydrocarbon miscible floods and more recently CO2 flood operations. Major properties in Pengrowth’s light oil portfolio include Judy Creek, Weyburn, Swan Hills, Carson Creek, Fenn Big Valley and Deer Mountain.

P+P Value Pengrowth Percent Reserve Before Tax Percent 2008 P+P of Total Life at 10% of Total 2008 Oil 2008 Gas 2008 NGL 2008 Total Development Field Reserves Reserves Index Discount Assets Production Production Production Production Capital


LIGHT OIL Judy Creek 39,073 12.1% 11.0 881.8 15.8% 6,801 4.3 2,247 9,759 25.4Weyburn 22,205 6.9% 23.6 392.0 7.0% 2,589 0.0 0 2,589 19.5Swan Hills 18,103 5.6% 19.1 256.9 4.6% 2,025 1.7 263 2,570 15.1Carson Creek 15,649 4.8% 13.4 264.7 4.7% 2,069 3.4 271 2,910 10.8Fenn Big Valley 6,413 2.0% 9.0 107.1 1.9% 863 7.3 66 2,152 15.2Deer Mountain 6,066 1.9% 21.0 96.8 1.7% 606 0.1 66 691 16.0Other 32,813 10.1% 9.5 659.1 11.8% 7,788 6.5 445 9,321 67.4Total 140,322 43.4% 12.7 2,658.3 47.6% 22,740 23.3 3,357 29,992 169.3



BC

ABSK

NSHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN

FORTST. JOHN


EDMONTON

LIGHT OIL

WeyburnUnit

Carson Creek

Judy Creek

Swanhills

Deer Mountain

Fenn/Big Valley

PENGROWTH 2008 | LIGHT OIL 19

MAJOR FIELDS: Judy Creek

Operator: Pengrowth

Remaining Reserve Life: 50 yrs.

Pengrowth Average Working Interest: 100%

Reserve Life Index: 11.0 yrs.*

Remaining Company Interest (P+P reserves): 39.1 mmboe*

Company Interest Production: 9,759 boe per day*

Pengrowth also has a 54.4 percent working interest in the Judy Creek Gas Conservation Plant that services a number of other properties in the area including Swan Hills, Virginia Hills and South Swan Hills. Judy Creek is located approximately 180 kilometres northwest of Edmonton, Alberta and covers an area of approximately 38,300 acres. Judy Creek was discovered in 1959, placed on waterflood in 1962 and hydrocarbon miscible flood in 1985. In total, the Judy Creek A and B pools contain 1.1 billion bbls of OOIP of which 44 percent has been produced to date. An estimated three percent of OOIP remains recoverable.

Weyburn unit

Operator: Encana






Medium, (25 to 34º API) sour crude oil is produced from the Midale carbonate reservoir under waterflood and a CO2 miscible flood EOR program. This is the largest EOR project in Canada with OOIP of 1.4 billion bbls and approximately 10 million tonnes of CO2 remaining in the reservoir. The field consists of approximately 700 producing wells, and 300 injection wells, which have produced over 423 mmbbls, or 30 percent of the OOIP to date. At year end 2008, remaining reserves for the Weyburn Unit are estimated to be approximately nine percent of the OOIP.

SWan HillS

Operator: Devon Canada






Effective May 30, 2008, Pengrowth’s non-operated working interest in the Swan Hills Unit No. 1 increased through acquisition from 22.34 to 24.01 percent. The unit is located near the Judy Creek field in north central Alberta. OOIP is over 1.4 billion bbls of which an estimated 42 percent, or 607 mmbbls has been produced to year end 2008. Remaining recoverable reserves are estimated to be another five percent of OOIP.

Fenn big Valley

Operator: Pengrowth






Fenn Big Valley is located 130 kilometres northeast of Calgary, Alberta. Pengrowth has high working interests (mostly 100 percent) in several oil pools producing from the Nisku and Leduc formations. The Nisku production currently accounts for approximately 80 percent of the oil production in this area at an average water cut of 97 percent. The field began producing in 1953 and to date, under natural water drive, has recovered approximately 62 percent of the estimated 503 mmbbls of OOIP. Remaining recovery is estimated to be another one percent.

deer Mountain

Operator: Pengrowth





Company Interest Production: 691 boe per day*

Deer Mountain is located 200 kilometres northwest of Edmonton, Alberta, and consists of both a Pengrowth operated unit which covers approximately 6,400 acres and four non-unit wells. The 85.42 percent working interest in the unit covers 10 sections of land, and the non-unit lands contribute an additional four sections of land with operated interests that range from 67 to 100 percent. A waterflood scheme has been operating in the Deer Mountain unit since September 1968. OOIP for Deer Mountain Unit No. 1 is estimated to be 56.4 mmbbls of which cumulative production of approximately 29 percent has been recovered to date. An estimated 20 percent of the OOIP remains recoverable.

LIGHT OIL

* indicates 2008 data

20 LIGHT OIL | PENGROWTH 2008

LIGHT OIL

THE FACTS - JUDY CREEK CO2 ENHANCED OIL RECOVERY PILOT PROJECT

WHAT IS THE HISTORY OF THE JUDY CREEK CO2 EOR PROJECT?Judy Creek was one of Canada’s largest oil pool discoveries in 1959. Despite their long production history, the A and B pools have a reserve life index of 11 years and a 50 year total remaining life on a proved plus probable basis. Our working interest is 100 percent in both the A and B pools and Judy Creek remains one of Pengrowth’s most significant assets due to its size and the high-quality light crude oil that is produced. In 2008, production from this property represented 12 percent of Pengrowth’s total production.

Judy Creek’s reservoir characteristics coupled with existing surface facilities make it a prime candidate to evaluate CO2 EOR in the Swan Hills area. This area contains several large oil-in-place reservoirs in which Pengrowth is a significant player.

CO2 injection is an EOR process that holds the potential to increase incremental recovery by an additional three to five percent. As the OOIP is estimated at be over one billion bbls in the Judy Creek pools, the added reserve recovery could be in excess of 30 mmbbls. To evaluate this potential, planning for a CO2 injection pilot began in late 2005, culminating in commencement of injection in February 2007.

The aim of the pilot is to quantify the incremental oil and previously injected hydrocarbon which would be recoverable following hydrocarbon miscible flooding

WHAT DO THE OPERATIONS LOOK LIKE?In 2007, Pengrowth started an injection well in the center of four producing wells. This pilot pattern was monitored to collect technical data which was then used in the evaluation of pilot performance.

Purchased CO2, which is transported to the site, is supplemented with acid gas from Pengrowth’s Judy Creek Gas Conservation Plant. Injection of pure purchased CO2 commenced in February 2007, with supplemental acid gas injection commencing in April 2007.

By the end of 2007, flood response had been observed at three of the four pattern producers through recovery of incremental ethane, methane, oil and some CO2 injectant.

The pilot continued to operate throughout 2008 with increased oil response and CO2 recycling, but reduced ethane and methane response. Pengrowth is encouraged by the results to date and we intend to continue CO2 injection until the second quarter of 2009. Monitoring of production response and operational considerations will continue through 2009 and 2010.

Ongoing data collection including a follow-up 3D seismic survey over the pilot area, was conducted at the end of the first quarter of 2009.

Commercial production could commence as early as 2013, depending on the availability of appropriately priced CO2.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?CO2 injection can significantly increase oil production and reserves in suitable oil pools. Pengrowth is a working interest partner in Canada’s largest CO2 flood at the partner-operated Weyburn Unit in southeastern Saskatchewan. The experience we have and will continue to gain at Judy Creek will help us evaluate our remaining asset base for other potential CO2 flood candidates.

CO2 injection can significantly increase oil production and reserves in suitable oil pools. Pengrowth is a working interest partner in Canada’s largest CO2 flood at the partner-operated Weyburn Unit in southeastern Saskatchewan.

2010 20151995 2000 2005 20200

2,000

4,000

6,000

8,000

10,000

12,000

14,000

JUDY CREEK CO2 POTENTIALHISTORICALDEVELOPMENTCO2 POTENTIAL

Pengrowth assumes

operatorship

CO2 EORBegins

Oil

Prod

uctio

n (b

bl/d

)

PENGROWTH 2008 | LIGHT OIL 21

LIGHT OIL

CARSON CREEK PRODUCTION BOE/D)

JAN

95

JAN

96

JAN

97

JAN

98

JAN

99

JAN

00

JAN

01

JAN

02

JAN

03

JAN

04

JAN

05

JAN

06

JAN

07

JAN

08

JAN

09

JAN

10

JAN

11

JAN

12

(bar

rels

per

day)

0

1000

2000

3000

4000

5000

6000

7000PengrowthAcquisition

Actual

InfillDrilling

Forecast

ArrestingDecline Gas Pool

Development

Forecast at Acquisition

WHAT IS THE HISTORY OF THE CARSON CREEK PROPERTY? Carson Creek is Pengrowth’s second top producer of light oil and is another example of a successful value adding acquisition. Carson Creek assets were acquired from ExxonMobil Canada in September of 2006. These assets included an 87.5 percent operated working interest in Carson Creek North Unit No. 1 and a 95.1 percent operated working interest in both Carson Creek Unit No. 1 and the Carson Creek Gas Plant. Carson Creek is immediately south of Pengrowth’s existing interest in Judy Creek and Swan Hills Unit No. 1. Due to the close proximity of these fields, operating synergies can be achieved therefore providing Pengrowth with a significant competitive advantage.

WHAT DO THE OPERATIONS LOOK LIKE?Since acquiring the property, Pengrowth has shot large 3D seismic surveys over the majority of the Carson Creek field. A reservoir simulation model was constructed to enable our engineers, geologists and geophysicists a chance to collaborate on the best strategies to maximize recovery. Field operations have been focused on well optimization and, as of the end of the first quarter of 2009, five major workovers have been performed. Ten new wells have been drilled since December 2006, adding production and reserves to our bottom line.

In 2007, Pengrowth participated with an industry partner in a new drill near the southwest boundary of the Carson Creek Unit No.1. This well confirmed a downdip extension of the original gas pool discovered in the 1960s. Pengrowth followed up on this discovery with the drilling of an additional five wells, including the first horizontal well completed with multi-stage fracture technology. Initial rates are very encouraging and Pengrowth intends to dedicate significant capital to Carson Creek in 2009.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?The Carson Creek acquisition is consistent with Pengrowth’s long term strategy of acquiring working interests in large OOIP and gas-in-place reservoirs offering the potential for incremental recovery through the application of EOR and new technology. Since acquiring the original interest in 2006, Pengrowth has increased its position through three additional acquisitions of partner interests.

Our CO2 pilot at Judy Creek will be a good case study to determine if additional reserves can be accessed at Carson in the future. The advent of multi-stage fracture technology has unlocked gas reserves, that in vertical wells, would be uneconomic to pursue. Coupled with our extensive plant and gathering infrastructure, Carson Creek has the potential to be one of the most significant cash flow generators in Pengrowth’s future.

THE FACTS - CARSON CREEK

CarSon Creek (oil property)

Operator: Pengrowth






Carson Creek is located 160 kilometres northwest of Edmonton, Alberta and is comprised of two Pengrowth operated units (one oil and one gas and condensate) which cover approximately 46,200 acres. The Carson Creek North Unit (mainly oil) in which Pengrowth has an 88.6 percent working interest was discovered in 1958 and the current waterflood was initiated in 1964. OOIP for the Carson Creek North Unit is estimated to be 378 mmbbls, with recovery to date of approximately 46 percent. Remaining reserves at 2008 year end represent another three percent of OOIP.


22 HEAVY OIL | PENGROWTH 2008

Heavy oil has become significant for the Trust since our acquisition of properties from Murphy Oil in 2004 and ConocoPhillips in 2007. Our properties consist mainly of operated primary and secondary recovery fields and a partner-operated, enhanced recovery thermal project at Tangleflags. The major operated properties include Jenner and Bodo.

