Our corporate responsibility. - ARC Resources Ltd.

We at ARC believe that corporate responsibility comprises our commitmentsto all our stakeholders: the people who own and work in our company, thepeople that we do business with, the communities where we live and operate in,government and other regulatory agencies that we interact with and the peopleof the provinces whose oil and gas we produce. We are committed to honest andrespectful day-to-day interactions with all our stakeholders. Our enduring goal is tocontribute to the well-being of all of these groups by implementing best practicesin health, safety and environmental management, by following ethical businessand labour practices, and by contributing to the economies of our communitiesthrough investments, jobs and support for various not-for-profit agencies.About this Report..................................................................................................................................................2A History of Corporate Responsibility at ARC..................................................................................................3President’s Message.............................................................................................................................................4Corporate Responsibility Management............................................................................................................ 7Environment..........................................................................................................................................................9Health and Safety...............................................................................................................................................12Employees............................................................................................................................................................15Communities........................................................................................................................................................18Economic Impacts..............................................................................................................................................20Performance Summary..................................................................................................................................... 23Corporate Responsibility 1

About this ReportThis is ARC’s first corporate responsibility report and covers the 2006 and 2007 reporting years. Consequently, not all information thatwe would like to include is available. We have well developed tracking systems for environment, health and safety and are working toimprove our social data management systems. We plan on improving our reporting in all areas in subsequent years.We see this report not only as a means to communicate with our stakeholders, but also as a management tool that will help us identify areaswhere we can improve performance with respect to our impact on society and the environment.NOTES:• We plan on publishing a corporate responsibility report every two years• This report covers performance for the years ended 2005 – 2007. This does not capture all of ARC’s substantial work doneearlier to ensure responsible operations• References to “ARC” or “the company” mean ARC Energy Trust, its subsidiaries and joint venture investments, unless the contextindicates otherwise• Environmental data is reported for all facilities where ARC is the operator of record, regardless of ownership• All financial information is reported in Canadian dollars unless otherwise noted. Please refer to our 2007 Annual Report andAnnual Information Form for more details on our financial performance• Except where noted, data does not cover contractors or temporary employees• Data measurement techniques and bases for calculations, if not obvious, are included with the data• Key performance indicators were determined through review of the Canadian Association of Petroleum Producers (CAPP)Stewardship Program, the Global Reporting Initiatives (GRI) G3 Sustainability Reporting Guidelines, and stakeholder and staffinput. Under the G3 we have achieved a C level of reporting according to the application levels laid out by the GRI. The GRIindex, on page 24 indicates where you can find specific disclosures• The accuracy of this report is of vital concern to ARC and our stakeholders. Senior management and relevant staff havereviewed all information in this report, and believe it is an accurate representation of our performance. ARC undertakes a varietyof internal and external assurance activities on information presented in this report, including financial, environmental, healthand safety performance, management systems and compliance audits. Third-party assurance of this report at this point wouldbe premature given our ongoing work to close gaps in our data management systems• Performance graphs are included throughout the report, and statistical data are provided in a table on page 23• Please visit our website for additional information in the “Health, Safety and Environment” section at www.arcresources.comADVISORY REGARDING FORWARD-LOOKING STATEMENTSThis Corporate Responsibility Report contains forward-looking statements that may be identified by words like “outlook,” “estimates” andsimilar expressions. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertaintiesand are not guarantees of future performance. Actual results could differ materially as a result of changes to ARC’s plans, the impact ofchanges in commodity prices, general economic, market and business conditions as well as production development and operatingperformance and other risks associated with oil and gas operations.2Corporate Responsibility

a history of corporateresponsibility at ARCIt takes a lot of time, integrity, effort, and diligence to build a responsible and successful company. That is whyARC began with and has maintained strong values since inception in 1996. We have always believed in doingwhat is right, not just what is required. Although this is the first time we have reported on our non-financialinitiatives and performance, we have a proud history of responsible operations and governance.Highlights of our proactive business practices from the years that precede this reporting period include:• Right from inception one of our core beliefs has been involvement with communities, both from the corporate perspective andalso supporting employees to contribute financially or through volunteerism• In 1996, ARC established a general reclamation fund, which has been used for reclaiming disturbed and contaminated landsthroughout our asset portfolio. In 2006, we established an additional reclamation fund, specifically for our newly acquiredRedwater properties• 2000 marked ARC’s first year of reporting our greenhouse gas emissions and management plans to the Voluntary ClimateRegistry. We received a Leadership Award for the Upstream Oil & Gas sector that year. Continued voluntary reporting to theCanadian Greenhouse Gas Registries, along with the CAPP Stewardship program, and now also the Carbon Disclosure Project,helps us measure and manage our environmental performance• In 2002, ARC acquired assets in southeast Saskatchewan that were wasting resources by flaring solution gas. To rectify thesituation we built a solution gas plant in our Lougheed field and tied in gas production from the battery for processing, whichreduced flaring and related air emissions• In 2004, the ARC Board of Directors established the Health, Safety and Environment (HSE) Committee to focus more Boardattention on HSE and climate change issues• We acquired properties in Pembina and Redwater in 2005. This strategic move committed ARC to enhanced oil recovery (EOR)and has focused attention and resources on carbon capture and storage• Since our inception we have positively affected the economy, spending $1.7 billion on capital projects, $1.2 billion on operatingactivities and paying $1.3 billion in royalties, and $2.7 billion to our unitholders in distributionsCorporate Responsibility3

president’s messageWe at ARC Energy Trust are committed to communicating openly with our stakeholders to givetransparency to our business, operations, and our corporate philosophy.The evolution of ARC, as with any business, started with the basic concept of creating value forour investors. Much of our initial energy was spent on progressing ARC from a new company in 1996to a successful business today. But there is a lot more to ARC than our solid financial andoperating performance.We believe it is important to communicate our core beliefs and initiatives on the environment, healthand safety, community interaction, and our involvement in the Canadian economy. This CorporateResponsibility report is ARC’s first publication to directly speak to these issues.Although this is the first time that we are compiling our corporate responsibility information andphilosophy into a formal document, ARC has built its operations on a strong base of ethics since ourinception. We at ARC have always placed high value on:• Safety of our workplace• Protection of the environment in which we operate• Our social responsibility to communities in which we operate• Setting high operating standards for our company and our employees• Being a leader within our peer group• Delivering long-term, continued value to our investors• Our core beliefs that comprise our corporate cultureThis report summarizes our successes, and highlights areas in which we commit to improve. ARC hasalways strived to be forward-looking and we believe that our employees and all of our stakeholders areinterested in non-financial information on a company with whom they work, invest, and interact.We at ARC Energy Trust are committed to communicating openly with ourstakeholders to give transparency to our business, operations, and ourcorporate philosophy.The evolution of ARC, as with any business, started with the basic conceptof creating value for our investors. Much of our initial energy was spent onprogressing ARC from a new company in 1996 to a successful business today.There is a lot more to ARC than our solid financial and operating performance.42Corporate Responsibility

