The Emergence of Canadian Royalty Trusts

1. The Emergence of Canadian Royalty Trusts July 7, 2005 Randall J. Findlay, P.Eng. President

2. Forward Looking Statements This presentation contains certain forward-looking estimates that involve substantial known and unknown risks and uncertainties, certain of which are beyond Provident’s control, including the impact of general economic conditions in Canada and the United States, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, pipeline design and construction, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. Provident’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds that Provident will derive there from.

3. Outline • Provident Energy Overview • How Canadian Trusts Work • Why Canadian Trusts Work • Inside an Income Trust – Provident Energy • Canadian Trusts and the International A&D Scene • Provident Highlights • Reasons to Invest in Provident

4. Provident Energy 1 Based on January 1, 2005 reserve reports. Economic Life Index is 13.4 including midstream assets. 2 March 28, 2005 unit price of C$11.65

5. Differentiation Through Diversification Canada Oil & Gas Production U.S. Oil & Gas Production Midstream Services Diversification of Cash Flow

6. Historic Market Capitalization of Trust Sector • The income trust market grew 43% in 2004 to an aggregate market capitalization of just under $120 billion; the trust sector has grown by over 400% in the last 5 years • Oil & Gas trusts represent 34% of the total trust market Market Capitalization (C$billion) $140 $118.1 $120 $100 $82.3 $80 $60 $44.1 $40 $29.1 $20.7 $19.9 $17.2 $16.9 $20 $8.7 $0 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Source: RBC Capital Markets Energy Trusts Power & Pipelines Trusts Business Trusts REITs

7. Trust Performance • Since 2000, the Oil and Gas Trust Index has outperformed the TSX Composite Index and the TSX Energy Index

8. Royalty / Income Trusts as Producers • Income Trust Production (excluding Canadian Oilsands)1 • Oil 270,000 bpd • Gas 1.6 bcf/d • Total 540,000 boed • Key Players: ARC, Bonavista, Enerplus, Pengrowth, Primewest, Provident 1 PWC 2004 Canadian Energy Survey

9. Income Trusts as Gas Processors and Pipelines • Services Provided: • Gas Gathering, Transmission and Processing • NGL Gathering and Processing • NGL Marketing and Transportation • Key Players: Keyera, Altagas, Taylor, Ft. Chicago, InterPipe, Pembina, Provident

10. Global Climate - Demographics • Expected increase in the number of retirees over the next 15 years • 2000 – 29 million over 65 in U.S. • 2000 to 2020 – 35 million will retire in U.S. • Retirees will demand income bearing financial vehicles including trusts • Limited trust equivalent financial instruments

11. Who Owns Trusts in Canada • Retail investors represent approximately 80% of income trust holders Source: Estimations based upon results of Canada Newswire survey of investors seeking information on PrimeWest Energy Trust and Enerplus Resources Fund Source: BMO Nesbitt Burns, CIBC World Markets and RBC Capital Markets

12. How IT, RT, LP’s Work • Income Trusts (IT), Royalty Trust (RT), Limited Partnerships (LP) – Similar to US MLP and LLC structures

13. How Income Trusts & Royalty Trusts Work

14. Energy Trust Business Models Old Model • Acquire, deplete, acquire • 90 to 100% payout ratio • Production replacement through acquisition • Acquisitions may not offer operational synergies • Focus on WCSB

15. Energy Trust Business Models New Model • Sustainability model • Payout < 75% cash flow • Production replacement through acquisition and the drill bit • Acquisitions based on leverage opportunity to maximize operational efficiencies • Long-life assets sought

16. Energy Trust Business Models Hybrid / Diversification Trust • Sustainable model • Low payout ratios • Reinvestment in asset development • Acquisitions based on long-term value and short-term cash flow • Geographical and energy business diversity • Unique partnerships with explorers and non-conventional producers

17. Why Trusts Work • Performance • Strong history of total returns • Attractive economic environment: low interest rates and high commodity prices • Tax efficient • Demographics • High demand for yield • Stable returns • Old world economy • Asset backed investment • Value driven growth • Visible cash generation and distribution

18. Inside an Income Trust - Provident Oil and Gas Production (OGP) • Looks like and E&P company, except ‘E’ becomes ‘D’ • Cash flow not distributed (10 - 50%) used for: • Internal development • Oil and gas • Midstream • Small acquisitions • Cash on cash yield 9 - 15%