HEAVY OIL



HEAVY OIL Bodo 7,544 2.3% 11.5 119.6 2.1% 1,580 2.0 0 1,917 4.9Jenner 7,112 2.2% 6.5 179.4 3.2% 3,049 0.4 6 3,121 9.2Tangleflags 5,394 1.7% 7.1 78.8 1.4% 2,505 0.4 0 2,571 3.0Other 4,628 1.4% 7.2 67.7 1.2% 1,008 4.2 0 1,716 24.6Total 24,678 7.6% 7.8 445.4 8.0% 8,142 7.1 6 9,325 41.7



BC

ABSK

NSHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN


EDMONTON

HEAVY OIL

Tangleflags

Jenner

Bodo

PENGROWTH 2008 | HEAVY OIL 23

HEAVY OIL

THE FACTS - HEAVY OILMAJOR FIELDS: Jenner

Operator: Pengrowth






The Jenner heavy oil property is located approximately 250 kilometres east of Calgary, Alberta. Pengrowth has an average working interest of 94.5 percent in the north pool and an average working interest of 89.1 percent in the south pool. Pengrowth operates all of the production within this property. Oil quality ranges from 14 to 20° API and is produced from the Upper Mannville formation.

bodo

Operator: Pengrowth






The Bodo heavy oil property straddles the Alberta-Saskatchewan border east of Provost, Alberta and produces mainly 12° API oil from the McLaren formation and 15° API oil from the Lloydminster formation. Pengrowth operates several batteries to treat oil, as well as a number of compressor stations to process solution and non-associated gas.

tangleFlagS

Operator: Canadian Natural Resources






The Tangleflags property is located in west-central Saskatchewan, approximately 40 kilometres northeast of Lloydminster. It produces 12° API oil mainly from the Lloydminster sands under thermal recovery process, with some cold production from other Mannville sands. Pengrowth holds a 50 percent non-operated working interest.

WHAT IS THE HISTORY OF PENGROWTH’S HEAVY OIL?Heavy oil gets its name because its density is greater than light crude oil. While there is significantly more heavy oil in the world than conventional light crude oil, the increased viscosity and density makes production more challenging.

In Canada, heavy oil can be further differentiated between oil sands and conventional heavy oil. Oil sands refer to heavy oil trapped in sands that can only be extracted using mining or reservoir heating techniques. Conventional heavy oil can generally be extracted using traditional drilling and production techniques. Refining costs are higher due to the relatively high sulphur content, which results in heavy crudes often being priced at a discount to lighter ones.

Pengrowth first became a participant in heavy oil production with the acquisition of assets from Murphy Oil in 2004. Our heavy oil properties consist of primary and secondary recovery fields that straddle the border of eastern Alberta and western Saskatchewan. Pengrowth increased its heavy oil holdings with the 2007 ConocoPhillips property acquisition, which added the Jenner field in southeast Alberta, and about 3,500 boe per day of production.

WHAT DO THE OPERATIONS LOOK LIKE?In 2009, Pengrowth expects to drill two horizontal and one vertical well. One horizontal well is planned to take advantage of the current polymer injection scheme in Bodo.

As with most Pengrowth properties, an EOR program is being investigated to increase reservoir pressure and recoverable reserves. Pengrowth is continuing our reservoir enhancement pilot using polymer flood stimulation technology that has already seen a positive increase in production at Bodo. This increase has led to the expansion of our polymer flooding initiatives in the Bodo area. Future expansion to other areas is being evaluated and the implementation of a surfactant/polymer flood is being explored for Pengrowth’s EOR program.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?The strategic advantage with heavy oil is that the exploration risk is minimal. While heavy oil prices may be lower than light oil prices, returns on heavy oil production can be similar due to lower finding and development costs when compared to conventional oil reserves.


24 CONVENTIONAL GAS | PENGROWTH 2008

CONVENTIONAL GAS



CONVENTIONAL GAS Olds 24,766 7.7% 17.3 315.8 5.7% 0 18.4 685 3,755 12.9Harmattan 19,124 5.9% 10.0 298.2 5.3% 322 16.1 1,226 4,226 11.1Dunvegan 6,139 1.9% 10.1 89.6 1.6% 40 7.7 407 1,727 4.3Quirk Creek 5,878 1.8% 10.7 78.6 1.4% 0 3.6 223 822 7.7Carson Creek 5,231 1.6% 6.5 109.6 2.0% 0 4.7 689 1,477 13.6McLeod River 3,664 1.1% 8.4 69.0 1.2% 42 5.3 198 1,129 0.4Kaybob 3,519 1.1% 13.9 49.8 0.9% 0 4.5 38 781 2.7Blackstone 3,399 1.1% 10.5 40.0 0.7% 0 5.6 0 941 0.1Other 17,214 5.3% 7.6 300.1 5.4% 571 28.1 319 5,577 30.4Total 88,934 27.5% 10.4 1,350.8 24.2% 975 94.0 3,786 20,434 83.3



Conventional gas provides a stable source of base production for Pengrowth. In fact, Pengrowth’s first acquisition was a working interest in the Dunvegan Gas Unit in 1989. Pengrowth’s major properties in this category include Olds, Harmattan, Dunvegan, Quirk Creek, Carson Creek, McLeod River, Kaybob and Blackstone.

BC

AB

NSHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN


EDMONTON

CONVENTIONAL GAS

QuirkCreek

Carson Creek

McLeodRiver

Blackstone

Kaybob

Dunvegan

OldsHarmattan

PENGROWTH 2008 | CONVENTIONAL GAS 25

CONVENTIONAL GAS

MAJOR FIELDS: oldS

Operator: Pengrowth






The Olds property is Pengrowth’s largest operated gas property, located 95 kilometres north of Calgary, Alberta. Pengrowth’s interests include 100 percent ownership in the Olds Gas Unit No. 1. In addition, Pengrowth has a 75 percent average working interest in non-unit reserves. The Olds unit produces sour natural gas from the Wabamun formation, with H2S concentrations ranging from less than one to 35 percent. The non-unit reserves are contained within formations from the Wabamun to the Edmonton group, and are predominantly sweet natural gas.

HarMattan

Operator: Pengrowth






The Harmattan gas field is located approximately 90 kilometres northwest of Calgary, Alberta. It is comprised of wells and pools in formations from the Cardium to the Wabumun, as well as two partner-operated Elkton units. The production is predominantly sweet natural gas with working interests averaging 55 percent in the non-unit lands and 25 percent in the units.

dunVegan

Operator: Devon Canada






The partner operated Dunvegan gas field is located 430 kilometres northwest of Edmonton, Alberta in the Peace River area. Pengrowth has a 10.37 percent working interest in the Dunvegan Gas Unit No. 1 and various interests in non-unit producing wells. The property contains over 200 producing wells and covers an area of approximately 52,600 acres. About 95 percent of the unit’s identified natural gas reserves are contained in the Mississippian Debolt formation. A new play in the Upper Debolt formation has emerged over the last year. This zone is not part of the main unit. Gas potential is still being evaluated, but initial results are promising.

Quirk Creek

Operator: Imperial Oil






The Quirk Creek asset is located approximately 50 kilometres southwest of Calgary, Alberta, and is comprised of several highly permeable pools contained within Mississippian thrust sheets. Pengrowth holds working interests ranging from 25 to 68 percent in 17 producing natural gas wells and a 31 percent working interest in the Quirk Creek Gas Plant. Natural gas production averages nine percent H2S, with associated liquids. Quirk Creek has been producing since the late 1960s, but a new well drilled in 2006, the first in 25 years, extended the field’s potential. * indicates 2008 data

26 CONVENTIONAL GAS | PENGROWTH 2008

CONVENTIONAL GAS

WHAT IS THE HISTORY OF PENGROWTH’S OLDS/HARMATTAN AREA?The Olds and Harmattan areas are situated approximately 95 kilometres northwest of Calgary. The Olds Crossfield Wabamun D1 zone was discovered in 1952 by Shell Oil Company of Canada with the gas plant built in1964. The Olds Gas Plant produces sour natural gas, which is processed into elemental sulphur, liquids and residue gas. Harmattan production is predominantly sweet natural gas and sour oil. These areas represent Pengrowth’s two largest producing conventional gas properties.

The acquisition of Olds and Harmattan played an important role in the success of Pengrowth’s strategic acquisition plan over the past few years. The Olds facility was acquired in 2006 as part of Pengrowth’s merger with Esprit Energy Trust. Harmattan was part of a substantial acquisition from ConocoPhillips in early 2007. The two acquisitions complemented existing Pengrowth assets in the area.

In September 2008, Pengrowth announced the acquisition of Accrete Energy Inc., acquiring reserves in the Harmattan area of approximately 8.4 mmboe, with associated production of approximately 1,900 boe per day. Complementary to the Esprit and ConocoPhillips acquisitions, the Accrete acquisition represented a strategic tuck-in opportunity within Pengrowth’s existing land holdings in the Olds/Harmattan area.

WHAT DO THE OPERATIONS LOOK LIKE?Olds is Pengrowth’s largest operated conventional natural gas property. Pengrowth’s interests include 100 percent ownership in the Olds Gas Plant and a 75 percent average working interest in non-unit reserves. Pengrowth’s Harmattan interests include an average 55 percent in non-unit and 25 percent in unit lands, respectively. Together, Olds and Harmattan represent 10 percent of Pengrowth’s 2008 corporate production and 14 percent of reserves. Olds has a reserve life index of 17 years while Harmattan is 10 years, based on proved plus probable reserves at 2008 year-end.

Pengrowth operates the Olds gas plant which processes both our own production and third party volumes. This gives us a high level of control over costs and ensures our gas production has continuous facility access. The revenue received from third party processing allows Pengrowth to reduce operating costs. Pengrowth plans to continue to pursue additional third party custom gathering and processing contracts to further lower its overall unit operating costs.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?The Olds and Harmattan fields are characterized as long life reserves that provide stable operating cash flows. Both fields also provide multi-zone potential for increased production from both carbonate and clastic reservoirs. Since taking over operatorship in Olds and

The Olds and Harmattan fields are characterized as long life reserves that provide stable operating cash flows. Both fields also provide multi-zone potential for increased production from both carbonate and clastic reservoirs.

THE FACTS - OLDS/HARMATTAN

PENGROWTH 2008 | CONVENTIONAL GAS 27

CONVENTIONAL GAS

Harmattan, Pengrowth has been pursuing many new opportunities such as the use of 3D seismic. In addition we are developing a better understanding of our well performance and gathering system and facilities constraints, which will provide for an exciting future for the area.

Currently, Pengrowth is proceeding with the acidizing of existing horizontal wells to increase production and reserve recovery. Choosing re-drill candidates has allowed us to increase production with a relatively low capital investment. Re-entering existing wellbores is more cost effective compared to the drilling of a new well. Incremental production volumes are already connected to the area infrastructure which facilitates quick payout on our investment. Maintaining a low decline rate in tight Wabamun sour gas reservoirs and strategically choosing areas that will increase production will allow Pengrowth to optimize its production opportunities.

The Olds Gas Plant also presents a unique future opportunity for Pengrowth to attract additional third party volumes. The plant has a gross capacity of 84 mmcf per day but is currently running at approximately 57 percent capacity.

The location and extensive gas gathering systems throughout areas of west/central Alberta makes the Olds Gas Plant an efficient and profitable midstream operation.

kaybob

Operator: Pengrowth






The Kaybob Notikewin Unit No. 1 is located approximately 240 kilometres northwest of Edmonton, Alberta. Production of natural gas and liquids commenced in 1962.

MCleod riVer

Operator: Pengrowth






The McLeod River property is located approximately 110 kilometres west of Edmonton, Alberta. Pengrowth holds various interests in 87 wells in the property that range from 16.7 to 100 percent. Conventional gas is produced from the Rock Creek, Gething, Notikewin and Cardium formations.

CarSon Creek (gaS property)

Operator: Pengrowth






Carson Creek is located 160 kilometres northwest of Edmonton, Alberta and is comprised of two Pengrowth-operated units (one oil and one gas and condensate) which cover approximately 46,200 acres. The Carson Creek Beaverhill Lake Unit No. 1 (gas), in which Pengrowth has a 95.1 percent working interest, was discovered in 1958. From 1962 to 1985, a lean gas cycling scheme to strip natural gas liquids from the liquid-rich natural gas was operational. During this period the lean gas was re-injected. Gas reinjection now only occurs during plant disruption. Additional non-unit interests range from 24 to 95 percent. Pengrowth also has a 95.12 percent working interest in the Carson Creek Gas plant, which processes the gas production.


28 SHALLOW & UNCONVENTIONAL GAS | PENGROWTH 2008


Shallow gas has been a significant part of Pengrowth’s portfolio for some time and CBM production is an important new area. Shallow gas is an attractive play because it is generally low-risk with relatively low capital requirements. Our extensive infill drilling programs have increased the value of our shallow gas production. CBM and a new emerging shale gas opportunity in the Horn River Basin now provide Pengrowth with new, unconventional sources of gas as conventional production in the WCSB declines. Principle properties include Three Hills/Twining, Southern Alberta CBM, Monogram, Jenner and Lethbridge.