EnvironmentWe operate in an industry that affects the land, air, and water. Extracting fossil fuels requires the use of large machinery and the buildingof infrastructure in previously undeveloped areas, and often disturbs wildlife and vegetation. Our processes release emissions such asgreenhouse gases and sulphur dioxide into the atmosphere. We use water and other resources during operations.Since ARC is made up of people who have a vested interest in keeping our environment safe and healthy for future generations, we striveto minimize environmental impacts during our operations to the extent reasonably and economically feasible. Once we are finishedworking in an area, we reduce our environmental footprint through reclamation activities. Our commitment to being a leader in ourindustry means proactively meeting or exceeding regulations to protect the environment and working with a cooperative spirit with publicagencies in this regard.Through our participation in public reporting initiatives such as the Canadian Association of Petroleum Producer’s Stewardship Initiative,the Canadian GHG Challenge Registry, and the Carbon Disclosure Project, we gain access to information on best practices by others andcan make continual improvements to our programs. A leading ethical fund company issued a report in 2007 where it ranked all energycompanies on their environmental disclosure. ARC was the only trust that made it in the top ten rankings, amongst some of the leadingenergy companies in Canada. In 2007, ARC was included in the Jantzi Social Index in recognition for our commitment to the environment,community involvement, employee relations, human rights and corporate governance.Sustainable environmental practices are very much front and center in the news. Companies are encouraged by various advocacy andinvestor groups to take action. We are one of the few oil and gas operators who have a cash funded abandonment and reclamation fund.ARC actually has two reclamation funds – an unrestricted fund that is used for most of ARC’s reclamation projects and a restricted fundthat is specifically targeted for reclamation activities in our Redwater field in Alberta. This field is important to us as it will form a basisfor future greenhouse gas management projects, however, when ARC purchased Redwater, we assumed substantial reclamationobligations. Each quarter we withhold a portion of cash flow and fund ARC’s two reclamation funds. In 2007, we contributed $12 millioninto the funds. Our reclamation funds ensure that future stakeholders are not left carrying the entire financial burden of reclamation.An area of interest to ARC is carbon dioxide (CO 2) injection into mature reservoirs. This process has been around for over 30 years and isused as a means to recover additional resources. As an added benefit, this process allows CO 2that would normally be emitted into theatmosphere to be safely sequestered below the ground. With Redwater, ARC has one of Canada’s largest fields that may be suitable forsequestering unwanted CO 2from large emitters such as upgraders and refineries. Additionally, this practice helps to extract incrementaloil from mature fields, making more efficient use of already developed fields. It will be a few more years before we have commerciallyviable CO 2projects in Alberta. It will take legislation, and cooperation between emitters and end-users of CO 2before the requiredinfrastructure is in place for larger scale projects. We are conducting a CO 2enhanced oil recovery pilot project at Redwater in 2008 todetermine the commercial viability of a full scale CO 2injection project.Health and SafetyProtecting the health and safety of employees, contractors, and the public is paramount. ARC spends a significant amount of time on itshealth and safety programs. Whenever ARC purchases new properties, health and safety obligations are key considerations. Our healthand safety programs are proactive and include educating our employees and contractors in safe working practices. Maintaining a stronghealth and safety record is challenging in today’s environment – especially on the contractor side – with increasing activity levels in theindustry and much of the workforce less experienced than in the past. In spite of these challenges, ARC has consistently lowered our LostTime Injury frequency to a level better than the industry average. We track and strive to improve our recordable injuries as a leadingindicator of possible lost time accidents, and have initiated reporting near-misses so that we have a high level of awareness as to whatactivities could potentially result in injury. With no lost time accidents for employees in eleven of our twelve years of operations, we takepride in our performance, but every injury, no matter how minor, results in action.Corporate Responsibility5

We carry out internal and third party independent safety audits as soon as we acquire any property and upgrade faulty or hazardousequipment if any exists. We also carry out regular audits on our own facilities. ARC has emergency plans in place that prepare us foremergencies that can threaten people, the environment and our operations.ecoNoMYLike any other business, our goal is to be a profitable company generating long-term value for our investors. We also believe that our roleis to contribute to the prosperity of the Canadian economy at large. We infuse capital into the economy through employment incommunities across the four western Canadian provinces, support of local not-for-profit organizations, distributions to our unitholders,payment for services to our suppliers and contractors, and payment of crown royalties and municipal taxes. ARC contributed $128 millionin salaries, bonuses, and benefits over the past three years and since inception have spent $1.7 billion on capital projects, $1.2 billion onoperating activities, paid $1.3 billion in royalties and distributed approximately $3 billion to our owners. Whenever ARC purchases a newasset, we infuse money and people into the areas to improve operations and use local goods and services as much as possible.Our contributions to the economy are significant, from spending on capital projects and operating activities, to royalty payments togovernments, and distributions to our unitholders. The indirect economic impacts of ARC’s contributions then multiply, as investors andsuppliers invest that income in the Canadian economy through the purchase of goods and services, payment of taxes, and the creationof new businesses.coMMuNitY iNVoLVeMeNtBecause communities give so much to ARC in terms of important infrastructure and access to resources, we believe in giving back tocommunities. Over time, governments have reduced their commitments in key areas of health and social programs, leaving business topick up the slack. We are overwhelmed with requests for financial assistance for many deserving causes. We have made a corporatedecision to focus on specific areas of support. These areas are: health and wellness, social services, sports and recreation, arts and culture,and education. In 2007, ARC donated over $1.7 million to a total of 258 organizations. ARC has made major commitments to the UnitedWay, the Calgary Children’s Hospital, STARS air ambulance, the Canadian Sport Centre Calgary and the Alberta Cancer Foundation.We support some organizations on a one-time basis only, but we prefer to form partnerships for longer term development. Each of ourfield offices has the discretion to channel funds to community and social organizations in communities that host our operationsand employees.coNtiNuAL iMpRoVeMeNtWe understand that we are not perfect and don’t always meet everyone’s expectations, but we are committed to operating our businessin a responsible manner. Striving toward excellence is an integral part of our corporate philosophy. We have commenced corporateresponsibility reporting even though we are not able to tell a complete story. We believe that corporate responsibility is essential and ourstakeholders are interested in learning about ARC from all perspectives – not just the financial one. We have much more to do and weare working hard to get there. It is our goal to publish this report on a regular basis to keep our stakeholders apprised of our achievements,and our desire to do better in areas that need improvement.John P. DielwartPresident & Chief Executive Officer62 Corporate Responsibility

