Initial Annual Information Form (2004)Full Document 

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                         INITIAL ANNUAL INFORMATION FORM
                      FOR THE YEAR ENDED DECEMBER 31, 2002




                                 April 11, 2003



                                TABLE OF CONTENTS

                                                                            PAGE


GLOSSARY OF TERMS..............................................................1
         Conventions...........................................................4
         Abbreviations.........................................................4
         Other    .............................................................4
         Conversion............................................................4
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS..............................5
VERMILION ENERGY TRUST.........................................................5
         General  .............................................................5
         Organizational Structure of the Trust.................................5
         Summary Description of the Business...................................6
GENERAL DEVELOPMENT OF THE BUSINESS OF  THE TRUST AND VERMILION................8
         History of the Corporation............................................8
         Significant Acquisitions and Significant Dispositions.................9
NARRATIVE DESCRIPTION OF THE BUSINESS.........................................10
         Stated Business Objectives...........................................10
         Description of Properties............................................10
         Canada Assets........................................................10
         France Assets........................................................12
         Trinidad ............................................................13
         Petroleum and Natural Gas Reserves...................................14
         Landholdings.........................................................19
         Oil and Gas Wells....................................................20
         Reconciliation of Reserves...........................................20
         Production History and Prices Received...............................21
         Drilling Activity....................................................23
         Marketing............................................................23
         Capital Expenditures.................................................24
ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY TRUST......................25
         Trust Units..........................................................25
         Special Voting Rights................................................25
         Unitholders Limited Liability........................................26
         Issuance of Trust Units..............................................26
         Cash Distributions...................................................26
         Redemption Right.....................................................26
         Non-Resident Unitholders.............................................28
         Meetings of Unitholders..............................................28
         Exercise of Voting Rights Attached to Shares of Vermilion............28
         Trustee  ............................................................29
         Delegation of Authority, Administration and Trust Governance.........29
         Liability of the Trustee.............................................29
         Amendments to the Trust Indenture....................................30
         Takeover Bid.........................................................30
         Termination of the Trust.............................................30
         Reporting to Unitholders.............................................31
         Distribution Reinvestment and Optional Trust Unit Purchase Plan......31
         Unitholder Rights Plan...............................................31
ADDITIONAL INFORMATION RESPECTING VERMILION RESOURCES LTD.....................34
         Management of Vermilion..............................................34
         Vermilion Share Capital..............................................39
         Voting and Exchange Trust Agreement..................................43
         Support Agreement....................................................44
         Notes    ............................................................45
         Royalty Agreement....................................................46



                                TABLE OF CONTENTS
                                   (continued)
                                                                            PAGE


SELECTED CONSOLIDATED FINANCIAL INFORMATION...................................47
MANAGEMENT'S DISCUSSION AND ANALYSIS..........................................48
         Liquidity and Capital Resources......................................49
         Production...........................................................51
         Capital Expenditures.................................................52
         Cash Flow Netbacks...................................................53
         Crude Oil Marketing..................................................53
         Natural Gas Marketing................................................54
         Revenue  54
         Royalties............................................................55
         Lifting Costs........................................................55
         Debt and Interest Expense............................................56
         General and Administrative Expenses..................................56
         Depletion and Depreciation Expense...................................56
         Taxes    ............................................................57
         Risk Management......................................................57
         Currency Risk........................................................57
         Environment, Health and Safety.......................................57
MARKET FOR SECURITIES.........................................................58
RISK FACTORS..................................................................58
         Reserve Estimates....................................................59
         Volatility of Oil and Natural Gas Prices.............................59
         Changes in Legislation...............................................59
         Investment Eligibility...............................................59
         Operational Matters..................................................59
         Environmental Concerns...............................................59
         Kyoto Protocol.......................................................60
         Debt Service.........................................................60
         Delay in Cash Distributions..........................................60
         Taxation of Vermilion................................................60
         Depletion of Reserves................................................61
         Net Asset Value......................................................61
         Return of Capital....................................................61
         Nature of Trust Units................................................61
         Unitholders Limited Liability........................................61
ADDITIONAL INFORMATION........................................................62