SHALLOW GAS Three Hills/Twining 12,364 3.8% 9.9 238.6 4.3% 405 11.3 359 2,648 13.5Coalbed Methane 8,300 2.6% 10.6 135.0 2.4% 0 11.0 3 1,839 17.9Monogram 8,032 2.5% 8.7 163.4 2.9% 0 14.1 0 2,350 18.1Jenner 7,893 2.4% 11.5 122.6 2.2% 21 12.1 3 2,039 1.6Lethbridge 3,291 1.0% 9.0 56.7 1.0% 0 6.8 0 1,142 0.3Other 14,091 4.4% 10.5 222.0 4.0% 256 26.2 108 4,738 21.2Total 53,971 16.7% 10.1 938.3 16.8% 683 81.6 473 14,755 72.6



BC

ABSK

NSHALIFAXHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARYCALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN


EDMONTON

SHALLOW GAS & UNCONVENTIONAL GAS

Three Hills

Twinning

Lethbridge

Monogram

Jenner

Horn River

PENGROWTH 2008 | SHALLOW & UNCONVENTIONAL GAS 29

SHALLOW & UNCONVENTIONAL GASMAJOR FIELDS: Coal bed MetHane (CbM)

Operator: Pengrowth





Company Interest Production: 1.839 boe per day*

Pengrowth has interests in several fields which produce CBM gas. Pengrowth’s CBM activity is focused in the Lone Pine Creek, Ghost Pine, Fenn Big Valley and Twining areas which are 100 to 160 kilometres northeast of Calgary, Alberta.

tHree HillS/tWining

Operator: Pengrowth






The Three Hills/Twining property is located 130 kilometres northeast of Calgary, Alberta. Pengrowth’s interest ranges from three to 100 percent working interest plus royalty interests. Although production is mainly gas, there is oil production from this area.

MonograM

Operator: Encana






The Monogram Gas Unit is located approximately 225 kilometres southeast of Calgary, Alberta. Gas production from the unit is from the shallow Medicine Hat, Milk River and Second White Specks formations which were unitized in 1975. Drilling of the field commenced in 1971. By the end of 2008, 839 wells have been drilled.

Jenner

Operator: Pengrowth






The Jenner shallow gas property is located 250 kilometres east of Calgary, Alberta. Production from this property is primarily from the Milk River, Medicine Hat and Second White Specks formations within the Jenner, Atlee Buffalo and Atlee fields. Pengrowth operates the majority of the production from this field.

letHbridge

Operator: Pengrowth






Pengrowth’s operations in the Lethbridge, Alberta area are expansive and include over 250 wells, many of which are 100 percent working interest. All wells produce sweet gas from the Milk River, Base Fish Scales (Barons) and Bow Island formations.

WHAT IS THE HISTORY OF PENGROWTH’S CBM DEVELOPMENT?CBM is methane gas associated with coal seams. As organic material is converted into coal, a large amount of methane gas is formed and stored in the coal seams.

The first CBM exploration in Canada began near Canmore, Alberta in the late 1970s. Exploration picked up in the late 1980s in southern Alberta. The decline in gas prices slowed CBM exploration until 2000 when interest was reignited in Alberta based on higher spot market prices, increased demand and predictions of resource decline.

Pengrowth acquired the majority of its CBM lands with the 2004 asset acquisition from Murphy Oil. Since then, we have added to our land position through the Crispin Energy Inc., Esprit Energy Trust and the ConocoPhillips property acquisitions and have also picked up additional lands at provincial government crown land sales. Currently, Pengrowth has a 65 percent average working interest in a 218,414 acre land position in the Horseshoe Canyon play and a 74 percent average working interest in a total land position of 254,690 acres in the Mannville formation.

THE FACTS - COALBED METHANE


30 SHALLOW & UNCONVENTIONAL GAS | PENGROWTH 2008


The Alberta Geological Survey estimates that there could be as much as 500 tcf of natural gas in Alberta coals although it is not known how much of it can actually be produced. The majority of CBM development is currently taking place in the dry Horseshoe Canyon and Belly River coals of south-central Alberta. Pengrowth and other companies are now starting to target thick coals in the Mannville formation which are deeper and require larger capital outlay for drilling and completions compared to the Horseshoe Canyon.

Once extracted, CBM gas requires little processing. Large-scale CBM production in Canada is a fairly recent development and Pengrowth is committed to remain at the forefront.

WHAT DO THE CURRENT OPERATIONS LOOK LIKE?Pengrowth’s CBM production is located in the Three Hills, Twining, Lone Pine Creek and Fenn Big Valley areas of southern Alberta. Pengrowth originally developed these properties through partnerships with other CBM operators. As our land position grew, we developed a CBM team in late 2005 to maximize our assets in this new core area.

Pengrowth’s CBM production began in early 2006 when we drilled 12 operated wells. The success of this initial program led to an additional 51 operated wells later that year, 80 operated and non-operated wells in 2007 and 64 operated and non-operated wells in 2008.

Gas derived from the Horseshoe Canyon formation is shallow and requires a relatively low capital commitment of approximately $450 thousand to drill, complete and tie in wells. Horseshoe Canyon wells typically payout in three to five years with an average rate per well of 100 mcf per day which has been an attractive investment.

The Mannville zone is present in Pengrowth’s Fenn Big Valley acreage at a depth of approximately 1300 metres and in the Twining area at depths of 1400 to 1600 metres. These wells have the potential to produce at rates from 250 mcf per day up to one mmcf per day. The Mannville play is a newer play that has the potential to unlock large gas reserves and add significant value to Pengrowth.

Pengrowth is targeting 20 operated Horseshoe Canyon and two operated Mannville coal wells for 2009. We also expect 40 to 50 non-operated Horseshoe Canyon CBM wells to be drilled throughout the year.

Proved plus probable CBM reserves totaled 8.3 mmboe at the end of 2008 and production averaged approximately 2,200 boe per day during December 2008.

WHY IS THIS AREA IMPORTANT FOR PENGROWTH?CBM represents a large unconventional natural gas resource and new technologies now allow us to unlock production more efficiently and capitalize on opportunities. The long-life nature of CBM means production is expected to last several decades. With this in mind, Pengrowth has acquired and holds rights to land around key areas where CBM drilling is taking place and expects to utilize these rights to increase reserves and production in coming years.

In addition to continued drilling of new lands, potential exists to increase the number of wells on our existing lands. Our current Horseshoe Canyon drilling program uses a four-well per section model. The team is looking into moving to an eight-well per section model which would dramatically increase reserves and production.

CBM is a prime example of how Pengrowth is able to develop a purchased resource to generate additional value for unitholders. Pengrowth started to develop CBM in partnership with other operators. Learning from these partnerships while building our own team, has allowed us to develop a strong knowledge base able to generate significant reserves, increase production and add value for Pengrowth unitholders.

JUN

E 05

SEPT 05

MA

R 06

SEPT 06

MA

R 07

SEPT 07

MA

R 08

SEPT 08

DEC

05

JUN

E 06

DEC

06

JUN

E 07

DEC

07

JUN

E 08

DEC

08

0

4500

9000

13500

18000

OPERATED AND PARTNER OPERATED CBM PRODUCTION

OPERATED MONTH AVERAGE (MCF/D)NON-OPERATED MONTH AVERAGE (MCF/D)

PENGROWTH 2008 | SHALLOW & UNCONVENTIONAL GAS 31


KEG RIVER PLATFORM

DEVONIANUNCONVENTIONAL

SHALE

DEVONIANUNCONVENTIONAL

SHALE

NORTHApacheOotla

Apache& Nexen

Ootla

NexenDilly

Pengrowth LandsEnCanaTwo Mile Lake

South KomieSOUTH

MID

-DEV

ON

IAN

SEC

TIO

N

SHALE ZONESTHICKENING TOSOUTH UNDER

PGF LANDS

THE FACTS - HORN RIVER BASIN SHALE GAS

WHAT IS THE HISTORY OF PENGROWTH’S SHALE GAS DEVELOPMENT IN THE HORN RIVER BASIN AREA?Shale gas comes from rocks that have historically been considered source rocks for oil and gas bearing formations. When organic material is deposited along with basinal muds, and exposed to high pressures and temperatures during deposition and burial, it is transformed into shale containing natural gas.

Although shale gas development is relatively new in the WCSB, it has become an increasingly important resource in the United States with current production estimated at over four bcf per day. Gas shales are attracting an increasing amount of attention from Canadian exploration companies, and the trend is expected to increase with significant hydrocarbon volume stored within gas shales in Canada. Recent resource estimates by the Gas Technology Institute of total gas-in-place within the shale formations of the WCSB total over one thousand tcf.

One of the most promising shale gas plays in Canada is in the Devonian aged Horn River Basin in northeastern British Columbia. Pengrowth has recently acquired 63,490 gross acres that are prospective for shale gas. Of this land base, approximately 33,740 acres are held at 100 percent working interest with the remaining 29,750 acres held at a 40 percent working interest.

Recent estimates put the total amount of gas in the Horn River Basin at 250 to 300 tcf. With a 20 percent recovery factor, this means that there is an estimated 60 tcf of recoverable gas located in the basin. Estimates of total gas and recovery factors are continually being modified as the play becomes more developed. The shale in the Horn River Basin was first proven productive by EOG Resources in early 2007 and has subsequently been actively drilled

by companies such as EnCana, Apache, Nexen, Devon, Quicksilver, Imperial Oil and Petro-Canada. Early results from the Horn River Basin indicate that the Devonian shales may be capable of producing significant quantities of natural gas. Some early wells have tested at rates ranging from five to eight mmcf per day. .

WHAT DO THE CURRENT OPERATIONS LOOK LIKE?Pengrowth’s current holdings are in the Gunnel Creek area of the basin. In January 2009, the first vertical test well was drilled and will create important information on the organic content, gas composition and gas-in-place estimates. Well costs could be up to $10 million per well and production rates are estimated to range between six to eight mmcf per day. Pengrowth is developing a strategy for evaluating and developing this enormous gas resource in order to provide a new core area for long term cash flow to the Trust.

WHY IS THIS AREA IMPORTANT FOR PENGROWTH?Unconventional reservoirs may produce for 30 years and potentially longer. Compared to conventional reservoirs, with an average lifespan of 10 to 15 years, unconventional gas recovery factors have the capacity to increase over time. Operational efficiencies and the advancement of new technologies over time will reduce costs and increase recoveries. For example, from 2000 to 2003, improved technologies in multi-stage fracing and horizontal drilling increased the gas production in the Barnett Shales in Texas from 50 mmcf per day to 560 mmcf per day.

The Horn River Basin provides the opportunity for Pengrowth to be at the leading edge of the development of new technologies and development strategies. Our newly acquired land provides the opportunity to organically develop a new core area, thus targeting long life reserves.

32 OFFSHORE GAS | PENGROWTH 2008

SOEP encompasses the North Triumph, Venture, Thebaud, South Venture and Alma fields located off the east coast of Nova Scotia. SOEP provides geographic diversification within our property portfolio and provides Pengrowth with direct exposure to the premium northeastern United States gas markets.

OFFSHORE GAS



OFFSHORE GAS Sable Offshore Energy Project 9,213 2.8% 3.7 184.0 3.3% 0 34.8 1,693 7,485 1.4Total 9,213 2.8% 3.7 184.0 3.3% 0 34.8 1,693 7,485 1.4



BC

ABSK

NSHALIFAXHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN


EDMONTON

OFFSHORE GAS

Sable OffshoreEnergy Program

PENGROWTH 2008 | OFFSHORE GAS 33

OFFSHORE GAS

THE FACTS - SABLE OFFSHORE ENERGY PROJECT (SOEP)

WHAT IS THE HISTORY OF PENGROWTH’S INVOLVEMENT IN SOEP? The SOEP fields were discovered in the 1970s and are located 225 kilometres off the east coast of Nova Scotia on the Scotian Shelf. The Sable offshore area contains one of the largest natural gas basins in eastern Canada.

Development of the North Triumph, Venture and Thebaud fields, started in the mid-1990s and gas production began flowing on December 31, 1999. The Alma and South Venture fields began producing in 2003 and 2004, respectively. The five producing fields are connected to two onshore processing facilities; the Goldboro Gas Plant and the Point Tupper Fractionation Plant. Compression was installed in 2006 to allow the SOEP fields to be drawn down to much lower pressures, allowing for additional gas recovery at higher production rates.

A maturing and competitive WCSB was one reason Pengrowth decided in 2000 to consider other locations for potential investment, including Canada’s east coast. The initiative resulted in Pengrowth acquiring an 8.4 percent working interest in SOEP reserves from the Nova Scotia government’s Crown Corporation in June of 2001. In 2003, the offshore infrastructure assets were acquired from Emera Offshore Energy and the onshore facilities were purchased from the other SOEP owners. Pengrowth currently holds an undivided 8.4 percent working interest in SOEP.

