Provident Energy Announces First Quarter Results.

Energy Editors/Business Editors

CALGARY, Alberta--(BUSINESS WIRE)--May 5, 2004

Provident Energy Trust (AMEX:PVX) (TSX:PVE.UN):

First Quarter 2004 Highlights

-- Closed equity offering, raising net proceeds of $47.9 million

-- Entered into negotiations for the concurrent acquisitions of

Olympia Energy and Viracocha Energy for approximately $425

million total; the acquisitions were announced on April 6

-- Generated $39.2 million ($0.45/unit) in cash flow from

operations

-- Declared distributions of $31 million ($0.36/unit)

All values are in Canadian dollars and conversions of natural gas volumes to barrels of oil equivalent (boe) are at 6:1 unless otherwise indicated.

Provident Energy Trust (Provident) reported first quarter 2004 cash flow from operations of $39.2 million ($0.45/unit) compared to $42.0 million ($0.69/unit) in 2003. Distributions declared in the quarter totaled $31.0 million ($0.36/unit) compared to $33.1 million ($0.60/unit) in 2003. For the first quarter 2004, Provident's payout ratio of cash flow from operations was 79 percent and its payout ratio of adjusted cash flow was 86 percent.

For the first quarter, Provident had a net loss of $2.3 million ($0.06/unit) compared to an $8.7 million ($0.17/ unit) loss for the same period in 2003. The implementation of new Canadian Institute of Chartered Accountants Accounting Guideline 13 "hedging relationships" resulted in a pre-tax non-cash reduction to revenue and earnings of $22.2 million and a net loss for the first quarter of 2004.

"Provident experienced a strong start to 2004. Operations within our oil and gas production and midstream services business units were solid and our financial results for the quarter were consistent with expectations," said Provident Chief Executive Officer Tom Buchanan. "We continue to pursue our balanced portfolio business strategy and executed several actions during the first quarter of 2004 which should result in increased cash flow per unit, stable cash distributions, and accretive growth of our underlying business."

During the first quarter of 2004, Provident announced and closed a bought deal financing, issuing 4.5 million trust units at a price of $11.20 per unit for net proceeds of approximately $47.9 million. The net proceeds of the issue were used for debt reduction and to fund ongoing capital expenditures. At quarter-end, Provident's long-term debt to total book value capitalization was approximately 20 percent. Including letters of credit in support of the midstream marketing business of $15.1 million, Provident had drawn on 63 percent of its $310 million revolving term credit facility as compared to 80 percent as of December 31, 2003. Provident maintains a disciplined capital structure that with its longer life stable infrastructure assets can support increased debt leverage compared to traditional oil and gas reserve based trusts.

Additionally during the first quarter, Provident entered into negotiations on two separate and independent Arrangement Agreements to concurrently acquire all the outstanding shares of Olympia Energy Inc. (Olympia) (TSX:OLY) and Viracocha Energy Inc. (Viracocha) (TSX:VCA). The acquisitions were announced on April 6, 2004. Aggregate consideration for Olympia and Viracocha is approximately $217.6 million and $205.9 million, respectively, payable through the issuance of Provident units and the assumption of debt and working capital. The transactions, separately and on a combined basis, are accretive to Provident's cash flow, production and reserves on a per unit basis. Upon closing, expected to occur May 28, 2004, Provident estimates the acquisition of Olympia and Viracocha will increase Provident's 2004 average daily production to approximately 30,000 boed. On a pro forma basis, production will be weighted 45 percent natural gas, 33 percent light/medium oil and NGLs, and 22 percent heavy oil.

Business Unit Results

"Midstream Services' operations performed as expected for the quarter," said Provident President Randy Findlay. "Oil and Gas Production's (OGP) operations were also on track for the quarter. Although, disappointed with the impact weather had on the launch of our capital program, we have now begun our shallow gas drilling activities and will initiate our heavy oil drilling program in May."

Midstream Services

Provident's Midstream Services business unit generates cash flow by providing fee-based services including extraction, transportation, storage, distribution and marketing of natural gas liquids to petroleum productions and refiners, petrochemical companies, and marketing firms. Midstream Services assets comprise the most modern and lowest-cost-NGL processing system of its kind in western Canada  and include 100-percent ownership of the Redwater NGL Fractionation Facility;100-percent ownership of the proprietary Liquids Gathering System; and 43.3-percent ownership of the Younger Extraction Plant.

For the first quarter of 2004, Provident's Midstream Services business unit generated $10.4 million in cash flow from operations - on target with expectations. Throughput at the Redwater fractionation facility averaged 58,640 bpd. There is no comparable period given the fourth quarter of 2003 was the first quarter of recorded contribution from the Midstream Services business unit.

Oil and Gas Production (OGP)

Provident's OGP business unit produces cash flow from the production and sale of natural gas, light/medium oil, natural gas liquids, and heavy oil to energy marketers.

In the first quarter of 2004, OGP generated $28.8 million of cash flow from operations compared to $42.0 million for the same period in 2003. The year over year decrease in OGP cash flow from operations is attributable to lower production volumes, higher operating costs, and a decrease in natural gas prices and OGP's realized crude oil prices due primarily to the increased strength of the Canadian dollar compared to the U.S. dollar.

First quarter 2004 production averaged 24,326 boed compared to 28,602 boed for the same period in 2003. Compared to fourth quarter 2003, production was down 1,900 boed due to natural declines as well as increased downtime and weather driven delays impacting the timing of Provident's Southwest Saskatchewan and Southern Alberta drilling program. Production for the first quarter 2004 was weighted 44 percent natural gas, 29 percent medium/light oil and natural gas liquids, and 27 percent heavy oil.

Operating costs were $8.36/boe during the first quarter compared to $6.79/boe during the first quarter 2003 and $8.99/boe in the fourth quarter of 2003. The year over year increase was due to lower production volumes and increased processing fees and down hole costs, and higher fuel and power costs. Due to the higher fuel and power price environment and increasing down hole service costs, Provident now expects operating costs for the 2004 to average $8.00 - $8.50.

During the first quarter, Provident invested $10.9 million in development capital including $0.5 million spent in Lloydminster and $2.2 million in West Central and Southern Alberta on recompletion and drilling activities. Approximately $7.8 million was spent primarily for three acquisitions of mineral rights in Southeast and Southwest Saskatchewan with significant shallow gas drilling opportunity. Provident executed several property acquisitions in the first quarter of 2004, acquiring 380 boed of production and mineral rights in the Lloydminster and Southern Alberta core areas for $6.6 million. Provident also divested of non-core assets receiving proceeds of $6.4 million. Proceeds from the disposition will go toward funding Provident's 2004 capital program budget, which has increased to approximately $66.3 million from $47.5 million. The capital budget increase is primarily due to a reprioritization and high-grading of Provident's development plans including: $6.9 million of additional capital for shallow gas drilling in Southwest Saskatchewan; $3.8 million for land acquisition; $6.6 million associated with capital spending on assets acquired through the Olympia and Viracocha transactions; and $1.1 million for midstream and corporate programs. Provident now estimates it will add approximately 4,900 boed of initial production, 1,900 boed more than originally budgeted. Production adds through its internal development program should be weighted 62 percent natural gas, 23 percent light/medium oil and NGLs, and 15 percent heavy oil.

Commodity Price Risk Management

Provident's Commodity Price Risk Management involves a disciplined hedging strategy and use of derivative instruments to minimize price risk associated with volatility of commodity prices.

In the OGP business, field netbacks were $15.62 /boe in the first quarter 2004 compared to $18.15/boe realized in the first quarter last year. The 14 percent decrease is due to lower realized commodity prices and higher operating costs offset by lower opportunity cost on hedging activities and decreased royalty costs. For the first quarter of 2004 the program recorded an opportunity cost of $9.4 million on crude oil ($8.23/boe) and an opportunity cost of $0.5 million on natural gas ($0.08/mcf) compared to an opportunity cost of $11.7 million on crude oil ($9.60/barrel) and an opportunity cost of $10.9 million on natural gas ($1.45/mcf) in the first quarter of 2003. In addition, the Midstream Services business unit realized a gain of $0.2 million on propane, ethane and foreign exchange hedging activities with no comparative for 2003.

On a per unit basis opportunity costs were $0.11 in the first quarter of 2004 compared to $0.37 in the first quarter of 2003.

A conference call with senior management to review the quarter results is scheduled for 9 a.m. MDT (11:00 a.m. EDT) on Wednesday, May 5. Analysts, investors and media may access the conference call by dialing 416-405-8532 in the Toronto area and 1-877-295-2825 for all other areas of Canada and the United States. Please call in five to 10 minutes prior to the scheduled start time. A live webcast will also be available on Provident's website at www.providentenergy.com. A replay of the conference call will be available on the Provident website and by dialing 416-695-5800 or 1-800-408-3053. The passcode for the replay is 3045945.

Provident Energy Trust is a Calgary-based, open-ended energy income trust that owns and manages an oil and gas production business and a midstream services business. Provident's energy portfolio is located in some of the more stable and predictable producing regions in western Canada. Provident provides monthly cash distributions to its unitholders and trades on the Toronto Stock Exchange and the American Stock Exchange under the symbols PVE.UN and PVX, respectively.

