<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>ex99_1form40-f.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
                                                                    EXHIBIT 99.1
                                                                    ------------





                                 [LOGO OMITTED]


                               V E R M I L I O N
                                  ENERGY TRUST


                         RENEWAL ANNUAL INFORMATION FORM
                      FOR THE YEAR ENDED DECEMBER 31, 2003






                                 April 20, 2004


<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

GLOSSARY OF TERMS..............................................................1
         Conventions...........................................................4
         Abbreviations.........................................................4
         Other    .............................................................4
         Conversion............................................................5
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS..............................5
VERMILION ENERGY TRUST.........................................................5
         General  .............................................................5
         Organizational Structure of the Trust.................................6
         Summary Description of the Business...................................7
         History of Vermilion..................................................8
         Significant Acquisitions and Significant Dispositions.................9
NARRATIVE DESCRIPTION OF THE BUSINESS.........................................10
         Stated Business Objectives...........................................10
         Description of Properties............................................10
         Petroleum and Natural Gas Reserves...................................12
         Marketing............................................................24
ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY TRUST......................24
         Trust Units..........................................................24
         Special Voting Rights................................................25
         Unitholders Limited Liability........................................25
         Issuance of Trust Units..............................................25
         Cash Distributions...................................................25
         Redemption Right.....................................................26
         Non-Resident Unitholders.............................................27
         Meetings of Unitholders..............................................27
         Exercise of Voting Rights Attached to Shares of Vermilion............27
         Trustee  ............................................................28
         Delegation of Authority, Administration and Trust Governance.........28
         Liability of the Trustee.............................................28
         Amendments to the Trust Indenture....................................29
         Takeover Bid.........................................................29
         Termination of the Trust.............................................29
         Reporting to Unitholders.............................................30
         Distribution Reinvestment and Optional Trust Unit Purchase Plan......30
         Unitholder Rights Plan...............................................31
ADDITIONAL INFORMATION RESPECTING VERMILION RESOURCES LTD.....................33
         Management of Vermilion..............................................33
         Vermilion Share Capital..............................................35
         Voting and Exchange Trust Agreement..................................39
         Support Agreement....................................................40
         Notes    ............................................................41
         Royalty Agreement....................................................42
         Management's discussion and analysis.................................43
MARKET FOR, PRICE RANGE AND TRADING VOLUME OF SECURITIES......................43
CONFLICTS OF INTEREST.........................................................43
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS....................43
LEGAL PROCEEDINGS.............................................................44
MATERIAL CONTRACTS............................................................44
INTERESTS OF EXPERTS..........................................................44
TRANSFER AGENT AND REGISTRAR..................................................44
RISK FACTORS..................................................................44
         Reserve Estimates....................................................44


                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)


         Volatility of Oil and Natural Gas Prices.............................44
         Changes in Legislation...............................................44
         Investment Eligibility...............................................45
         Operational Matters..................................................45
         Environmental Concerns...............................................45
         Kyoto Protocol.......................................................45
         Debt Service.........................................................46
         Delay in Cash Distributions..........................................46
         Taxation of Vermilion................................................46
         Depletion of Reserves................................................46
         Net Asset Value......................................................47
         Return of Capital....................................................47
         Nature of Trust Units................................................47
         Unitholders Limited Liability........................................47
         Accounting Write-Downs as a Result of GAAP...........................47
         Variations in Interest Rates and Foreign Exchange Rates..............48
         Mutual Fund Trust Status.............................................48
ADDITIONAL INFORMATION........................................................49
         Schedule "A" Report on reserves data by independent qualified
           reserves evaluator (form 51-101F2)
         Schedule "B" Report of management and directors on reserves
           data and other information




                                      -ii-

<PAGE>
                                        1


                                GLOSSARY OF TERMS

The following are defined terms used in this Annual Information Form:

"ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), R.S.A. 2000, c. B-9, as
amended, including the regulations promulgated thereunder;

"AFFILIATE" when used to indicate a relationship with a person or company, has
the same meaning as set forth in the SECURITIES ACT (Alberta);

"ARRANGEMENT" means the plan of arrangement under the ABCA involving the trust,
Vermilion, Clear energy Inc. and Vermilion acquisition Ltd.

"AVENTURA" means Aventura Energy Inc., a corporation incorporated pursuant to
the ABCA;

"AVENTURA SHARES" means the common shares of Aventura;

"BOARD OF DIRECTORS" or "BOARD" means the board of directors of Vermilion;

"CONTROL" means, with respect to control of a body corporate by a person, the
holding (other than by way of security) by or for the benefit of that person of
securities of that body corporate to which are attached more than 50% of the
votes that may be cast to elect directors of the body corporate (whether or not
securities of any other class or classes shall or might be entitled to vote upon
the happening of any event or contingency) provided that such votes, if
exercised, are sufficient to elect a majority of the board of directors of the
body corporate;

"CURRENT MARKET PRICE OF A TRUST UNIT" means, in respect of a Trust Unit on any
date, the weighted average trading price of the Trust Units on the TSX on that
date and the nine trading days preceding that date, or, if the Trust Units are
not then listed on the TSX, on such other stock exchange or automated quotation
system on which the Trust Units are listed or quoted, as the case may be, as may
be selected by the board of directors of Vermilion for such purpose; provided,
however, that if in the opinion of the board of directors of Vermilion the
public distribution or trading activity of Trust Units for that period does not
result in a weighted average trading price which reflects the fair market value
of a Trust Unit, then the Current Market Price of a Trust Unit shall be
determined by the board of directors of Vermilion, in good faith and in its sole
discretion, and provided further that any such selection, opinion or
determination by such board of directors shall be conclusive and binding and for
the purposes of this definition, the weighted average trading price shall be
determined by dividing (a) the aggregate dollar trading value of all Trust Units
sold on the TSX (or other stock exchange or automated quotation system, if
applicable) over the applicable ten trading days by (b) the total number of
Trust Units sold on such stock exchange or system during such period;

"DISTRIBUTABLE CASH" means all amounts available for distribution during any
applicable period to holders of Trust Units;

"DISTRIBUTION" means a distribution paid by the Trust in respect of the Trust
Units, expressed as an amount per Trust Unit;

"DISTRIBUTION PAYMENT DATE" means any date that Distributable Cash is
distributed to Unitholders, generally being the 15th day of the calendar month
following any Distribution Record Date;

"DISTRIBUTION RECORD DATE" means the last day of each calendar month or such
other date as may be determined from time to time by the Trustee, except that
December 31 shall in all cases be a Distribution Record Date;

"DRIP PLAN" means the Distribution Reinvestment and Optional Trust Unit Purchase
Plan adopted by the Trust;

"EXCHANGEABLE SHARES" means the Series A exchangeable shares in the capital of
Vermilion;

"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares;

<PAGE>
                                       2


"EXCHANGE RATIO" means the exchange ratio used to determine the number of Trust
Units a holder of Exchangeable Shares is entitled to receive upon an exchange of
Exchangeable Shares which, in respect of each Exchangeable Share, was initially
equal to one upon completion of the Arrangement, and shall be cumulatively
adjusted thereafter by: (a) increasing the Exchange Ratio on each Distribution
Payment Date by an amount, rounded to the nearest five (5) decimal places, equal
to a fraction having as its numerator the product of the Exchange Ratio
immediately prior to the applicable Distribution Payment Date and the
Distribution, expressed as an amount per Trust Unit, paid on that Distribution
Payment Date, and having as its denominator the Current Market Price of a Trust
Unit on the last business day prior to that Distribution Payment Date; and (b)
decreasing the Exchange Ratio on each record date for the payment of dividends
to holders of Exchangeable Shares by Vermilion, if any, by an amount, rounded to
the nearest five (5) decimal places, equal to a fraction having as its numerator
the amount of the dividend payable to holders of Exchangeable Shares, expressed
as an amount per Exchangeable Share, and having as its denominator the Current
Market Price of a Trust Unit on the date that is the last business day prior to
that dividend record date. The Exchange Ratio shall also be adjusted in the
event of certain other reorganizations or distributions in respect of the Trust
Units as necessary on an economic equivalency basis as further described in the
Exchangeable Share Provisions;

"GLJ" means Gilbert Laustsen Jung Associates Ltd., independent petroleum
engineering consultants of Calgary, Alberta;

"GLJ REPORT" means the independent engineering evaluation of certain oil, NGL
and natural gas interests of the Trust and Aventura prepared by GLJ dated April
20, 2004 and effective January 1, 2004.

"INCOME TAX ACT" or "TAX ACT" means the INCOME TAX ACT (Canada), R.S.C. 1985, c.
1. (5th Supp), as amended, including the regulations promulgated thereunder;

"INSOLVENCY EVENT" means the institution by Vermilion of any proceeding to be
adjudicated to be a bankrupt or insolvent or to be wound up, or the consent of
Vermilion to the institution of bankruptcy, dissolution, insolvency or
winding-up proceedings against it, or the filing of a petition, answer or
consent seeking dissolution or winding-up under any bankruptcy, insolvency or
analogous laws, including without limitation the COMPANIES CREDITORS'
ARRANGEMENT ACT (Canada) and the BANKRUPTCY AND INSOLVENCY ACT (Canada), and the
failure by Vermilion to contest in good faith any such proceedings commenced in
respect of Vermilion within fifteen (15) days of becoming aware thereof, or the
consent by Vermilion to the filing of any such petition or to the appointment of
a receiver, or the making by Vermilion of a general assignment for the benefit
of creditors, or the admission in writing by Vermilion of its inability to pay
its debts generally as they become due, or Vermilion not being permitted,
pursuant to solvency requirements of applicable law, to redeem any retracted
Exchangeable Shares pursuant to the Exchangeable Share Provisions;

"NON-RESIDENT" means (a) a Person who is not a resident of Canada for the
purposes of the Tax Act; or (b) a partnership that is not a Canadian partnership
for the purposes of the Tax Act;

"NOTES" means the unsecured, subordinated notes issued by Vermilion under the
Arrangement;

"PARTNERSHIP" means Vermilion Resources, the partners of which are Vermilion and
its wholly-owned subsidiary, 764031 Alberta Ltd.;

"PERMITTED INVESTMENTS" means (a) obligations issued or guaranteed by the
government of Canada or any province of Canada or any agency or instrumentality
thereof, (b) term deposits, guaranteed investment certificates, certificates of
deposit or bankers' acceptances of or guaranteed by any Canadian chartered bank
or other financial institutions the short-term debt or deposits of which have
been rated at least A or the equivalent by Standard & Poor's Corporation,
Moody's Investors Service, Inc. or Dominion Bond Rating Service Limited, and (c)
commercial paper rated at least A or the equivalent by Dominion Bond Rating
Service Limited, in each case maturing within 180 days after the date of
acquisition;

"PRO RATA SHARE" of any particular amount in respect of a Unitholder at any time
shall be the product obtained by multiplying the number of Trust Units that are
owned by that Unitholder at that time by the quotient obtained when such a
number is divided by the total number of all Trust Units that are issued and
outstanding at that time;

<PAGE>
                                       3


"ROYALTY" means the royalty granted under the Royalty Agreement commencing
February 1, 2003, entitling the Trust to approximately 99% of the net cash flow
generated from the present and future oil and natural gas interests, rights and
related tangibles of the Partnership after certain costs, expenditures and
deductions;

"ROYALTY AGREEMENT" means the royalty agreement between the Partnership,
Vermilion, 764031 Alberta Ltd. and the Trust dated January 22, 2003 providing
for the creation of the Royalty;

"SPECIAL VOTING RIGHT" means the special voting right of the Trust, issued and
certified under the Trust Indenture for the time being outstanding and entitled
to the benefits and subject to the limitations set forth therein;

"SUBSEQUENT INVESTMENT" means those investments which the Trust is permitted to
make pursuant to the Trust Indenture;

"SUBSIDIARY" means, in relation to any person, any body corporate, partnership,
joint venture, association or other entity of which more than 50% of the total
voting power of shares or units of ownership or beneficial interest entitled to
vote in the election of directors (or members of a comparable governing body) is
owned or controlled, directly or indirectly, by such person;

"SUPPORT AGREEMENT" means the support agreement entered into between the Trust
and Vermilion Acquisition Ltd. (prior to its amalgamation with Vermilion) on
January 16, 2003;

"TRUST" means Vermilion Energy Trust, a trust established under the laws of
Alberta pursuant to the Trust Indenture;

"TRUSTEE" means Computershare Trust Company of Canada, the initial trustee of
the Trust, or such other trustee, from time to time, of the Trust;

"TRUST INDENTURE" means the amended and restated trust indenture dated as of
January 15, 2003 between Computershare Trust Company of Canada and Vermilion;

"TRUST SUBSIDIARY" means Vermilion Resources Ltd., 764031 Alberta Ltd.,
Vermilion Rep S.A., Vermilion Resources (Partnership), Aventura Energy Inc.

