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Provident's commodity price risk management program utilizes derivative instruments to provide protection against lower commodity prices and margins.
The program protects a percentage of Provident's oil and natural gas production against a decline in commodity prices while, with some products, allowing the Trust to participate in a rising commodity price environment.

For the Midstream business unit, the program provides price stabilization and the protection of fractionation spread margins and a percentage of inventory values. Midstream production margins are affected by the spread between the purchase cost of natural gas and sales price of propane, butane and condensate. Market conditions have not provided sufficient or adequate opportunity to directly manage propane, butane and condensate prices over the longer term. Prices for propane, butane and condensate historically have correlated with prices for crude oil. As a consequence, Provident has entered into natural gas, crude oil and foreign exchange financial derivative contracts through March 2013 in order to protect operating margins in the Midstream business. Short term financial derivative instruments directly fixing propane, butane, natural gasoline and electricity prices have also been executed.

The Program also reduces foreign exchange risk resulting from the conversion of U.S. dollars into Canadian dollars, interest rate risk and fixes a portion of Provident's input costs.

The commodity price derivative instruments the Trust uses include puts, calls, costless collars, participating swaps and fixed price products that settle against indexed referenced pricing.