Corporate Head Office:
700, 112 - 4th Avenue S.W.
Calgary, Alberta Canada T2P 0H3
Phone: [phone]
Toll Free: 1-800-587-6299
Fax: [phone]


Financial highlights

Canadian dollars (000s) except
 per unit amounts                  Quarter ended March 31,
                                        2004         2003   % Change
--------------------------------------------------------------------

Revenue                            $ 234,947     $ 66,710        252
                                   ----------------------
Cash flow from OGP operations         28,822       41,961        (31)
Cash flow from midstream
 services and marketing               10,390            -          -
                                   ----------------------
Total cash flow from operations       39,212       41,961         (7)
                                   ----------------------
 Per weighted average unit
  - basic                               0.45         0.69        (35)
 Per weighted average unit
  - diluted                             0.45         0.69        (35)
Declared distributions to
 unitholders                          31,036       33,091         (6)
 Per unit                               0.36         0.60        (40)
Net loss                              (2,251)      (8,743)        75
 Per weighted average unit
  - basic                              (0.06)       (0.17)        65
 Per weighted average unit
  - diluted                            (0.06)       (0.17)        65
Capital expenditures                  11,519        6,567         75
Property acquisitions                  4,718            -          -
Property dispositions                  6,409        1,788        258
Bank Debt                            178,800      188,500         (5)
Unitholders' equity                  695,813      455,456         53
Weighted average trust units
 and exchangeable shares
 outstanding (000s)                   88,041       61,118         44
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Operational highlights

                                   Quarter ended March 31,
                                        2004         2003   % Change
--------------------------------------------------------------------
Oil and Gas Production:
Daily production
 Light/medium crude oil (bpd)          5,965        7,285        (18)
 Heavy oil (bpd)                       6,588        6,245          5
 Natural gas liquids (bpd)             1,130        1,085          4
 Natural gas (mcf)                    63,859       83,924        (24)
                                    --------------------------------
 Oil equivalent (boed)(1)             24,326       28,602        (15)
Average selling price
 (before hedges)
 Light/medium crude oil ($/bbl)      $ 39.00      $ 43.64        (11)
 Heavy oil ($/bbl)                   $ 26.84      $ 31.63        (15)
 Corporate oil blend ($/bbl)         $ 32.62      $ 38.09        (14)
 Natural gas liquids ($/bbl)         $ 37.03      $ 45.13        (18)
 Natural gas ($/mcf)                 $  6.40      $  7.94        (19)
 Oil equivalent ($/boe)(1)           $ 35.34      $ 43.02        (18)
Netback (including hedges)($/boe)    $ 15.62      $ 18.15        (14)
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Midstream services and marketing
Redwater throughput (bpd)             58,640            -          -
--------------------------------------------------------------------
(1) Provident reports oil equivalent production converting natural
    gas to oil on a 6:1 basis.

Management's Discussion and Analysis

The following analysis provides a detailed explanation of Provident's operating results for the three months ended March 31, 2004 compared to the three months ended March 31, 2003 and should be read in conjunction with the consolidated financial statements of Provident.

This disclosure 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; 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 therefrom. All amounts are reported in Canadian dollars, unless otherwise stated.

Provident Energy Trust has diversified investments in certain segments of the energy value chain. Provident currently operates in two key business segments: crude oil and natural gas production and exploitation (OGP) and Midstream Services and Marketing (Midstream). Provident's OGP business unit produces crude oil and natural gas from five core areas in the western Canadian sedimentary basin while the Midstream business unit processes, markets, transports and offers storage of natural gas liquids at the Redwater facility and surrounding infrastructure located north of Edmonton, Alberta, and markets crude oil.

This analysis commences with a summary of the consolidated financial and operating results followed by segmented reporting on the OGP business unit and the Midstream business unit. The reporting focuses on the financial and operating measurements management uses in making business decisions and evaluating performance.

Consolidated cash flow from operations and cash distributions

                                                 Three months ended
                                                       March 31,
                                                 2004           2003
--------------------------------------------------------------------
Revenue, Cash Flow and Distributions
Revenue (net of royalties and
 non-hedging derivative instruments)          234,947         66,710

Cash flow from Operations                      39,212         41,961
 Per weighted average unit - basic(1)            0.45           0.69
 Per weighted average unit - diluted(1)          0.45           0.69
Interest on convertible debentures             (2,943)        (1,589)
                                             -----------------------
Adjusted cash flow                             36,269         40,372
Declared distributions                         31,036         33,091
 Per Unit(2)                                     0.36           0.60
Percent of cash flow distributed                   79%            79%
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Percent of adjusted cash flow distributed          86%            82%
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(1) includes exchangeable shares
(2) excludes exchangeable shares

Cash flow from operations ("cash flow") decreased 7 percent or $2.7 million in the first quarter of 2004 to $39.2 million as compared to the first quarter of 2003 total of $42.1 million. OGP generated $28.8 million of cash flow in the first quarter of 2004 compared to $42.0 million in the first quarter of 2003 while Midstream generated $10.4 million in cash flow in the first quarter of 2004 with no comparable figure for 2003.

The decrease in OGP cash flow is attributable to a 15 percent production decline combined with a decrease in the realized commodity prices as well as a higher weighting of heavy oil in Provident's production mix in the first quarter of 2004 compared to the first quarter of 2003.

The 15 percent decrease in production was due to natural production declines offset by development volume additions. The decrease in the realized commodity price was primarily associated with the lower natural gas prices in tandem with the appreciated value of the Canadian dollar against the US dollar in the first quarter of 2004 compared to the first quarter of 2003. Quarter over quarter there was a 13 percent appreciation in the value of the Canadian dollar against the US dollar. For commodity prices denominated in US dollars the appreciation of the Canadian dollar resulted in lower realized prices for Provident. Provident had a slightly higher percentage of heavy oil in its production mix in the first quarter of 2004 when compared to the first quarter of 2003. Prices for heavy oil are lower than for light or medium blends of crude oil. In 2003 natural production declines were primarily offset by a heavy oil drilling program. Heavy oil accounted for 27 percent of first quarter 2004 production compared to 22 percent in the first quarter of 2003.

Cash flow per unit decreased 35 percent to $0.45 from $0.69 in the first quarter of 2004 as compared to the first quarter of 2003. The opportunity cost associated with the Commodity Price Risk Management Program was $0.11 per unit in the first quarter of 2004 compared to an opportunity cost of $0.37 in the first quarter of 2003.

Management uses cash flow (before changes in non-cash working capital) to analyze operating performance. Cash flow as presented does not have any standardized meaning prescribed by Canadian GAAP and therefore it may not be comparable with the calculation of similar measures for other entities. Cash flow as presented is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with Canadian GAAP. All references to cash flow throughout this report are based on cash flow before changes in non-cash working capital.

Adjusted cash flow

Provident uses the term adjusted cash flow to refer to cash flow from operations net of the interest paid on the subordinated convertible debentures. Management reviews adjusted cash flow in setting distributions and historically has paid out the majority of its adjusted cash flow as distributions to unitholders. Provident has historically maintained a high payout ratio of adjusted cash flow as it has funded its annual capital program primarily through participation in its Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan program and minor property dispositions.

Distributions

The following table summarizes distributions paid or declared by the
Trust since inception:
--------------------------------------------------------------------
                                                 Distribution Amount
Record Date            Payment Date                (Cdn$)       (US$)
--------------------------------------------------------------------
2004
January 22, 2004       February 13, 2004           $0.12       $0.09
February 19, 2004      March 15, 2004               0.12        0.09
March 19, 2004         April 15, 2004               0.12        0.09
--------------------------------------------------------------------

Q1 2004 Cash Distributions paid as declared        $0.36       $0.27
--------------------------------------------------------------------
2003 Cash Distributions paid as declared           $2.06       $1.47
2002 Cash Distributions paid as declared           $2.03       $1.29
2001 Cash Distributions paid as declared
 - March 2001 - December 2001                      $2.54       $1.64
--------------------------------------------------------------------
Inception to March 31, 2004 -
 Distributions paid as declared                    $6.99       $4.67
--------------------------------------------------------------------
(a) exchange rate based on the Bank of Canada noon rate on the
    payment date.


Net loss

                                                  Three months ended
                                                        March 31,
--------------------------------------------------------------------
(000s except per unit data)                         2004        2003
--------------------------------------------------------------------

Net loss                                        $ (2,251)   $ (8,743)
 Per weighted average unit - basic(1)           $  (0.06)   $  (0.17)
 Per weighted average unit - diluted(2)         $  (0.06)   $  (0.17)
--------------------------------------------------------------------
(1) Based on weighted average number of trust units and trust units
    that would be issued upon conversion of exchangeable shares. Net
    loss available for distribution to unitholders in the basic and
    diluted per trust unit calculations has been reduced by interest
    on the convertible debentures.
(2) Based on weighted average number of trust units and trust units
    that would be issued upon conversion of exchangeable shares and
    conversion of the convertible debentures.

The net loss for the first quarter of 2004 is due to the implementation of CICA Accounting Guideline 13, "Hedging relationships." Under accounting guideline 13, hedging transactions must be documented and it must be demonstrated that the hedges are sufficiently effective to continue hedge accounting for positions hedged with derivatives. Provident did not apply hedge accounting to the Commodity Price Risk Management Program and therefore has marked to market the outstanding derivatives as of March 31, 2004. This resulted in a non-cash charge of $15.5 million in the first quarter of 2004. In addition, under accounting guideline 13, Provident's December 31, 2003 mark to market opportunity cost position of $25.2 million was set up as a deferred derivative loss and will be amortized as a non-cash expense over the life of those derivatives. Amortization of this amount resulted in a non-cash charge of $6.6 million in the first quarter of 2004. The combined net non-cash pre-tax charge for the quarter attributed to accounting guideline 13 was $22.0 million. On an after tax basis the impact was $14.1 million. In future periods, the non-cash mark to market expense or recovery (recorded as loss or gain on non-hedging derivative instruments) may be significant depending on Provident's derivative portfolio and the change in market prices during those periods.

The OGP business segment contributed $28.8 million of cash flow, $30.7 million of income before DD&A, taxes and non-cash charges to income, and had a net loss of $14.5 million. The Midstream business unit contributed $10.4 million of cash flow, $11.7 million of income before DD&A, taxes and non-cash charges to income, and had net income of $4.4 million.