"TRUST UNIT" or "UNIT" means a unit of the Trust issued by the Trust;

"TSX" means TSX Inc., carrying on business as the Toronto Stock Exchange;

"UNITHOLDER RIGHTS PLAN" means the trust unitholder rights plan adopted by the
Trust pursuant to the Unitholders Rights Plan Agreement;

"UNITHOLDER RIGHTS PLAN AGREEMENT" means the trust unitholder rights plan
agreement between the Trust and Computershare Trust Company of Canada dated
January 16, 2003 to establish the Unitholder Rights Plan;

"UNITHOLDERS" means holders from time to time of the Trust Units;

"UNIT RIGHTS INCENTIVE PLAN" means the Unit Rights Incentive Plan of the Trust;

"VERMILION" means Vermilion Resources Ltd.;

"VOTING AND EXCHANGE AGREEMENT TRUSTEE" means Computershare Trust Company of
Canada, the initial trustee under the Voting and Exchange Trust Agreement, or
such other trustee, from time to time appointed thereunder; and

<PAGE>
                                       4


"VOTING AND EXCHANGE TRUST AGREEMENT" means the voting and exchange trust
agreement entered into on January 16, 2003 between the Trust, Vermilion
Acquisition Ltd. (prior to its amalgamation with Vermilion) and the Voting and
Exchange Agreement Trustee.

CONVENTIONS

Unless otherwise indicated, references herein to "$" or "dollars" are to
Canadian dollars. All financial information herein has been presented in
Canadian dollars in accordance with generally accepted accounting principles in
Canada.

<TABLE>
<CAPTION>
ABBREVIATIONS

                OIL AND NATURAL GAS LIQUIDS                             NATURAL GAS

<S>            <C>                             <C>             <C>
 Bbl           Barrel                          Mcf             thousand cubic feet
 Bbls          Barrels                         Mmcf            million cubic feet
 Mbbls         thousand barrels                Bcf             billion cubic feet
 Bbls/d        barrels per day                 Mcf/d           thousand cubic feet per day
 NGLs          natural gas liquids             Mmcf/d          million cubic feet per day
 GJ            Gigajoule                       MMBTU           million British Thermal Units
 GJ/d          gigajoule per day
</TABLE>

OTHER

AECO-C        Intra-Alberta Nova Inventory Transfer Price (NIT net price)

API           American Petroleum Institute

(degree)API   an indication of the specific gravity of crude oil measured on
              the API gravity scale. Liquid petroleum with a specified gravity
              of 28 (degree)API or higher is generally referred to as light
              crude oil

ARTC          Alberta Royalty Tax Credit

BOE           barrel of oil equivalent of natural gas and crude oil on the
              basis of 1 BOE for 6 (unless otherwise stated) Mcf of natural
              gas (this conversion factor is an industry accepted norm and is
              not based on either energy content or current prices)

BOE/D         barrel of oil equivalent per day

m3            cubic metres

MBOE          1,000 barrels of oil equivalent

WTI           West Texas Intermediate, the reference price paid in U.S. dollars
              at Cushing, Oklahoma for crude oil of standard grade

MW/h          Megawatts per hour



<PAGE>
                                       5


CONVERSION

The following table sets forth certain standard conversion from Standard
Imperial Units to the International System of Units (or metric units).

            TO CONVERT FROM            TO                        MULTIPLY BY
            Mcf                        Cubic metres              28.174
            Cubic metres               Cubic feet                35.494
            Bbls                       Cubic metres              0.159
            Cubic metres               Bbls oil                  6.290
            Feet                       Metres                    0.305
            Metres                     Feet                      3.281
            Miles                      Kilometres                1.609
            Kilometres                 Miles                     0.621
            Acres                      Hectares                  0.405
            Hectares                   Acres                     2.471


                SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This annual information form contains forward-looking statements. All statements
other than statements of historical fact contained in this annual information
form are forward-looking statements, including, without limitation, statements
regarding the future financial position, business strategy, proposed
acquisition, budgets, litigation, projected costs and plans and objectives of or
involving the Trust or Vermilion. Many of these statements can be identified by
looking for words such as "believe", "expects", "will", "intends", '"projects",
"anticipates", "estimates", "continues" or similar words. The Trust and
Vermilion believe the expectations reflected in such forward-looking statements
are reasonable but no assurance can be given that these expectations will prove
to be correct and such forward-looking statements included, or incorporated by
reference, in this annual information form should not be unduly relied upon. A
discussion of the risk factors that could affect future results and could cause
results to differ materially from those expressed in the forward-looking
statements contained herein is included in this annual information form under
"Risk Factors".

The forward-looking statements contained herein are expressly qualified in their
entirety by this cautionary statement. Such forward-looking statements are made
as of the date of this annual information form and neither the Trust nor
Vermilion undertakes any obligation to publicly update or revise such
forward-looking statements to reflect new information, subsequent events or
otherwise.

                             VERMILION ENERGY TRUST

GENERAL

Vermilion Energy Trust is an open-end unincorporated investment trust governed
by the laws of the Province of Alberta and created pursuant to the Trust
Indenture. The head and principal office of the Trust is located at Suite 2800,
400 - 4th Avenue, S.W., Calgary, Alberta, T2P 0J4.

The Trust was formed on December 16, 2002 pursuant to the Trust Indenture, as
amended and restated on January 15, 2003. As a result of the the Arrangement,
former holders of common shares of Vermilion received Units or Exchangeable
Shares, or a combination thereof, in accordance with the elections made by such
holders, and Vermilion become a subsidiary of the Trust. See "General
Development of the Business of the Trust and Vermilion - Significant
Acquisitions and Significant Dispositions - The Arrangement".

<PAGE>
                                       6


ORGANIZATIONAL STRUCTURE OF THE TRUST

The following diagram describes the intercorporate relationships among the Trust
and its subsidiaries as at December 31, 2003, the percentage of votes attaching
to all voting securities of each subsidiary beneficially owned by Vermilion, as
well as the flow of cash from the oil and gas properties held by such
subsidiaries to the Trust, and from the Trust to the Unitholders. Reference
should be made to the appropriate sections of this annual information form for a
complete description of the structure of the Trust.

                               ------------------
                               | Unitholders(1) |
                               -----------------
                                        |
                                        |
                             Cash Distributions (2)
                                        |
                                        |
                                        /\
                                       /  \
                                      /    \
                                     /      \
                                    /        \
                                   /          \
                                  /  Vermilion \
                                 / Energy Trust \
           _________________\   /                \
           |                /  /__________________\
           |                      /_\           |
           |                       |            |
           |                       |            |
           |            Flux de tresorerie    Placement
           |                       |            |
           |                       |            |
           |                       |           /_\
           |                 ---------------------        -------------------
           |           _____ |     Vermilion     | ______ |    Exchangeable  |
           |          |      |   Resources Ltd.  |        |    Shareholders  |
           |          |      --------------------- \      -------------------|
           |          |       |               |     \
           |          |       |               |      \
  cash flow (4)       |       |               |       \
           |          |       |               |        \
           |          |       |               |         \
           |          |       |               |          \
           |          |       |               |           \
           |          |      100%            100%         72,2%
           |          |       |               |              \
           |          |       |               |               \
           |          |    ---------------  --------------   --------------
           |          |    |    764031   |  | Vermilion  |   |  Aventura   |
           |        95.32% | Alberta Ltd.|  |  REP S.A.  |   | Energy, Inc.|
           |          |    |  (Alberta)  |  |  (France)  |   |  (Alberta)  |
           |          |    --------------   --------------   --------------
           |          |      |
           |          |      |
           |          |   4.68%
           |          |      |
           |          |      |
           |    -------------------------
           |___ |  Vermilion Resources  |
                |     (Partnership)     |
                ------------------------


NOTES:

(1)      The Unitholders own 100% of the equity of the Trust.

(2)      Cash distributions are made to Unitholders monthly based on the Trust's
         cash flow.

(3)      Cash flow represents payments made by Vermilion to the Trust in respect
         of principal and interest payments on the Notes. In addition to such
         payments, dividends may also be paid on the common shares of Vermilion.

(4)      Cash flow represents payments made by the Partnership under the Royalty
         Agreement.

(5)      The Trust will invest funds raised through any subsequent issuance of
         Trust Units in additional securities of Vermilion to enable Vermilion
         to make capital expenditures. In addition, the Trust may reinvest a
         portion of the income received from Vermilion as well as any repayments
         of principal on the Notes in securities of Vermilion to enable
         Vermilion to make capital expenditures.

<PAGE>
                                       7


SUMMARY DESCRIPTION OF THE BUSINESS

VERMILION ENERGY TRUST

The Trust was established to acquire and hold, directly and indirectly,
interests in petroleum and natural gas properties. Cash flow from the properties
is flowed from Vermilion to the Trust by way of interest payments and principal
repayments on the Notes and dividends declared on the common shares of
Vermilion, and from the Partnership to the Trust by way of royalty payments
under the Royalty Agreement. Under the terms of the Trust Indenture, the Trust
is also entitled to:

         (a)      acquire or invest in securities of Vermilion and in the
                  securities of any other entity including without limitation,
                  bodies corporate, partnerships or trusts, and borrowing funds
                  or otherwise obtaining credit for that purpose;

         (b)      acquire royalties in respect of Canadian resource properties
                  as defined in the Tax Act and making any deferred royalty
                  purchase payments which may be required with respect to such
                  royalties; provided however that in no event shall the Trust
                  invest in any royalties which constitute an interest in land
                  or a covenant running with the properties with respect to
                  which such royalties relate;

         (c)      dispose of any part of the property of the Trust, including,
                  without limitation, any securities of Vermilion;

         (d)      temporarily hold cash and investments for the purposes of
                  paying the expenses and the liabilities of the Trust, making
                  other Permitted Investments as contemplated by the Trust
                  Indenture, paying amounts payable by the Trust in connection
                  with the redemption of any Trust Units, and making
                  distributions to Unitholders; and

         (e)      pay costs, fees and expenses associated with the foregoing
                  purposes or incidental thereto.

The Trustee is prohibited from acquiring any investment which (a) would result
in the cost amount to the Trust of all "foreign property" (as defined in the Tax
Act) which is held by the Trust to exceed the amount prescribed by section 5000
of the Tax Regulations or (b) would result in the Trust not being considered
either a "unit trust" or a "mutual fund trust" for purposes of the Tax Act.

The Trustee may declare payable to the Unitholders all or any part of the net
income of the Trust. It is currently anticipated that the only income to be
received by the Trust will be from the interest received on the principal amount
of Notes, royalty income pursuant to the Royalty Agreement, and dividends on the
common shares of Vermilion. The Trust currently makes monthly cash distributions
to Unitholders of the interest income earned from the Notes, income earned under
the Royalty Agreement and dividends received on the common shares of Vermilion,
after expenses, if any, and any cash redemptions of Trust Units.

Unitholders receive monthly distributions of the cash flow generated by
Vermilion and distributed to Unitholders through the Trust. The Trust currently
employs a strategy which: (i) provides Unitholders with a competitive annual
cash on cash yield through monthly cash distributions, (ii) ensures that
Vermilion's existing assets are maintained at a level that provides sustainable
ongoing cash flow, and (iii) continues to expand the business of the Trust
through the development of growth opportunities that are intended to provide
long-term stable cash flows and be accretive to the existing Unitholders. The
Trust intends to finance acquisitions through bank financing and the issuance of
additional Trust Units from treasury, while maintaining prudent leverage.



VERMILION RESOURCES LTD.

Vermilion Resources Ltd. was incorporated under the ABCA on November 23, 1993.
On January 1, 2003, Vermilion amalgamated with its wholly-owned subsidiary,
973675 Alberta Ltd. and on January 15, 2003, Vermilion

<PAGE>
                                       8


amalgamated with its wholly-owned subsidiaries, Big Sky Resources Inc.,
Vermilion Gas Marketing Inc. and 962134 Alberta Ltd. On January 22, 2003,
Vermilion was amalgamated with Vermilion Acquisition Ltd. pursuant to the
Arrangement. Where the information in this annual information form is as of a
date prior to January 22, 2003, the terms "Vermilion" or "Vermilion Resources
Ltd." shall refer to Vermilion Resources Ltd. prior to its amalgamation with
Vermilion Acquisition Ltd. under the Arrangement.

The Trust is the sole holder of Vermilion common shares. Certain former
shareholders of Vermilion own Exchangeable Shares in accordance with the
elections made by such holders under the Arrangement. Vermilion continues to
carry on an oil and natural gas business similar to that carried on by Vermilion
prior to the Arrangement becoming effective. Vermilion owns, directly or
indirectly, all of the assets that were owned by Vermilion prior to the
Arrangement becoming effective, other than certain exploration assets that were
conveyed to Clear Energy Inc. under the Arrangement, and certain Trinidad assets
that were transferred to Aventura following the Arrangement becoming effective.
See "General Development of the Business of the Trust and Vermilion -
Significant Acquisitions and Significant Dispositions".

The head office of Vermilion is located at Suite 2800, 400 - 4th Avenue S.W.,
Calgary, Alberta, T2P 0J4 and its registered office is located at Suite 3700,
400 - 3rd Avenue S.W., Calgary, Alberta, T2P 4H2.

HISTORY OF VERMILION

The following describes the development of Vermilion's business over the last
three years.

On May 22, 2001, Vermilion increased its ownership in Aventura through
participation in a private placement of special warrants. In conjunction with
the private placement Vermilion also received finance options and finance
warrants.

On March 21, 2002, Vermilion closed the acquisition of Artemis Energy Limited, a
private company whose principal assets were natural gas producing properties,
for total consideration of $31 million, including $9.1 million of debt. The
acquisition gave Vermilion a new core property located in the Mikwan area of
Alberta.

On June 21, 2002, Vermilion signed an agreement to purchase a 40% participating
interest in, and operatorship of the Central Block onshore Trinidad, for total
consideration of $66.3 million, including the assumption of $19 million of debt.