corporate responsibilitymanagementARC is committed to the highest standards of corporate governance practices and procedures. As corporategovernance continues to evolve, we constantly review, appraise and modify our programs to ensure that wemeet current expectations for best practices. ARC’s approach to corporate governance meets the guidelines ofNational Instrument 58-101. To ensure that corporate responsibility is integrated throughout ARC, we haveimplemented numerous governance and management mechanisms.Board of DirectorsARC’s Board of Directors consists of eight members, all of whom, except for the CEO, are “independent” directors within the meaning ofCanadian Securities National Instrument 58-101. The Chairman of the Board is an independent director.Unitholders, shareholders and employees can provide input to the Board through various avenues. The annual general meeting process enablesunitholders to introduce resolutions and topics for discussion. Employees are encouraged to ask any question on any topic of any senior companyofficial. There is an email address for the Board, from which questions are directed to the Board when appropriate.Board CommitteesThe Board has established the following committees to address critical issues: Audit; Health, Safety and Environment (HSE); HumanResources and Compensation; Policy and Board Governance; Risk; and Reserves.In 2004, the ARC Board of Directors established the Health, Safety and Environment (HSE) Committee. The Committee meets four timesa year and assists the Board in its responsibilities for oversight and due diligence by reviewing, reporting and making recommendationsto the Board and management on the development and implementation of HSE policies, standards and practices. This committee meetsseparately with ARC management who has responsibility for such matters and reports to the Board. All members of the HSE Committeeare independent directors. The HSE Committee’s mandate and other board mandates are available on our website.The daily management of corporate responsibility commitments and implementation of programs is ledby ARC’s senior management team. Our approach incorporates management systems, regular audits, andcorrective action tracking.Corporate Responsibility7

Management ApproachThe strategic management of corporate responsibility is shared among numerous corporate groups:HSE, Human Resources, Corporate Services, Investor Relations, Land and Operations. These groupshave a mandate to provide strategic-level support to ARC’s senior management team. The dailymanagement of corporate responsibility commitments and implementation of programs is led by ARC’ssenior officer and management teams. Our approach incorporates management systems (e.g., HSEManagement System), regular audits, and corrective action tracking.PoliciesWe have adopted a range of mandatory policies to govern our behaviour and ensure ethical and responsibleoperations. One of our primary mechanisms for ensuring ethical conduct is our Code of Business Conductand Ethics, which is described in the Employee section of this report. In addition to a wide-ranging Health,Safety and Environment Policy, we adhere to internally developed policies addressing: harassment anddiscrimination; compensation, benefits and leave; and whistleblower protection.Stakeholder EngagementStakeholder engagement is at the heart of corporate responsibility. We need to understand what ourstakeholders care about so we can mutually develop beneficial solutions. The traditional definition ofstakeholder is along the lines of “one who can be affected by or can affect a company’s operations.”This covers almost everyone. To engage in a more pragmatic manner we have categorized our primarystakeholders as: unitholders; employees; landowners and community members; governments;regulators; and suppliers and other business partners. We engage with any party that is interested inour company and its activities.Political Activities and ContributionsOur Code governs the political activities and contributions of employees and of the corporation. ARCdoes not contribute funds to any political parties in Canada or abroad. ARC participates in publicpolicy debate on the federal and provincial level on subjects such as greenhouse gas legislation,provincial royalties and proposed changes to the tax regime for trusts.The following sections describe how ARC tackles the areas we see as integral to operatingresponsibly. Each section presents the related commitments we have made, our managementapproach, select management issues, and our performance on select indicators.82Corporate Responsibility

environmentWe understand that our operations have an affect on the environment and people.The majority of ARC’s operations are in areas with a long history of development. We work to maximize theeffectiveness of existing infrastructure (e.g., roads, wells) and as a result, we tend to have fewer impacts onthe land. Balancing this is the fact that as oil and gas reservoirs deplete, more energy and effort is required toextract the resource. But we also realize that the more efficiently we can extract resources - that is, with lessenergy and water inputs and less waste outputs - the more financially attractive our operations become.It is against this backdrop that we work to reduce our environmental impacts.Our Environmental CommitmentsARC strives to exhibit leadership in the environmental arena. As stated in our HSE Policy, we will:• meet or exceed regulations, industry standards, and stakeholder requirements• integrate environmental management measures into our activities• be prepared for emergencies• monitor and assess performance• maintain high standards for our various reporting initiativesBy the time of our next report we plan to:• explore subject areas where we can set quantitative environmental targets• refine our audit process by combining different types and assessing their effectiveness• improve our measurement and records systemsCorporate Responsibility 9