The first quarter 2003 net loss was primarily associated with $18.4 million non-cash expense associated with the management internalization. Further, the 2003 comparative figures for the net loss have been restated for the retroactive application of the Asset Retirement Obligation accounting standard.

Taxes

                                                 Three months ended
                                                      March 31,
--------------------------------------------------------------------
                                                2004            2003
--------------------------------------------------------------------

Capital taxes                              $   1,005        $  1,210
Future income taxes recovery               $ (14,549)       $ (2,674)
--------------------------------------------------------------------

The first quarter 2004 future income tax recovery of $10.5 million was in part due to the Alberta corporate income tax rate dropping from 12.5 percent to 11.5 percent.

Capital taxes include the Saskatchewan Resource surcharge and federal and provincial large corporation taxes. Comparative figures for future income taxes (recovery) have been restated due to the retroactive application of the new Asset Retirement Obligation accounting standard.

Interest expense
                                                 Three months ended
                                                      March 31,
--------------------------------------------------------------------
                                                2004            2003
--------------------------------------------------------------------

Interest on long-term debt                   $ 2,144         $ 2,269
 Weighted-average interest rate                  4.0%            4.2%
--------------------------------------------------------------------

Interest expense decreased by 6 percent in the first quarter of 2004 as compared to the first quarter of 2003. This is primarily due to the issue of 4.5 million units on February 4, 2004 for net proceeds of $47.9 million. Proceeds of the issuance of these units were applied against long-term debt and, at March 31, 2004 Provident's long-term debt of $178.8 million was 5 percent lower than March 31, 2003.

Financial Instruments

Commodity Price Risk Management Program

Provident's Commodity Price Risk Management Program has been in place since the inception of the Trust to help manage the volatility in Provident's oil and natural gas prices and to assist with stabilizing cash flow and distributions per unit. Provident uses a combination of forward sales contracts, physical hedges on both wellhead prices and heavy oil differentials, financial hedging on WTI crude oil and AECO natural gas prices and Cdn/US exchange rate hedges.

For the first quarter of 2004 the program recorded an opportunity cost of $9.4 million on crude oil ($8.23 per barrel) and an opportunity cost of $0.5 million on natural gas ($0.08 per mcf) compared to an opportunity cost of $11.7 million on crude oil ($9.60 per barrel) and an opportunity cost of $10.9 million on natural gas ($1.45 per mcf) in the first quarter of 2003. In addition, the Midstream business unit realized a gain of $0.2 million on propane, ethane and foreign exchange hedging activities with no comparative for 2003. On a per unit basis opportunity costs were $0.11 in the first quarter of 2004 compared to $0.37 in the first quarter of 2003.

At March 31, 2004 the mark to market value of open contracts was in a loss position of $40.6 million based on commodity prices prevailing at that date.

A table summarizing Provident's aggregate position under the Commodity Price Risk Management Program as at March 31, 2004 is available on Provident's website at www.providentenergy.com.

Liquidity and Capital Resources

                                           March 31,     December 31,
--------------------------------------------------------------------
                                               2004             2003
--------------------------------------------------------------------
Long-term debt                            $ 178,800        $ 236,500
Working capital (surplus)/deficit            15,343          (18,552)
                                         ---------------------------
Net debt                                    194,143          217,948
                                         ---------------------------

Equity (at book value)                      695,813          679,228
                                         ---------------------------

                                         ---------------------------
Total capitalization at book value        $ 889,956        $ 897,176
                                         ---------------------------
                                         ---------------------------

 Net debt as a percentage of total
  book value capitalization                      22%              24%
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Bank debt and working capital

As at March 31, 2004 Provident had drawn on 58 percent of its $310.0 million term credit facility as compared to 80 percent drawn as of December 31, 2003. The decrease in the percentage drawn was due to the issue of 4.5 million units for net proceeds of $47.9 million on February 4, 2004. The proceeds for the issuance of these units has initially been applied to long-term debt.

At March 31, 2004 Provident had letters of credit guaranteeing Provident's performance under certain commercial contracts that totaled $15.1 million, marginally increasing bank line utilization to 63 percent. The guarantees are associated with the midstream business unit. At December 31, 2003 Provident's guarantees totaled $12.3 million.

Provident's working capital decreased by $33.9 million as at March 31, 2004. $22.0 million of the decrease was due to the implementation of accounting guideline 13, "Hedging Relationships" (see changes in accounting policy in this MD&A), $10.2 million was due to the decrease in petroleum product inventory, while $1.7 million was due to changes in miscellaneous working capital accounts.

Convertible subordinated debentures

                                         Three months ended March 31,
--------------------------------------------------------------------
                                                     2004       2003
--------------------------------------------------------------------
Interest on 10.5% convertible debentures          $ 1,307    $ 1,589

Conversions on 10.5% convertible debentures            25      1,905

Interest on 8.75% convertible debentures          $ 1,636    $     -

Conversions on 8.75% convertible debentures             -          -

Total interest on convertible debentures          $ 2,943    $ 1,589

Total conversions on convertible debentures            25      1,905
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The Trust's debentures net of issue costs are currently classified in Unitholders' Equity as the principal amount of the debentures can be settled with either trust units or cash at the time of maturity. Interest on the Debentures is included in Unitholders' Equity as accumulated interest on convertible debentures.

Trust Units

In the first quarter of 2004 the Trust issued 0.3 million units on conversion of exchangeable shares to units (conversion amount $2.1 million) (first quarter of 2003 - 3.1 million units with a conversion amount of $31.3 million), 0.002 million units on conversion of convertible debentures (conversion amount $0.025 million) (first quarter of 2003 - 0.2 million units with a conversion amount of $1.9 million) and 0.4 million units were issued or are to be issued resulting from Provident's DRIP program (proceeds of $4.6 million) (first quarter of 2003 - 0.7 million units with proceeds of $7.5 million).

On February 4, 2004 the Trust issued 4.5 million units at $11.20 per unit for proceeds of $50.4 million ($47.9 million net of issue costs) pursuant to a January 22, 2004 public offering. Proceeds from the issue were initially used to pay down Provident's bank debt and throughout 2004 will be used to finance the 2004 capital budget.

Capital expenditures and funding
                                                  Three Months Ended
                                                        March 31,
                                                    2004        2003
--------------------------------------------------------------------
Capital Expenditures and Funding
Capital Expenditures
Capital expenditures and site restoration      $ (12,071)   $ (7,210)
Property acquisitions                             (4,718)          -
Corporate acquisitions                                 -        (164)
Property dispositions                              6,409       1,788
                                              ----------------------
Net capital expenditures                       $ (10,380)   $ (5,586)
                                              ----------------------
                                              ----------------------

Funded By
Adjusted cash flow net of
 declared distributions                            5,233       7,281
Issue of trust units, net of cost;
 excluding DRIP                                   48,631         600
DRIP proceeds                                      4,604       7,500
Change in working capital                          9,612     (11,095)
Increase (decrease) in long term bank debt       (57,700)      1,300
                                              ----------------------
                                               $  10,380    $  5,586
                                              ----------------------
                                              ----------------------

Capital expenditures were funded by a combination of DRIP proceeds, proceeds received on non-core property dispositions, cash flow and equity. Provident's strategy is to fund acquisitions by accessing the capital markets and to fund capital expenditures through DRIP and other equity if needed.

Asset Retirement Obligation

                                 For the three months ended March 31,
                                                  2004          2003
--------------------------------------------------------------------
Carrying amount, beginning of period          $ 33,182      $ 32,645
Increase in liabilities during the period          329           130
Settlement of liabilities during the period     (1,068)         (143)
Accretion expense                                  580           543
                                              --------      --------
Carrying amount, end of period                $ 33,023      $ 33,175
                                              --------      --------
                                              --------      --------

--------------------------------------------------------------------

Asset retirement obligation (ARO) decreased by $0.2 million to $33.0 million during the first quarter of 2004. The decrease in the ARO balance in the quarter is primarily associated with the disposition of the Westward Ho area.

The Trust's asset retirement obligation is based on the Trust's net ownership in wells and facilities and management's estimate of the costs to abandon and reclaim those wells and facilities as well as an estimate of the future timing of the costs to be incurred. Midstream assets, including the Redwater facility, the Younger Plant and the liquids gathering system have been excluded from the asset retirement obligation as retirement obligations associated with these assets have indeterminate settlement dates.

The total undiscounted amount of future cash flows required to settle asset retirement obligations is estimated to be $99.0 million. Payments to settle asset retirement obligations occur over the operating lives of the assets estimated to be from zero to 20 years. Estimated cash flows have been discounted at the Trust's credit-adjusted risk free rate of 7 percent and an inflation rate of 2 percent.

Non-cash general and administrative

Non-cash general and administrative includes expenses or recoveries associated with Provident's unit option plan. Provident recorded a recovery of $0.4 million in the first quarter of 2004 (2003 - nil).

OGP Segment Review

Crude oil price

The following prices are net of transportation expense.

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------

Oil per barrel
 WTI (US$)                             $ 35.16     $ 33.80         4
 Exchange rate (from US$ to Cdn$)      $  1.32     $  1.51       (13)
 WTI expressed in Cdn$                 $ 46.41     $ 51.04        (9)
 Corporate realized crude oil and
  natural gas liquids price before
  hedging (Cdn$)                       $ 32.98     $ 38.61       (15)
 Corporate realized light/medium
  oil price before hedging (Cdn$)      $ 39.00     $ 43.64       (11)
 Corporate realized heavy oil price
  before hedging (Cdn$)                $ 26.84     $ 31.63       (15)
 Corporate realized natural gas
  liquids price before hedging (Cdn$)  $ 37.03     $ 45.13       (18)
--------------------------------------------------------------------

Provident's pre-hedged realized oil and natural gas liquids price decreased 15 percent to $32.98 in the first quarter of 2004 as compared to the first quarter of 2003. Two key factors lead to decrease Provident's pre-hedged realized oil and natural gas liquids price. First, the 13 percent strengthening in the value of the Canadian dollar versus the US dollar in the first quarter of 2004 compared to the first quarter of 2003, eroded Provident's pre-hedged price. Secondly, lower priced heavy oil, as a percentage of total oil and natural gas liquids production, increased 5 percent to 48 percent in the first quarter of 2004 when compared to the first quarter of 2003.