On October 17, 2002, Vermilion increased its ownership in Aventura through
participation in a private placement of common shares for an aggregate cost of
$6.0 million

On January 15, 2003 the shareholders of Vermilion approved the reorganization of
Vermilion by way of a plan of arrangement under the ABCA into Vermilion Energy
Trust and Clear Energy Inc., a publicly traded oil and gas exploration company.
The Arrangement, completed on January 22, 2003, resulted in former Vermilion
shareholders and optionholders owning all of the issued and outstanding common
shares of Clear Energy Inc. and all of the issued and outstanding Trust Units,
and the Trust owning all of the issued and outstanding common shares of
Vermilion. See "Significant Acquisitions and Significant Dispositions - The
Arrangement".

Following the completion of the Arrangement, Vermilion completed certain
transactions with Aventura pursuant to which Vermilion transferred all of its
Trinidad interests to Aventura in exchange for Aventura Shares, thereby
increasing Vermilion's ownership interest in Aventura to 72.2%. Vermilion also
acquired from Aventura a 25% gross overriding royalty which was held by Aventura
on certain of Vermilion's non-operated interests and properties located in
Bottrel, Alberta for cash consideration of $6.3 million. See "Significant
Acquisitions and Significant Dispositions - Transactions with Aventura Energy
Inc."

As at March 31, 2004 Vermilion had 132 full time employees of which 63 were
located in head office, 26 in Canadian field offices and 43 in France.

<PAGE>
                                       9


SIGNIFICANT ACQUISITIONS AND SIGNIFICANT DISPOSITIONS

THE ARRANGEMENT

Under the terms of the Arrangement, Vermilion was reorganized into the Trust and
Clear Energy Inc., which resulted in certain oil and gas exploration assets
being transferred to Clear Energy Inc. These assets included oil and gas
properties in the Peace River Arch area of Alberta which, at the time of the
Arrangement, produced approximately 1,610 BOE/D, together with certain
undeveloped landholdings in the southern foothills region of Alberta and in
Saskatchewan.

Pursuant to the Arrangement, the outstanding common shares and options of
Vermilion were exchanged for an aggregate of 51.5 million Trust Units. Also, as
part of the Arrangement, Vermilion issued an aggregate of 6.0 million
Exchangeable Shares to former holders of common shares in accordance with
elections made by such holders under the Arrangement. Each Exchangeable Share is
exchangeable into that number of Trust Units as calculated pursuant to the
Exchange Ratio at the time of such exchange. Upon completion of the Arrangement,
the Trust held all of the issued and outstanding Notes.

TRANSACTIONS WITH AVENTURA ENERGY INC.

In conjunction with the Arrangement, Vermilion entered into an agreement with
Aventura whereby Vermilion agreed to complete the following transactions with
Aventura (collectively, the "Aventura Transactions"):

         (a)      the acquisition by Aventura of all the outstanding common
                  shares of Vermilion (Barbados) Ltd., a subsidiary of Vermilion
                  for consideration consisting of an aggregate of 212.1 million
                  Aventura Shares, at a price of $0.35 per Aventura Share, for
                  aggregate consideration of $74.2 million; and

         (b)      the acquisition by Vermilion from Aventura of a 25% gross
                  overriding royalty currently held by Aventura on certain of
                  Vermilion's non-operated interests and properties located in
                  Bottrel, Alberta for cash consideration of $6.3 million.

The Aventura Transactions were completed on January 22, 2003. As a result of the
completion of the Aventura Transactions, Vermilion increased its ownership
interest in Aventura to 322.7 million Aventura Shares representing 72.2% of the
issued and outstanding Aventura Shares. In March 2003, Aventura completed a
consolidation of its issued and outstanding common shares on the basis of one
new common share for each ten common shares issued and outstanding. As a result,
Vermilion's 72.2% ownership interest in Aventura has been consolidated into 32.3
million common shares. In addition, Aventura's common shares commenced trading
on the TSX in March 2003 under the symbol AVR.

PROPOSED TRANSACTIONS

On February 19, 2004, Vermilion announced the signing of an agreement to
purchase 5,900 boe per day of production, 14.3 mmboe of proved (P90) reserves
and 17.4 mmboe of proved plus (P50) reserves in the Netherlands by its wholly
owned subsidiary, Vermilion Oil & Gas Netherlands B.V. ("Vermilion Netherlands")
for Euro 48.3 million (Cdn $80.5 million) effective January 1, 2004. The
transaction is subject to normal government and regulatory approvals and is
expected to close in May, 2004.

During 2003, Vermilion and Aventura entered into discussions with a potential
acquirer of Aventura. On March 22, 2004, an offer was made to acquire all of the
issued and outstanding shares of Aventura for $5.10 per share. The transaction
is expected to close in early May 2004 at which time the Trust would receive a
cash payment of approximately $165 million that would initially be used to
reduce outstanding debt and eventually be applied toward the future acquisition
of cash-flow generating properties.

On April 5, 2004, Vermilion announced that a newly formed wholly-owned
subsidiary, Verenex Energy Inc. ("Verenex"), had entered into an agreement with
Prairie Fire Oil & Gas Ltd. ("Prairie Fire"), a capital pool corporation
formerly listed on the TSX Venture Exchange, whereby Verenex will amalgamate
with Prairie Fire. Verenex was established by Vermilion to accelerate its
exploration program in France and to pursue international

<PAGE>
                                       10


exploration and acquisition opportunities. To fund its capital program, Verenex
intends to conduct an equity financing. Upon completion of the amalgamation and
financing, it is anticipated that Vermilion will own approximately 50% of the
shares of Verenex. The transaction is subject to regulatory approvals, the
approval of Prairie Fire's minority shareholders and completion of the equity
financing. Completion of the transaction is targeted for early June 2004.
Verenex's management team will be led by James D. McFarland, a former director
of Vermilion.


                      NARRATIVE DESCRIPTION OF THE BUSINESS

STATED BUSINESS OBJECTIVES

Vermilion is actively engaged in the business of oil and natural gas
exploitation, development, acquisition and production in Canada, France and
Trinidad. Vermilion's business plan is to maximize returns to the Trust from its
oil and natural gas properties and related assets. Where possible, Vermilion
will seek to expand its reserve base through the selective addition of
high-quality, long-life reserves with low risk development opportunities.

In reviewing potential participations or acquisitions, Vermilion will consider a
number of factors, including: (a) the present value of the future revenue from
such properties from the proved producing, total proved and established
reserves; (b) the amount of potential for additional reservoir development; (c)
whether sufficient infrastructure exists in the prospect to provide for
increased activity; (d) the cost of any potential development; (e) investments
in properties that exhibit medium to long life reserves and stable production
base; and (f) the ability of Vermilion to enhance the value of acquired
properties through additional exploitation efforts and additional development
drilling. The board of directors of Vermilion may, in its discretion, approve
asset or corporate acquisitions or investments that do not conform to these
guidelines based upon the board's consideration of the qualitative aspects of
the subject properties including risk profile, technical upside, reserve life,
asset quality and the Trust's business prospects.

DESCRIPTION OF PROPERTIES

The following is a description of the oil and natural gas properties, plants,
facilities and installations in which Vermilion has an interest and that are
material to Vermilion's operations and exploration activities. The production
numbers stated refer to Vermilion's working interest share before deduction of
Crown, freehold and other royalties. Reserve amounts are stated, before
deduction of royalties, at December 31, 2003, based on forecast cost and price
assumptions as evaluated in the GLJ Report. See "Narrative Description of the
Business - Petroleum and Natural Gas Reserves".

CANADA ASSETS

The Trust's production in Canada is located in six areas, all in Alberta:
Drayton Valley, Slave Lake, Athabasca, Southern Foothills, Central Alberta and
Peace River. The Trust's main producing area is Drayton Valley, while Slave Lake
is the main oil producing area. Athabasca, Central Alberta and Peace River are
mainly gas and Southern Foothills is primarily a non-operated project area.

Vermilion holds an average working interest of 69.5% in 259,895 (180,686 net)
acres of developed land, 331 (234 net) producing natural gas wells and 302 (204
net) producing oil wells at December 31, 2003. Vermilion operates two natural
gas plants and has an ownership interest in a third, resulting in combined gross
processing capacity of over 75 Mmcf/d. In addition, Vermilion has treating
capacity of over 13,000 Bbls/d of oil in four oil batteries.

For the year ended December 31, 2003, production in Canada averaged 60.0Mmcf/d
of natural gas and 6,678Bbls/d of oil and NGLs.

The GLJ Report indicates that Vermilion's interest in these properties at
January 1, 2004 consists of 34,598 MBOE of total proven reserves and 46,633 MBOE
of proved plus probable reserves.

<PAGE>
                                       11


FRANCE ASSETS

Vermilion's main producing area in France is located in the Aquitaine Basin
which is southwest of Bordeaux, France. The Paris Basin, located just east of
Paris, France is primarily an oil producing area. The area contains five
producing fields and one main oil battery at Vaudoy. The South Aquitaine area is
the only non-operated producing property that Vermilion holds in France.
Vermilion holds a 100% working interest in 37,855 acres of developed land in the
Aquitaine and Paris basins and a 30.2% working interest in 8,320 (2,512 net)
acres of developed land and 126 (114 net) net producing oil wells at December
31, 2003.

For the year ended December 31, 2003, Vermilion's production in France averaged
6,018 Bbls/d of oil and 1.5 mmcf/d of natural gas.

The GLJ Report indicates that Vermilion's interest in these properties at
January 1, 2004 consists of 28,682 MBOE of total proven reserves and 38,989 MBOE
of proved plus probable reserves.

TRINIDAD

As part of the reorganization of Vermilion, separate from the Arrangement,
Vermilion's 40% working interest in the Central Block in Trinidad was acquired
by Aventura. As a result of the completion of this transaction, Vermilion owns
72.2% of the outstanding Aventura Shares. The purpose of this transaction was to
consolidate the Trinidad property working interest into one international entity
and allow for further maturity of these growth assets to be fully realized by
Unitholders. All capital expenditures commitments are held by Aventura with no
funding obligations remaining with Vermilion.

GENERAL DEVELOPMENT OF THE BUSINESS OF AVENTURA

Aventura is an internationally focused public energy company engaged in the
exploration, development and production of oil and gas. Aventura's current asset
portfolio is a 65% working interest in the central block Trinidad The assets are
contained in the Central Block onshore permit where Trinidad's government oil
and gas operating corporation, Petroleum Company of Trinidad Tobago Limited
("Petrotrin"), has a 35% working interest alongside Aventura's interest. For the
year ended December 31, 2003, the average production from Aventura's interest in
Trinidad was approximately 2,377 BOE/D, and 23 BOE/D from it's assets in
Argentina. In 2003, Aventura sold all of its operations in Saskatchewan and
Argentina to focus on its opportunities in Trinidad. (see also PROPOSED
TRANSACTIONS)

TRINIDAD - CENTRAL BLOCK

The Central Block is an exploration block covering 111 square kilometres in the
centre of the onshore Trinidad Southern basin. Aventura has participated in the
drilling of four wells in the central block since it commenced operations in the
country.

The Carapal Ridge -1 well was drilled and tested in 2001. After the installation
of production facilities and a pipeline to Petrotrin facilities, the well was
placed on production in December 2002. For 2003, production from this well
averaged 2,377 BOE/D, with production rates restricted by available gas markets.

The second well, Corsan -1, was also drilled in 2001 and has been suspended for
completion at a later date. In 2003, Aventura participated in the drilling of
two wells. The saunders -1 well was drilled and has suspended pending further
evaluation to determine the potential effectiveness of a stimulation program.
Subsequent to the saunders -1 well, Aventura drilled the Baraka -1 exploration
well. The Baraka -1 well tested commercial gas and is currently shut -in pending
the installation of tie- in facilities.

 The GLJ Report indicates that Aventura's interest in the Central Block at
January 1, 2004 consists of 44,499 of total proven reserves and 67,772 of
established reserves.

<PAGE>
                                       12


STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

RESERVES AND FUTURE NET REVENUE

The following is a summary of the oil and natural gas reserves and the value of
future net revenue of Vermilion as evaluated by GLJ. Pricing used in the
forecast and constant price evaluations is set forth in the notes to the tables.

Information contained in this section is effective December 31, 2003 unless
otherwise stated. Reserves information with respect to Canada and France was
prepared on January 31, 2004 and April 20, 2004 with respect to Trinidad.

All evaluations of future net production revenue set forth in the tables below
are stated after overriding and lessor royalties, Crown royalties, freehold
royalties, mineral taxes, direct lifting costs, normal allocated overhead and
future capital investments. It should not be assumed that the discounted future
net production revenue estimated by the GLJ Report represents the fair market
value of the reserves. Other assumptions relating to the costs, prices for
future production and other matters are included in the GLJ Report. There is no
assurance that the future price and cost assumptions used in the GLJ Report will
prove accurate and variances could be material.

Reserves for Canada and France are established using deterministic methodology.
Reserves for Trinidad are determined by probabilistic methodology due to the
reserve size and data available. Total Proved Reserves are established at the 90
percent probability (P90) level. There is a 90 percent probability that the
actual reserves recovered will be equal to or greater than the P90 reserves.
Total Proved Plus Probable Reserves are established at the 50 percent
probability (P50) level. There is a 50 percent probability that the actual
reserves recovered will be equal to or greater than the P50 reserves. Trinidad
reserves are reported at Aventura's 65% interest, of which Vermilion owns 72.2%.