Greenhouse Gas Emissions8000007000006000005000004000003000002000001000000.130.1905 06 070.19 0.200.150.100.05GHG intensity (tonnes/m 3 OE)Greenhouse Gas Emissions(CO 2 e tonnes/year)Note: The increase in the 2006 GHG was aresult of the December 2005 acquisition ofRedwater and NPCU.SO 2(tonnes)Benzene(tonnes)Gas flared& Vented(10 3 m 3 /yr)Solution GasConservationRate (%)Air Emissions05 06 072,381 2,461 2,7734.7 5.4 2.513,919 23,132 16,74095.4 94.7 97.7Our Management ApproachTo consistently live up to our commitments, we have been developing a robust environmentalmanagement system that comprises the following elements:• an environmental policy• annual goals and objectives• regular auditing, and• quarterly reporting to the HSE Committee of the Board of DirectorsWe strive to continually improve our environmental management system to ensure that emergingtrends, new technology, and government regulations are fully incorporated.We have a corporate HSE group that develops operating practices and procedures with HSECo-ordinators located at our field offices. Together we ensure that a consistent environmentalmanagement process is executed through the company.Managing Greenhouse Gas EmissionsFor any oil and gas company, reducing greenhouse gas (GHG) emissions is a considerable challenge.For ARC, it is a challenge we are addressing strategically and aggressively.ARC has intentionally acquired oil reservoirs that we believe are prime candidates for enhanced oilrecovery through the injection of carbon dioxide (CO 2). If CO 2is captured from large sources and madeavailable to us, we could sequester large amounts of carbon in our reservoirs, thereby reducing theamount of CO 2emitted into the atmosphere and increasing ultimate oil recovery. Currently there areno large quantities of CO 2being captured by emitters.Depending on what happens with carbon trading mechanisms in Canada and on availability of CO 2that would otherwise be emitted to the atmosphere, we could end up with significant carbon credits,as we expect to be able to sequester perhaps as much as 10,000 to 20,000 tonnes of C0 2per day.This is equivalent to removing 2,000 to 4,000 vehicles from the roads daily (and over one millionvehicles annually). In July 2008, ARC commenced a pilot C0 2injection project in the Redwater area.Midway through 2007 ARC began the first phase of implementing a fugitive emission managementprogram that will help us monitor and manage our fugitive emissions. We believe this programpresents an opportunity to make emission reductions that would not otherwise occur. The programwill continue through 2009 at which time we will assess the benefits of continued fugitiveemission monitoring. Fugitive emissions are air pollutant releases not confined to a stack, duct, vent,tank or other identified sources.Current Alberta greenhouse gas regulations do not significantly affect ARC since we do not operateany facilities that qualify as a large final emitter. However, ARC does have an interest in 34 facilitiesthat exceed the 3,000 tonnes per year Federal guideline. Subject to elaboration of the full federalguidelines, the impact on ARC’s operations is minimal at this time. We are continuously working onimproving our data management processes in order to obtain consistent, accurate, and verifiabledata. We feel the benefits associated with quality data management will become increasingly valuableas the regulatory environment clarifies and strengthens.Managing ObligationsARC actively reclaims abandoned oil and gas leases and roads. This involves returning our sites to astate equivalent to conditions prior to disturbance. We actively use soil treatment facilities ratherthan land farming techniques or landfills. This allows us to return native soils during the reclamationprocess. We have recently received approval for, and built, a bio-remediation facility in the Redwaterfield to facilitate the treatment of hydrocarbon contaminated soils in the Redwater area.10 2Corporate Responsibility

ARC maintains an active reclamation fund in which we set aside funds annually to ensure we are ableto address current and future liabilities. The balance of this fund, on December 31, 2007 stood at$26.1 million with annual contributions of $12 million. The Trust has estimated the net present valueof its total asset retirement obligations to be $140 million as at December 31, 2007. Since 2005, ARChas spent $32.3 million on reclamation activities.Our PerformanceGreenhouse Gas EmissionsFrom 2005 to 2007, our CO 2emissions have increased 84 per cent, largely as the result of a purchaseof mature oil and gas assets from another operator. We have had a 43 per cent increase in carbonintensity (tonnes CO 2e/m 3 OE) in the same period.A major contributor to this increase is our Redwater field that requires significant energy use to movethe amount of fluids produced each day, and consequently generates more indirect GHG emissions.We acquired our Redwater properties in December 2005 fully aware that gaining an excellent longtermCO 2sequestration reservoir meant increasing our corporate GHG emissions in the short-term.The Redwater field alone increased our GHG emissions by 54 per cent.Air EmissionsSulphur dioxide (SO2) emissions have increased slightly since 2005, likely due to the variable chemicalsignature of our production, not due to any specific programs. Benzene emissions (from glycoldehydrators) have declined 48 per cent from 2005 to 2007, primarily due to benzene managementprograms and regulatory guidelines. We believe that the solution gas conservation rate has improvedbecause we are now receiving more accurate reporting from our Saskatchewan facilities.Flaring has gone up 25 per cent since 2005. The increase is due to large flaring volumes in northeastBritish Columbia (from well testing) in 2006. ARC is one of the leading companies developing theMontney gas resource in northeast British Columbia and the lack of infrastructure in the near-termdictates that significant flaring during testing will continue. This is a priority concern for us and wewill continue to pursue efforts to reduce this figure in the coming years. Notwithstanding significantefforts to reduce flaring, ARC is one of the leading companies developing the Montney gas resource inNE British Columbia and the lack of infrastructure in the near term dictates that significant flaringduring testing will continue.25000020000015000010000050000500400300200100Water Usem 3 Withdrawn05 06 07Spills and Leaks4833 3205 06 07NumberVolume (m 3 )5040302010Water UseOur fresh water withdrawals have decreased by 28 per cent since 2005. This figure includes totalsurface and ground water diverted for use under license. We actively pursue and evaluate sources ofnon-potable water to meet our needs.Spills and LeaksThe number of reportable spills and leaks has varied year-to-year; however, our volume recoveredcontinues to improve annually. The majority of occurrences are along pipelines and at fittings. Whenpatterns emerge, we work to identify root causes and share learnings to prevent recurrence.Wellsite ReclamationARC has 985 abandoned wells, with reclamation complete at 483 of those sites. Of the remaining 502sites, ARC is actively working on 190 leases while 312 leases are being evaluated.Wellsite Reclamation100080060040020005 06 07Abandoned WellsReclamations CompletedActive ReclamationsNew CertificateCorporate Responsibility 11

health and safetyCertain aspects of the oil and gas industry are inherently hazardous. Heavy machinery, pressurizedvessels, sour gas, and industrial processes present certain risks in the workplace and to the general public.Compounding safety issues is the current elevated activity level in our industry. The high activity levels meanthat projects are on tighter deadlines and highly qualified labour is harder to find. Both of these situations leadto the potential for more safety incidents.ARC remains vigilant and proactive in ensuring employee and public safety.Our Health and Safety CommitmentsOur belief that people are our greatest asset is reflected in our commitment to the health and safety of our employees, contractors andthe public. We will not compromise our safety standards to achieve corporate goals. Further, we will:• strive to achieve a high level of health and safety performance through the active managementand engagement of all individuals involved in our operations• ensure the integrity of our systems and operations• be prepared for emergencies• invest in the well-being and development of our employees• monitor and assess our performance and continually improve our processes• meet or exceed regulations and industry standardsBy the time of our next report we plan to:• continue to enhance our audit system to ensure we are able to identify areas to implement improvements• update our Health and Safety Manual to ensure all policies and procedures meet or exceed regulatory requirements andexpectations of our stakeholders• expand our communication with employees and contractors to ensure understanding of ARC’s health and safety objectives12 2 Corporate Responsibility