Natural gas price

The following prices are net of transportation expense.

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------

AECO (Cdn$)                             $ 6.60      $ 7.61       (13)
Gas revenue per mcf (1)(Cdn$)           $ 6.40      $ 7.94       (19)

(1) Excluding the effects of the commodity price risk management
    program
--------------------------------------------------------------------

Provident's realized gas price excluding hedges was off 19 percent in the first quarter of 2004 compared to the very high price environment that existed in the first quarter of 2003.

Production

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------

Daily production
 Crude oil - Light/Medium (bpd)          5,965       7,285       (18)
           - Heavy (bpd)                 6,588       6,245         5
 Natural gas liquids (bpd)               1,130       1,085         4
 Natural gas (mcfd)                     63,859      83,924       (24)
                                        ----------------------------
 Oil equivalent (boed) (1)              24,326      28,602       (15)

(1) Provident reports equivalent production converting natural gas
    to oil on a 6:1 basis.
--------------------------------------------------------------------

The first quarter of 2004 daily production mix was 44 percent natural gas, 27 percent conventional heavy oil and 29 percent medium/light crude oil and natural gas liquids. This compares to 49 percent natural gas, 22 percent conventional heavy oil and 29 percent medium/light crude oil and natural gas liquids in the first quarter of 2003. Any single property within Provident's portfolio does not exceed 10 percent of daily production.

Revenue and royalties

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------
Oil
 Revenue                              $ 38,524    $ 46,828       (18)
 Cash hedging                           (9,396)    (11,685)      (20)
 Royalties (net of ARTC)                (7,272)     (8,665)      (16)
                                      ------------------------------
 Net revenue                          $ 21,856    $ 26,478       (17)
                                      ------------------------------
                                      ------------------------------
 Net revenue (per barrel)             $  19.13    $  21.74       (14)
 Royalties as a percentage of revenue     18.9%       18.5%        3

Natural gas
 Revenue                              $ 37,620    $ 60,572       (38)
 Cash hedging                             (445)    (10,917)      (96)
 Amortization of deferred hedging            -        (245)        -
 Royalties (net of ARTC)                (6,971)    (13,651)      (49)
                                      ------------------------------
 Net revenue                          $ 30,204    $ 35,759       (16)
                                      ------------------------------
                                      ------------------------------
 Net revenue (per mcf)                $   5.20    $   4.73        10
 Royalties as a percentage of revenue     18.5%       22.5%      (18)

Natural gas liquids
 Revenue                              $  3,808    $  4,406       (14)
 Royalties                              (1,002)     (1,616)      (38)
                                      ------------------------------
 Net revenue                          $  2,806    $  2,990        (6)
                                      ------------------------------
                                      ------------------------------
 Net revenue (per barrel)             $  27.29    $  30.62       (11)
 Royalties as a percentage of revenue     26.3%       36.7%      (28)

Total
 Revenue                              $ 79,952    $111,806       (28)
 Cash hedging                           (9,841)    (22,602)      (56)
 Amortization of deferred hedging            -        (245)        -
 Royalties (net of ARTC)               (15,245)    (23,932)      (36)
                                      ------------------------------
 Net revenue                          $ 54,866    $ 65,027       (16)
                                      ------------------------------
                                      ------------------------------
 Net revenue per boe                  $  24.78    $  25.26        (3)
 Royalties as a percentage of revenue     19.1%       21.4%      (10)
--------------------------------------------------------------------

Quarter over quarter, oil, natural gas and natural gas liquids revenue has decreased by 28 percent. The decrease in revenue is made up of three key elements. First, production decreased 15 percent in the first quarter of 2004 when compared to the first quarter of 2003. Second, Provident's pre-hedged realized price for oil, natural gas and natural gas liquids decreased 17 percent in the first quarter of 2004 when compared to the first quarter of 2003. The decrease in Provident's pre-hedged realized price is primarily associated with the 13 percent appreciation of the Canadian dollar compared to the US dollar but is also due to weaker commodity prices for natural gas as well as a 5 percent increase in heavy oil production as a percentage of Provident's oil and natural gas liquids production.

Production expenses

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------
Production expenses                   $ 18,504    $ 17,484         6
Production expenses (per boe)         $   8.36    $   6.79        23
--------------------------------------------------------------------

Production expenses, expressed on a boe basis, increased 23 percent in the first quarter of 2004 compared to the same period in 2003. This increase reflects declining production volumes bearing the fixed cost component of operating cost over fewer barrels of oil equivalent production. Further, higher costs for electricity, propane, processing fees and equalization costs have trended higher in recent quarters driven by high commodity prices and increased servicing and workover costs.

In the current commodity price environment of WTI in excess of US$30 per barrel and AECO above CDN$6.00/GJ, the increased electricity costs and processing charges will drive Provident's operating costs to the $8.00 to $8.50 per barrel range.

General and administrative

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------

Cash general and administrative        $ 4,386     $ 2,918        50
Cash general and administrative
 per boe                               $  1.98     $  1.13        75
--------------------------------------------------------------------

General and administrative expenses increased 50 percent in the first quarter of 2004 when compared to the first quarter of 2003 due to additional staff and increased rent. The increase in the barrel of oil equivalent rate has also been affected by the 15 percent quarter over quarter production decrease.

Operating netback

                                         Three months ended March 31,
--------------------------------------------------------------------
                                          2004        2003  % change
--------------------------------------------------------------------
Netback per boe
 Gross production revenue              $ 35.88     $ 43.44       (17)
 Cash hedging                            (4.45)      (8.78)      (49)
                                       -----------------------------
 Realized revenue                        31.43       34.66        (9)

 Royalties (net of ARTC)                 (6.89)      (9.30)      (26)
 Transportation costs                    (0.56)      (0.42)       33
 Operating costs                         (8.36)      (6.79)       23
                                       -----------------------------
                                       $ 15.62     $ 18.15       (14)
                                       -----------------------------
--------------------------------------------------------------------

At $15.62 the first quarter 2004 operating netback was 14 percent lower than the $18.15 realized in the first quarter of 2003. The decrease in the netback is due to lower realized commodity prices and higher operating costs offset by lower opportunity costs on hedging activities and decreased royalty costs.

Depletion, depreciation and accretion (DD&A)

                                               Three months ended
                                                    March 31,
--------------------------------------------------------------------
Canadian dollars (000s except per unit data)     2004           2003
--------------------------------------------------------------------

DD&A                                         $ 32,153       $ 34,783
DD&A per boe                                 $  14.53       $  13.52

--------------------------------------------------------------------

DD&A includes accretion expense associated with asset retirement obligation of $0.6 million in the first quarter of 2004 (first quarter of 2003 - $0.5 million).

Capital expenditures

                                               Three months ended
                                                    March 31,
--------------------------------------------------------------------
Canadian dollars (000s)                          2004           2003
--------------------------------------------------------------------

Lloydminster                                 $    500       $  3,118
West central and southern Alberta               2,190          1,847
Southeast and southwest Saskatchewan            7,750          1,120
Office and other                                  540            482
                                             -----------------------
Total additions                              $ 10,980       $  6,567
                                             -----------------------
                                             -----------------------

Property acquisitions                        $  4,718       $      -
                                             -----------------------
                                             -----------------------

Dispositions                                 $  6,409       $  1,788
                                             -----------------------
--------------------------------------------------------------------

Provident's capital expenditures are primarily funded through the Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan (DRIP). The DRIP program allows investors to reinvest distributions into Trust Units. Provident directs proceeds from the DRIP program, along with the proceeds from asset dispositions, towards the capital expenditure budget.

Provident spent $11.0 million in the first quarter of 2004 of which $0.5 million was spent in the Lloydminster core area on re-completions, equipping and seismic activities. $2.2 million was spent in the west central and southern Alberta core areas on non-operated drilling activities combined with several re-completions, and facility upgrades. $7.8 million was spent in southeast and southwest Saskatchewan primarily for the acquisition of mineral rights.

Provident also executed several property acquisitions in the first quarter of 2004. Through these purchases Provident acquired some production as well as additional mineral rights in both the Lloydminster and southern Alberta core areas.

Provident incurred $6.6 million of capital expenditures in the first quarter of 2003 primarily associated with a drilling program in the Lloydminster core area.

In the quarter Provident received proceeds of $6.4 million from the disposition of properties that management believed did not fit within the risk profile for future development at Provident. The proceeds of the disposition will be used to fund a portion of Provident's 2004 capital program.

Midstream Services and Marketing Review

The assets

The Midstream business unit processes natural gas liquids (NGL) at the Redwater fractionation, storage and transportation facility located near Edmonton, Alberta. The integrated Redwater system is comprised of three core assets:

-- 100 percent ownership of the Redwater NGL Fractionation

Facility, a 65,000 barrels per day (bbl/d) fractionation,

storage and transportation facility that includes 12 pipeline

receipt and delivery points, railcar loading facilities with

direct access to CN and CP rail, two propane truck loading

facilities, and six million gross barrels of salt cavern

storage. The facility can process high-sulphur NGL streams and

is one of only two facilities in western Canada capable of

extracting ethane from the natural gas liquids stream.