   [Charts summarizing net revenue for oil and natural gas reserves omitted.]





<PAGE>
                                       13


                          RECONCILIATION OF COMPANY NET
                       RESERVES BY PRINCIPAL PRODUCT TYPE
                     BASED ON FORECAST PRICES AND COSTS (9)


The following table sets forth a reconciliation of the changes in Vermilion's
light and medium crude oil, associated and non-associated gas (combined)
reserves as at December 31, 2003 against such reserves as at December 31,2002.


            [Chart showing reconciliation of net reserves omitted.]


<PAGE>
                                       14


The following table sets forth changes between future net revenue estimates
attributable to net proved reserves as at December 31, 2003 against such
reserves as at December 31, 2002.


      RECONCILIATION OF CHANGES IN NET PRESENT VALUES OF FUTURE NET REVENUE
                                DISCOUNTED AT 10%
                     BASED ON CONSTANT PRICES AND COSTS (8)


<TABLE>
<CAPTION>
                                                                                                        (M$)
<S>                                                                                               <C>
CANADA
    Estimated Future Net Revenue at December 31, 2002                                                679,864
      Sales and Transfers of Oil and Gas Produced, Net of Production Costs and Royalties           (130,492)
      Net Change in Prices, Production Costs and Royalties Related to Future Production            (121,994)
      Development Costs During the Period                                                             28,997
      Changes in Estimated Future Development Costs                                                 (14,932)
      Extensions and Improved Recovery                                                                 9,119
      Discoveries                                                                                          -
      Acquisitions of Reserves                                                                             -
      Dispositions of Reserves                                                                      (18,384)
      Technical Reserves Revisions                                                                  (43,343)
      Accretion of Discount                                                                           67,986
      Net Change in Income Taxes                                                                           -
      All Other Changes                                                                                5,798
    Estimated Future Net Revenue at December 31, 2003                                                462,620

FRANCE
    Estimated Future Net Revenue at December 31, 2002                                                247,147
      Sales and Transfers of Oil and  Gas Produced, Net of Production Costs and Royalties           (47,002)
      Net Change in Prices, Production Costs and Royalties Related to Future Production            (153,147)
      Development Costs during the Period                                                             28,353
      Changes in Estimated Future Development Costs                                                 (16,369)
      Extensions and Improved Recovery                                                                11,939
      Discoveries                                                                                          -
      Acquisitions of Reserves                                                                             -
      Dispositions of Reserves                                                                             -
      Technical Reserves Revisions                                                                     7,478
      Accretion of Discount                                                                           36,863
      Net Change in Income Taxes                                                                      32,997
      All Other Changes                                                                               28,588
    Estimated Future Net Revenue at December 31, 2003                                                176,848

TRINIDAD
    Estimated Future Net Revenue at December 31, 2002                                                 62,419
      Sales and Transfers of Oil and  Gas Produced, Net of Production Costs and Royalties            (8,793)

      Net Change in Prices, Production Costs and Royalties Related to Future Production                3,439
      Development Costs during the Period                                                             13,460
      Changes in Estimated Future Development Costs                                                 (15,821)
      Extensions and Improved Recovery                                                                     -
      Discoveries                                                                                     22,639
      Acquisitions of Reserves                                                                             -
      Dispositions of Reserves                                                                             -
      Technical Reserves Revisions                                                                    81,626
      Accretion of Discount                                                                           11,683
      Net Change in Income Taxes                                                                    (61,940)
      All Other Changes                                                                                2,466
    Estimated Future Net Revenue at December 31, 2003                                                111,178
</TABLE>

NOTES:

1.   "Gross Reserves" are Vermilion's working interest (operating or
     non-operating) share before deducting of royalties and without including
     any royalty interests of the company. "Net Reserves" are the company's
     working interest (operating or non-operating) share after deduction of
     royalty obligations, plus the company's royalty interests in reserves.

2.   "Proved" reserves are those reserves that can be estimated with a high
     degree of certainty to be recoverable. It is likely that the actual
     remaining quantities recovered will exceed the estimated proved reserves.

3.   "Probable" reserves are those additional reserves that are less certain to
     be recovered than proved reserves. It is equally likely that the actual
     remaining quantities recovered will be greater or less than the sum of the
     estimated proved plus probable reserves.

4.   "Developed" reserves are those reserves that are expected to be recovered
     from existing wells and installed facilities or, if facilities have not
     been installed, that would involve a low expenditure (e.g. when compared to
     the cost of drilling a well) to put the reserves on production.

<PAGE>
                                       15


5.   "Developed Producing" reserves are those reserves that are expected to be
     recovered from completion intervals open at the time of the estimate. These
     reserves may be currently producing or, if shut-in, they must have
     previously been on production, and the date of resumption of production
     must be known with reasonable certainty.

6.   "Developed Non-Producing" reserves are those reserves that either have not
     been on production, or have previously been on production, but are shut in,
     and the date of resumption of production is unknown.

7.   "Undeveloped" reserves are those reserves expected to be recovered from
     known accumulations where a significant expenditure (for example, when
     compared to the cost of drilling a well) is required to render them capable
     of production. They must fully meet the requirements of the reserves
     classification (proved, probable, possible) to which they are assigned.

8.   The product prices used in the constant price and cost evaluations in the
     GLJ Report were as follows: OIL - $40.81Cdn/Bbl Light, Sweet Crude at
     Edmonton GAS - $ 6.09 Cdn/mmbtu AECO-C Spot PENTANES PLUS - $41.31Cdn/Bbl
     at Edmonton PROPANE - $29.81 Cdn/Bbl at Edmonton BUTANE - $31.81 Cdn/Bbl at
     Edmonton TRINIDAD GAS $1.56 Cdn/mcf

9.   The pricing assumptions used in the GLJ Report with respect to net values
     of future net revenue (forecast) as well as the inflation rates used for
     operating and capital costs are set forth below. The Natural Gas Liquids
     price is an aggregate of the individual natural gas liquids prices used in
     the Total Proved + Probable evaluation. GLJ is an independent qualified
     reserves evaluator appointed pursuant to NI 51-101.

<TABLE>
<CAPTION>
                                                                                 Natural Gas   Natural Gas   Inflation   Exchange
                 Light and Medium Crude Oil          Crude Oil    Natural Gas     Trinidad       Liquids        Rate      Rate
            ------------------------------------   ------------   -----------    -----------   ----------    ---------   --------

                WTI       EDMONTON     CROMER      BRENT BLEND
              CUSHING    PAR PRICE     MEDIUM       CRUDE OIL      AECO GAS       WELLHEAD     FOB FIELD
             OKLAHOMA     400 API     29.30 API     FOB NORTH        PRICE       GAS PRICE       GATE
            ($US/BBL)    ($CDN/BBL)   ($CDN/BBL)   SEA ($USBBL)   ($CDN/MMBTU)    $CDN/MCF     ($CDN/BBL)      %/YEAR    $US/$CDN
            ---------    ----------   ----------   ------------   ------------   ---------     ----------      ------    --------
<C>         <C>          <C>          <C>          <C>            <C>            <C>           <C>           <C>         <C>
Year

Forecast

2003
2004          29.00         37.75        31.75         27.50          5.85           1.56          28.92         1.5        .75
2005          26.00         33.75        28.75         24.50          5.15           1.56          24.89         1.5        .75
2006          25.00         32.50        28.50         23.50          5.00           1.41          23.81         1.5        .75
2007          25.00         32.50        28.50         23.50          5.00           1.40          23.89         1.5        .75
2008          25.00         32.50        28.50         23.50          5.00           1.33          23.84         1.5        .75
Thereafter    25.00         32.50        28.50         23.50          5.00           1.33          23.82         1.5        .75
</TABLE>


UNDEVELOPED RESERVES

The following table is based on forecast evaluations and sets forth the net
volumes of proved undeveloped reserves that were attributed for each of
Vermilion's product types for Canada and France for the most recent five
financial years and in the aggregate before that time.

<TABLE>
<CAPTION>
                             LIGHT AND MEDIUM OIL       NATURAL GAS        NATURAL GAS LIQUIDS          BOE'S
                                    (MBBL)                 (MMCF)                 (MBBL)                (MBBL)
                             --------------------  ---------------------  ---------------------  --------------------
<S>                          <C>                   <C>                    <C>                    <C>
Aggregate prior to 1999               -                      -                      -                     -
1999                                1,359                    -                      -                   1,359
2000                                1,360                  1,829                   120                  1,785
2001                                1,466                    133                     5                  1,493
2002                                4,366                 17,305                   497                  7,748
2003                                2,738                 14,852                   568                  5,782
</TABLE>


UNDEVELOPED RESERVES

The following table is based on forecast evaluations and sets forth the net
volumes of proved undeveloped reserves that were attributed for each of
Vermilion's product types for Trinidad for the most recent five financial years
and in the aggregate before that time.

<TABLE>
<CAPTION>
                             LIGHT AND MEDIUM OIL       NATURAL GAS        NATURAL GAS LIQUIDS          BOE'S
                                    (MBBL)                 (MMCF)                 (MBBL)                (MBBL)
                             --------------------  ---------------------  ---------------------  --------------------
<S>                          <C>                   <C>                    <C>                    <C>
Aggregate prior to 1999               -                      -                      -                     -
1999                                  -                      -                      -                     -
2000                                  -                      -                      -                     -
2001                                  -                      -                      -                     -
2002                                  -                   48,457                  1,773                 9,849
2003                                  -                    3,501                      0                   548
</TABLE>

<PAGE>
                                       16


Proven undeveloped reserves are those reserves expected to be recovered from
known accumulations where a significant expenditure (for example, when compared
to the cost of drilling a well) is required to render them capable of
production. These reserves have a 90% probability of being recovered.

Vermilion's current plan is to develop these reserves in the following 2 years.
This timetable may be altered depending on outside market forces, changes in
capital allocations and impact of future acquisitions and dispositions.

The following table is based on forecast evaluations and sets forth the net
volumes of probable undeveloped reserves that were attributed for each of
Vermilion's product types for Canada and France for the most recent five
financial years and in the aggregate before such time:

<TABLE>
<CAPTION>
                             LIGHT AND MEDIUM OIL       NATURAL GAS        NATURAL GAS LIQUIDS          BOE'S
                                    (MBBL)                 (MMCF)                 (MBBL)                (MBBL)
                             --------------------  ---------------------  ---------------------  --------------------
<S>                          <C>                   <C>                    <C>                    <C>
Aggregate prior to 1999               -                      -                      -                     -
1999                                  -                      -                      -                     -
2000                                  -                      -                      -                     -
2001                                  -                      -                      -                     -
2002                                6,197                 10,172                   339                  8,231
2003                                7,384                  8,410                   325                  9,111
</TABLE>

The following table is based on forecast evaluations and sets forth the net
volumes of probable undeveloped reserves that were attributed for each of
Vermilion's product types for Trinidad for the most recent five financial years
and in the aggregate before such time:

<TABLE>
<CAPTION>
                             LIGHT AND MEDIUM OIL       NATURAL GAS        NATURAL GAS LIQUIDS          BOE'S
                                    (MBBL)                 (MMCF)                 (MBBL)                (MBBL)
                             --------------------  ---------------------  ---------------------  --------------------
<S>                          <C>                   <C>                    <C>                    <C>
Aggregate prior to 1999               -                      -                      -                     -
1999                                  -                      -                      -                     -
2000                                  -                      -                      -                     -
2001                                  -                      -                      -                     -
2002                                  -                   64,793                  2,393                 13,192
2003                                  -                  106,577                  3,762                 21,525
</TABLE>


Probable undeveloped reserves are those reserves expected to be recovered from
known accumulations where a significant expenditure (for example, when compared
to the cost of drilling a well) is required to render them capable of
production. These reserves have a 50% probability of being recovered.

Vermilion's current plan is to develop these reserves in over the next 5 years.
In general, development of these reserves requires additional evaluation data to
increase the probability of success to an acceptable level for Vermilion. This
increases the timeline for the development of these reserves. This timetable may
be altered depending on outside market forces, changes in capital allocations
and impact of future acquisitions and dispositions.

<TABLE>
<CAPTION>
                            FUTURE DEVELOPMENT COSTS

                                                                                    TOTAL PROVED
                                                TOTAL PROVED      TOTAL PROVED     PLUS PROBABLE
                                              ESTIMATED USING   ESTIMATED USING   ESTIMATED USING
                                              CONSTANT PRICES   FORECAST PRICES   FORECAST PRICES
                                                 AND COSTS         AND COSTS         AND COSTS
                                                    (M$)              (M$)              (M$)
                                              ---------------   ---------------   ---------------
<S>                                           <C>               <C>               <C>
CANADA
2004                                               21,279            21,279            33,856
2005                                                3,152             3,199            12,046
2006                                                  424               437             4,769
2007                                                  383               400               453
2008                                                 -                 -                  318
Remainder                                           2,470             2,603             3,241
                                              ---------------   ---------------   ---------------
Total for all years undiscounted                   27,708            27,918            54,683
                                              ---------------   ---------------   ---------------
Total for all years discounted at 10%/year         24,724            24,785            48,374
                                              ===============   ===============   ===============

FRANCE
2004                                               20,450            20,450            32,855
2005                                               14,390            14,606            28,207
2006                                                5,678             5,850            14,091
</TABLE>

<PAGE>
                                       17


<TABLE>
<S>                                           <C>               <C>               <C>
2007                                                  378               395             8,761
2008                                                  243               258               258
Remainder                                             655               723               723
                                              ---------------   ---------------   ---------------
Total for all years undiscounted                   41,794            42,282            84,895
                                              ---------------   ---------------   ---------------
Total for all years discounted at 10%/year         37,208            37,587            73,691
                                              ===============   ===============   ===============

TRINIDAD
2004                                                    0                 0                 0
2005                                                3,477             3,477             3,477
2006                                                2,925             2,969             4,421
2007                                                    0                 0                 0
2008                                                    0                 0                 0
Remainder                                          10,401            11,747            15,520
                                              ---------------   ---------------   ---------------
Total for all years undiscounted                   16,803            18,193            23,418
                                              ---------------   ---------------   ---------------
Total for all years discounted at 10%/year          9,619            10,159            12,716
                                              ===============   ===============   ===============
</TABLE>

Vermilion expects to source its capital expenditure requirements from internally
generated cashflow and as appropriate from debt or equity financing. It is
anticipated that costs of funding the future development costs will not impact
development of its properties. In Trinidad, Vermilion and Aventura entered into
discussions with a potential acquirer of Aventura. (see PROPOSED TRANSACTIONS)
Should the acquisition close, the acquirer of Aventura would be responsible for
the future capital expenditure costs in Trinidad.