The SOEP fields originally contained over two tcf of gas reserves and more than 60 mmbbls of NGL reserves.

WHAT DO THE CURRENT OPERATIONS LOOK LIKE?Net daily production to Pengrowth is currently approximately 7,500 boe per day and is comprised of about 80 percent natural gas and 20 percent NGLs. Raw gas is delivered to the Goldboro, Nova Scotia onshore facility where the liquids are extracted and sent to the Point Tupper fractionation plant for processing and separation.

Sales gas is transported to market via the Maritimes and North East Pipeline through Nova Scotia and New Brunswick and into the northeastern United States. Pengrowth has a sales contract with a power plant customer in New Brunswick and sells the remainder of the gas on the spot market.

After fractionation at Point Tupper, condensates are shipped by tanker to North American refineries. Condensate shipments occur approximately every two months. Other liquids, such as propane and butane, are shipped by both truck and rail.

Ongoing computer field modeling identifies the best methods of enhancing gas recovery. Well workovers are scheduled based on production decline curves to ensure maximum output. The original North Triumph water handling system was rebuilt in 2008 in anticipation of water from the North Triumph wells. The major capital project for 2009 will be the drilling of a fourth well in the Alma field in June.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?SOEP is an excellent example of Pengrowth’s forward thinking and leadership in the energy trust sector. We were the first Trust to purchase an offshore asset in Canada. Currently, SOEP represents a core asset for Pengrowth and provides stable production that garners a premium price in United States northeast markets.

Other oil and gas companies flank Pengrowth’s offshore activity in the area. EnCana’s Deep Panuke project is now underway, having received regulatory approval in 2007. Plans are to drill at SOEP in 2009, while an offshore drilling rig is in the area for the Deep Panuke project. This additional well at SOEP will add to current production levels and extend the ultimate life of the field.

Pengrowth also owns a number of Significant Discovery Licenses (SDLs) along with ExxonMobil and Shell. At the time of discovery, these fields were too small to develop as stand alone projects. Once existing SOEP reserves begin to decline and our facilities have the capacity to process other reserves, the SDLs will be considered for development. With additional SOEP drilling and potential SDL development, Pengrowth is working hard to enhance unitholder value by producing stable production of premium priced natural gas for many years to come.

34 OILSANDS | PENGROWTH 2008

Pengrowth currently holds one major oil sands asset; Lindbergh. Although not currently producing, Lindbergh represents a significant, long-term opportunity for Pengrowth. This asset is currently under evaluation and a pilot SAGD project is expected to commence in 2012 with commercial production planned for 2016. Using current estimated recovery modeling, the future of Lindbergh could equal approximately 40 percent of Pengrowth’s current proved and probable reserves.

OIL SANDS



OIL SANDS Lindbergh 6,345 2.0% - 4.6 0.1% 0 0.0 0 0 20.0Total 6,345 2.0% - 4.6 0.1% 0 0.0 0 0 20.0



BC

ABSK

NSHALIFAX

PRINCE ALBERT

SASKATOON

REGINAMEDICINE HAT

LETHBRIDGE

CALGARY

FORTMCMURRAY

GRANDEPRAIRIE

FORTST. JOHN


EDMONTON

OIL SANDS

Lindbergh

PENGROWTH 2008 | OILSANDS 35

OIL SANDS

THE FACTS - LINDBERGH

WHAT IS THE HISTORY OF PENGROWTH’S LINDBERGH ASSETS?Pengrowth’s entry into the oil sands resulted from the 2004 acquisition of 100 percent working interest in the Lindbergh property from Murphy Oil.

Lindbergh is located in the southern portion of the Cold Lake oil sands area where there is an estimated 70 billion bbls of OOIP. Thermal in-situ development is used to produce heavy oil from deep reservoirs like Lindbergh. Using SAGD technology, horizontal well pairs are drilled and steam is injected to heat the immobile heavy oil, allowing it to flow through the reservoir to the wellbore.

The Lindbergh lease holds 1.7 billion bbls of OOIP. Within the anticipated SAGD development area we estimate reserves of about 140 mmbbls. The oil is less viscous than the typical SAGD reservoir and the formation is of very high quality. The 500 metre depth to the reservoir allows a relatively high steam injection pressure, which translates to higher temperature, and more energy transfer to the heavy oil. The high quality homogenous rock and viscosity of the oil is predicted to yield comparatively high oil recovery rates. There is a thick cap rock above the reservoir providing an excellent seal to contain the steam injection into the formation.

Pengrowth filed an application with the ERCB and Alberta Environment for a pilot scale SAGD feasibility project at the Lindbergh property in April of 2008.

WHAT DO THE OPERATIONS LOOK LIKE?Initial scoping assessments were conducted during 2006, followed by more detailed work to review the feasibility of various development schemes and to propose a pilot project in early 2007.

Although the project presents large challenges, technology and expertise have continued to advance significantly over the past 10 to 15 years. The current commodity environment of low oil prices represents a challenge in funding the pilot project, however, progressing the pilot and further delineation of the resource through stratigraphic wells and 3D seismic surveys are important to ensure the commercial project is ready to move forward once commodity prices improve.

While capital intensive, the Lindbergh project will deliver strong long-term returns. Pengrowth plans to reuse a number of the existing facilities and vessels which will save an estimated $15 to $20 million for the pilot project and subsequent commercial project phases.

Further physical work at the plant or pad site will not occur until regulatory approval is granted and is expected late in 2009. Once regulatory and internal approvals are in place, the Lindbergh team is planning to execute ground work on the facility drilling pad construction, and drilling of the well pairs. It is estimated that the construction and drilling phases of the project will take approximately one year.

The time from steam introduction to first oil production will depend on the horizontal well warm up cycle which could take one to three months before full steam injection can occur. Production levels are projected to increase over time to the maximum allowable rate of 2,500 boe per day.

WHY IS THIS AREA IMPORTANT TO PENGROWTH?Projects similar to the Lindbergh oil sands project have been successfully constructed and operated in the Cold Lake and Bonnyville areas, which significantly reduce the risk previously associated with SAGD development. Significant Lindbergh oil sands reserves and the inherent long-life nature of the project further enhance Pengrowth’s ability to diversify its asset base. Using current estimated recovery modeling, the future of Lindbergh may be equivalent to approximately 40 percent of Pengrowth’s current proved plus probable reserves.

Finding and development costs are relatively low and forecast long-term strong oil prices have encouraged the feasibility of developing this property. Commercial production potential is currently estimated to be 10,000 boe per day for greater than 25 years into the future.

Commercial phases are being assessed in parallel with pilot design. An accelerated commercial phase could see production commencing in approximately 2016.

OPERATIONSOPERATIONAL STATISTICAL REVIEW

36 OPERATIONAL STATISTICAL REVIEW | PENGROWTH 2008

PENGROWTH 2008 | OPERATIONAL STATISTICAL REVIEW 37

OPERATIONAL STATISTICAL REVIEWRESERVESBased on an independent engineering evaluation conducted by GLJ effective December 31, 2008 and prepared in accordance with NI 51-101, Pengrowth’s proved plus probable reserves were 323.5 mmboe. This represents a 112 percent replacement of proved plus probable reserves during 2008 through the addition of 23.9 mmboe resulting from drilling activity, improved recovery applications and technical revisions, and the acquisition of 9.7 mmboe, net of dispositions, offset by 30.0 mmboe of production.

Proved producing reserves are estimated at 200.6 mmboe; these reserves represent approximately 85 percent of the total proved reserves of 235.2 mmboe. The total proved reserves account for 73 percent of the proved plus probable reserves. These percentages compare closely to 84 percent and 75 percent, respectively for 2007.

Using a 10 percent discount factor and GLJ January 1, 2009 pricing, the proved producing reserves account for 71 percent of the proved plus probable before tax value while the total proved reserves account for 79 percent of the proved plus probable before tax value. Using a 6:1 boe conversion rate for natural gas, approximately 37 percent of Pengrowth’s proved plus probable reserves are light/medium crude oil, nine percent are heavy oil, 10 percent are NGLs, 41 percent are natural gas and three percent are CBM.

Although focused in strategic core areas, Pengrowth is a geographically diversified energy trust with properties located across Canada in the provinces of British Columbia, Alberta, Saskatchewan and offshore Nova Scotia. On a proved plus probable reserve basis, the Alberta, British Columbia, Saskatchewan and offshore Nova Scotia holdings account for 82 percent, five percent, 10 percent and three percent, respectively of reserves reported by GLJ.

RESERVES SUMMARY 2008Company Interest GLJ January 1, 2009 forecast prices and costs

Light & medium Heavy oil NGLs Natural gas Oil equivalent Oil equivalent crude oil (mbbl) (mbbl) (mbbl) (bcf) 2008 (mboe) 2007 (mboe)

Proved producing 72,564 14,453 22,009 549.3 200,580 202,898Proved developed non-producing 821 148 415 21.7 5,004 4,997Proved undeveloped 17,030 1,676 1,120 58.9 29,640 33,275Total proved 90,415 16,277 23,543 629.9 235,224 241,169Total proved plus probable 121,289 27,728 32,442 852.0 323,463 319,921


RESERVE RECONCILIATION Pengrowth added 33.6 mmboe of proved plus probable reserves during 2008, replacing production by 112 percent. Reserve additions amounting to 23.9 mmboe, mainly from drilling and improved recovery projects with some net positive technical revisions, accounted for approximately 71 percent of the increase. Most significant of these were the improved recovery additions for the proposed Lindbergh thermal pilot project, drilling extensions at Carson Creek and Fenn Big Valley and infill drilling and improved recovery at Weyburn and Deer Mountain. The balance of the additions, totaling 9.7 mmboe, resulted from acquisitions, net of some minor dispositions. The acquisitions were aimed at increasing Pengrowth’s ownership in existing core areas. The largest was at Harmattan while others of significance were at Swan Hills and Carson Creek. Production during 2008 amounted to 30.0 mmboe.


OPERATIONAL STATISTICAL REVIEWRESERVES RECONCILIATION 2008Company Interest GLJ January 1, 2009 forecast prices and costs

Light & medium Heavy oil NGLs Natural gas Oil equivalent crude oil (mbbl) (mbbl) (mbbl) (bcf) (mboe)

TOTAL PROVED December 31, 2007 92,977 16,906 21,786 657.0 241,169 Extensions 619 199 796 12.5 3,689 Infill Drilling 1,264 260 103 8.9 3,109 Improved Recovery 1,314 0 93 0.3 1,464 Technical Revisions 1,989 1,885 1,903 20.8 9,244 Discoveries 17 0 0 0.6 120 Acquisitions 1,182 0 2,282 19.2 6,661 Dispositions (11) 0 (10) (1.2) (224)Production (8,936) (2,973) (3,409) (88.1) (30,009)December 31, 2008 90,415 16,277 23,543 629.9 235,224 PROVED PLUS PROBABLE December 31, 2007 124,188 21,792 28,994 869.7 319,921 Extensions 1,215 247 1,589 28.3 7,762 Infill Drilling 1,594 566 285 10.1 4,125 Improved Recovery 2,009 6,389 101 0.2 8,539 Technical Revisions (363) 1,707 1,364 3.3 3,264 Discoveries 20 0 0 0.9 173 Acquisitions 1,576 0 3,533 29.3 9,987 Dispositions (14) 0 (15) (1.6) (299)Production (8,936) (2,973) (3,409) (88.1) (30,009)December 31, 2008 121,289 27,728 32,442 852.0 323,463

* Table may have rounding differences.

NET PRESENT VALUE SUMMARY 2008*At GLJ January 1, 2009 forecasted prices and costs

Before Income Taxes

Undiscounted Discounted Discounted Discounted Discounted ($ millions) at 5% at 10% at 15% at 20%

Proved Reserves Proved Developed Producing 6,947 5,046 3,982 3,308 2,843Proved Developed Non-Producing 162 103 75 57 46Proved Undeveloped 1,097 611 368 229 142Total Proved Reserves 8,206 5,761 4,425 3,594 3,030Probable Reserves 3,703 1,899 1,157 779 558Total Proved Plus Probable Reserves 11,909 7,660 5,582 4,373 3,589

* Prior to provision for interest, debt service charges and general and administrative expenses.