Our Management ApproachAs described in the environment section of this report we have developed a comprehensive HSEmanagement system. Our HSE management system includes, among other elements: a strong healthand safety policy; annual goals and objectives; training; audits and performance reviews; andquarterly reporting to the HSE Committee of the Board of Directors.Our health and safety management system includes policies and procedures that address activitiesundertaken throughout the full life-cycle of our facilities: exploration, drilling and completions,operations, and decommissioning and reclamation.Any person entering an ARC site must have received a safety orientation first. The best time toaddress safety is before a job begins. Accordingly, ARC has implemented Job Hazard Assessment(JHA) as a standard operating practice. We recognize that all individuals are at risk and should beinvolved in job safety. Through a JHA, hazards are identified and either eliminated or controlled priorto commencing work.When a safety incident does occur, no matter how minor, ARC management is actively involved in thereview, recommendations and follow-up. ARC promotes more comprehensive reporting by identifyingpotential trends and focusing on causation. Since the introduction of our “minor/near miss” form in2005 our reporting has increased 112 per cent. In 2007, ARC launched the “Stop, Think, Report”campaign to reinforce the importance of Near Miss and Hazard Identification reporting. We believethat this program has contributed significantly to completing the 2007 calendar year with zero LostTime Injuries (LTIs) for employees.ARC maintains detailed emergency response plans (ERPs) that allow us to manage emergencies ofany type wherever we work or have facilities. Community members and government agencies areincluded in the development and testing of ERPs. Frequent training of our employees and contractorsensures the highest level of public safety.Health and Safety200520062007033245395012983659002362836FatalitiesLost Time Injuries (total)Medical Aid/Restricted WorkProperty damage; accidentsIncidents with no visible injury ordamage (including near miss/hazardindentification reporting)note: data includes employees and contractorsCorporate Responsibility 13

Managing ContractorsContractors are essential to ARC’s success. We retain contractors for various services, but most oftheir activities are in the field where there is potential exposure to higher risk activities.ARC considers our contractors to be an integral part of our safety program and strives to eliminate allcontractor injuries, occupational illnesses, and unsafe practices. Our contractor managementprogram involves:• Pre-qualification: all of our contractors must have, as a minimum, a safety program,liability insurance, and Worker’s Compensation Board Clearance for the province in whichthey are working• Orientation: at the start of any new work program, ARC and contractors meet to discusspotential safety issues of the work and alternatives to mitigate hazards identified. Thisprocess is repeated for every new contractor that arrives on-site• Ongoing attention: Daily safety meetings and targeted training sessions are held duringthe work program. We also issue safety alerts to employees and contractors when weidentify serious issues• Review: ARC regularly measures the health and safety performance of its contractors byhaving in-house and third-party audits conducted. If items requiring action are identified, wework with our contractor to improve the situation. If that fails we cease using the contractorWe also hold annual educational workshops to assist the efforts of our on-site supervisors, contractorsand operations staff in making all operations safer.Managing AssetsWe have a fundamental responsibility to ensure that our equipment and facilities operate in a mannerthat does not place our employees or the public at risk and that the environmental impact ofthe operation of our assets is minimized. This responsibility is met by ensuring the integrity ofour assets.For all of our oil and gas facilities, that consist of piping, pressure vessels, valves and other equipment,our Pressure Equipment Integrity Management System (PEIMS) implements preventive maintenancemeasures. These measures include training requirements for operations and maintenance personnel,in-service inspections and coordinating out-of-service inspections with planned outages. For ourpipelines, we have a Pipeline Operating and Maintenance Manual that combines generic and sitespecific procedures and processes. This manual is in place to ensure long-term integrity of ourpipelines and continued compliance with government regulations. Corrosion is the leading cause ofpipeline failures. As such, we are utilizing state-of-the-art corrosion prediction software and aredeveloping specific corrosion control strategies. Our Pipeline Integrity Management System (PLIMS)captures and communicates our best practices so that they can be incorporated into new pipelinedesigns and used in maintaining our existing pipeline infrastructure.14 2 Corporate Responsibility

employeesARC sees its responsibility to employees as a moral imperative. These are our colleagues and often our friends.In a tight labour market, we need to offer a work environment that attracts, motivates, inspires, and retainsemployees. Although we expect a lot from each other, we balance our demands on employees with fairtreatment, opportunities for development, and competitive compensation. Every position at ARC is seenas important to the success of our company. We have developed a corporate culture that values thecontribution of each employee as an individual. We offer the advantages of a growing company whilestriving to maintain a small company feel.Our Commitments to EmployeesARC operates in a competitive marketplace for the best employees with a wide range of talents. Our desire is to attract and retain thebest and brightest people in our industry. To achieve this goal we have firm commitments to our employees. We will:• Treat all employees with dignity, respect, and fairness• Value and respect employees’ rights• Provide equal opportunity in all aspects of employment• Not tolerate conduct that makes someone feel uncomfortable or unwelcome• Offer a competitive compensation package that rewards individual contribution and shares in the company’s success• Encourage continuous personal and career growthOur Management ApproachOur employee relations are managed by a corporate Human Resources team. In addition to performing the typical responsibilities ofemployee recruitment, and compensation and benefits management, our Human Resources team coordinates learning initiatives andwellness programs.Corporate Responsibility 15