OIL AND GAS PROPERTIES AND WELLS

The following table sets forth the number of wells in which Vermilion held a
working interest as at December 31, 2003:

<TABLE>
<CAPTION>
                                                     OIL                             NATURAL GAS
                                      -----------------------------------  ---------------------------------
                                          GROSS(1)           NET(2)            GROSS(1)           NET(2)
                                           WELLS              WELLS             WELLS             WELLS
                                      ----------------  -----------------  ----------------  ---------------
<S>                                         <C>                <C>               <C>               <C>
ALBERTA
     Producing                              302                204               331               234
     Non-producing                           71                 50                60                43
FRANCE
     Producing                              126                114                 -                 -
     Non-producing                           21                 13                 -                 -
TRINIDAD
     Producing                                -                  -                 1              0.65
     Non-producing                            1               0.65                 2                1.3
TOTAL
     Producing                              428                318               332             234.65
     Non-producing                           93              63.65                62               44.3
</TABLE>

NOTES:

(1)  "Gross" refers to the total wells in which Vermilion has an interest,
     directly or indirectly.

(2)  "Net" refers to the total wells in which Vermilion has an interest,
     directly or indirectly, multiplied by the percentage working interest owned
     by Vermilion, directly or indirectly, therein.

COSTS INCURRED

The following table summarizes the capital expenditures made by Vermilion on oil
and natural gas properties for the year ended December 31, 2003.

<TABLE>
<CAPTION>
                           PROPERTY ACQUISITION COSTS          EXPLORATION COSTS    DEVELOPMENT COSTS
                                     (M$)                            (M$)                 (M$)
                    -----------------------------------------  -----------------    -----------------
                    PROVED PROPERTIES    UNPROVED PROPERTIES
                    -----------------    -------------------
<S>                 <C>                  <C>                   <C>                  <C>
Canada                      -                     -                 5,819               27,692
France                      -                     -                   -                 30,469
Trinidad                    -                     -                15,586                  -
                    -----------------    -------------------   -----------------    -----------------
Total                       -                     -                21,405               58,161
                    =================    ===================   =================    =================
</TABLE>

<PAGE>
                                       18


EXPLORATION AND DEVELOPMENT ACTIVITIES

The following table sets forth the number of exploratory and development wells,
which Vermilion completed during its 2003 financial year:

                                  EXPLORATORY WELLS           DEVELOPMENT WELLS
                                  -----------------           -----------------
                                 GROSS(1)     NET(2)         GROSS(1)     NET(2)
                                 --------     ------         --------     ------
Canada
     Oil Wells                     -            -               -            -
     Gas Wells                     14          7.3              5           3.1
     Dry Holes                     1           0.5              3           1.5
                                 --------     ------         --------     ------
     Total Completed Wells         15          7.8              8           4.6
                                 ========     ======         ========     ======
France
     Oil Wells                     1            1               1            1
     Gas Wells                     -            -               -            -
     Dry Holes                     -            -               -            -
                                 --------     ------         --------     ------
     Total Completed Wells         1            1               1            1
                                 ========     ======         ========     ======
Trinidad
     Oil Wells                     1          0.65              -            -
     Gas Wells                     1          0.65              -            -
     Dry Holes                     -            -               -            -
                                 --------     ------         --------     ------
     Total Completed Wells         2           1.3              -            -
                                 ========     ======         ========     ======
Total Vermilion
     Oil Wells                     2          1.65              1            1
     Gas Wells                     15         7.95              5           3.1
     Dry Holes                     1           0.5              3           1.5
                                 --------     ------         --------     ------
     Total Completed Wells         18         10.1              9           5.6
                                 ========     ======         ========     ======


Vermilion has initially budgeted $45 million for its 2004 apital program in
Canada and France. The funds will be used to drill wells to develop reserves in
its key areas of Drayton Valley, Slave Lake, Athabasca and Central Alberta and
the Paris basin. A portion of the capital will be allocated to workovers,
production optimization, and maintenance capital.


PROPERTIES WITH NO ATTRIBUTED RESERVES

The following table sets out Vermilion's undeveloped land as at December 31,
2003

                                                 UNDEVELOPED LAND
                                     -------------------------------------
AREA                                 GROSS ACRES(1)           NET ACRES(1)
----                                 --------------           ------------

Alberta                                    504,129              375,303
France                                   1,102,312              699,855
Trinidad                                    26,250               17,063
                                     --------------           ------------
Total                                    1,632,691            1,092,221
                                     ==============           ============

NOTES:
(1)  "Gross" refers to the total acres in which Vermilion has an interest,
     directly or indirectly.

(2)  "Net" refers to the total acres in which Vermilion has an interest,
     directly or indirectly, multiplied by the percentage working interest owned
     by Vermilion, directly or indirectly therein.


ABANDONMENT AND RECLAMATION COSTS

Vermilion has estimated its abandonment costs by determining amounts for
facility decommissioning and reclamation costs (including salvage) by area in
both Canada and France. As well Vermilion has determined abandonment costs
(including salvage) and reclamation costs per well, by area and applied this
amount to its net wells in each of Canada and France. The GLJ report includes
amounts for abandonment and reclamation costs in Trinidad. As there are only
four wells in Trinidad and the amounts included for abandonment and reclamation
are not considered material, such costs are not included in the abandonment
tables below for Vermilion.


<PAGE>
                                       19


The number of net wells to be abandoned is 668 in Canada and 204 in France.

The total amount of costs net of salvage is set forth in the following table.

        COUNTRY            UNDISCOUNTED (M$)      DISCOUNTED 10% (M$)
        -------            -----------------      -------------------
        Canada                   33,726                  5,425
        France                   39,233                  1,703


In estimating the future net revenue it is important to note that facilities
costs and non-producing wells in France were excluded from the abandonment
calculation totalling:

                           FACILITIES                    NON-PRODUCING
             ----------------------------------   -----------------------------
             UNDISCOUNTED ($M)   DISCOUNTED 10%   UNDISCOUNTED   DISCOUNTED 10%
             -----------------   --------------   ------------   --------------
Canada            7,248               190
France           20,713               411            8,174             2,145


In the next three years, Vermilion expects to pay:


        COUNTRY            UNDISCOUNTED (M$)       DISCOUNTED 10% (M$)
        -------            -----------------       -------------------
        Canada                    873                     668
        France                     59                      45


Vermilion has set aside a reclamation fund to help cover these future costs. It
is currently funded at $0.20 per producing boe.

TAX HORIZON

As a result of the Trust's tax efficient structure, annual taxable income in
Canada is transferred from its operating entities to Vermilion Energy Trust, and
from the Trust to its Unitholders. This is primarily accomplished through the
deduction of the royalties on underlying oil and gas properties held by its
operating subsidiaries. Therefore, it can be expected that no income tax
liability would be incurred by the Trust in Canada for as long as the
organization maintains this corporate tax structure. In France, the Trust is
currently taxable, subject to a 35.4% corporate tax rate after eligible
deductions.

PRODUCTION ESTIMATES

The following table sets forth the volume of production estimated for 2004:

<TABLE>
<CAPTION>
                   LIGHT AND MEDIUM OIL     NATURAL GAS     NATURAL GAS LIQUIDS       BOE
                          (MBBL)              (MMCF)              (MBBL)            (MBBL)
<S>                       <C>                 <C>                   <C>              <C>
Canada                    1,540               21,801                855              6,029
France                    2,577                  466                 -               2,655
Trinidad                    -                  4,600                115                882
                          -----               ------                ---              -----
Total Trust               4,117               26,867                970              9,566
                          =====               ======                ===              =====
</TABLE>

PRODUCTION HISTORY

The following table sets forth certain information in respect of production,
product prices received, royalties, production costs and netbacks received by
Vermilion for each quarter of its most recently completed financial year:


<PAGE>
                                       20

<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED  THREE MONTHS ENDED   THREE MONTHS ENDED   THREE MONTHS ENDED
                                       MARCH 31, 2003       JUNE 30, 2003     SEPTEMBER 30, 2003    DECEMBER 31, 2003
                                     ------------------  ------------------   ------------------   ------------------
<S>                                         <C>                 <C>                <C>                 <C>
Canada
     Average Daily Production
       Light and Medium Oil (bbl/d)         5,049               5,184              4,530               2,220
       Natural Gas (mcf/d)                  65.42               62.67              57.62               54.28
       Natural Gas Liquids (bbl/d)          1,956               2,111              1,867               1,808
                                     ------------------  ------------------   ------------------   ------------------
     Average Net Prices Received
       Light and Medium Oil ($/bbl)         42.90               41.08              42.45               44.61
       Natural Gas ($/mcf)                   6.45                6.25               5.66                5.57
       Natural Gas Liquids ($/bbl)          41.09               35.06              32.38               35.36
                                     ------------------  ------------------   ------------------   ------------------
     Royalties
       Light and Medium Oil ($/bbl)         10.80                8.44               7.90                8.06
       Natural Gas ($/mcf)                   1.82                2.16               1.86                1.69
       Natural Gas Liquids ($/bbl)          12.70               10.33               9.97               11.18
                                     ------------------  ------------------   ------------------   ------------------
     Production Costs
       Light and Medium Oil ($/bbl)          6.13                5.62               7.19                8.20
       Natural Gas ($/mcf)                   0.68                0.86               0.91                1.07
       Natural Gas Liquids ($/bbl)           6.13                5.62               7.19                8.20
                                     ------------------  ------------------   ------------------   ------------------
     Netback Received
       Light and Medium Oil ($/bbl)         25.97               27.02              27.36               28.35
       Natural Gas ($/mcf)                   3.95                3.23               2.89                2.81
       Natural Gas Liquids ($/bbl)          22.26               19.11              15.22               15.98
                                     ==================  ==================   ==================   ==================
France
     Average Daily Production
       Light and Medium Oil (bbl/d)         5,987               6,107              5,824               6,155
       Natural Gas (mcf/d)                   1.42                1.36               1.59                1.69
       Natural Gas Liquids (bbl/d)            -                   -                  -                   -
     Average Net Prices Received
       Light and Medium Oil ($/bbl)         36.16               28.65              30.16               33.00
       Natural Gas ($/mcf)                   5.71                4.66               4.92                4.75
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Royalties
       Light and Medium Oil ($/bbl)          4.99                4.04               4.47                4.97
       Natural Gas ($/mcf)                   0.25                0.24               0.25                0.24
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Production Costs
       Light and Medium Oil ($/bbl)          6.80                6.69               6.57                6.48
       Natural Gas ($/mcf)                   2.37                2.65               2.88               0.73
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Netback Received
       Light and Medium Oil ($/bbl)         24.37               17.92              19.12               21.55
       Natural Gas ($/mcf)                   3.09                1.77               1.79                3.78
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ==================  ==================   ==================   ==================
Trinidad
     Average Daily Production
       Light and Medium Oil ($/bbl)           342                 305                359                 340
       Natural Gas ($/mcf)                  11.63               11.46              13.27               13.13
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Average Net Prices Received
       Light and Medium Oil ($/bbl)         42.44               38.10              36.07               36.58
       Natural Gas ($/mcf)                   1.69                1.52               1.52                1.56
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Royalties
       Light and Medium Oil ($/bbl)          5.14                3.29               5.50                4.73
       Natural Gas ($/mcf)                   0.19                0.16               0.13                0.14
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Production Costs
       Light and Medium Oil ($/bbl)           -                   -                  -                   -
       Natural Gas ($/mcf)                   0.36                0.73               0.56                0.43
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ------------------  ------------------   ------------------   ------------------
     Netback Received
       Light and Medium Oil ($/bbl)         37.30               34.81              30.57               31.85
       Natural Gas ($/mcf)                   1.14                0.63               0.83                0.99
       Natural Gas Liquids ($/bbl)            -                   -                  -                   -
                                     ==================  ==================   ==================   ==================
</TABLE>

<PAGE>
                                       21


MARKETING

Vermilion is party to certain financial instruments, such as crude oil and
natural gas contracts and foreign currency forward contracts. Vermilion has
entered into these contracts for hedging purposes only in order to protect its
cash flow on future sales from the potential adverse impact of fluctuations in
oil and gas prices and in the U.S./Canadian dollar exchange rate. The contracts
reduce the fluctuations in sales revenues by establishing fixed prices or a
trading range on a portion of its oil and gas sales. All of the future sales
contracts described below are arranged with counter parties representing major
financial (banking) institutions with AA to AAA credit ratings thereby reducing
counter party credit risk exposure.