-- 43.3 percent ownership of the 38,500 bbl/d Younger NGL

extraction plant located at Taylor in northeastern British

Columbia that supplies 16,700 bbl/d of net NGLs for processing

at Redwater.

-- 100 percent ownership of the 565 kilometer proprietary Liquids

Gathering System that runs along the Alberta-British Columbia

border providing access to a highly active basin for

liquids-rich natural gas exploration and exploitation.

Provident also has long-term shipping rights on the Pembina

Peace Pipeline, that extends the product delivery

transportation network through to the Redwater fractionation

facility.

The majority of the property, plant and equipment are depreciated over 30 years on a straight-line basis reflecting the long useful life of these assets.

Midstream services

Provident's midstream services offers customers several types of services and contractual arrangements which include:

Fee for service processing - ("Transportation and Fractionation - T&F") In these arrangements, NGL owners (typically natural gas producers) deliver to Provident their NGLs and pay fees for the transportation, processing, fractionation, storage and distribution of their NGL barrels and are responsible for the marketing of their product.

Fixed margin processing: This service involves NGL owners delivering their product to Provident with Provident taking title and paying the NGL owner an amount that is the difference between a delivery price of raw NGLs that is discounted to postings and the posted price in that month for the finished products (this is the "fixed margin"). The discounted price that Provident purchases the product for covers the costs of transportation, fractionation, storage, marketing and distribution of the NGLs.

Storage: NGL owners pay fees to store their NGLs.

Transport and Distribution: NGL owners pay fees to transport NGLs through the LGS pipeline and use rail and truck loading facilities.

The contracts

At the Redwater facility, approximately 75% of the available capacity is contracted through fee-for-service with major oil and natural gas producers and petrochemical businesses. As a result of these contracts, approximately 68% of Redwater's system volume is contracted for 10 years or longer.

Fractionation plant capacity and throughput

The Redwater facility was constructed between 1996 and 1998. It is the most modern facility of its type in Canada and is currently designed for throughput capacity of 65,000 bpd of NGLs with an expectation to average approximately 63,000 bpd. During the quarter throughput averaged 58,640 bpd. While throughput at Redwater averaged less than 63,000 bpd, Provident was able to optimize existing capacity and contractual arrangements to achieve its financial objectives.

Revenues

First quarter of 2004 product sales and services revenues of $161.2 million include T&F processing, fixed margin processing and revenues generated through storage and distribution services. The majority of NGL revenues are earned pursuant to the long-term contracts and annual evergreen purchase and sales commitments.

Cost of goods sold

The cost of goods sold of $139.6 million for the quarter relates to NGL product sales revenue included in the product sales and services revenue, where Provident has purchased the natural gas liquids. The NGL costs would be applicable to the fixed margin contracts and a small percentage of volume delivered from the Younger facility on which Provident retains fractionation risk. The majority of the natural gas liquids are purchased pursuant to long-term contracts and annual evergreen purchase commitments.

Other expenses

The plant has modern technology and low cost operations compared to other existing North American facilities of this type. First quarter 2004 operating costs of $9.0 million were representative of normal operations for the quarter without any major turnarounds or operating difficulties. General and administrative expenses of $0.9 million, interest of $1.1 million, and depreciation of $2.3 million for the quarter are estimated by management to also be representative of normal operations for a quarter.

Crude oil marketing

In the first quarter of 2004 $33.2 million revenue was generated from marketing other producers' crude oil. Management estimates that marketing of third party volumes, combined with certain Provident crude oil volumes, will provide better producer netbacks than can be achieved through third party marketers.

Critical Accounting Policies

Certain accounting policies are identified as critical accounting policies because they form an integral part of Provident's financial position and also require management to make judgments and estimates based on conditions and assumptions that are inherently uncertain. These accounting policies could result in materially different results should the underlying assumptions or conditions change.

Management assumptions are based on Provident's historical experience, management's experience, and other factors that, in management's opinion, are relevant and appropriate. Management assumptions may change over time as further experience is gained or as operating conditions change.

Details of Provident's critical accounting policies are as follows:

Property, plant and equipment

Provident follows the full cost method of accounting, whereby all costs associated with the acquisition and development of oil and natural gas reserves are capitalized. Utilization of the full cost method of accounting requires the use of management estimates and assumptions for amounts recorded for depletion and depreciation of property, plant and equipment as well as for the ceiling test.

The provision for depletion and depreciation is calculated using the unit of production method based on current production divided by Provident's share of estimated total proved oil and natural gas reserve volumes before royalties. The recoverability of a cost centre is tested by comparing the carrying value of the cost centre to the sum of the undiscounted cash flows expected from the cost centre. If the carrying value is not recoverable the cost centre is written down to its fair value.

Proved reserves are an estimate, under existing reserve evaluation polices, of volumes that can reasonably be expected to be economically recoverable under existing technology and economic conditions. Changes in underlying assumptions or economic conditions could have a material impact on Provident's financial results. To mitigate these risks management utilizes McDaniel & Associates Consultants Ltd., an independent engineering firm, to evaluate Provident's reserves.

Estimates of future production, oil and natural gas prices and future costs used in the ceiling test are, by their very nature, subject to uncertainty and changes in underlying assumptions could have a material impact on Provident's financial results.

Asset retirement obligation

The new Canadian Institute of Chartered Accountants ("CICA") standard for Asset Retirement Obligations changes the method of accounting for certain site restoration costs. Under the new standard, the fair value of asset retirement obligations are recorded as liabilities on a discounted basis, when incurred. The value of the related assets are increased by the same amount as the liability and depreciated over the useful life of the asset. Over time the liability is adjusted for the change in present value of the liability or as a result of changes to either the timing or amount of the original estimate of undiscounted future cash flows.

Asset retirement obligation requires that management make estimates and assumptions regarding future liabilities and cash flows involving environmental reclamation and remediation. Such assumptions are inherently uncertain and subject to change over time due to factors such as historical experience, changes in environmental legislation or improved technologies. Changes in underlying assumptions, based on the above noted factors, could have a material impact on Provident's financials results.

Changes in Accounting Policy

Hedging relationships

Effective January 1, 2004 the Trust adopted CICA accounting guideline 13, "Hedging relationships." This accounting guideline addresses the identification, designation, documentation and effectiveness of hedging relationships for the purpose of applying hedge accounting. In addition, it establishes criteria for discontinuing the use of hedge accounting. Under accounting guideline 13, hedging transactions must be documented and it must be demonstrated that the hedges are sufficiently effective to continue accrual accounting for positions hedged with derivatives. Any derivative financial instruments that do not meet the hedging criteria will be accounted for in accordance with Emerging Issues Committee ("EIC") - 128, "Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments." These instruments will be recorded on the balance sheet at fair value and changes in fair value will be recognized in income in the period in which the change occurs. In connection with the implementation of accounting guideline 13 the Trust reviewed its Commodity Price Risk Management Program and determined that none of the derivative instruments qualified for hedge accounting.

At January 1, 2004 the Trust recorded an unrealized loss of $25.2 million in deferred charges on the Consolidated Balance Sheet that is being recognized in income over the term of the previously designated hedged items. The earnings impact was a $6.6 million loss before taxes and was recorded in amortization of deferred charges on the Statement of Operations and Accumulated Loss.

At March 31, 2004 the Trust recorded a non-hedging derivative instrument payable of $40.6 million ($35.4 million short-term and $5.2 million long-term), that being the mark to market loss position of the Trust's non-hedging derivative instruments at that date. As a result, the Trust recorded a loss on non-hedging derivative instruments of $15.4 million on the Statement of Operations and Accumulated Loss, that being the difference between January 1, 2004 mark to market loss position of $25.2 million on non-hedging derivative instruments and the March 31, 2004 loss position of $40.6 million on non-hedging derivative instruments.

Full cost accounting

Effective January 1, 2004 the Trust adopted CICA accounting guideline 16, "Oil and Gas Accounting - Full Cost." This accounting guideline replaced CICA accounting guideline 5, "Full cost accounting in the oil and gas industry." Accounting guideline 16 modifies how the ceiling test calculation is performed. The recoverability of a cost centre is tested by comparing the carrying value of the cost centre to the sum of the undiscounted cash flows expected from the cost centre. If the carrying value is not recoverable the cost centre is written down to its fair value. Adopting accounting guideline 16 had no effect on the Trust's financial results.

Business risks

The oil and natural gas trust industry is subject to numerous risks that can affect the amount of cash flow available for distribution to unitholders and the ability to grow. These risks include but are not limited to:

-- fluctuations in commodity price, exchange rates and interest

rates;

-- government and regulatory risk in respect of royalty and

income tax regimes;

-- operational risks that may affect the quality and

recoverability of reserves;

-- geological risk associated with accessing and recovering new

quantities of reserves;

-- transportation risk in respect of the ability to transport oil

and natural gas to market; and

-- capital markets risk and the ability to finance future growth.

The midstream industry is also subject to risks that can affect the amount of cash flow available for distribution to unitholders and the ability to grow. These risks include but are not limited to:

-- Operational matters and hazards including the breakdown or

failure of equipment, information systems or processes, the

performance of equipment at levels below those originally

intended, operator error, labour disputes, disputes with

owners of interconnected facilities and carriers and

catastrophic events such as natural disasters, fires,

explosions, fractures, acts of eco-terrorists and saboteurs,

and other similar events, many of which are beyond the control

of the Trust or Provident.

-- the Midstream NGL Assets are subject to competition from other

gas processing plants, and the pipelines and storage, terminal

and processing facilities are also subject to competition from

other pipelines and storage, terminal and processing

facilities in the areas they serve, and the gas products

marketing business is subject to competition from other

marketing firms.