OPERATIONAL STATISTICAL REVIEWGLJ’s January 1, 2009 forecast prices are shown below:

Edmonton light Natural gas WTI crude oil crude oil at AECO Year (U.S. $/bbl) (Cdn $/bbl) (Cdn $/mmbtu)

2009 57.50 68.61 7.582010 68.00 78.94 7.942011 74.00 83.54 8.342012 85.00 90.92 8.702013 92.01 95.91 8.952014 93.85 97.84 9.142015 95.73 99.82 9.342016 97.64 101.83 9.542017 99.59 103.89 9.752018 101.59 105.99 9.95Thereafter +2%/yr +2%/yr +2%/yr

BEFORE TAX NET ASSET VALUE AT DECEMBER 31, 2008In the following table, Pengrowth’s net asset value is measured with reference to the ten percent discount present value of future net cash flows from reserves, as estimated by GLJ and prior to consideration of income tax. The calculation is shown using the GLJ escalated price forecast.

GLJ Escalated $Thousands, except per unit amounts Price Forecast

Value of Proved plus Probable Reserves discounted at 10% 5,581,528 Undeveloped lands (1) 209,701 Working capital deficit (2) (68,188)Reclamation funds (3) 27,219 Long-term debt (3) (1,697,293)Fair value of commodity contracts (4) 164,692 Fair value of FX contracts (4) (18,727)Other liabilities (3)(5) (77,694)Asset retirement obligations (6) (195,622)Net Asset Value $ 3,925,616 Units Outstanding (000’s) 256,076 NAV/Unit $ 15.33

(1) Pengrowth’s internal estimate

(2) Excludes distributions payable, current portion of risk management contracts and future income taxes

(3) Represents the estimated fair value.

(4) Represents the total fair value of risk management contracts on Pengrowth’s year end financial statements

(5) Other liabilities include convertible debt and non-current contract liabilities

(6) The asset retirement obligation is based on Pengrowth’s estimate of future site restoration and abandonment liabilities except that it is discounted at ten percent less that portion of these costs that are included in the value of proved plus probable reserves

RESERVE LIFE INDEXPengrowth’s proved reserve life index decreased to 8.0 years from 8.2 years last year. The proved plus probable reserve life index of 10.6 years can be compared to last year’s value of 10.4 years. The changes are mainly due to Pengrowth’s ongoing development efforts which are aimed at increasing reserves and production and extending the life of its fields.

Reserve Life Index 2008 2007 2006

Total proved 8.0 8.2 8.0Proved plus probable 10.6 10.4 10.1


OPERATIONAL STATISTICAL REVIEWFINDING, DEVELOPMENT AND ACQUISITION COSTS Finding and deVelopMent CoStS During 2008, Pengrowth spent $388.3 million on development and optimization activities, which added 17.6 mmboe of proved and 23.9 mmboe of proved plus probable reserves including revisions. The largest proved plus probable additions were for the proposed Lindbergh thermal pilot project, drilling extensions at Carson Creek, Fenn Big Valley and Harmattan, infill drilling and improved recovery at Weyburn and Deer Mountain and infill drilling at Monogram, as well as performance related positive technical revisions at Judy Creek, Quirk Creek, Carson Creek, Jenner and Tangleflags.

In total, Pengrowth participated in drilling 507 gross wells (217 net wells) during 2008 with a 96 percent success rate.

aQuiSitionS and diSpoSitionSPengrowth made strategic acquisitions during 2008 aimed at increasing ownership in existing core areas in an ongoing effort to high-grade its portfolio. Pengrowth spent $148.2 million on acquisitions adding 6.7 mmboe of proved and 10.0 mmboe of proved plus probable reserves. Total proceeds from minor dispositions of small, isolated properties and undeveloped acreage during 2008 were $17.4 million, resulting in a decrease of 0.2 mmboe proved and 0.3 mmboe proved plus probable reserves.

In September 2008, Pengrowth closed the acquisition of Accrete Energy Inc. Along with another complementary small asset acquisition, the Accrete acquisition expanded Pengrowth’s operations in the southern Alberta Harmattan area. Pengrowth also increased its interests in the core Judy Creek area by acquiring additional ownership in existing assets at Carson Creek and Swan Hills.

Finding, deVelopMent and aCQuiSition CoStSPengrowth’s finding, development and acquisition costs are summarized below. These are determined separately for exploration and development activity and acquisition and disposition transactions, with and without change in future development costs. Future development costs reflect the amount of estimated capital that will be required to bring non-producing, undeveloped or probable reserves on stream. These forecasts of future development costs will change with time due to ongoing development activity, inflationary changes in capital costs and acquisition or disposition of assets.

Proved plus 2008 Proved Probable

FD&A COSTS EXCLUDING CHANGES IN FUTURE DEVELOPMENT CAPITAL Exploration and Development Capital Expenditures - $thousands $ 388,300 $ 388,300Exploration and Development Reserve Additions including Revisions - mboe 17,627 23,863Finding and Development Cost - $/boe $ 22.03 $ 16.27

Net Acquisition Capital - $thousands $ 130,795 $ 130,795Net Acquisition Reserve Additions - mboe 6,437 9,688Net Acquisition Cost - $/boe $ 20.32 $ 13.50

Total Capital Expenditures including Net Acquisitions - $thousands $ 519,095 $ 519,095Reserve Additions including Net Acquisitions - mboe 24,064 33,551Finding Development and Acquisition Cost - $/boe $ 21.57 $ 15.47


OPERATIONAL STATISTICAL REVIEW Proved plus 2008 Proved Probable

FD&A COSTS INCLUDING FUTURE DEVELOPMENT CAPITAL Exploration and Development Capital Expenditures - $thousands $ 388,300 $ 388,300Exploration and Development Change in FDC - $thousands $ 12,000 $ 180,000Exploration and Development Capital including Change in FDC - $thousands $ 400,300 $ 568,300Exploration and Development Reserve Additions including Revisions - mboe 17,627 23,863Finding and Development Cost - $/boe $ 22.71 $ 23.82

Net Acquisition Capital - $thousands $ 130,795 $ 130,795Net Acquisition FDC - $thousands $ 1,000 $ 10,000Net Acquisition Capital including Change in FDC - $thousands $ 131,795 $ 140,795Net Acquisition Reserve Additions - mboe 6,437 9,688Net Acquisition Cost - $/boe $ 20.47 $ 14.53

Total Capital Expenditures including Net Acquisitions - $thousands $ 519,095 $ 519,095Total Change in FDC - $thousands $ 13,000 $ 190,000Total Capital including Change in FDC - $thousands $ 532,095 $ 709,095Reserve Additions including Net Acquisitions - mboe 24,064 33,551Finding Development and Acquisition Cost including FDC - $/boe $ 22.11 $ 21.14

TOTAL FUTURE NET REVENUE (UNDISCOUNTED)GLJ January 1, 2009 forecast pricing and costs

Revenue Revenue Operating Development Abandonment Before Income After ($millions) Revenue Royalties Costs Costs Costs(1) Income Tax Tax(2) Income TaxProved producing 14,466 2,919 4,203 214 182 6,947 1,053 5,894 Proved developed non-producing 328 80 62 21 3 162 64 98 Proved undeveloped 2,721 630 636 343 14 1,097 666 431 Total Proved 17,515 3,630 4,901 579 200 8,206 1,783 6,423 Total Probable 7,567 1,640 1,769 430 26 3,703 1,489 2,214 Proved Plus Probable 25,082 5,269 6,670 1,009 225 11,909 3,272 8,637

(1) Well abandonment costs as reported by GLJ

(2) Income tax as estimated by Pengrowth

TAX POOLSOn a combined basis, Pengrowth’s tax pools total approximately $3.1 billion. The table below provides an estimate of tax pools at both the trust and the operating entity level as at December 31, 2008. These estimates are based upon forecasts prepared internally and have not been verified by any provincial or federal taxing authority. They have been included for information purposes only.

($ millions)

Trust Tax Pools $ 1,308 OPERATING ENTITY TAX POOLS Canadian Oil and Gas Property Expense (COGPE) 27Canadian Development Expense (CDE) 314Undepreciated Capital Cost (UCC) 682Canadian Exploration Expense (CEE) 23Other (Injectants, etc.) 702Total Tax Pools $ 3,056

OPERATIONSCOMMUNITY INITIATIVES

42 COMMUNITY INITIATIVES | PENGROWTH 2008

PENGROWTH 2008 | COMMUNITY INITIATIVES 43

COMMUNITY INITIATIVES

INVESTING IN COMMUNITY ENERGYPengrowth delivers outstanding unitholder value by making strategic oil and natural gas investments, improving the quality of maturing assets and enabling our team members to find new ways of improving performance through creativity and ingenuity. Pengrowth also delivers unitholder value by investing in the communities in which we operate. In 2008, Pengrowth’s community improvement efforts were further enhanced with the introduction of our company’s Community Investment Guidelines. These guidelines strengthen relationships with key stakeholders and contribute to communities impacted by our operations.

Today, Pengrowth provides funding for community partners in key areas that include education, health, leadership development, significant community need, and youth sport organizations. It is our goal to partner with organizations that develop life-long skills that include community and character development and leadership training.

Pengrowth Management Limited and Pengrowth Corporation are proud of the partnerships and initiatives listed below:

Calgary HealtH truStIn 2008, Pengrowth and the Calgary Health Trust raised more than $1.1 million for the Pengrowth Rockyview Invitational Golf Tournament – one of Canada’s most successful fundraising golf events. Since 2006, funds raised have contributed to the purchase of advanced technology for the Southern Alberta Urology Centre of Excellence. In the past 17 years, Pengrowth has helped raise more than $7 million for the express purpose of helping the Rockyview General Hospital purchase leading edge healthcare equipment.

induStry SpotligHtIndustry Spotlight is an innovative and interactive tool designed to deal with growing skill shortages in critical job areas that include construction and natural resources. Industry Spotlight helps stimulate youth interest in choosing a career in these industries. It has provided Pengrowth with the ability to provide insight into the company’s operations and opportunities as well as to create ongoing awareness about the entire oil and natural gas industry.

kidS CanCer Care Foundation oF alberta (kCCFa)In 2008, Pengrowth continued to support the KCCFA, contributing to the one of the largest childhood cancer research initiatives in the country. The Foundation now offers more than 20 year-round and summer camp and community outreach programs to Alberta families. KCCFA is one of the few charities in North America dedicated to supporting the entire continuum of childhood cancer, fighting the disease with laughter at camp, the best hospital treatments available, innovative science research and post-secondary education scholarships. All of these components work in unison to provide brighter futures for sick kids.

In 2008, Pengrowth and the Calgary Health Trust raised more than $1.1 million for the Pengrowth Rockyview Invitational Golf Tournament – one of Canada’s most successful fundraising golf events. In the past 17 years, Pengrowth has helped raise more than $7 million for the express purpose of helping the Rockyview General Hospital purchase leading edge healthcare equipment.

44 COMMUNITY INITIATIVES | PENGROWTH 2008


pengroWtH noVa SCotia energy SCHolarSHip prograMThe Pengrowth Nova Scotia Energy Scholarship Program provides resources to ensure the success of future oil and gas industry leaders. Established in March 2005, the $2 million program is a partnership between Pengrowth ($1.5 million) and the Province of Nova Scotia ($500,000). Since its inception, the scholarship has provided more than $500,000 to 77 students in the form of university and trade scholarships, innovation grants and funding of the Professorship in Petroleum Financial Management at Saint Mary’s University.

Canadian openPengrowth has sponsored the Canadian Open for the past 10 years and is proud to contribute to this national event that represents energy, excellence and leadership. The Canadian Open is ranked among one of the world’s oldest and most respected golf championship traditions.

allan and Jean Millar CentrePengrowth has operated in the Whitecourt and Swan Hills, Alberta regions since 1997 after acquiring the Judy Creek properties from Imperial Oil. In addition to its business operations, Pengrowth’s strong commitment to supporting important community projects helps build a better quality of life in the areas in which we operate. In 2008, our company marked the 10th anniversary of the Judy Creek acquisition and, in partnership with Whitecourt’s Allan and Jean Millar Centre, donated a multi-media scoreclock to help ensure the ongoing success of community sports tournaments and athletic programs.

pengroWtH CareS

“Pengrowth celebrates the valuable contributions of team members in the communities they live and work in. Having a program like “Pengrowth Cares” available to team members clearly establishes Pengrowth’s commitment to promoting community spirit and the importance of giving back to those less fortunate. Pengrowth matched my donation to the Canadian Cancer Society ensuring my contribution had an even greater impact in funding cancer research.”