Our approach to attracting and retaining employees is to offer competitive, incentive-basedcompensation packages and the opportunity to develop, grow and advance personally. To supportlearning and career growth, we offer employees an education reimbursement program. ARC alsosends employees on professional development training offered through local educational institutionsor to conferences and seminars that focus on particular areas of professional, managerial, or technicaldevelopment. We encourage work-life balance by holding regular wellness sessions for employees,which cover topics such as personal health, diet and nutrition, smoking cessation, financial education,and many other topics that deal with personal wellbeing.ARC wants to prepare the employees of today to take over leadership of the company tomorrow. Wehave established succession coaching and mentoring programs that train employees in managerialand executive leadership skills. ARC’s mentoring program is open to employees at all levels withinthe company.Interacting with EmployeesARC conducts a yearly survey entitled “Measuring the Strength of our Workplace”. The survey asksemployees about mentorship, vision, values and culture, compensation and benefits. In the survey,we also provide each employee an opportunity to specifically identify three areas in which ARCperforms well and suggestions for improving the way we do business.From the results of the survey, we have learned that communication is an area that needs improvement.In 2006, several initiatives were developed to improve communication.• Lunch sessions with the CEO where any employee can attend and pose questions• An anonymous question box on the corporate intranet where employees can pose anyquestion and will receive an answer from a member of ARC’s senior management team• Quarterly meetings to update employees on the operations and financial performanceof the companyEnsuring Ethical ConductOur Code of Business Conduct and Ethics is the foundation upon which all ARC employees operate. Itreflects our commitment to a culture of honesty, integrity, respect and accountability and outlines thebasic principles and policies with which all employees are expected to comply. The Code addressesARC wants to prepare the employees of today to take over leadership of thecompany tomorrow. We have established succession coaching and mentoringprograms that train employees in managerial and executive leadership skills.ARC’s mentoring program is open to employees at all levels withinthe company.16 2Corporate Responsibility

such issues as equal opportunity, harassment, conflict of interest, confidentiality, compliance,corruption and bribery, and political activity, among others. We updated the Code in 2006, a copy ofwhich can be found on our website. Employees are required to annually sign off their review andcommitment to upholding the Code. A hotline is available for employees to confidentially lodge anyconcerns about potential breaches of the Code.Our PerformanceDiversityARC’s philosophy is to seek the best person for the position, regardless of gender, race, or othercharacteristic. We do not ask employees to self-identify, nor do we set diversity targets.However, we do track the percentage of women in our workforce (41 per cent) and as a proportion ofmanagement (19 per cent).WorkforceBetween 2005 and 2007 our staffing levels increased by 129 employees. At year-end 2007, we had 396permanent employees, 95 per cent of which are full time. None of our employees are unionized orcovered by a collective bargaining agreement.TurnoverOur voluntary turnover rate of 4.8 per cent for 2007 compares favourably with the industry averageof 10 per cent. The only discernable variance amongst different employee groups is a higher turnoverrate in the 30-50 age group than other age groups.Ethical ConductCalls into the Whistle-blower Hotline often involve simple questions about how an employee shouldapproach a certain situation. We also receive calls to report a potential breach of our Code of BusinessConduct and Ethics on the Integrity Hotline. We follow up substantiated concerns with an internalinvestigation. There have been no incidents of discrimination reported.For the past two years our Privacy Officer has not received any complaints concerning release ofprivate information.Diversity2007Workforce2007Permanent Employees# of EmployeesVoluntary TurnoverAnnual Turnover (%)4001241%300108200659%18 37810042MaleFemaleFull Time Part Time005 06 07005 06 07Corporate Responsibility 17

communitiesOur assets have often been a part of many communities for decades, and likely will be for decades to come.Therefore, we take the opportunity to become part of the community. As neighbours, we share a responsibilityfor the well-being of the communities where we operate. As a responsible community member we need towork collaboratively with our neighbours to achieve success.Because communities give so much to ARC in terms of important infrastructure and access to resources, webelieve in contributing to these communities through direct involvement and charitable giving. ARC supportsthe communities we operate in through financial contributions to, and active partnerships with, variousorganizations. Responsible community citizenship also inspires us to communicate clearly and openly withour neighbours about our activities.Our Community CommitmentsGovernments might grant us permits to operate, but community members grant us permission. We realize that we must continue toremain a responsible citizen if we hope to retain our social license to operate. To ensure responsible community citizenship, we will:• Communicate fairly and openly with communities in which we operate• Engage community residents and landowners in operating decisions• Contribute 0.5 per cent of our rolling three year average net income to charitable organizationsBy the time of our next report we plan to:• Identify metrics and begin measuring other components of our interactions and relationships with communitiesOur Management ApproachWe focus our community interaction in two primary areas—stakeholder engagement and community investments. ARC follows adecentralized approach to community outreach because it puts decision making closest to the action.18 2 Corporate Responsibility

At a minimum, we solicit community input into our proposed or existing activities through publicconsultation as specified in industry and regulatory guidelines. We often expand our efforts toengage with nearby residents and landowners on an ongoing basis. Open communication with ourneighbors allows all involved to detect concerns, evolving problems or crises early, and to avoidmiscommunication. We engage stakeholders through open houses, public meetings, one-on-onemeetings, print and the web.Our vision for community investments is to focus on programs that address fundamental communityissues such as poverty, child hunger, family violence and homelessness to name a few. There aremany deserving programs in our communities and we receive many requests for support. ARC’sphilosophy is to support as many as possible but select strategic initiatives for financial commitmentson a multi-year basis. We focus our charitable investments in the following areas:• Health & Wellness• Social services• Arts & Culture• Community• EducationWe apply the following criteria when making a funding decision:• The extent of ARC’s presence in the area• The perceived need is compelling and does not duplicate existing services or facilities• The charity fits with our values and culture• The services or activities provided are without regard to race, religion, creed, sexor sexual orientation• The soliciting organization is financially viable and efficiently and ethically managed• The sponsoring organization is a tax-registered, non-profit group or its equivalentWe place high value on community participation and encourage our employees to contribute tothe communities in which they live and work. Between 20 and 25 per cent of our budget forcharitable donations is available to field offices in Grande Prairie, Drayton Valley, Red Deer, MedicineHat, Redwater and Estevan.Charitable Contributions$ Thousands20001500100050005 06 07Charitable Contributions200727%20%5% 2%HealthEducationCommunity3%43%Social ServicesArtsOtherInspiring ExcellenceIn 2003, ARC created a partnership with the Canadian Sport Centre of Calgary (CSCC), one of the topOlympic sports training environments in the world. The partnership embraces the relationshipbetween Olympic athletes and ARC’s culture of passion, commitment, balanced lifestyle, team effortand innovation. The partnership was developed to offer ARC employees opportunities to learn fromsuccesses, attitudes and behaviours of Canadian Olympic athletes and their support teams. Thefundamental goal of the Inspiring Excellence initiative is to enrich the lives of ARC employees andtheir families while providing funding to the CSCC through involvement with Olympic athletes eventsand facilities. We hope that Inspiring Excellence will be an enduring part of life at ARC; fostering adesire for personal excellence at work and at home. The initiative is still running strong.Our PerformanceCharitable ContributionsThanks to our continuing strong profits we have been able to increase our charitable contributionsover the years. Donations have increased 104 per cent since 2005.We have not designated specific proportions of our budget for the six focus areas. For 2007, thecategory receiving the largest proportion of our donations was Health & Wellness.Corporate Responsibility 19