Provident strives to minimize these business risks by:

-- employing and empowering management and technical staff with

extensive industry experience;

-- adhering to a strategy of acquiring, developing and optimizing

quality, low-risk reserves in areas where we have technical

and operational expertise;

-- developing a diversified, balanced asset portfolio that

generally offers developed operational infrastructure,

year-round access and close proximity to markets;

-- adhering to a consistent and disciplined Commodity Price Risk

Management Program to mitigate the impact that volatile

commodity prices have on cash flow available for distribution.

-- marketing crude oil and natural gas to a diverse group of

customers, including aggregators, industrial users,

well-capitalized third-party marketers and spot market buyers;

-- marketing natural gas liquids and related services to

selected, credit worthy customers at competitive rates;

-- maintaining a low cost structure to maximize cash flow and

profitability;

-- maintaining prudent financial leverage and developing strong

relationships with the investment community and capital

providers;

-- adhering to strict guidelines and reporting requirements with

respect to environmental, health and safety practices; and

-- maintaining an adequate level of property, casualty,

comprehensive and directors' and officers' insurance coverage.

Risks Associated With the Level of Foreign Ownership

Generally, a trust cannot qualify as a "mutual fund trust" for the purposes of the Tax Act if it is established or is being maintained primarily for the benefit of non-residents. Although not without uncertainty, this is generally accepted to exist in most situations where Non-Resident holders own significantly in excess of 50% of the aggregate number of Trust Units issued and outstanding. However, there is currently an exception to the non-resident ownership restriction where not more than 10% of the trust's property has at any time consisted of "taxable Canadian property". Prior to the March 2004 Canadian Federal Budget (the "Budget"), Canadian resource property, including a resource royalty, was not "taxable Canadian property" for this purpose, and therefore a number of resource royalty trusts, including the Trust, were not required to restrict non-resident ownership of their units. Under the Federal Canadian Budget proposals, the definition of "taxable Canadian property" for this purpose will be amended so as to include Canadian resource property, and therefore resource royalty trusts, including the Trust, will be required to restrict non-resident ownership of their units prior to January 1, 2007.

Unit trading activity

The following table summarizes the unit trading activity of the Provident units for the three months ended March 31, 2004 on both the Toronto Stock Exchange and the American Stock Exchange:

                                                     Q1
                                               --------
TSE - PVE.UN (Cdn$)
High                                           $  11.55
Low                                            $   9.21
Close                                          $  10.76
Volume (000s)                                    13,156
-------------------------------------------------------
AMEX - PVX (US$)
High                                           $   9.06
Low                                            $   7.59
Close                                          $   8.24
Volume (000s)                                    36,172
-------------------------------------------------------


Quarterly table
                                                  2004
                                              ---------
                                                  First
($000s except per unit amounts)                 Quarter
Financial - consolidated
 Revenue                                      $ 234,947
 Cash flow                                    $  39,212
 Net income                                   $  (2,251)
 Unitholder distributions                     $  31,036
 Distributions per unit                       $    0.36
                                              ---------
Oil and gas production
 Cash revenue                                 $  54,865
  Earnings before interest, DD&A, taxes
   and other non-cash items                   $  30,741
 Cash flow                                    $  28,822
 Net income                                   $  (6,994)

Midstream services and marketing
 Cash revenue                                 $ 233,031
 Earnings before interest, DD&A and taxes     $  11,682
 Cash flow                                    $  10,452
 Net income                                   $   4,743

Operating
Oil and gas production
 Light/medium oil (bpd)                           5,965
 Heavy oil (bpd)                                  6,588
 Natural gas liquids (bpd)                        1,130
 Natural gas (mcfd)                              63,859
                                              ---------
 Oil equivalent (boed)                           24,326

Midstream services and marketing
 Redwater throughput (bpd)                       58,640

(Cdn $)
Average selling price net of transportation expense
 Light/medium oil per bbl
 (before hedges)                              $   39.00
 Light/medium oil per bbl
 (including hedges)                           $   26.15
 Heavy oil per bbl
 (before hedges)                              $   26.84
 Heavy oil per bbl
 (including hedges)                           $   22.80
 Natural gas liquids per barrel               $   37.03
 Natural gas per mcf
 (before hedges)                              $    6.40
 Natural gas per mcf
 (including hedges)                           $    6.32


Quarterly table

                                         2003
--------------------------------------------------------------------
($000s except per            First  Second   Third   Fourth      YTD
 unit amounts)             Quarter Quarter Quarter  Quarter    Total
Financial - consolidated
 Revenue                   $66,710 $57,520 $67,622 $214,297 $406,149
 Cash flow                 $41,961 $31,571 $28,866 $ 33,308 $135,706
 Net income                $(8,743)$23,073 $(2,003)$ 21,067 $ 33,394
 Unitholder distributions  $33,091 $35,528 $28,969 $ 32,023 $129,611
 Distributions per unit    $  0.60 $  0.60 $  0.47 $   0.39 $   2.06
--------------------------------------------------------------------

Oil and gas production
 Cash revenue              $66,710 $57,520 $55,260 $ 54,468 $233,958
 Earnings before
  interest,DD&A
  and taxes                $26,845 $33,989 $31,517 $ 25,660 $118,011
 Cash flow                 $41,961 $31,571 $28,785 $ 24,385 $126,702
 Net income                $(8,743)$23,073 $(2,003)$ 12,947 $ 25,274

Midstream services and
 marketing
 Cash revenue              $     - $     - $23,713 $173,435 $197,148
 Earnings before
  interest, DD&A
  and taxes                $     - $     - $    81 $ 10,243 $ 10,324
 Cash flow                 $     - $     - $    81 $  8,923 $  9,004
 Net income                $     - $     - $    81 $  8,039 $  8,120

Operating
Oil and gas production
 Light/medium oil (bpd)      7,825   6,770   6,748    6,454    6,812
 Heavy oil (bpd)             6,245   6,700   7,495    7,151    6,902
 Natural gas liquids (bpd)   1,085   1,162   1,276    1,145    1,167
 Natural gas (mcfd)         83,924  72,898  73,090   68,657   74,596
--------------------------------------------------------------------
 Oil equivalent (boed)      28,602  26,781  27,701   26,193   27,314

Midstream services and
 marketing
 Redwater throughput (bpd)       -       -       -   63,616      N/A

(Cdn $)
Average selling price net of transportation expense
 Light/medium oil per bbl
  (before hedges)          $ 43.64 $ 33.57 $ 33.49 $  32.79 $  36.02
 Light/medium oil per bbl
  (including hedges)       $ 32.04 $ 29.18 $ 28.24 $  26.61 $  29.09
 Heavy oil per bbl
  (before hedges)          $ 31.63 $ 23.47 $ 24.17 $  20.61 $  24.74
 Heavy oil per bbl
  (including hedges)       $ 24.63 $ 21.92 $ 22.16 $  20.25 $  22.09
Natural gas liquids per
 barrel                    $ 45.13 $ 37.16 $ 28.26 $  34.48 $  35.87
Natural gas per mcf
(before hedges)            $  7.94 $  6.87 $  5.88 $   5.62 $   6.63
Natural gas per mcf
(including hedges)         $  6.49 $  5.64 $  5.14 $   5.48 $   5.71



PROVIDENT ENERGY TRUST
CONSOLIDATED BALANCE SHEETS
Canadian Dollars (000s)
(unaudited)

                                                As at          As at
                                            March 31,   December 31,
                                                 2004           2003
                                       ------------------------------

Assets
Current assets
 Cash                                     $        92    $        45
 Accounts receivable                          132,280        118,890
 Petroleum product inventory                   14,037         24,206
 Deferred derivative loss (notes 2 and 5)      18,542              -
 Prepaids                                       5,745          5,632
                                       ------------------------------
                                              170,696        148,773

Cash reserve for future site reclamation        2,095          1,829
Goodwill                                      102,443        102,443

Property, plant and equipment                 862,697        884,891
                                       ------------------------------
                                          $ 1,137,931    $ 1,137,936
                                       ------------------------------
                                       ------------------------------

Liabilities
Current liabilities
 Accounts payable and accrued liabilities $   136,284    $   121,832
 Cash distributions payable                     9,169          8,389
 Non-hedging derivative instruments
  (notes 2 and 6)                              40,586              -
                                       ------------------------------
                                              186,039        130,221

Long-term debt                                178,800        236,500
Asset retirement obligation (notes 2 and 7)    33,023         33,182
Future income taxes                            44,256         58,805

Unitholders' Equity
Unitholders' contributions                    858,644        803,299
Exchangeable shares                            17,441         19,518
Convertible debentures                        119,377        119,395
Contributed surplus                               870          1,305
Accumulated loss                               (6,280)        (4,029)
Accumulated cash distributions               (279,054)      (248,018)
Accumulated interest on
 convertible debentures                       (15,185)       (12,242)
                                       ------------------------------
                                              695,813        679,228
                                       ------------------------------
                                          $ 1,137,931    $ 1,137,936
                                       ------------------------------
                                       ------------------------------

Subsequent event (note 11)



PROVIDENT ENERGY TRUST
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED LOSS
(unaudited)
Canadian Dollars (000s except per unit amounts)

                                        Three months ended March 31,
                                       ------------------------------
                                                 2004           2003
                                       ------------------------------
                                                         (restated -
                                                             note 2)
Revenue (note 3)
 Revenue                                  $   266,647   $     89,311
 Realized loss on non-hedging derivative
  instruments                                  (9,656)       (22,601)
 Unrealized loss on non-hedging
  derivative instruments                      (22,044)             -
                                       ------------------------------
                                              234,947         66,710

