Commodity Price Risk Program

The Trust continues to execute a commodity prce risk management program that is designed to limit the Trust's exposure to fluctuations in commodity prices and to protect monthly cash distributions and support the Trust's capital program. Our hedging strategy uses structures that provide a floor price while allowing upside participation in a rising comodity price market.

In accordance with the Trust's credit policy, the Trust mtigates associated credit risk by limiting financial derivative transactiosn to counterparties with investment grade credit ratings.

In the Midstream business, production margins are impacted by the spread between the purchase cost of natural gas and sales price propane, butane and condensate. Financial market liquidity may not provide sufficient or adequate opportunity to directly hedge propane, butane and condensate 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 and crude oil financial derivative contracts through 2011 in roder to proctect production margins in the Midstream business. Short term financial derivative instruments directly fixing propane and butane prices have also been executed

To view a summary of hedging contracts at March 31, 2008 – click here