Contracts outstanding in respect of hedging transactions which Vermilion will
assume are as follows:

OIL HEDGING                       WTI                           Brent
Fixed Price Swaps        bbls/d        US$/bbl          bbls/d        US$/bbl
                       ---------------------------------------------------------
2004                      2,250         24.35            2,250         22.93
2005                      1,500         24.80            1,500         23.37
                       ---------------------------------------------------------

GAS HEDGING                                              Floor        Ceiling
Costless Collars                        GJ/d            Cdn$/GJ       Cdn$/GJ
                                   ---------------------------------------------
Q1 2004                                19,148            4.99           8.70
Q2 2004                                17,500            4.71           6.64
Q3 2004                                17,500            4.71           6.64
Q4 2004                                 5,897            4.71           6.64
                                   ---------------------------------------------
2004 Average                           14,993            4.80           7.30
                                   ---------------------------------------------


Vermilion has also put in place currency-conversion hedges for the Canadian-U.S.
dollar of US$2.7 million per month, covering the majority of its oil hedge
position for 2004 at approximately US$0.71 per Canadian dollar.

            ADDITIONAL INFORMATION RESPECTING VERMILION ENERGY TRUST

TRUST UNITS

An unlimited number of Trust Units may be created and issued pursuant to the
Trust Indenture. Each Trust Unit shall entitle the holder thereof to one vote at
any meeting of the holders of Trust Units and represents an equal fractional
undivided beneficial interest in any distribution from the Trust (whether of net
income, net realized capital gains or other amounts) and in any net assets of
the Trust in the event of termination or winding-up of the Trust. All Trust
Units outstanding from time to time shall be entitled to equal shares of any
distributions by the Trust, and in the event of termination or winding-up of the
Trust, in any net assets of the Trust. All Trust Units shall rank among
themselves equally and rateably without discrimination, preference or priority.
Each Trust Unit is transferable, subject to compliance with applicable Canadian
securities laws, is not subject to any conversion or pre-emptive rights and
entitles the holder thereof to require the Trust to redeem any or all of the
Trust Units held by such holder (see "Redemption Right") and to one vote at all
meetings of Unitholders for each Trust Unit held.

The Trust Units do not represent a traditional investment and should not be
viewed by investors as "shares" in either Vermilion or the Trust. As holders of
Trust Units in the Trust, the Unitholders will not have the statutory rights
normally associated with ownership of shares of a corporation including, for
example, the right to bring "oppression" or "derivative" actions. The price per
Trust Unit will be a function of anticipated distributable income from Vermilion
and the ability of Vermilion to effect long term growth in the value of the
Trust. The market price of the Trust Units will be sensitive to a variety of
market conditions including, but not limited to, interest rates, commodity
prices and the ability of the Trust to acquire additional assets. Changes in
market conditions may adversely affect the trading price of the Trust Units.


<PAGE>
                                       22


SPECIAL VOTING RIGHTS

In order to allow the Trust flexibility in pursuing corporate acquisitions, the
Trust Indenture allows for the creation of Special Voting Rights which will
enable the Trust to provide voting rights to holders of Exchangeable Shares and,
in the future, to holders of other exchangeable shares that may be issued by
Vermilion or other subsidiaries of the Trust in connection with other
exchangeable share transactions.

An unlimited number of Special Voting Rights may be created and issued pursuant
to the Trust Indenture. Holders of Special Voting Rights shall not be entitled
to any distributions of any nature whatsoever from the Trust and shall be
entitled to attend at meetings of Unitholders and to such number of votes at
meetings of Unitholders as may be prescribed by the board of directors of
Vermilion in the resolution authorizing the issuance of any Special Voting
Rights. Except for the right to attend and vote at meetings of the Unitholders,
the Special Voting Rights shall not confer upon the holders thereof any other
rights.

Under the terms of the Voting and Exchange Trust Agreement, the Trust has issued
a Special Voting Right to the Voting and Exchange Trust Agreement Trustee for
the benefit of every Person who holds Exchangeable Shares.

UNITHOLDERS LIMITED LIABILITY

The Trust Indenture provides that no Unitholder, in its capacity as such, shall
incur or be subject to any liability in contract or in tort in connection with
the Trust or its obligations or affairs and, in the event that a court
determines Unitholders are subject to any such liabilities, the liabilities will
be enforceable only against, and will be satisfied only out of the Trust's
assets. Pursuant to the Trust Indenture, the Trust will indemnify and hold
harmless each Unitholder from any cost, damages, liabilities, expenses, charges
or losses suffered by a Unitholder from or arising as a result of such
Unitholder not having such limited liability.

The Trust Indenture provides that all contracts signed by or on behalf of the
Trust must contain a provision to the effect that such obligation will not be
binding upon Unitholders personally. Notwithstanding the terms of the Trust
Indenture, Unitholders may not be protected from liabilities of the Trust to the
same extent a shareholder is protected from the liabilities of a corporation.
Personal liability may also arise in respect of claims against the Trust (to the
extent that claims are not satisfied by the Trust) that do not arise under
contracts, including claims in tort, claims for taxes and possibly certain other
statutory liabilities. The possibility of any personal liability to Unitholders
of this nature arising is considered unlikely in view of the fact that the sole
activity of the Trust is to hold securities, and all of the business operations
are carried on by Vermilion, directly or indirectly.

The activities of the Trust and its subsidiary, Vermilion, will be conducted,
upon the advice of counsel, in such a way and in such jurisdictions as to avoid
as far as possible any material risk of liability to the Unitholders for claims
against the Trust including by obtaining appropriate insurance, where available,
for the operations of Vermilion and having contracts signed by or on behalf of
the Trust include a provision that such obligations are not binding upon
Unitholders personally.

ISSUANCE OF TRUST UNITS

The Trust Indenture provides that Trust Units, including rights, warrants and
other securities to purchase, to convert into or to exchange into Trust Units,
may be created, issued, sold and delivered on such terms and conditions and at
such times as the Trustee, upon the recommendation of the board of directors of
Vermilion may determine. The Indenture also provides that Vermilion may
authorize the creation and issuance of debentures, notes and other evidences of
indebtedness of the Trust which debentures, notes or other evidences of
indebtedness may be created and issued from time to time on such terms and
conditions to such persons and for such consideration as Vermilion may
determine.

CASH DISTRIBUTIONS

The Trustee may declare payable to the Unitholders all or any part of the net
income of the Trust earned from interest income on the Notes, from the income
generated under the Royalty Agreement and from any dividends paid on the common
shares of Vermilion, less all expenses and liabilities of the Trust due and
accrued and which are

<PAGE>
                                       23


chargeable to the net income of the Trust. In addition, Unitholders may, at the
discretion of the board of directors of Vermilion, receive distributions in
respect of prepayments of principal on the Notes made by Vermilion to the Trust
before the maturity of the Notes. It is anticipated however, that the Trust may
reinvest a portion of the repayments of principal on the Notes to make capital
expenditures to develop the business of Vermilion with a view to enhancing
Vermilion's cash flow from operations.

Cash distributions will be made on the 15th day of each month to Unitholders of
record on the immediately preceding Distribution Record Date. Commencing
February 2003, the Trust declared monthly distributions equal to $0.17 per unit
for a total of $1.87 per unit.

REDEMPTION RIGHT

Trust Units are redeemable at any time on demand by the holders thereof upon
delivery to the Trust of the certificate or certificates representing such Trust
Units, accompanied by a duly completed and properly executed notice requiring
redemption. Upon receipt of the notice to redeem Trust Units by the Trust, the
holder thereof shall only be entitled to receive a price per Trust Unit (the
"Market Redemption Price") equal to the lesser of: (a) 90% of the "market price"
of the Trust Units on the principal market on which the Trust Units are quoted
for trading during the 10 trading day period commencing immediately after the
date on which the Trust Units are tendered to the Trust for redemption; and (b)
the closing market price on the principal market on which the Trust Units are
quoted for trading on the date that the Trust Units are so tendered for
redemption.

For the purposes of this calculation, "market price" will be an amount equal to
the simple average of the closing price of the Trust Units for each of the
trading days on which there was a closing price; provided that, if the
applicable exchange or market does not provide a closing price but only provides
the highest and lowest prices of the Trust Units traded on a particular day, the
market price shall be an amount equal to the simple average of the average of
the highest and lowest prices for each of the trading days on which there was a
trade; and provided further that if there was trading on the applicable exchange
or market for fewer than five of the 10 trading days, the market price shall be
the simple average of the following prices established for each of the 10
trading days: the average of the last bid and last ask prices for each day on
which there was no trading; the closing price of the Trust Units for each day
that there was trading if the exchange or market provides a closing price; and
the average of the highest and lowest prices of the Trust Units for each day
that there was trading, if the market provides only the highest and lowest
prices of Trust Units traded on a particular day. The closing market price shall
be: an amount equal to the closing price of the Trust Units if there was a trade
on the date; an amount equal to the average of the highest and lowest prices of
the Trust Units if there was trading and the exchange or other market provides
only the highest and lowest prices of Trust Units traded on a particular day;
and the average of the last bid and last ask prices if there was no trading on
the date.

The Market Redemption Price payable by the Trust in respect of any Trust Units
tendered for redemption during any calendar month shall be satisfied by way of a
cash payment on the last day of the following month. The entitlement of
Unitholders to receive cash upon the redemption of their Trust Units is subject
to the limitation that the total amount payable by the Trust in respect of such
Trust Units and all other Trust Units tendered for redemption in the same
calendar month and in any preceding calendar month during the same year shall
not exceed $250,000 provided that, the Trust may, in its sole discretion, waive
such limitation in respect of any calendar month. If this limitation is not so
waived, the Market Redemption Price payable by the Trust in respect of Trust
Units tendered for redemption in such calendar month shall be paid on the last
day of the following month as follows: (a) firstly, by the Trust distributing
Notes having an aggregate principal amount equal to the aggregate Market
Redemption Price of the Trust Units tendered for redemption, and (b) secondly,
to the extent that the Trust does not hold Notes having a sufficient principal
amount outstanding to effect such payment, by the Trust issuing its own
promissory notes to the Unitholders who exercised the right of redemption having
an aggregate principal amount equal to any such shortfall, which promissory
notes, (herein referred to as "Redemption Notes") shall have terms and
conditions substantially identical to those of the Notes.

If at the time Trust Units are tendered for redemption by a Unitholders, the
outstanding Trust Units are not listed for trading on the TSX and are not traded
or quoted on any other stock exchange or market which Vermilion considers, in
its sole discretion, provides representative fair market value price for the
Trust Units or trading of the outstanding Trust Units is suspended or halted on
any stock exchange on which the Trust Units are listed for trading or, if not so

<PAGE>
                                       24


listed, on any market on which the Trust Units are quoted for trading, on the
date such Trust Units are tendered for redemption or for more than five trading
days during the 10 trading day period, commencing immediately after the date
such Trust Units were tendered for redemption then such Unitholders shall,
instead of the Market Redemption Price, be entitled to receive a price per Trust
Unit (the "Appraised Redemption Price") equal to 90% of the fair market value
thereof as determined by Vermilion as at the date on which such Trust Units were
tendered for redemption. The aggregate Appraised Redemption Price payable by the
Trust in respect of Trust Units tendered for redemption in any calendar month
shall be paid on the last day of the third following month by, at the option of
the Trust: (a) a cash payment; or (b) a distribution of Notes and/or Redemption
Notes as described above.

It is anticipated that this redemption right will not be the primary mechanism
for holders of Trust Units to dispose of their Trust Units. Notes or Redemption
Notes which may be distributed in specie to Unitholders in connection with a
redemption will not be listed on any stock exchange and no market is expected to
develop in such Notes or Redemption Notes. Notes and Redemption Notes may not be
qualified investments for trusts governed by registered retirement savings
plans, registered retirement income funds, deferred profit sharing plans and
registered education savings plans.

NON-RESIDENT UNITHOLDERS

It is in the best interest of Unitholders that the Trust qualify as a "unit
trust" and a "mutual fund trust" under the Tax Act. Certain provisions of the
Tax Act require that the Trust not be established nor maintained primarily for
the benefit of Non-Residents. Accordingly, in order to comply with such
provisions, the Trust Indenture contains restrictions on the ownership of Trust
Units by Unitholders who are Non-Residents. In this regard, the Trust shall,
among other things, take all necessary steps to monitor the ownership of the
Trust Units to carry out such intentions. If at any time the Trust becomes aware
that the beneficial owners of 50% or more of the Trust Units then outstanding
are or may be Non-Residents or that such a situation is imminent, the Trust
shall take such action as may be necessary to carry out such intentions.

MEETINGS OF UNITHOLDERS

The Trust Indenture provides that meetings of Unitholders must be called and
held for, among other matters, the election or removal of the Trustee, the
appointment or removal of the auditors of the Trust, the approval of amendments
to the Trust Indenture (except as described under "Amendments to the Trust
Indenture"), the sale of the property of the Trust as an entirety or
substantially as an entirety, and the commencement of winding-up the affairs of
the Trust. Meetings of Unitholders will be called and held annually for, among
other things, the election of the directors of Vermilion and the appointment of
the auditors of the Trust.