Schedule A - CONSOLIDATED FINANCIAL STATEMENTS
Schedule B - PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS




                                GLOSSARY OF TERMS

The following are defined terms used in this Annual Information Form:

"ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), R.S.A. 2000, c. B-9, as
amended, including the regulations promulgated thereunder;

"AFFILIATE" when used to indicate a relationship with a person or company, has
the same meaning as set forth in the SECURITIES ACT (Alberta);

"AVENTURA" means Aventura Energy Inc., a corporation incorporated pursuant to
the ABCA;

"AVENTURA SHARES" means the common shares of Aventura;

"BOARD OF DIRECTORS" or "BOARD" means the board of directors of Vermilion;

"CONTROL" means, with respect to control of a body corporate by a person, the
holding (other than by way of security) by or for the benefit of that person of
securities of that body corporate to which are attached more than 50% of the
votes that may be cast to elect directors of the body corporate (whether or not
securities of any other class or classes shall or might be entitled to vote upon
the happening of any event or contingency) provided that such votes, if
exercised, are sufficient to elect a majority of the board of directors of the
body corporate;

"CURRENT MARKET PRICE OF A TRUST UNIT" means, in respect of a Trust Unit on any
date, the weighted average trading price of the Trust Units on the TSX on that
date and the nine trading days preceding that date, or, if the Trust Units are
not then listed on the TSX, on such other stock exchange or automated quotation
system on which the Trust Units are listed or quoted, as the case may be, as may
be selected by the board of directors of Vermilion for such purpose; provided,
however, that if in the opinion of the board of directors of Vermilion the
public distribution or trading activity of Trust Units for that period does not
result in a weighted average trading price which reflects the fair market value
of a Trust Unit, then the Current Market Price of a Trust Unit shall be
determined by the board of directors of Vermilion, in good faith and in its sole
discretion, and provided further that any such selection, opinion or
determination by such board of directors shall be conclusive and binding and for
the purposes of this definition, the weighted average trading price shall be
determined by dividing (a) the aggregate dollar trading value of all Trust Units
sold on the TSX (or other stock exchange or automated quotation system, if
applicable) over the applicable ten trading days by (b) the total number of
Trust Units sold on such stock exchange or system during such period;

"DISTRIBUTABLE CASH" means all amounts available for distribution during any
applicable period to holders of Trust Units;

"DISTRIBUTION" means a distribution paid by the Trust in respect of the Trust
Units, expressed as an amount per Trust Unit;

"DISTRIBUTION PAYMENT DATE" means any date that Distributable Cash is
distributed to Unitholders, generally being the 15th day of the calendar month
following any Distribution Record Date;

"DISTRIBUTION RECORD DATE" means the last day of each calendar month or such
other date as may be determined from time to time by the Trustee, except that
December 31 shall in all cases be a Distribution Record Date;

"DRIP PLAN" means the Distribution Reinvestment and Optional Trust Unit Purchase
Plan adopted by the Trust;

"EXCHANGE RATIO" means the exchange ratio used to determine the number of Trust
Units a holder of Exchangeable Shares is entitled to receive upon an exchange of
Exchangeable Shares which, in respect of each Exchangeable Share, was initially
equal to one upon completion of the Arrangement, and shall be cumulatively
adjusted thereafter by: (a) increasing the Exchange Ratio on each Distribution
Payment Date by an amount, rounded to the nearest five (5) decimal places, equal
to a fraction having as its numerator the product of the Exchange Ratio
immediately prior to the applicable Distribution Payment Date and the
Distribution, expressed as an amount per Trust Unit, paid on



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that Distribution Payment Date, and having as its denominator the Current Market
Price of a Trust Unit on the last business day prior to that Distribution
Payment Date; and (b) decreasing the Exchange Ratio on each record date for the
payment of dividends to holders of Exchangeable Shares by Vermilion, if any, by
an amount, rounded to the nearest five (5) decimal places, equal to a fraction
having as its numerator the amount of the dividend payable to holders of
Exchangeable Shares, expressed as an amount per Exchangeable Share, and having
as its denominator the Current Market Price of a Trust Unit on the date that is
the last business day prior to that dividend record date. The Exchange Ratio

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