Annual Report - 2001 - ARC Resources Ltd.

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PAGE 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. INCOME TAXES The tax provision differs from the amount computed by applying the combined Canadian federal and provincial income tax statutory rate to income before future income tax recovery as follows: 2001 2000 Income before future income tax recovery $ 112,558 $ 110,872 Expected income tax expense at statutory rates 47,950 49,449 Effect on income tax of: Net income of the Trust (72,852) (44,381) Effect of change in provincial tax rate (9,111) – Resource allowance (3,121) (7,982) Non-deductible crown charges 8,431 3,052 Alberta Royalty Tax Credit (191) (231) Capital Tax 764 93 Future income tax recovery $ (28,130) $ – The net future income tax liability is comprised of: 2001 2000 Future tax liabilities: Capital assets in excess of tax value $ 192,679 – Future tax assets: Attributed Canadian Royalty Income (5,165) – Future removal and site restoration costs (11,367) – Deductible share issue costs (1,444) – Net future income tax liability $ 174,703 – The petroleum and natural gas properties and facilities owned by the Trust’s corporate subsidiaries have an approximate tax basis of $203.6 million ($159.6 million in 2000) available for future use as deductions from taxable income. Included in this tax basis are non-capital loss carryforwards of $65.2 million ($8.1 million in 2000) which expire in the years through 2008. No current income taxes were paid or payable in 2001 or 2000. ARC ENERGY TRUST AR 2001
PAGE 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. RELATED PARTY TRANSACTIONS Pursuant to a reorganization of the ARC Group of Companies on June 9, 2000, ARC Financial Corporation assigned its rights and obligations under the management agreement to ARC Resources Management Ltd. Fees payable to the Manager for management, advisory and administrative services include a fee equal to three per cent of net production revenue; and fees of 1.5 per cent, and 1.25 per cent of the purchase price of acquisitions and the net proceeds of dispositions, respectively. In 2001, total acquisition and disposition fees paid or payable to the Manager were $7,926,798 ($2,680,000 in 2000). These fees are accounted for as either part of the purchase price or as a reduction of the proceeds of disposition of property, plant and equipment. During 2001, the Manager was reimbursed $11,714,502 ($5,016,949 in 2000) for general and administrative expenses incurred on behalf of the Trust. 12. CONTINGENCIES The Trust is involved in litigation and claims associated with normal operations, and is of the opinion that any resulting settlements would not materially affect its financial position or reported results of operations. 13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”), which differ in some respects to those in the United States. Any differences in accounting principles as they pertain to the accompanying consolidated financial statements are immaterial except as described below: The application of US GAAP would have the following effect on net income as reported: 2001 2000 Net income as reported $ 140,688 $ 110,872 Adjustments (net of applicable income taxes): Write-down of property, plant and equipment (a) (110,635) – Depletion, depreciation and amortization (a) 10,338 10,646 Unrealized gain on derivative instruments (d) 6,592 – Foreign exchange translation gain (loss) (b) (2,486) 1,106 Unit based compensation (c) (4,474) (4,402) Net income under US GAAP $ 40,023 $ 118,222 2001 2000 Net income per trust unit under US GAAP Basic $ 0.39 $ 1.86 Diluted 0.39 1.84 2001 2000 Comprehensive Income: Net income under US GAAP $ 40,023 $ 118,222 Unrealized gain on derivative instruments (net of future income taxes of $6,125) 8,251 – Other comprehensive income (d) $ 48,274 $ 118,222 ARC ENERGY TRUST AR 2001
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AR 2001 ARC ENERGY TRUST ANNUAL REP
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Photo: Drilling in the Drayton Vall
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OPERATING HIGHLIGHTS Years ended De
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AT THE TIME OF OUR INITIAL PUBLIC O
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PAGE 4 FEATURE: MANAGEMENT EXPERTIS
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John P. Dielwart Director, Presiden
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PAGE 8 MESSAGE TO UNITHOLDERS We ha
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PAGE 10 MESSAGE TO UNITHOLDERS envi
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PAGE 12 MESSAGE TO UNITHOLDERS We r
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PAGE 14 FEATURE: QUALITY ASSETS A C
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Top: Deanna Kalenchuk, Wayne Lentz,
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PAGE 18 OPERATIONS REVIEW DEVELOPME
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PAGE 20 MAJOR PROPERTIES NORTHERN A
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Page 37 and 38: PAGE 32 ACQUISITIONS AND DIVESTMENT
Page 39 and 40: PAGE 34 RESERVES RESERVES Based on
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Page 43 and 44: PAGE 38 ENVIRONMENT, HEALTH AND SAF
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Page 85 and 86: PAGE 80 DIRECTORS AND OFFICERS John
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