Expenses
 Cost of goods sold                           180,536              -
 Production, operating and maintenance         27,548         17,484
 Transportation                                 1,234          1,071
 General and administrative                     4,831          2,918
 Management internalization                         -         18,392
 Interest on long-term debt                     2,144          2,269
 Depletion, depreciation and accretion         34,449         34,783
                                       ------------------------------
                                              250,742         76,917
                                       ------------------------------

Loss before taxes                             (15,795)       (10,207)
                                       ------------------------------

Capital taxes                                   1,005          1,210
Future income tax recovery                    (14,549)        (2,674)
                                       ------------------------------
                                              (13,544)        (1,464)
                                       ------------------------------

Net loss for the period                        (2,251)        (8,743)

Accumulated loss, beginning of period,
 restated                                      (4,029)       (37,423)
                                       ------------------------------
Accumulated loss, end of period           $    (6,280)   $   (46,166)
                                       ------------------------------
                                       ------------------------------

Net loss per unit - basic                 $     (0.06)   $     (0.17)
                                       ------------------------------
                                       ------------------------------
                  - diluted               $     (0.06)   $     (0.17)
                                       ------------------------------
                                       ------------------------------


PROVIDENT ENERGY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
Canadian dollars (000s)
(unaudited)

                                        Three months ended March 31,
                                       ------------------------------
                                                 2004           2003
                                       ------------------------------

Cash provided by operating activities
 Net loss for the period                  $    (2,251)   $    (8,743)
 Add non-cash items:
 Depletion, depreciation and accretion         34,449         34,783
 Amortization of deferred charges                 (62)           203
 Non-cash general and administrative             (419)             -
 Unrealized loss on non-hedging
  derivative instruments (note 3)              22,044              -
 Future income tax recovery                   (14,549)        (2,674)
 Management internalization                         -         18,392
                                       ------------------------------
 Cash flow from operations                     39,212         41,961
 Change in non-cash working capital             5,862        (13,915)
                                       ------------------------------
                                               45,074         28,046
                                       ------------------------------

Cash used for financing activities
 Increase (decrease) in long-term debt        (57,700)         1,300
 Declared distributions to unitholders        (31,036)       (33,091)
 Issue of trust units, net of issue costs      53,235          8,100
 Interest on convertible debentures            (2,943)        (1,589)
 Change in non-cash financing working capital   3,722          2,323
                                       ------------------------------
                                              (34,722)       (22,957)
                                       ------------------------------

Cash used used for investing activities
 Expenditures on property,
  plant and equipment                         (11,519)        (6,567)
 Oil and gas property acquisitions             (4,718)             -
 Acquisition of Provident Management Corp           -           (164)
 Proceeds on disposition of oil
  and natural gas properties                    6,409          1,788
 Reclamation fund contributions
  net of expenditures                            (552)          (643)
 Change in non-cash investing working capital      75            573
                                       ------------------------------
                                              (10,305)        (5,013)
                                       ------------------------------

Increase in cash                                   47             76
Cash beginning of period                           45             42
                                       ------------------------------
Cash end of period                        $        92    $       118
                                       ------------------------------
                                       ------------------------------

Supplemental disclosure of cash
 flow information
Cash interest paid including debenture
 interest                                 $     2,467    $     2,124
Cash capital taxes paid                   $       905    $     1,210



NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)

March 31, 2004

The Interim Consolidated Financial Statements of Provident Energy Trust ("the Trust") have been prepared by management in accordance with accounting principles generally accepted in Canada. Certain information and disclosures normally required in the notes to the annual financial statements have been condensed or omitted. The Interim Consolidated Financial Statements should be read in conjunction with the Trust's audited Financial Statements and the notes for the year ended December 31, 2003, which are disclosed in the annual report filed by the Trust.

1. Significant accounting policies

The Interim Consolidated Financial Statements have been prepared based on the consistent application of the accounting policies and procedures as set out in the Financial Statements of the Trust for the year ended December 31, 2003 except as described in note 2.

2. Changes in accounting policy

a. Non-hedging derivative instruments

Effective January 1, 2004 the Trust adopted CICA accounting guideline 13, "Hedging relationships." This accounting guideline addresses the identification, designation, documentation and effectiveness of hedging relationships for the purpose of applying hedge accounting. In addition, it establishes criteria for discontinuing the use of hedge accounting. Under accounting guideline 13, hedging transactions must be documented and it must be demonstrated that the hedges are sufficiently effective to continue accrual accounting for positions hedged with derivatives. Any derivative financial instruments that do not meet the hedging criteria will be accounted for in accordance with Emerging Issues Committee ("EIC") - 128, "Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments." These instruments will be recorded on the balance sheet at fair value and changes in fair value will be recognized in income in the period in which the change occurs. In connection with the implementation of accounting guideline 13 the Trust reviewed its Commodity Price Risk Management Program and determined that none of the derivative instruments qualified for hedge accounting.

At January 1, 2004 the Trust recorded an unrealized loss of $25.2 million in deferred charges on the Consolidated Balance Sheet that is being recognized in income over the term of the previously designated hedged items. The earnings impact was a $6.6 million loss before taxes and was recorded in amortization of deferred charges on the Statement of Operations and Accumulated Loss.

At March 31, 2004 the Trust recorded a non-hedging derivative instrument payable of $40.6 million ($35.4 million short-term and $5.2 million long-term), that being the mark to market loss position of the Trust's non-hedging derivative instruments at that date. As a result, the Trust recorded a loss on non-hedging derivative instruments of $15.4 million on the Statement of Operations and Accumulated Loss, that being the difference between January 1, 2004 mark to market loss position of $25.2 million on non-hedging derivative instruments and the March 31, 2004 loss position of $40.6 million on non-hedging derivative instruments.

b. Property, plant & equipment

Effective January 1, 2004 the Trust adopted CICA accounting guideline 16, "Oil and Gas Accounting - Full Cost." This accounting guideline replaced CICA accounting guideline 5, "Full cost accounting in the oil and gas industry." Accounting guideline 16 modifies how the ceiling test calculation is performed. The recoverability of a cost centre is tested by comparing the carrying value of the cost centre to the sum of the undiscounted cash flows expected from the cost centre. If the carrying value is not recoverable the cost centre is written down to its fair value. Adopting accounting guideline 16 had no effect on the Trust's financial results.

c. Asset retirement obligation

The Trust adopted CICA Handbook Section 3110 "Asset Retirement Obligations" (ARO) effective December 2003. This change in accounting policy has been applied retroactively with restatement of prior periods presented for comparative purposes. As a result of this change, net loss for the comparative three months ended March 31, 2003 decreased by $0.009 million ($0.015 million net of future income tax expense of $0.006 million). At March 31, 2003 the ARO balance increased by $19.4 million to $33.2 million, the net PP&E balance increased by $18.7 million to $691.3 and the future tax liability increased by $0.7 million to $114.1 million. Opening 2003 accumulated loss increased by $1.4 million ($2.1 million net of future income tax recovery of $0.7 million).

Prior to the adoption of CICA Handbook Section 3110, the Trust recognized a provision for future site reclamation based on the unit-of-production method applied to estimated future site abandonment and reclamation costs.

3. Revenue

                                        Three months ended March 31,
                                       ------------------------------
                                                 2004           2003
                                       ------------------------------
Gross production revenue                  $    79,952    $   113,243
Product sales and service revenue             201,940              -
Royalties                                     (15,245)       (23,932)
                                       ------------------------------
Revenue                                       266,647         89,311
                                       ------------------------------
Realized loss on non-hedging
 derivative instruments                        (9,656)       (22,601)
Unrealized loss on non-hedging
 derivative instruments (note 6)              (22,044)             -
                                       ------------------------------
                                          $   234,947    $    66,710
                                       ------------------------------
                                       ------------------------------

The realized loss on non-hedging derivative instruments of
$9.7 million (2003 - $22.6 million realized loss) relates to the
cash settlement on derivative instruments.

Unrealized loss on non-hedging
 derivative instruments (note 6)          $   (15,452)   $         -
Amortization of loss on non-hedging
 derivative instruments (note 5)               (6,592)             -
                                       ------------------------------
Unrealized loss on non-hedging
 derivative instruments                   $   (22,044)   $         -
                                       ------------------------------
                                       ------------------------------


4. Segmented information

                           Three months ended March 31, 2004
                    -------------------------------------------------
                         Oil and     Midstream
                         Natural      Services      Inter-
                             Gas           and     segment
                      Production     Marketing Elimination     Total
                    -------------------------------------------------
Revenue
 Gross production
  revenue               $ 79,952    $         -  $       -  $ 79,952
 Royalties               (15,245)             -          -   (15,245)
 Product sales and
  service revenue              -        232,845    (30,905)  201,940
 Realized gain/(loss) on
  non-hedging derivative
  instruments             (9,842)           186          -    (9,656)
                    -------------------------------------------------
                          54,865        233,031    (30,905)  256,991

Expenses
 Cost of goods sold            -        211,441    (30,905)  180,536
 Operating expenses       18,504          9,044          -    27,548
 Transportation            1,234              -          -     1,234
 General and
  administrative           4,386            864          -     5,250
                    -------------------------------------------------
                          24,124        221,349    (30,905)  214,568

Earnings (loss) before
 interest taxes, depletion,
 depreciation and
 accretion                30,741         11,682          -    42,423

Non-cash revenue
 Unrealized loss on
  non-hedging derivative
  instruments            (14,394)        (1,058)         -   (15,452)
 Amortization of loss on
  non-hedging derivative
  instruments             (6,592)             -          -    (6,592)
                    -------------------------------------------------
                         (20,986)        (1,058)         -   (22,044)

Other expenses
 Depletion, depreciation
  and accretion           32,153          2,296           -   34,449
 Interest on
  long-term debt           1,024          1,120           -    2,144
 Non-cash general
  and administrative        (384)           (35)          -     (419)
 Capital taxes               895            110           -    1,005
 Future income tax expense
  (recovery)             (16,939)         2,390           -  (14,549)
                    -------------------------------------------------
                          16,749          5,881           -   22,630

Net income (loss) for
 the period             $ (6,994)      $  4,743       $   -  $(2,251)
                    -------------------------------------------------
                    -------------------------------------------------

Selected balance sheet items
Capital Expenditures
 Property, plant
  and equipment           15,698            539               16,237
Working capital
 Accounts receivable      46,021         99,099     (12,840) 132,280
 Petroleum product
  inventory                    -         14,037           -   14,037
 Accounts payable and
  accrued liabilities     57,863         91,261     (12,840) 136,284
 Long-term debt           78,800        100,000           -  178,800

The Trust's business activities are conducted through two business segments: oil and natural gas production and midstream services and marketing.