Katie d’entremont, Surface Land coordinator, Pengrowth corPoration

allan and Jean Millar CentreWHiteCourt alberta

“By demonstrating their commitment as a community partner, Pengrowth has contributed to the Allan and Jean Millar Centre in a significant and meaningful way. The addition of a new scoreclock supports the centre’s athletic programs and promotes community spirit,”

racheL SoderquiSt, recreation manager, town of whitecourt

PENGROWTH 2008 | COMMUNITY INITIATIVES 45


pengroWtH CareS In 2008, our company established Pengrowth Cares, an internal program aimed at helping our employees help the community through hands-on volunteer efforts and charity donation matching. The goal of Pengrowth Cares is to help create stronger communities and a true sense of pride by doubling team members’ charity donations and/or volunteer hours served to a total of $200 per team member per year.

pengroWtH SaddledoMeSince 2000, Pengrowth Management Limited has been sponsoring Calgary’s leading sports and entertainment facility – the Pengrowth Saddledome, home of the Calgary Flames, the Calgary Hitmen, and the Calgary Roughnecks. The Saddledome sponsorship has helped Pengrowth provide unique and ongoing opportunities for minor sports organizations and charities to attend numerous events held at this world class arena.

aboriginal relationSPengrowth recognizes that our development initiatives, goals and operational plans can impact Aboriginal communities. In 2008, Pengrowth established a set of Aboriginal Relations Guidelines as part of a consistent approach when considering development plans and operational activities that impact Aboriginal groups.

An internal process led by Pengrowth Public and Government Affairs has been established to effectively manage Aboriginal sponsorship and related community donation requests that are received in a wide array of styles and contain varied amounts of information. These guidelines also serve as a frame of reference for interested parties when clarifying our company’s commitment to issues that directly involve Aboriginal communities.

“Industry Spotlight is designed to engage, inspire and inform young people about the exciting career opportunities that exist in Alberta. Our product and initiative would not be possible if it was not for the foresight and incredible commitment companies like Pengrowth demonstrate in their industry and wider community. Pengrowth has gone the extra mile to ensure our product and product launch was a huge success. We look forward to a long term working relationship and are proud to call Pengrowth a sponsor.”

andrew ramSay, founder, induStry SPotLight foundation canada

OPERATIONS

46 CORPORATE GOVERNANCE | PENGROWTH 2008

CORPORATE GOVERNANCE

PENGROWTH CORPORATION BOARD OF DIRECTORSJaMeS S. kinnear, CHairMan and CHieF exeCutiVe oFFiCer, b.SC., C.F.a.Mr. Kinnear graduated from the University of Toronto in 1969 with a B.Sc. degree and received a Certified Financial Advisor designation in 1979. In 1982 he founded Pengrowth Management Limited and in 1988 created Pengrowth Gas Income Fund, the forerunner to Pengrowth Energy Trust. Prior to 1982, he worked in the securities sector in Montreal, Toronto and London, England. Mr. Kinnear was awarded the Ernst and Young, Prairies Region Entrepreneur of the Year award for 2001, and the Alberta Venture Businessman of the Year award in 2008. Mr. Kinnear currently serves on a number of boards and committees, including The Banff Centre Board of Governors, Canadian Council of Chief Executives, Canadian Olympic Foundation, National Arts Centre Foundation Board, Pengrowth Rockyview General Hospital Invitational Golf Tournament and the Rockyview General Hospital Development Council.

derek eVanS, preSident and CHieF operating oFFiCer, b.SC., p. eng.Derek Evans joined the Board in May 2009. Most recently he served as President, CEO and director of Focus Energy Trust from May 2002 until March 2008. Mr. Evans has over 26 years of experience in the energy sector in Western Canada having spent the majority of his career with Renaissance Energy Limited in a variety of operational and management positions the last being Senior Vice President of Operations. Mr. Evans holds a Bachelor of Science degree in Mining Engineering from Queen’s University and is a registered Professional Engineer in the province of Alberta. At present Mr. Evans serves as a director of Franco-Nevada Corporation, a Toronto Stock Exchange listed issuer, as well as a private oil and gas company, and one not for profit organization. He is also a member of the Institute of Corporate Directors.

tHoMaS a. CuMMing, b.a.SC., p. eng.Thomas Cumming joined the Corporation’s board of directors in April 2000. He held the position of President and Chief Executive Officer 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 is currently Chairman of Alberta’s Electricity Balancing Pool and serves as a Director of the Alberta Capital Market Foundation. He is also a past president of the Calgary Chamber of Commerce. Mr. Cumming received his Bachelor of Applied Science in Engineering and Business at the University of Toronto.

Wayne k. Foo, b.SC., M.SC.Wayne Foo joined the Corporation’s board of directors in June 2006. He is a geologist with extensive oil and gas industry experience and he received a Bachelor of Science in Geology from the University of Calgary in 1977 and a Masters of Science in Geology from Queen’s University in 1979. Mr. Foo has had a varied 27 year career in the energy sector, including exploration and production management with Chevron Corporation; President, Chief Operating Officer and Vice President of Archer Resources Ltd.; and President and Chief Executive Officer of Dominion Energy Canada Ltd. At present, Mr. Foo is President and CEO, and a director of Petro Andina Resources Inc., a TSX listed company.

PENGROWTH 2008 | CORPORATE GOVERNANCE 47

CORPORATE GOVERNANCE

MiCHael S. parrett, b.a. eCon., CaMichael Parrett, appointed to the Corporation’s board of directors in April 2004, has acted as an independent consultant having provided advisory service to various companies in Canada and the United States. Mr. Parrett is Chairman of Gabriel Resources Limited. He was formerly President of Rio Algom Limited and prior to that Chief Financial Officer of Rio Algom and Falconbridge Limited. He has participated as an instructor, panel member and guest speaker at various mining conferences, as well as the Law Society of Upper Canada, the Insurance Institute of Ontario and the Canadian School of Management.

a. terenCe poole, b.CoMM, CaTerry Poole joined the Corporation’s board of directors in April 2005. Mr. Poole received a Bachelor of Commerce degree from Dalhousie University and holds a Chartered Accountant designation. Mr. Poole brings extensive senior financial management, accounting, capital and debt market experience to Pengrowth. Mr. Poole retired from Nova Chemicals Corporation in 2006 where he had held various senior management positions including Executive Vice-President, Corporate Strategy and Development. Mr. Poole currently serves on the board of directors for Methanex Corporation.

d. MiCHael g. SteWart, b.SC., p.eng.Michael Stewart, appointed to the Corporation’s board of directors in October 2006, is a corporate director serving on the boards of directors of TransCanada Corporation, Canadian Energy Services Inc., the general partner of Canadian Energy Services LP, Orleans Energy Ltd. and Northpoint Energy Ltd. Mr. Stewart is a native Albertan and graduated from Queen’s University in Kingston, Ontario in 1973 with a Bachelor of Science degree in Geological Sciences. He is a member of the Institute of Corporate Directors and the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

niCHolaS C.H. VillierS, b.SC., p.eng.Nicholas Villiers joined the Corporation’s board of directors in November 2007. Mr. Villiers retired from the Royal Bank of Canada in May 2002 where he was Vice Chairman of Royal Bank of Canada Europe Ltd. and Managing Director of RBC Capital Markets (previously RBC Dominion Securities) with responsibility for international mergers and acquisitions and for senior client relationships within the International Investment Banking Group. During his 19-year career with the RBC Group, Mr. Villiers developed an extensive knowledge of a range of industry sectors and established relationships with senior management, major shareholders and international investors worldwide.

JoHn b. ZaoZirny, Q.C., b.CoMM., ll.b., ll.M.John Zaozirny joined the Corporation’s board of directors in 1988. Mr. Zaozirny is Vice Chairman of Canaccord Capital Corporation. He was Minister of Energy and Natural Resources for the Province of Alberta from 1982 to 1986. Mr. Zaozirny currently serves on the boards of numerous Canadian and international corporations. He is also a Governor of the Business Council of British Columbia. Mr. Zaozirny acts as Pengrowth’s Vice Chairman and Lead Independent Director.


CORPORATE GOVERNANCEThe Board of directors and senior management consider good corporate governance to be central to the effective and efficient operation of Pengrowth Energy Trust and the Corporation.

CORPORATE GOVERNANCEThe Board of directors (“Board”) of Pengrowth Corporation has general authority over the business and affairs of the Corporation and derives its authority in respect to Pengrowth Energy Trust by virtue of the delegation of powers by the Trustee to the Corporation as “Administrator” in accordance with the Trust Indenture.

The Board is responsible for the stewardship and affairs of Pengrowth Energy Trust and the Corporation. The Board has established administrative procedures which prescribe the rules governing the approval of transactions carried out in the course of Pengrowth’s operations, the delegation of authority and the execution of documents on behalf of Pengrowth. The Board reviews and approves various matters including the appointment of corporate officers, as well as the annual capital and operating budgets and authorization of unbudgeted investments and divestitures above a specified dollar threshold. The Board’s expectations of management are communicated directly to management and through committees of the Board. The responsibilities of the Board are set forth in a written mandate of the Board which the Board reviews annually and changes as appropriate.

For complete information on our corporate governance practices, please read our 2009 Management Information Circular. Below is a summary of some of our corporate governance structures and practices:

BOARD OF DIRECTORSThe Board is comprised of nine members, seven of whom are considered independent. Two members are considered related to the Corporation and Pengrowth Energy Trust by virtue of their appointment pursuant to the terms of the Unanimous Shareholder Agreement. The Corporation has appointed a Vice Chairman and Lead Independent Director. An in-camera session chaired by the Vice Chairman and Lead Independent Director is held at the end of each meeting of the Board. The Board has adopted a Corporate Governance Policy to establish guidelines pursuant to which the Board will fulfill its obligations to the Corporation. The Board has adopted a strategic planning process and has approved a strategic plan that will be reviewed and updated on an annual basis. It also reviews and approves the annual budget for the Corporation. The Board currently has the following standing committees:

1. Audit Committee2. Corporate Governance Committee3. Compensation Committee4. Reserves, Operations and Environmental, Health and Safety Committee

Each committee has Terms of Reference or a Charter that sets out its duties and responsibilities. These duties and responsibilities are reviewed annually and any changes are submitted to the Board for approval. Copies of these corporate governance documents are available on our website at www.pengrowth.com. Each committee makes regular reports to the Board of directors. The Board reviews the Corporation’s policies upon the recommendation of the Corporate Governance Committee.

At the organizational meeting following Pengrowth’s Annual Meeting of Unitholders, committee members are appointed or re-appointed based on the needs of Pengrowth and the skills of each director. The Board is responsible for nominating any new directors on the recommendation of the Corporate Governance Committee, and invitations to join the Board are made by the Vice Chairman and Lead Independent Director. Position descriptions are in place for the Chairman of the Board, the Vice Chairman and Lead Independent Director, the chairman of each committee, the Chief Executive Officer and the President and Chief Operating Officer. The Corporation’s code of business conduct and ethics (“the Code”) was updated in 2009 and all directors, officers and employees are required to sign an acknowledgement confirming they have read and understand its contents. There is no retirement policy for the Board.

PENGROWTH 2008 | CORPORATE GOVERNANCE 49

CORPORATE GOVERNANCEAUDIT COMMITTEEThe Audit Committee is comprised of the following three members of the Board, each of whom are considered independent and financially literate for the purposes of applicable United States and Canadian regulatory requirements relating to audit committee composition: Tom Cumming (Chairman), Michael Parrett and Terry Poole. The committee includes at least one person that would be considered an “audit committee financial expert” as defined in the applicable rules of the U.S. Exchange Act of 1934.

The primary purposes of the Audit Committee are to:

• monitortheperformanceoftheCorporation’sinternalauditfunctionandtheintegrityoftheCorporation’sfinancialreporting process and systems of internal controls regarding finance, accounting and legal compliance;

• monitortheindependenceandperformanceoftheCorporation’sexternalauditors;and

• provideanavenueofcommunicationamongtheexternalauditors,theinternalauditors,managementandtheBoard.

The Audit Committee also has the authority to conduct any investigation appropriate to fulfilling its responsibilities and it has direct access to the Corporation’s internal and external auditors. A whistle blower policy has been incorporated into the Code and sets out the procedures for submitting complaints or concerns to the chair of the Audit Committee regarding accounting, internal accounting controls, financial reporting or auditing matters. Members of the Audit Committee meet with the auditor independently from members of management. The Audit Committee also has an in-camera session at the end of each meeting.

CORPORATE GOVERNANCE COMMITTEEThe Corporate Governance Committee is comprised of four members of the Board, each of whom is considered to be independent for the purposes of applicable United States and Canadian regulatory requirements relating to corporate governance committee composition: John Zaozirny (Chairman), Michael Parrett, Wayne Foo and Terry Poole.