economic impacts“Wealth” literally means a condition of well-being. Our activities directly lead to generating and distributingwealth throughout society. Beyond our financial relationships with employees, suppliers, communities,unitholders and others, our operations contribute to other socio-economic dimensions of well-being.Although they cannot be measured by dollars, opportunities for human development, certainty throughlong-term agreements, and improvements to infrastructure are all important impacts ARC has on ourstakeholders. A company benefits society and improves economic well-being by creating jobs and injectingcash into the economy through salaries, distribution payments to unitholders, and through payment of taxesand fees to governments.By the very nature of our corporate structure and focus, ARC is positioned as a long-term contributor to variouseconomies. Our assets are characterized by long-life reserves, extensive production histories, low decline rates,and a diversified property mix. This results in attractive distributions to unitholders, low operating costs, morepredictable supplier and employer relationships, and the opportunity to become a community citizen ratherthan a short-term visitor.Our Economic CommitmentsWe are committed to creating long-term value for our unitholders, employees, communities and governments, suppliers and otherstakeholders. Further, we are committed to:• Reinvesting earnings in employees, communities and capital• Creating employment in our six main field offices and surrounding communities• Preferring local suppliers• Staying invested in Western Canada20 2 Corporate Responsibility

Our Management ApproachOur approach to creating value is not necessarily to grow the number of our assets, but to sustain andoptimize assets. We work to make mature infrastructure economically viable again. By focusing onmaintenance, retrofits and follow-up monitoring, we extend the life expectancy of previously neglectedproperties. In the words of the Coalition of Canadian Energy Trusts: “Capital-efficient trusts work toextract ‘every last drop’ from mature oil and gas reservoirs in Canada and invest in assets that majoroil firms have deemed too small and time-consuming to develop.”Obviously as a trust our primary goal is to generate income for investors. We also see generatingwealth for our other stakeholders as a major goal. We are working to ensure those most affected byour developments continue to share the economic benefits in the form of jobs, local purchases andinvestments in their communities.To be able to contribute to communities, suppliers, governments, and employees we need to remainfinancially successful. For complete information on our financial performance please see ourAnnual Report.Developing Local EconomiesARC is proud of our investment in the local economies of western Canada. Since inception, ARC’scumulative capital spending in western Canada is $1.7 billion. ARC has distributed a total of $2.7billion in cumulative distributions to our unitholders since 1996. ARC has paid out $1.3 billion inroyalties to the provinces we operate in since 1996 and contributed $1.2 billion in operating costs tothe economy. All of these contributions add to the Canadian economy at large through job creationboth in small and large communities, and through money re-invested by unitholders into the purchaseof goods and services and directed to other investments in their provinces and communities.Developing local supply chains brings benefits. We have worked with larger suppliers to make surethey have distribution centres in the same places as our field offices. We have worked directly withseveral small local suppliers to help develop their business and ensure they meet our requirements.Our commitment to responsible development influences how we choose suppliers. In addition toqualifying suppliers based on typical financial considerations, we assess their HSE performance andprefer to hire locally. Strong relationships with our suppliers and contractors are essential to ourmutual success.ARC employs residents of the local communities in which we operate and has more than 150 fieldstaff and consultants working in our six core areas. Because we operate in small, largely agriculturalcommunities, we help to diversify the economy and allow rural residents to prosper in their owncommunities. For example, when ARC purchased the field of Redwater located in central Alberta, wehired new employees to maintain and enhance this older producing area that is fundamental to ourCO 2sequestration strategy.Please see the Communities section of this report for further information on our community investments.Corporate Responsibility 21

Operating Expenses$ Million25020015010050Wages & Benefitsto Employees$ Million605040302010Cash Flow fromOperating Activities$ Million350.0262.5175.087.505 06 0705 06 0705 06 07Our PerformanceOperating ExpensesOperating expenditures have increased by 54 per cent, to over $200 million of which a significantportion goes into the rural communities in western Canada.These figures include purchases of goods and services but exclude capital expenditures.Distributions Paid to UnitholdersSince inception in 1996, the Trust has distributed $21.03 per unit for a total of $2.66 billion.Furthermore, distributions remained at $0.20 per unit per month through 2007, a level that has beenmaintained since October 2005.Royalties to GovernmentsOur most significant economic impact on government finances is the payment of royalties.Since ARC distributes all of our taxable income to unitholders, we do not incur income taxes. Ourcapital and other taxes have totaled less than $4 million/year for the past three years.Lease Payments to LandownersIn addition to obtaining regulatory and social licenses to operate, we need to get approval from thelandowner too. ARC makes lease payments to landowners for access to the resource.The figures in this graph do not include leases paid to the Crown, which have totaled $0.5 million/yearfor the past three years.500400300200100Distributions toUnitholders$ MillionRoyalties to Governments$ Million250200150100501512963Lease Paymentsto Landowners$ Million05 06 0705 06 0705 06 0722 2Corporate Responsibility