19. Balanced Portfolio Maintains Stable Distributions

20. Diversification Key to Stability and Sustainability Reserve Life Indices Years Midstream Services US-OGP Canada-OGP Source: Scotia Capital RLIs at January 1, 2005

21. Increase Sustainability of the Trust Baseline Distribution per Unit Cash Flow per Unit Acquisitions & Internal Development US-OGP US - OGP Midstream Business Canadian - OGP Years

22. Impact on the Oil and Gas Sector • Repatriation of Canadian assets • Reinvestment • Increased efficiency of oil and gas sector

23. Oil and Gas Investment Cycle MAJOR E&P Cos DIVEST Income and Royalty Trusts SELL SPINOUT JUNIOR E&P Cos

24. Total Trust Capital Expenditures $MM* * Excludes acquisitions Source: FirstEnergy

25. 2001 Competitive Landscape Price / '01 Cash Flow 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x 2001 Canadian Large-Caps 2001 Canadian Mid-Caps 2.3x 2001 Royalty Trusts 2001 Juniors 1 Multiple arbitrage of 1 –2 x CF Based on TD Newcrest and current street research estimates 1 Excludes high/low

26. Why US and International Markets Are Next Royalty trusts and sponsored juniors continue to receive premium valuations but the arbitrage between juniors and royalty trusts has narrowed Price / '04 Cash Flow 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x U.S. Independents Canadian Large-Caps Canadian Mid-Caps Royalty Trusts 1 Sponsored Juniors 1 EV / '04 Debt-Adjusted Cash Flow • Based on TD Newcrest and street research estimates • 1 Excludes high/low. Please note that the composition of each sector group differs significantly from 2004, • in terms of number and size of players in each group

27. 2005 Acquisition Metrics 2Includes Nautilus acquisition March 2005 12005 Q1 EBITDA of C$16.4 MM, assets purchased in 2003 for C$298 MM Source: BMO Nesbitt Burns and internal sources

28. After Tax Netbacks Comparison Calendar 2005 Forecast Netbacks

29. Impact of Canadian Income Trusts Market • More competitive acquisitions and divestitures • Development of marginal reserves • Proliferation of yield vehicles • Multiple expansion

30. Deliver Production & Throughput Achieve Efficient Capital Spending Build Platforms & Offer New Services Drive Focus $127 MM $79 MM - COGP $46 MM – US OGP $ 2 MM - Midstream Leverage & extend LGS Achieve IRR targets Value driven COGP – core areas US OGP – core & new areas Midstream - Redwater Organic, JV, Acquisitions: halo, property, corporate 80 – 85% Payout ratio Operational excellence Risk management 35,600 – 36,400 boed 41% - Light/Med oil/NGLS 35% - Natural gas 60,000 – 63,000 bpd Improve Netbacks 2005 Objectives - Provident Deliver Upon Expectations Cash Flow Sustainability Growth Discipline

31. 2005 Objectives – Consolidated Oil and Gas 2005 Capital Expenditures 2005 Production Estimate

32. 2005 Objectives - Midstream

33. 2001 2005 Management Team • Partnership • Canada & USA TEAM Balanced Commodity Mix • <15% Heavy oil • 50% Heavy oil Economic Life Index • 9.3 years • 13+ w/ Midstream • 6.3 years • Canada & USA • Oil and Gas • Midstream Asset Diversification • Canada • Oil and Gas Value Creation • Conversion • ~240% Total return Investing in Provident today… 1Based on January 1, 2005 P+P reserve reports

34. Differentiation Through Diversification.

35. Appendix

36. 2005 Objectives - COGP boed

37. 2005 Objectives - USOGP

38. Cash Flow Sustainability Growth Discipline 2005 Q1 Highlights Deliver Production & Throughput Achieve Efficient Capital Spending Build Platforms & Offer New Services Drive Focus Cash Flow $64.1 MM $37.6 MM COGP $11.4 MM USOGP $15.2 MM Midstream Production 35,102 boed 29,110 COGP 5,992 USOGP Marketing Throughput 61,590 bpd P+P increased 20.1 million barrels – Nautilus acquisition Capital expenditures $29 MM Total $14.1 MM COGP $ 14.9 MM USOGP Distributions maintained $0.12/unit ($51.7 MM) Expanded U.S. platform Nautilus Resources – March 2005 ($96MM) 81% Payout ratio % Issued $100 million of 6.5 %, seven and half year convertible unsecured subordinated debentures