The primary functions and purposes of the Corporate Governance Committee are to:

• assisttheBoardincarryingoutitsresponsibilitiesbyreviewingcorporategovernanceandnominationissuesandmakingrecommendations to the Board as appropriate;

• reviewandreporttotheBoardonmattersofcorporategovernanceandtheBoard’scomposition;and

• provideoversightreviewoftheCorporation’ssystemsforachievingcompliancewithlegalandregulatoryrequirements.

The Corporate Governance Committee acknowledges the formal guidelines relating to corporate governance in Canada as provided for by National Policy 58-101 Disclosure of Corporate Governance Practices and National Policy 58-201 Corporate Governance Guidelines as well as the guidelines of the New York Stock Exchange and other regulatory provisions as they pertain to corporate governance matters and the overriding objective of promoting appropriate behaviour with respect to all aspects of Pengrowth’s business.

Responsibilities of the Corporate Governance Committee are set out in its Terms of Reference, including recommending committees of the Board and their composition, reviewing the need for, and the performance and suitability of those committees and making such adjustments as are deemed necessary from time to time, and taking a lead role in monitoring and assessing the effectiveness of the corporate governance structure of Pengrowth.


CORPORATE GOVERNANCEThe Corporate Governance committee annually reviews and recommends to the Board for approval, the compensation paid by the Corporation to the non-executive Directors’. The Corporate Governance Committee is also responsible for making regular assessments of the overall performance, effectiveness and contribution of the Board, the Chairman of the Board, each committee of the Board, each committee chair and each Director and reporting on such assessments to the Board.

The committee reviews policies of the Corporation, such as the Corporate Disclosure Policy, the policy in respect to Insider Trading and Self-Dealing, the Code and the Privacy Policy, on an annual basis and recommends to the Board any necessary changes. In-camera sessions are held at the end of each meeting.

COMPENSATION COMMITTEEThe Compensation Committee is comprised of the following four members of the Board, each of whom is considered to be independent: Michael Parrett (Chairman), Tom Cumming, Michael Stewart and John Zaozirny. The committee’s responsibilities include setting general compensation guidelines for the employees of the Corporation and, recommending for approval by the Board, specific compensation guidelines for senior employees, officers and consultants of the Corporation; in conjunction with the Corporate Governance Committee, overseeing the evaluation of, and reporting to the Board on reviewing and approving all public disclosure on compensation, including a report on executive compensation for inclusion in Pengrowth’s proxy statement and information circular. The committee holds in camera sessions as part of its meetings.

RESERVES, OPERATIONS AND ENVIRONMENTAL, HEALTH AND SAFETY COMMITTEEThe Reserves, Operations and Environmental, Health and Safety Committee is comprised of the following three members of the Board, each of whom is considered to be independent: Wayne Foo (Chairman), Michael Stewart and Tom Cumming. The committee’s responsibilities include:

• overseeingtheoilandnaturalgasreservesevaluationprocessandthepublicdisclosureofreservesdataandrelatedinformation required by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities and Statement of Financial Accounting Standards No. 69 – Disclosures About Oil and Gas Producing Activities;

• reviewingtheoperationsofPengrowth,includingmattersrelatingtoPengrowth’soperatingactivitiesanditsoperatingexpense and capital expenditures budget; and

• assessingenvironmental,healthandsafetyrisksandissuesaffectingPengrowth,includingtheevaluationofPengrowth’sprograms, controls and reporting systems and its compliance with applicable laws, rules and regulations.

OPERATIONSSUMMARY OF TRUST UNIT TRADING DATA

UNIT PRICE TO BOOK VALUE (CDN$/UNIT) BOOK VALUE (C$/UNIT) UNIT PRICE TRADING RANGE (C$/UNIT)

0

10

20

30

0

10

20

30

2000 2001 2002 2003 2004 2005 2006 2007 2008

10.05

9.94

9.71

9.36

9.56

9.23

12.50

11.17

10.43

2008 Price/Book Value Range = 0.8x - 2.0x

TRUST UNIT CLOSING PRICE & HISTORICAL CASH DISTRIBUTION (CDN $)

TRUST UNIT YEAR END CLOSING PRICE (CDN$) CLASS A TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $)CLASS B TRUST UNIT TRADING YEAR END CLOSING PRICE (CDN $) CASH DISTRIBUTION ($ PER TRUST UNIT) (CDN $)

0.0

0.1

0.2

0.3

0.4

0.5

0

6

12

18

24

30

99 00 01 02 03 04 05 06 07 08

UNIT PRICE TO NET ASSET VALUE (CDN$/UNIT) NET ASSET VALUE (C$/UNIT) UNIT PRICE TRADING RANGE (C$/UNIT)

0

10

20

30

0

10

20

30

2000 2001 2002 2003 2004 2005 2006 2007 2008

14.42

11.13

11.21

9.08

11.17

17.73

15.42

16.62

15.33

2008 Price/Net Asset Value Range = 0.6x - 1.4x

High Low Close Volume (000’s) Value ($ millions)

TSX - PGF.UN ($ CDN) 2008 1st quarter 19.82 14.16 19.67 30,755 557.9 2nd quarter 21.56 19.17 20.50 28,004 569.7 3rd quarter 20.55 14.73 15.99 31,735 565.4 4th quarter 15.98 8.55 9.35 35,035 402.7 Year 21.56 8.55 9.35 125,529 2,095.72007 1st quarter 20.85 18.62 19.45 37,742 744.8 2nd quarter 21.04 18.82 20.27 28,348 561.5 3rd quarter 20.70 16.92 18.64 27,970 524.5 4th quarter 18.68 17.00 17.62 23,559 423.1 Year 21.04 16.92 17.62 117,619 2,253.9NYSE - PGH ($ U.S.) 2008 1st quarter 19.47 13.67 19.10 14,293 257.5 2nd quarter 21.90 18.86 20.11 19,425 392.7 3rd quarter 20.20 14.16 14.94 26,815 457.7 4th quarter 15.00 6.84 7.62 41,776 401.2 Year 21.90 6.84 7.62 102,309 1,509.12007 1st quarter 17.96 15.82 16.87 26,633 449.1 2nd quarter 19.84 16.45 19.09 23,668 428.6 3rd quarter 19.85 16.25 18.84 19,284 346.9 4th quarter 19.21 17.30 17.77 13,980 256.4 Year 19.85 15.82 17.77 83,565 1,481.0

PENGROWTH 2008 | SUMMARY OF TRUST UNIT TRADING DATA 51

OPERATIONSHISTORICAL DISTRIBUTIONS

PENGROWTH ANNUAL CASH DISTRIBUTIONSCDN$/UNIT/YEAR

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

CUMULATIVE DISTRIBUTIONS PAID$ MILLIONS

0

1000

2000

3000

4000

5000

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

$3.97 billion paid in total to end of 2008

or $39.66 per trust unit.

HISTORICAL DISTRIBUTIONS

Distribution Date 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994

15-Jan 0.225 0.25 0.25 0.23 0.21 0.20 0.13 0.34 0.25 0.11 0.14 0.15 0.08 0.07 0.0615-Feb 0.225 0.25 0.25 0.23 0.21 0.20 0.13 0.40 0.26 0.13 0.22 0.31 0.13 0.18 0.1015-Mar 0.225 0.25 0.25 0.23 0.21 0.25 0.13 0.43 0.30 0.13 0.11 0.15 0.08 0.07 0.0615-Apr 0.225 0.25 0.25 0.23 0.21 0.25 0.13 0.38 0.29 0.15 0.11 0.22 0.09 0.07 0.0615-May 0.225 0.25 0.25 0.23 0.21 0.25 0.15 0.33 0.32 0.22 0.24 0.24 0.23 0.22 0.1615-Jun 0.225 0.25 0.25 0.23 0.21 0.25 0.21 0.29 0.24 0.16 0.11 0.21 0.20 0.16 0.1315-Jul 0.225 0.25 0.25 0.23 0.21 0.21 0.17 0.26 0.26 0.19 0.11 0.15 0.20 0.08 0.0615-Aug 0.225 0.25 0.25 0.23 0.22 0.21 0.16 0.28 0.30 0.22 0.11 0.15 0.16 0.08 0.0715-Sep 0.225 0.25 0.25 0.23 0.22 0.21 0.15 0.21 0.28 0.21 0.11 0.17 0.10 0.08 0.0715-Oct 0.225 0.225 0.25 0.23 0.22 0.21 0.17 0.21 0.30 0.22 0.11 0.11 0.16 0.14 0.1315-Nov 0.225 0.225 0.25 0.23 0.23 0.21 0.20 0.21 0.38 0.25 0.11 0.11 0.10 0.08 0.0715-Dec 0.225 0.225 0.25 0.25 0.23 0.21 0.20 0.15 0.37 0.23 0.17 0.14 0.14 0.12 0.15Total 2.700 2.925 3.00 2.78 2.59 2.66 1.93 3.49 3.55 2.22 1.65 2.11 1.67 1.35 1.12Cumulative Total 39.66 36.96 34.03 31.03 28.25 25.66 23.00 21.07 17.58 14.03 11.81 10.16 8.05 6.38 5.03

52 HISTORICAL DISTRIBUTIONS | PENGROWTH 2008

HISTORICAL CASH YIELDYIELD BASED ON YEAR-END CLOSING PRICE AND ANNUAL DISTRIBUTIONS

JULY 2004-2006 CALCULATED USING WEIGHTED AVERAGE CLOSING PRICE OF A AND B UNITS

0.05

0.10

0.15

0.20

0.25

0.30

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

11%

9%10%

12%

15%14%

18%

25%

13%

13%12%

11%

15%17%

29%

OPERATIONS

PENGROWTH 2008 | FIVE YEAR REVIEW 53

FIVE YEAR REVIEW

CONSOLIDATED BALANCE SHEETS

(Stated in thousands of dollars) As at December 31 2008 2007 2006 2005 2004

ASSETS Current assets Cash and term deposits - 2,017 - - - Other current assets 320,595 234,099 209,848 127,394 104,667 320,595 236,116 209,848 127,394 104,667 goodwill 660,896 660,598 598,302 182,835 170,619 property, plant and equipment 4,251,381 4,306,682 3,741,602 2,067,988 1,989,288 other long term assets 84,469 30,855 140,377 13,215 11,960 5,317,341 5,234,251 4,690,129 2,391,432 2,276,534 LIABILITIES AND UNITHOLDERS’ EQUITY Current liabilities Bank indebtedness 2,631 - 9,374 14,567 4,214 Other current liabilities 388,123 425,719 361,423 225,032 178,999 390,754 425,719 370,797 239,599 183,213 Convertible debentures 74,915 75,030 75,127 - -long term debt 1,524,503 1,203,236 604,200 368,089 345,400 asset retirement obligations 344,345 352,171 255,331 184,699 171,866 Future income taxes 293,318 387,100 316,805 110,112 75,628 other long term liabilities 25,701 34,775 18,192 12,937 38,216 trust unitholders’ equity Trust unitholders’ capital 4,588,587 4,432,737 4,383,993 2,514,997 2,383,284 Equity portion of convertible debentures 160 160 160 - - Contributed surplus 16,579 9,679 4,931 3,646 1,923 Deficit (1,941,521) (1,686,356) (1,339,407) (1,042,647) (922,996) 2,663,805 2,756,220 3,049,677 1,475,996 1,462,211 5,317,341 5,234,251 4,690,129 2,391,432 2,276,534

54 FIVE YEAR REVIEW | PENGROWTH 2008

FIVE YEAR REVIEWCONSOLIDATED STATEMENTS OF INCOME AND DEFICIT

(Stated in thousands of dollars) Years ended December 31 2008 2007 2006 2005 2004

REVENUES Oil and gas sales 1,919,049 1,722,038 1,214,093 1,151,510 815,751 Processing and other income 15,525 19,429 15,639 15,091 12,390 Royalties, net of incentives (433,970) (319,319) (241,494) (213,863) (160,351) 1,500,604 1,422,148 988,238 952,738 667,790 Interest and other income - 1,144 3,129 2,596 1,770 net revenue 1,500,604 1,423,292 991,367 955,334 669,560 EXPENSES Operating 418,497 406,522 270,519 218,115 159,742 Transportation 12,519 12,672 7,621 7,891 8,274 Amortization of injectants for miscible floods 25,876 34,063 34,644 24,393 19,669 Interest 76,304 84,292 32,109 21,642 29,924 General and administrative 58,937 55,903 36,613 30,272 24,448 Management fee 6,950 6,807 9,941 15,961 12,874 Foreign exchange loss (gain) 189,172 (61,857) 22 (6,966) (17,300)Depletion and depreciation 609,326 639,084 351,575 284,989 247,332 Accretion 28,051 25,722 16,591 14,162 10,642 Unrealized loss (gain) on fair value of commodity contracts (249,899) 122,307 (26,499) - -Other expenses 946 2,737 10,183 4,029 3,274 1,176,679 1,328,252 743,319 614,488 498,879 income before taxes 323,925 95,040 248,048 340,846 170,681 income tax expense Capital - - 14 2,244 1,320 Future (71,925) (264,612) (14,269) 12,276 15,616 (71,925) (264,612) (14,255) 14,520 16,936 NET INCOME 395,850 359,652 262,303 326,326 153,745 Deficit, beginning of year (1,686,356) (1,339,407) (1,042,647) (922,996) (713,680)Distributions paid or declared (651,015) (706,601) (559,063) (445,977) (363,061)Deficit, end of year (1,941,521) (1,686,356) (1,339,407) (1,042,647) (922,996)net income per trust unit Basic 1.58 1.47 1.49 2.08 1.15 Diluted 1.58 1.46 1.49 2.07 1.15