performance summaryARC is committed to measuring and reporting our sustainability performance in a transparent manner. When reliable data for performanceindicators are not available, or when calculation methodologies for different years vary considerably we have left a blank in the table.We have included footnotes to provide clarity on definitions, boundary conditions, and other explanations.2005 2006 2007Production (BOE/day) 56,254 63,056 62,723EnvironmentGreenhouse Gas Emissions• Absolute (CO 2e tonnes/yr) (1) 374,101 692,742 689,747• Intensity (CO 2e/m 3 OE) 0.129 0.194 0.185SO 2(tonnes/yr) 2,381 2,461 2,773Benzene (tonnes/yr) 4.67 5.43 2.45Flared gas (10 3 m 3 /yr) 12,771 21,884 16,016Vented gas (10 3 m 3 /yr) 1,149 1,249 725Solution gas conservation rate 95.4% 94.7% 97.7%Water use (m 3 /yr) 236,984 149,353 171,298Reclamation• Abandoned wells 911 940 985• Active reclamation ongoing 198 168 190• Reclamation complete 428 472 483• Certificates received 6 10 11Spills and Leaks• Number of reportable spills 33 48 32• Total volume (m 3 ) 199 339 440• Volume recovered (m 3 ) 0 158 332Number of fines and penalties 0 0 0Health and SafetyContractor and employee injury rates (per/200,000 hours worked)Lost time frequency - Employee 0.00 0.00 0.00Lost time frequency - Contractor 0.44 0.10 0.00Recordable frequency - Employee 0.33 0.24 0.94Recordable frequency - Contractor 4.96 2.36 1.88Fatalities - Employee/Contractor 0 0 0SocialWorkforce profile• Full-time 313 375 378• Part-time 11 14 18Voluntary turnover (%) 10.14 5.87 4.83Community investments ($ thousands) 856.7 1,298.4 1,742.3EconomicRoyalties paid to governments ($ millions) 235.3 222.3 219.4Distributions paid to unitholders ($ millions) 376.6 484.2 498.0Payroll and benefits paid to employees ($ millions) 33.4 44.7 50.2Payments to landowners ($ million) 8.5 11.1 12.4Operating costs ($/boe) 6.9 8.5 9.5Capital Expenditures ($ million) 365.1 496.3 439.7FinancialRevenues ($ millions) 1,165.2 1,230.5 1,251.6Earnings ($ millions) 356.9 460.1 495.3Cash flow from operating activities ($ millions) 639.5 760.6 704.9(1)The increase in 2006 CO 2emissions was a result of the December 2005 acquisition of very mature oil fields from another operator.Corporate Responsibility 23

GRI content indexThis report has been prepared using the G3 version of the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines.We self-declare this report as achieving Application Level C. For more information on the GRI please visit www.globalreporting.orgCategory GRI Indicator Description Page #Strategy & Analysts 1.1 CEO statement 4-6Organizational Profile 2.1 Company name inside front cover24 2 Corporate Responsibility2.2 Primary brands, products, and/or services inside front cover2.3 Operational structure inside front cover2.4 Location of headquarters inside front cover2.5 Countries where ARC operates inside front cover2.6 Nature of ownership and legal form inside front cover2.7 Nature of markets served inside front cover2.8 Scale of the company inside front cover2.9 Significant changes during reporting period N/A2.10 Awards received inside back coverReport Parameters 3.1 Reporting period 23.2 Date of most recent previous report 23.3 Reporting cycle 23.4 Contact point for questions inside back cover3.5 Process for defining report content 23.6 Boundary of report 23.7 Limitations on report scope or boundary 23.8 Basis for reporting on non-wholly owned operations 23.10 Explanation of information restatements N/A3.11 Significant changes in measurement N/A3.12 List of GRI indicators addressed 243.13 Policy and current practice on external assurance of report 2Governance, Commitments & Engagement 4.1 Governance structure, including major committees under the Board 74.2 Independence of Board chair 74.3 Independent, non-executive directors on Board 74.4 Mechanisms for shareholder participation 74.9 Organizational structure for economic, environmental and social management 74.12 Externally developed economic, environmental, and social charters,principles, or other initiativesinside back cover4.14 Stakeholder groups engaged 1, 194.15 Basis for identification and selection of stakeholders with whom to engage 8, 194.16 Approaches to stakeholder consultation 19Economic EC1 Direct economic value generated and distributed 21-23Environmental EN8 Total water withdrawal by source 11, 23EN16 Total direct and indirect greenhouse gas emissions 10, 11, 23EN20 NO, SO, and other significant emissions 10, 11, 23EN23 Total number and volume of significant spills 11, 23EN28 Environmental non-compliance and fines 17, 23Social LA1 Breakdown of workforce 17, 23N/A = not applicableLA2 Total number and rate of employee turnover 17LA4 Employees covered by collective bargaining agreements 17LA7 Standard injury and lost day rates and fatalities 13, 23LA13 Diversity 17HR4 Total number of incidents of discrimination and actions taken 17SO5 Participation in public policy development 8SO6 Contributions to political parties 8PR8 Privacy complaints 17

Contact and FeedbackWe welcome and value your feedback on this report and ourcorporate responsibility activities. If you have any questions,comments or concerns, please contact us:ARC Energy TrustSuite 2100, 440 - 2 Avenue SWCalgary, Alberta, Canada T2P 5E91-888-272-4900 (403) 503-8600ir@arcresources.comwww.arcresources.comaffiliations, Participation and recognitionIn 2003, ARC’s first year ofreporting to the CAPPStewardship program, weachieved Gold level. ARC hasachieved Platinum levelever since.In 2007, ARC was added to theJSI, a common stock index of60 Canadian companies thatpass a set of broadly basedenvironmental, social andgovernance rating criteria.ARC has achieved Gold levelperformance with the CanadianGHG Challege Registry everyyear since 2000, except 2001and 2006 (Silver).ARC responded to the 2008CDP questionnaire, and wasrecognized as being one ofCanada’s Climate DisclosureLeaders.Measurement AbbreviationsbblsbarrelsBOEbarrel of oil equivalentCO 2ecarbon dioxide equivalentKtonneskilotonnesMcfthousand cubic feetMMcfmillion cubic feetMMcfemillion cubic feet equivalentm 3m 3 OEcubic metrescubic metres of oil equivalent10 3 m 3 thousand cubic metres

Suite 2100, 440 - 2 Avenue SWCalgary, Alberta, Canada T2P 5E91-888-272-4900 (403) 503-8600www.arcenergytrust.com