A meeting of Unitholders may be convened at any time and for any purpose by the
Trustee and must be convened, except in certain circumstances, if requisitioned
by the holders of not less than 5% of the Trust Units then outstanding by a
written requisition. A requisition must, among other things, state in reasonable
detail the business purpose for which the meeting is to be called.

Unitholders may attend and vote at all meetings of Unitholders either in person
or by proxy and a proxyholder need not be a Unitholder. Two persons present in
person or represented by proxy and representing in the aggregate at least 5% of
the votes attaching to all outstanding Trust Units shall constitute a quorum for
the transaction of business at all such meetings. For the purposes of
determining such quorum, the holders of any issued Special Voting Rights who are
present at the meeting shall be regarded as representing outstanding Trust Units
equivalent in number to the votes attaching to such Special Voting Rights.

The Trust Indenture contains provisions as to the notice required and other
procedures with respect to the calling and holding of meetings of Unitholders in
accordance with the requirements of applicable laws.

EXERCISE OF VOTING RIGHTS ATTACHED TO SHARES OF VERMILION

The Trust Indenture prohibits the Trustee from voting the shares of Vermilion
with respect to (a) the election of directors of Vermilion, (b) the appointment
of auditors of Vermilion or (c) the approval of Vermilion's financial
statements, except in accordance with an Ordinary Resolution adopted at an
annual meeting of Unitholders.

<PAGE>
                                       25


The Trustee is also prohibited from voting the shares to authorize:

         (a)      any sale, lease or other disposition of, or any interest in,
                  all or substantially all of the assets of Vermilion, except in
                  conjunction with an internal reorganization of the direct or
                  indirect assets of Vermilion as a result of which either
                  Vermilion or the Trust has the same interest, whether direct
                  or indirect, in the assets as the interest, whether direct or
                  indirect, that it had prior to the reorganization;

         (b)      any statutory amalgamation of Vermilion with any other
                  corporation, except in conjunction with an internal
                  reorganization as referred to in paragraph (a) above;

         (c)      any statutory arrangement involving Vermilion except in
                  conjunction with an internal reorganization as referred to in
                  paragraph (a) above;

         (d)      any amendment to the articles of Vermilion to increase or
                  decrease the minimum or maximum number of directors; or

         (e)      any material amendment to the articles of Vermilion to change
                  the authorized share capital or amend the rights, privileges,
                  restrictions and conditions attaching to any class of
                  Vermilion's shares in a manner which may be prejudicial to the
                  Trust;

without the approval of the Unitholders by Special Resolution at a meeting of
Unitholders called for that purpose.

TRUSTEE

Computershare Trust Company of Canada is the initial trustee of the Trust. The
Trustee is responsible for, among other things, accepting subscriptions for
Trust Units and issuing Trust Units pursuant thereto and maintaining the books
and records of the Trust and providing timely reports to holders of Trust Units.
The Trust Indenture provides that the Trustee shall exercise its powers and
carry out its functions thereunder as Trustee honestly, in good faith and in the
best interests of the Trust and, in connection therewith, shall exercise that
degree of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances.

The initial term of the Trustee's appointment is until the third annual meeting
of Unitholders. The Unitholders shall, at the third annual meeting of the
Unitholders, re-appoint, or appoint a successor to the Trustee for an additional
three year term, and thereafter, the Unitholders shall reappoint or appoint a
successor to the Trustee at the annual meeting of Unitholders three years
following the reappointment or appointment of the successor to the Trust. The
Trustee may also be removed by Special Resolution of the Unitholders. Such
resignation or removal becomes effective upon the acceptance or appointment of a
successor trustee.

DELEGATION OF AUTHORITY, ADMINISTRATION AND TRUST GOVERNANCE

The board of directors of Vermilion has generally been delegated the significant
management decisions of the Trust. In particular, the Trustee has delegated to
Vermilion responsibility for any and all matters relating to the following: (a)
an Offering; (b) ensuring compliance with all applicable laws, including in
relation to an Offering; (c) all matters relating to the content of any Offering
Documents, the accuracy of the disclosure contained therein, and the
certification thereof; (d) all matters concerning the terms of, and amendment
from time to time of the material contracts of the Trust; (e) all matters
concerning any underwriting or agency agreement providing for the sale of Trust
Units or rights to Trust Units; (f) all matters relating to the redemption of
Trust Units; (g) all matters relating to the voting rights on any investments in
the Trust Fund or any Subsequent Investments; and (h) all matters relating to
the specific powers and authorities as set forth in the Trust Indenture.

LIABILITY OF THE TRUSTEE

The Trustee, its directors, officers, employees, shareholders and agents and all
of their successors and assigns shall not be liable to any Unitholders or any
other person, in tort, contract or otherwise, in connection with any matter
pertaining to the Trust or the property of the Trust, arising from the exercise
by the Trustee of any powers,

<PAGE>
                                       26


authorities or discretion conferred under the Trust Indenture, including,
without limitation, any action taken or not taken in good faith in reliance on
any documents that are, prima facie properly executed, any depreciation of, or
loss to, the property of the Trust incurred by reason of the sale of any asset,
any inaccuracy in any evaluation provided by any other appropriately qualified
person, any reliance on any such evaluation, any action or failure to act of
Vermilion, or any other person to whom the Trustee has, with the consent of
Vermilion, delegated any of its duties hereunder, or any other action or failure
to act (including failure to compel in any way any former trustee to redress any
breach of trust or any failure by Vermilion to perform its duties under or
delegated to it under the Trust Indenture or any other contract), unless such
liabilities arise out of the gross negligence, wilful default or fraud of the
Trustee or any of its directors, officers, employees or shareholders. If the
Trustee has retained an appropriate expert, adviser or legal counsel with
respect to any matter connected with its duties under the Trust Indenture, the
Trustee may act or refuse to act based on the advice of such expert, adviser or
legal counsel, and the Trustee shall not be liable for and shall be fully
protected from any loss or liability occasioned by any action or refusal to act
based on the advice of any such expert, adviser or legal counsel. In the
exercise of the powers, authorities or discretion conferred upon the Trustee
under the Trust Indenture, the Trustee is and shall be conclusively deemed to be
acting as Trustee of the assets of the Trust and shall not be subject to any
personal liability for any debts, liabilities, obligations, claims, demands,
judgments, costs, charges or expenses against or with respect to the Trust or
the property of the Trust Fund. In addition, the Trust Indenture contains other
customary provisions limiting the liability of the Trustee.

AMENDMENTS TO THE TRUST INDENTURE

The Trust Indenture may be amended or altered from time to time by Special
Resolution.

The Trustee may, without the approval of any of the Unitholders, amend the Trust
Indenture for the purpose of:

         (a)      ensuring the Trust's continuing compliance with applicable
                  laws or requirements of any governmental agency or authority
                  of Canada or of any province;

         (b)      ensuring that the Trust will satisfy the provisions of each of
                  subsections 108(2) and 132(6) of the Tax Act as from time to
                  time amended or replaced;

         (c)      ensuring that such additional protection is provided for the
                  interests of Unitholders as the Trustee may consider
                  expedient;

         (d)      removing or curing any conflicts or inconsistencies between
                  the provisions of the Trust Indenture or any supplemental
                  indenture and any other agreement of the Trust or any offering
                  document pursuant to which securities of the Trust are issued
                  with respect to the Trust, or any applicable law or regulation
                  of any jurisdiction, provided that in the opinion of the
                  Trustee the rights of the Trustee and of the Unitholders are
                  not prejudiced thereby; or

         (e)      curing, correcting or rectifying any ambiguities, defective or
                  inconsistent provisions, errors, mistakes or omissions,
                  provided that in the opinion of the Trustee the rights of the
                  Trustee and of the Unitholders are not prejudiced thereby.

TAKEOVER BID

The Trust Indenture contains provisions to the effect that if a takeover bid is
made for the Trust Units and not less than 90% of the Trust Units (other than
Trust Units held at the date of the takeover bid by or on behalf of the offeror
or associates or affiliates of the offeror) are taken up and paid for by the
offeror, the offeror will be entitled to acquire the Trust Units held by
Unitholders who did not accept the takeover bid, on the terms offered by the
offeror.

TERMINATION OF THE TRUST

The Unitholders may vote to terminate the Trust at any meeting of the
Unitholders duly called for that purpose, subject to the following: (a) a vote
may only be held if requested in writing by the holders of not less than 20% of

<PAGE>
                                       27


the outstanding Trust Units; (b) a quorum of 50% of the issued and outstanding
Trust Units is present in person or by proxy; and (c) the termination must be
approved by Special Resolution of Unitholders.

Unless the Trust is earlier terminated or extended by vote of the Unitholders,
the Trustee shall commence to wind-up the affairs of the Trust on December 31,
2099. In the event that the Trust is wound-up, the Trustee will sell and convert
into money the property of the Trust in one transaction or in a series of
transactions at public or private sale and do all other acts appropriate to
liquidate the property of the Trust, and shall in all respects act in accordance
with the directions, if any, of the Unitholders in respect of termination
authorized pursuant to the Special Resolution authorizing the termination of the
Trust. Notwithstanding anything herein contained, in no event shall the Trust be
wound up until the Royalty shall have been disposed of, and under no
circumstances shall any Unitholder come into any possession of any interest in
the Royalty. After paying, retiring or discharging or making provision for the
payment, retirement or discharge of all known liabilities and obligations of the
Trust and providing for indemnity against any other outstanding liabilities and
obligations, the Trustee shall distribute the remaining part of the proceeds of
the sale of the assets together with any cash forming part of the property of
the Trust among the Unitholders in accordance with their Pro Rata Share.

REPORTING TO UNITHOLDERS

The financial statements of the Trust are audited annually by an independent
recognized firm of chartered accountants. The audited financial statements of
the Trust, together with the report of such chartered accountants, are mailed by
the Trustee to Unitholders and the unaudited interim financial statements of the
Trust are mailed to Unitholders as prescribed by applicable securities
legislation. The year end of the Trust is December 31.

The Trust is subject to the continuous disclosure obligations under all
applicable securities legislation.

DISTRIBUTION REINVESTMENT AND OPTIONAL TRUST UNIT PURCHASE PLAN

The Trust has established the DRIP Plan. The DRIP Plan is only available to
Unitholders who are residents of Canada.

Under the DRIP Plan, Unitholders may, at their option, reinvest their cash
distributions to purchase additional Trust Units (the "DRIP Units") by directing
the Plan Agent (as defined below) to apply Distributions on their existing Trust
Units to the purchase of DRIP Units or by making optional cash payments (the
"Cash Payment Option"). Computershare Trust Company of Canada in its capacity as
plan agent (the "Plan Agent") will apply Cash Distributions towards the purchase
of DRIP Units from the Trust, subject to certain limitations either from
treasury or at the discretion of Vermilion through the facilities of the TSX.
Drip Units will be acquired either at the average market price at which DRIP
Units are acquired through the facilities of the TSX or from treasury based on
the weighted average of the previous 10 days of trading prior to the applicable
Distribution. Under the Cash Payment Option, a Unitholder may, through the Plan
Agent purchase additional DRIP Units having a value of up to $5,000 per month.
Participants in the DRIP Plan will also receive additional distributions of
Trust Units equal to 5% of the DRIP Units purchased with their Distributions or
under the Cash Payment Option, as applicable (the "Bonus Units under the DRIP
Plan"). The aggregate number of DRIP Units that may be issued under the Cash
Payment Option in any fiscal year of the Trust will be limited to 2% of the
number of Trust Units issued and outstanding at the start of such fiscal year.
Participants will not have to pay any brokerage fees or service charges in
connection with the purchase of DRIP Units.

Unitholders may, after electing to participate in the DRIP Plan, terminate their
participation in the DRIP Plan by written notice to the Plan Agent. That notice,
if actually received no later than 5 business days prior to a Distribution
Record Date, will have effect for the distribution to be made on the following
Distribution Payment Date. Thereafter, distributions to those Unitholders will
be in cash. The Trust may amend, suspend or terminate the DRIP Plan in its sole
discretion provided that any amendment to the DRIP Plan must be approved by the
TSX and that any amendment, modification or suspension shall have no retroactive
effect if it would prejudice the interests of participants. The Trust is not
required to issue Trust Units into any jurisdiction where that issuance would be
illegal.

<PAGE>
                                       28


UNITHOLDER RIGHTS PLAN

Pursuant to the Unitholder Rights Plan Agreement, the Trust has put in place a
unitholder rights plan. The previous shareholder rights plan of Vermilion was
terminated under the Arrangement.

The following description of the Unitholder Rights Plan is qualified in its
entirety by reference to the full text of the Unitholder Rights Plan agreement,
a copy of which is available on request at the head office of Vermilion during
normal business hours.

PURPOSE

The purpose of the Unitholder Rights Plan is to afford both the Unitholders and
Vermilion sufficient time to evaluate and respond to an unsolicited offer made
for the Trust Units. Further, the Unitholder Rights Plan is intended to assist
in ensuring that all Unitholders have an equal opportunity to participate in any
takeover bid.

Vermilion is not aware of any interest by any third party in acquiring control
of Vermilion at this time.