FIVE YEAR REVIEWCONSOLIDATED STATEMENTS OF CASHFLOW

(Stated in thousands of dollars) Years ended December 31 2008 2007 2006 2005 2004

CASH PROVIDED BY (USED FOR): operating Net Income 395,850 359,652 262,303 326,326 153,745 Depletion and depreciation 609,326 639,084 351,575 284,989 247,332 Accretion 28,051 25,722 16,591 14,162 10,642 Future income taxes (reduction) (71,925) (264,612) (14,269) 12,276 15,616 Amortization of injectants 25,876 34,063 34,644 24,393 19,669 Purchase of injectants (21,009) (26,052) (34,630) (34,658) (20,415)Other non-cash items (81,201) 48,327 (37,515) (19,251) (23,595)Changes in non-cash operating working capital 27,548 (15,840) (24,331) 9,833 1,173 912,516 800,344 554,368 618,070 404,167 Financing Distributions paid (674,993) (717,562) (516,966) (436,450) (344,744)Bank indebtedness (13,658) (9,374) 9,374 - -Changes in long term debt and note payable 148,064 674,276 (74,870) (4,970) 95,000 Redemption of convertible debentures - - (21,184) - -Proceeds from issue of trust units 63,499 48,141 971,791 42,544 509,830 (477,088) (4,519) 368,145 (398,876) 260,086 investing Expenditures on business/ property acquisitions (37,066) (932,133) (553,331) (92,568) (572,980)Expenditures on property, plant and equipment (401,928) (309,708) (300,809) (175,693) (161,141)Deposit on acquisition - - (103,750) - -Other items 3,348 451,854 12,415 37,597 (669)Changes in non-cash operating working capital (1,799) (3,821) 37,529 1,117 2,169 (437,445) (793,808) (907,946) (229,547) (732,621)Change in cash and term deposits (2,017) 2,017 14,567 (10,353) (68,368)Cash and term deposits (bank indebtedness) 2,017 at beginning of year - - (14,567) (4,214) 64,154 Cash and term deposits (bank indebtedness) at year end - 2,017 - (14,567) (4,214)

56 FIVE YEAR REVIEW | PENGROWTH 2008

FIVE YEAR REVIEWOPERATING MEASURES

Years ended December 31 2008 2007 2006 2005 2004

PRODUCTION Crude Oil (bbl per day) 24,416 26,327 21,821 20,799 20,817 Heavy Oil (bbl per day) 8,122 7,168 4,964 5,623 3,558 Natural Gas (mcf per day) 240,825 266,980 175,578 161,056 144,277 Natural Gas Liquids (bbl per day) 9,315 9,409 6,774 6,093 5,281 Total (boe per day) 81,991 87,401 62,821 59,357 53,702 Annual (mmboe) 30.0 31.9 22.9 21.7 19.7 % natural gas 49 51 47 45 45 Production per weighted average trust unit outstanding (boe) 0.12 0.13 0.13 0.14 0.15 BENCHMARK PRICES WTI (U.S. per bbl) 99.65 72.12 66.25 56.70 41.47NYMEX (U.S. per mmbtu) 9.04 6.86 7.24 8.62 6.16AECO (Cdn $ per mcf) 7.70 6.31 7.07 8.48 6.79Currency (U.S. $ per Cdn $) 0.94 0.93 0.88 0.83 0.77AVERAGE REALIZED PRICES Crude Oil ($ per bbl) 77.78 71.88 66.85 58.59 43.21Heavy Oil ($ per bbl) 75.77 44.53 42.26 33.32 32.45Natural Gas ($ per mcf) 8.19 7.29 7.22 8.76 6.80Natural Gas Liquids ($ per bbl) 70.67 58.86 57.11 54.22 42.21Average price per boe 62.76 53.90 52.88 53.02 41.33AVERAGE NETBACK Crude Oil netback ($ per bbl) 43.19 42.14 38.55 35.01 24.38Heavy Oil netback ($ per bbl) 53.08 26.23 23.00 13.50 17.73Natural Gas netback ($ per mcf) 4.47 4.12 4.16 5.95 4.47Natural Gas Liquids netback ($ per bbl) 31.00 27.72 25.82 27.52 18.74Operating netback ($ per boe) 34.78 30.40 29.59 32.54 24.51Value of cash & trust units issued for acquisitions ($ millions) 148.2 1,035.9 1,449.3 180.5 569.7Capital expenditures ($ millions) 401.9 309.7 300.8 175.7 161.1reserves (proved plus probable) Reserves acquired in the year (mmboe) 10.0 65.1 81.5 16.7 47.9Reserves at year end (mmboe) 323.5 319.9 297.8 219.4 218.6Value of cash & trust units issued for acquisitions ($ per boe) 14.82 15.91 17.79 10.81 11.89Reserves per year end trust units outstanding 1.26 1.30 1.22 1.37 1.43


FIVE YEAR REVIEWFINANCIAL MEASURES

(Stated in thousands of dollars, except per trust unit and per boe amounts) Years ended December 31 2008 2007 2006 2005 2004

expenses ($ per boe) Royalties 14.46 10.01 10.53 9.87 8.16Operating 13.95 12.74 11.80 10.07 8.13Transportation 0.42 0.40 0.33 0.36 0.42Amortization of injectants for miscible floods 0.86 1.07 1.51 1.13 1.00Interest 2.54 2.64 1.40 1.00 1.52General and administrative 1.96 1.75 1.60 1.40 1.24Management fee 0.23 0.21 0.43 0.74 0.66Depletion and depreciation 20.31 20.03 15.33 13.15 12.58Accretion 0.93 0.81 0.72 0.65 0.54net income 395,850 359,652 262,303 326,326 153,745Net income per trust unit 1.58 1.47 1.49 2.08 1.15Capital expenditures 401,928 309,708 300,809 175,693 161,141 Cashflow Cash flows from operating activities 912,516 800,344 554,368 618,070 404,167Cash flows from operating activities per trust unit 3.65 3.26 3.15 3.93 3.03Distributions declared 651,015 706,601 559,063 445,977 363,061Distributions declared per trust unit 2.59 2.875 3.00 2.82 2.63Ratio of distribution declared over cash flow from operating activities (%) 71 88 101 72 90number of trust units outstanding Weighted average 250,182 245,470 175,871 157,127 133,395 Total at year end 256,076 246,846 244,017 159,864 152,973total assets 5,317,341 5,234,251 4,690,129 2,391,432 2,276,534Total assets per trust unit 20.76 21.20 19.22 14.96 14.88long term debt plus convertible debentures 1,599,418 1,278,266 679,327 368,089 345,400Long term debt plus convertible debentures per trust unit 6.25 5.18 2.78 2.30 2.26trust unitholders’ equity 2,663,805 2,756,220 3,049,677 1,475,996 1,462,211Trust unitholders’ equity per trust unit 10.40 11.17 12.50 9.23 9.56net asset value at 10% 3,925,616 4,102,748 3,762,728 2,834,663 1,708,012Net asset value per trust unit 15.33 16.62 15.42 17.73 11.17Capitalization highlights Net debt (net of working capital) 1,669,577 1,467,869 840,276 480,294 443,946Trust unitholders’ equity 2,670,248 2,756,220 3,049,677 1,475,996 1,462,211Total book capitalization 4,333,382 4,224,089 3,889,953 1,956,290 1,906,157Equity market capitalization 2,394,328 4,349,467 4,865,691 3,989,939 3,323,770Enterprise value 3,993,746 5,627,733 5,545,018 4,358,028 3,669,170Return on average equity (%) 14.6 12.4 11.6 22.2 11.7 Return on average capital employed (%) 7.8 2.4 8.9 18.6 10.4 Cash flow return on average equity (%) 33.7 27.6 24.7 30.3 27.7 Cash flow return on capital employed (%) 21.4 19.8 14.9 33.5 22.1 Average cost of debt capital (%) 5.5 5.6 5.7 4.6 5.1

OPERATIONS

58 CORPORATE INFORMATION | PENGROWTH 2008

CORPORATE INFORMATION

DIRECTORS OF PENGROWTH CORPORATION

Thomas A. Cumming Business consultant

Derek Evans President and chief operating officer Pengrowth corporation

Wayne K. Foo President & ceo, Petro andina resources inc.

James S. Kinnear chairman and chief executive officer, Pengrowth corporation

Michael S. Parrett Business consultant

A. Terence Poole Business consultant

D. Michael G. Stewart corporate director

Nicholas C. H. Villiers Business consultant

John B. Zaozirny Vice chairman and Lead independent director, Vice chairman canaccord capital corporation

Director Emeritus Thomas S. Dobson

Francis G. Vetsch

Stanley H. Wong

OFFICERS OF PENGROWTH CORPORATION

James S. Kinnear chairman and chief executive officer

Derek Evans President and chief operating officer

Christopher G. Webster chief financial officer

Gordon M. Anderson Vice President

Doug C. Bowles Vice President and controller

James Causgrove Vice President, Production and operations

William G. Christensen Vice President, Strategic Planning and reservoir exploitation

James M. Donihee Vice President and chief of Staff

Charles V. Selby Vice President and corporate Secretary

Larry B. Strong Vice President, geosciences

TRUSTEE

Computershare Trust Company of Canada

BANKERS

Bank Syndicate Administrative Agent: Royal Bank of Canada

AUDITORS

KPMG LLP

ENGINEERING CONSULTANTS

GLJ Petroleum Consultants Ltd.

PENGROWTH 2008 | CORPORATE INFORMATION 59

CORPORATE INFORMATION

ABBREVIATIONSbbl barrel bcf billion cubic feet boe* barrels of oil equivalent gj gigajoule mbbls thousand barrels mmbbls million barrels mboe* thousand barrels of oil equivalent mmboe* million barrels of oil equivalent mmbtu million British thermal units mcf thousand cubic feet mmcf million cubic feet tcf trillion cubic feet *6 mcf of gas =1 barrel of oil equivalent

STOCK EXCHANGE LISTINGSThe Toronto Stock Exchange: Symbol: PGF.UN

The New York Stock Exchange: Symbol: PGH

PENGROWTH ENERGY TRUSTHead oFFiCe2100, 222 Third Avenue SW Calgary, AB, Canada T2P 0B4 Telephone: (403) 233-0224 Toll-Free: (800) 223-4122 Facsimile: (403) 265-6251

Email: [email protected] Website: www.pengrowth.com

toronto oFFiCeScotia Plaza, 40 King Street West Suite 3006 – Box 106 Toronto, Ontario, Canada M5H 3Y2 Telephone: (416) 362-1748 Facsimile: (416) 362-8191

HaliFax oFFiCePurdy’s Tower 1 - Suite 1700 1959 Upper Water Street Halifax, Nova Scotia, Canada B3J 2N2 Telephone: (902) 425-8778 Facsimile: (902) 425-7887

INVESTOR RELATIONSFor investor relations enquiries, please contact:

inVeStor relationS, CalgaryTelephone: (403) 233-0224 Toll-Free: (888) 744-1111 Facsimile: (403) 693-8889 Email: [email protected]

HEAD OFFICE PHOTOGRAPHY:Marnie Burkhart Jazhart Studios, Calgary, AB

Gary Campbell Gary Campbell Photography, Calgary, AB

OPERATIONS


HEAD OFFICE2100, 222 Third Avenue SW | Calgary, Alberta, Canada T2P 0B4 Telephone: (403) 233-0224 | Fax: (403) 265-6251

www.pengrowth.com

pengrowth factbook 2008

Documents

pengrowth successful

pengrowth energy trust

pengrowth gas income

natural gas

largest oil

superior oil

gas property acquisition

heavy oil assets