Oil and natural gas production includes exploitation, development and production of crude oil and natural gas reserves. Midstream services and marketing includes fractionation, transportation, loading and storage of natural gas liquids, and marketing of crude oil and natural gas liquids.

For the first three quarters of 2003 the Trust operated in only one business segment, oil and natural gas production. Therefore, no segmented comparatives have been presented.

5. Deferred charges

Deferred derivative loss
 Non-hedging derivative liability, January 1, 2004        $   25,134
 Derivative instruments amortized                             (6,592)
                                                      ---------------
 Deferred derivative loss, March 31, 2004                 $   18,542
                                                      ---------------
                                                      ---------------


6.  Derivative instruments

Non-hedging derivative liabilities
 Mark to market unrealized loss, January 1, 2004          $   25,134
 Change in mark to market unrealized loss,
  March 31, 2004                                              15,452
                                                      ---------------
 Non-hedging derivative liability, March 31, 2004         $   40,586
                                                      ---------------
                                                      ---------------


7.  Asset retirement obligation

                                For the three months ended March 31,
                                                 2004           2003
                               -------------------------------------
Carrying amount, beginning of
 period                                      $ 33,182       $ 32,645
Increase in liabilities during
 the period                                       329            130
Settlement of liabilities during
 the period                                    (1,068)          (143)
Accretion expense                                 580            543
                               -------------------------------------
Carrying amount, end of period               $ 33,023       $ 33,175
                               -------------------------------------
                               -------------------------------------

The Trust's asset retirement obligation is based on the Trust's net ownership in wells and facilities and management's estimate of the costs to abandon and reclaim those wells and facilities as well as an estimate of the future timing of the costs to be incurred. Midstream assets, including the Redwater facility, the Younger Plant and the liquids gathering system have been excluded from the asset retirement obligation as retirement obligations associated with these assets have indeterminate settlement dates.

The total undiscounted amount of future cash flows required to settle asset retirement obligations is estimated to be $99.0 million.

Payments to settle asset retirement obligations occur over the operating lives of the assets estimated to be from zero to 20 years. Estimated cash flows have been discounted at the Trust's credit-adjusted risk free rate of 7 percent and an inflation rate of 2 percent.

8. Unitholders contributions and exchangeable shares

The Trust has authorized capital of an unlimited number of common
voting trust units.

                                   Three months ended March 31,
                                    2004                    2003
                       -----------------------------------------------
Trust Units                 Number     Amount      Number     Amount
                          of Units     (000s)    of Units     (000s)
                       -----------------------------------------------

Balance at beginning
 of period              82,824,688  $ 803,299  53,729,335  $ 513,835
Issued for cash          4,500,000     50,400           -          -
Exchangeable share
 conversions               240,838      2,077   3,120,543     31,265
Issued pursuant to unit
 option plan               120,535        917      73,287        600
Issued pursuant to the
 distribution reinvestment
 plan                      297,274      3,230     470,308      4,999
To be issued pursuant
 to the distribution
 reinvestment plan         131,417      1,374     257,149      2,500
Debenture conversions        2,336         25     177,986      1,905
Unit issue costs                 -     (2,678)          -        (89)
                       -----------------------------------------------
Balance at end
 of period              88,117,088  $ 858,644  57,828,608  $ 555,015
                       -----------------------------------------------
                       -----------------------------------------------

                                   Three months ended March 31,
                                    2004                    2003
                       -----------------------------------------------
Exchangeable shares         Number     Amount      Number     Amount
Provident Acquisitions
 Inc.                     of Units     (000s)    of Units     (000s)
                       -----------------------------------------------
Balance at beginning
 of period                 534,357    $ 5,829   5,227,844   $ 57,036
Converted to trust units  (190,299)    (2,077) (2,865,698)   (31,265)
                       -----------------------------------------------
Balance, end of period     344,058      3,752   2,362,146     25,771
                       -----------------------------------
Exchange ratio,
 end of period             1.29351          -      1.0918          -
                       -----------------------------------
Trust units issuable
 upon conversion,
 end of period             445,042       3,752  2,578,991   $ 25,771
                       -----------------------------------------------
                       -----------------------------------------------

Exchangeable shares         Number      Amount     Number     Amount
Provident Energy Ltd.     of Units      (000s)   of Units     (000s)
                       -----------------------------------------------
Balance at beginning
 of period               1,279,227    $ 13,689          -    $     -
Issued to acquire
 Provident Management Corp.      -           -  1,682,242     18,000
Converted to trust units         -           -          -
                       -----------------------------------------------
Balance, end of period   1,279,227      13,689   1,682,242    18,000
                       -----------------------------------
Exchange ratio,
 end of period             1.22632           -     1.03508
                       -----------------------------------
Trust units issuable
 upon conversion,
 end of period           1,568,742    $ 13,689   1,741,255  $ 18,000
                       -----------------------------------------------
                       -----------------------------------------------

The per trust unit amounts for the first quarter of 2004 were calculated based on the weighted average number of units outstanding of 88,040,817, which includes the shares exchangeable into trust units (2003 - 61,117,501). Net loss to unitholders in the basic per trust unit calculations has been increased by interest on the convertible debentures. The diluted per trust unit amounts for the first quarter of 2004 are calculated including an additional 142,594 trust units (2003 - 42,345) for the dilutive effect of the unit option plan. The Trust's convertible debentures are not included in the computation of diluted earning per unit as their effect is anti-dilutive. At March 31, 2004 11,451,863 units were issuable upon conversion of convertible debentures (2003 - 5,829,953).

9. Unit option plan

                                    Three months ended March 31,
                    -------------------------------------------------
                               2004                    2003
                    -------------------------------------------------
                                     Weighted               Weighted
                         Number of    Average   Number of    Average
                           Options   Exercise     Options   Exercise
                    -------------------------------------------------
Outstanding, beginning
 of period               4,008,744     $11.06     796,810     $10.86
 Granted                   211,750      10.86   2,203,500      11.08
 Exercised                (120,535)     10.96     (73,281)     10.69
 Cancelled                 (13,500)     10.90      (8,000)     10.81
                    -------------------------------------------------
Outstanding,
 end of period           4,086,459      11.06   2,919,029      11.03
                    -------------------------------------------------
Exercisable at
 end of period           2,179,863     $11.08   1,028,306     $11.08
                    -------------------------------------------------
                    -------------------------------------------------

The Trust Option Plan (the "Plan") is administered by the Board of Directors of the Provident. Under the Plan, all directors, officers and employees of Provident, are eligible to participate in the Plan. There are 5,000,000 trust units reserved for the Trust Option Plan. Options are granted at a "strike price" which is not less than the closing price of the units on The Toronto Stock Exchange on the last trading day preceding the grant. In certain circumstances, based upon the cash distributions made on the trust units, the strike price may be reduced at the time of exercise of the option at the discretion of the option holder. Options vest in the following manner; one-third vest six months after the grant date, one-third vest 1.5 years after the grant date and one-third vest 2.5 years after the grant date.

At March 31, 2004, the Trust had 4,086,459 options outstanding with exercise prices ranging between $8.40 and $12.39 per unit. The weighted average remaining contractual life of the options is 2.9 years and the weighted average exercise price is $11.06 per unit excluding average potential reductions to the strike prices of $1.30 per unit.

At March 31, 2003, the Trust had 2,919,029 options outstanding with prices ranging from $8.40 and $12.39 per unit. The weighted average exercise price was $11.03 per unit excluding average potential reductions to the strike prices. The weighted average remaining contractual life of the options was 3.5 years.

Due to the decrease in the market value of the unit price to $10.76 on March 31, 2004 from $11.43 on January 1, 2004, the Trust recorded a unit-based compensation recovery (non-cash general and administrative) of $0.4 million in the quarter for the 3.7 million options granted on or after January 1, 2003.

10. Reconciliation of cash flow and distributions

                                        Three months ended March 31,
                                       ------------------------------
                                                 2004           2003
                                       ------------------------------
Cash flow from operations                  $   39,212     $   41,961
Cash reserved for interest on
 convertible debentures                        (2,943)        (1,589)
Cash (reserved) used for financing and
 investing activities                          (5,233)        (7,281)
                                       ------------------------------
Cash distributions to unitholders              31,036         33,091
Accumulated cash distributions,
 beginning of period                          248,018        118,406
                                       ------------------------------
Accumulated cash distributions,
 end of period                             $  279,054     $  151,497
                                       ------------------------------
                                       ------------------------------
Cash distributions per unit                $     0.36     $     0.60

11. Subsequent event

On April 6, 2004 the Trust announced the concurrent acquisitions of Olympia Energy Inc. and Viracocha Energy Inc. for aggregate consideration of $217.6 million and $205.9 million, respectively, payable through the issuance of approximately 14,870,838 and 14,083,386 Provident units, respectively, and the assumption of existing debt and working capital estimated to be $51.9 million and $54.1 million respectively. Both transactions are expected to close in late May 2004.