BACKGROUND

Under current provincial securities legislation, a takeover bid would generally
involve an offer to acquire the Trust Units of the Trust where the Trust Units
subject to the offer to acquire, together with Trust Units already owned by the
bidder and certain related parties, aggregate 20% or more of the outstanding
Trust Units. Current legislation only requires that a takeover bid remain open
for acceptance for not less than 35 days and that any securities deposited may
be withdrawn only during the 10 days following the date of the bid. In addition,
such legislation does not require that a bid be made for all securities of a
particular class and the bidder may in a single transaction or series of
transactions acquire control of an entity pursuant to one or more private
agreements at a permissible premium to the then current market price, without an
offer being required to be made to all other securityholders of the entity. In
addition, the bidder may make "creeping acquisitions" of securities by slowly
accumulating shares through stock exchange transactions which may result, over
time, in the acquisition of control without the payment of fair value for
control of the entity or the sharing of the control premium among all
securityholders.

The Unitholder Rights Plan is designed to encourage any bidder to provide all
Unitholders with equal treatment in a takeover and full value for their
investment in the Trust Units of the Trust.

SUMMARY OF THE UNITHOLDER RIGHTS PLAN

The following is a summary of the principal terms of the Unitholder Rights Plan
which is qualified in its entirety by the actual text of the Unitholder Rights
Plan agreement.

ISSUE OF RIGHTS

On the Effective Date, one right (a "Right") shall be issued and attached to
each of the outstanding Trust Units and will attach to each Trust Unit of the
Trust that is subsequently issued. Initially, certificates representing Trust
Units of the Trust also represent the Rights.

RIGHTS EXERCISE PRIVILEGE

The Rights will separate from the Trust Units of the Trust and will be
exercisable, subject to action by Vermilion, 10 trading days (the "Separation
Time") after a person has acquired, or commences a takeover bid to acquire, 20%
or more of the Trust Units, other than by an acquisition pursuant to a takeover
bid permitted by the Unitholders Rights Plan (a "Permitted Bid"). The
acquisition by any person (an "Acquiring Person") of 20% or more of the Trust
Units, other than by way of a Permitted Bid, is referred to as a "Flip-in
Event". Any Rights held by an Acquiring Person will become void upon the
occurrence of a Flip-in Event. In the absence of action by Vermilion and 10 days
after the occurrence of a Flip-in Event, each Right (other than those held by
the Acquiring Person), will permit the purchase of that number of Trust Units
having an aggregate market price (as defined in the Unitholders Rights Plan)

<PAGE>
                                       29


equal to twice the exercise price for an amount in cash equal to the exercise
price (which the Unitholders Rights Plan currently sets at $35).
The issue of the Rights is not initially dilutive. However, holders of Rights
not exercising their Rights upon the occurrence of a Flip-in Event may suffer
substantial dilution.

CERTIFICATES AND TRANSFERABILITY

After the Separation Time, the Rights will be evidenced by Rights certificates
which will be transferable and traded separately from the Trust Units of the
Trust.

PERMITTED BID REQUIREMENTS

The requirements for a Permitted Bid include the following:

         (a)      the takeover bid must be made for all Units to all holders of
                  Trust Units, other than the Acquiring Person and provide that,
                  subject to the conditions of the Takeover Bid, the Offeror
                  will take up and pay for all Units validly tendered without
                  pro-rating;

         (b)      the takeover bid must contain, and the take-up and payment for
                  securities tendered or deposited is subject to, an irrevocable
                  and unqualified provision that no Trust Units will be taken up
                  or paid for pursuant to any takeover bid prior to the close of
                  business on the date which is not less than 45 days following
                  the date of the takeover bid and only if at such date more
                  than 50% of the Trust Units held by independent Unitholders
                  shall have been deposited or tendered pursuant to the takeover
                  bid and not withdrawn;

         (c)      the takeover bid contains an irrevocable and unqualified
                  provision that unless the takeover bid is withdrawn, Trust
                  Units may be deposited pursuant to such takeover bid at any
                  time during the period of time between the date of the
                  takeover bid and the date on which Trust Units may be taken up
                  and paid for and that any Trust Units deposited pursuant to
                  the takeover bid may be withdrawn until taken up and paid for;
                  and

         (d)      the takeover bid must contain an irrevocable and unqualified
                  provision that if, on the date on which Trust Units may be
                  taken up and paid for, more than 50% of the Trust Units held
                  by independent Unitholders shall have been deposited pursuant
                  to the takeover bid and not withdrawn, the Acquiring Person
                  will make a public announcement of that fact and the takeover
                  bid will remain open for deposits and tenders of Trust Units
                  for not less than 10 Business Days from the date of such
                  public announcement.

The Unitholder Rights Plan allows for a competing Permitted Bid (a "Competing
Permitted Bid") to be made while a Permitted Bid is in existence. A Competing
Permitted Bid must satisfy all the requirements of a Permitted Bid (subject to
certain exceptions).

WAIVER AND REDEMPTION

Vermilion may, prior to a Flip-in Event, waive the dilutive effects of the
Unitholder Rights Plan in respect of a particular Flip-in Event resulting from a
takeover bid made by way of a takeover bid circular to all holders of the Trust
Units of the Trust, in which event such waiver would be deemed also to be a
waiver in respect of any other Flip-in Event occurring under a takeover bid made
by way of a takeover bid circular to all holders of the Trust Units of the Trust
prior to the expiry of the takeover bid in respect of which the waiver is
granted. Vermilion may also waive the Unitholder Rights Plan in respect of a
particular Flip-in Event that has occurred through inadvertence, provided that
the Acquiring Person that inadvertently triggered such Flip-in Event reduces its
beneficial holdings to less than 20% of the outstanding Trust Units of the Trust
within 10 days or such other period as may be specified by Vermilion.

<PAGE>
                                       30


At any time prior to the occurrence of a Flip-in Event, Vermilion may at its
option redeem all, but not less than all, of the outstanding Rights at a price
of $0.00001 per Right.

GRANDFATHER PROVISIONS

The Unitholder Rights Plan exempts from the definition of Acquiring Person any
person who is the beneficial owner, as defined in the Unitholder Rights Plan, of
more than 20% of the outstanding Trust Units determined as at the Effective Date
provided that such person does not after the Effective Date become the
beneficial owner of additional Trust Units constituting 1.0% or more of the
outstanding Trust Units of the Trust other than pursuant to a Permitted Bid, a
Competing Permitted Bid or certain other exempt provisions.

           ADDITIONAL INFORMATION RESPECTING VERMILION RESOURCES LTD.

MANAGEMENT OF VERMILION

Vermilion has a board of directors currently consisting of five individuals. The
directors are elected by the Trust at the direction of Unitholders by ordinary
resolution, and hold office until the next annual meeting of the Trust, which is
anticipated to be held in May 18, 2004.

As at March 31, 2004, the directors and officers of Vermilion, as a group,
beneficially owned, directly or indirectly, 2,472,732 Trust Units representing
approximately 4.1% of the issued and outstanding Trust Units, as well as an
aggregate of 4,488,951 Exchangeable Shares. Assuming all Exchangeable Shares
were exchanged for Trust Units, using the Exchange Ratio of 1.16656, the
directors and executive officers would hold 7,709,363 Trust Units, representing
11.8% of then issued and outstanding Trust Units.

The following table sets forth certain information respecting the directors and
officers of Vermilion.

<TABLE>
<CAPTION>
                                                      DATE FIRST
                                                       ELECTED
           NAME AND                                OR APPOINTED AS   PRINCIPAL OCCUPATION DURING
  MUNICIPALITY OF RESIDENCE        OFFICE HELD         DIRECTOR      THE PAST FIVE YEARS
-----------------------------   -----------------  ---------------   ----------------------------------------------
<S>                             <C>                <C>               <C>
Lorenzo Donadeo                 President and            1994        Since  January   2003,   President  and  Chief
Calgary, Alberta                Chief Executive                      Executive    Officer   of   Vermilion;    Vice
                                Officer and                          President  and  Chief  Operating   Officer  of
                                Director                             Vermilion  from December 2000 to January 2003;
                                                                     since   February,    1995,    Executive   Vice
                                                                     President of Vermilion.

Claudio Ghersinich              Executive Vice           1994        Since January 2003,  Executive Vice President,
Calgary, Alberta                President,                           Business  Development of Vermilion;  Executive
                                Business                             Vice  President,  New  Ventures  of  Vermilion
                                Development and                      from  December  2000 to  January  2003;  since
                                Director                             February,  1995,  Executive  Vice President of
                                                                     Vermilion.

Jeffrey Boyce(1)(2)(3)(4)       Director                 1994        Since  January   2003,   President  and  Chief
Calgary, Alberta                                                     Executive  Officer of Clear  Energy  Inc.,  an
                                                                     oil   and   gas   company;   President,  Chief
                                                                     Executive  Officer  of  Vermilion from 1994 to
                                                                     January 2003.

Joseph Killi(1)(3)              Director                 1999        President of  Rosebridge  Capital Corp Inc., a
Calgary, Alberta                                                     real estate investment and advisory company.
</TABLE>

<PAGE>
                                       31


<TABLE>
<CAPTION>
                                                      DATE FIRST
                                                       ELECTED
           NAME AND                                OR APPOINTED AS   PRINCIPAL OCCUPATION DURING
  MUNICIPALITY OF RESIDENCE        OFFICE HELD         DIRECTOR      THE PAST FIVE YEARS
-----------------------------   -----------------  ---------------   ----------------------------------------------
<S>                             <C>                <C>               <C>
Larry Macdonald(1)(2)(3)(4)(5)  Director                 2002        Chief  Executive  Officer,  Point Energy Inc.,
Calgary, Alberta                                                     an oil and gas company,  from 2003 to present;
                                                                     Chairman   and   Chief   Executive    Officer,
                                                                     Pointwest  Energy  Inc.  from  2000  to  2003;
                                                                     President   and   Chief   Operating   Officer,
                                                                     Anderson Exploration Ltd., from 1992 to 1999.

Curtis Hicks                    Vice President,           -          Since March 2003 Vice  President,  Finance and
Calgary, Alberta                Finance and                          Chief  Financial  Officer of  Vermilion;  Vice
                                Chief Financial                      President  Finance and Chief Financial Officer
                                Officer                              of NAL Oil & Gas Trust from  November  2000 to
                                                                     February  2003;   Chief   Executive   Officer,
                                                                     Caravan  Oil & Gas Ltd.  from  August  1998 to
                                                                     November 2000.

Doug Reynolds                   Vice President,           -          Since  April  2002,  Vice  President,  Land of
Calgary, Alberta                Land                                 Vermilion;  from  February 2000 to April 2002,
                                                                     Senior  Landman and Land Manager for Foothills
                                                                     N.E.  B.C.  and  Hamburg  Areas at  Burlington
                                                                     Resources  Canada  Ltd.;  from October 1998 to
                                                                     February  2000,  Senior  Landman  on the  East
                                                                     Coast  for  ExxonMobil  Canada  Energy;   from
                                                                     October 1997 to January 2000,  Petroleum  Land
                                                                     Consultant for various corporations.

Raj Patel                       Vice President,           -          Since January 2001, Vice President,  Marketing
Calgary, Alberta                Marketing                            of Vermilion;  from September 1996 to December
                                                                     2000, President of Access Energy Management.

Paul Weevers                    Vice President,           -          Since May 2002, Vice President,  Production of
Calgary, Alberta                Production                           Vermilion;  from May 2001 to May 2002, Manager
                                                                     South  Production  at Apache  Canada Ltd.  and
                                                                     from  January  2001  to  May  2001   Reservoir
                                                                     Engineer   for  Apache   Canada   Ltd.;   Vice
                                                                     President,  Production  for Cabre  Exploration
                                                                     Ltd.  from  February  2000  to  January  2001;
                                                                     Independent    Engineering   Consultant   from
                                                                     December 1998 to February 2000.

Daniel Goulet                   Directeur                 -          Since  February  2003  Directeur   General  of
Biscarosse, France              General of                           Vermilion    REP   S.A.;    Production    and
                                Vermilion REP                        Engineering  Manager  of  Vermilion  REP S.A.
                                S.A.                                 from August 2000 to January 2003;   In-Country
                                                                     Operations Manager for PanAfrican  Energy from
                                                                     1997 to 2000.
</TABLE>

<PAGE>
                                       32


<TABLE>
<CAPTION>
                                                      DATE FIRST
                                                       ELECTED
           NAME AND                                OR APPOINTED AS   PRINCIPAL OCCUPATION DURING
  MUNICIPALITY OF RESIDENCE        OFFICE HELD         DIRECTOR      THE PAST FIVE YEARS
-----------------------------   -----------------  ---------------   ----------------------------------------------
<S>                             <C>                <C>               <C>
Charles Berard                  Corporate                 -          Partner at Macleod  Dixon  LLP,  Barristers  &
Calgary, Alberta                Secretary                            Solicitors.
</TABLE>

NOTES:
(1)      Member of the Audit Committee
(2)      Member of the Health, Safety and Environment Committee
(3)      Member of the Governance and Human Resources Committee
(4)      Member of the Independent Reserves Committee
(5)      Lead Director


VERMILION SHARE CAPITAL

Vermilion is authorized to issue an unlimited number of common shares and an
unlimited number of exchangeable shares issuable in series, of which an
unlimited number of Series A Exchangeable Shares are authorized. The Trust is
the sole holder of the issued and outstanding shares of Vermilion, other than
the Exchangeable Shares.

COMMON SHARES

Each common share will entitle its holder to receive notice of and to attend all
meetings of the shareholders of Vermilion and to one vote at such meetings. The
holders of common shares will be, at the discretion of the board of directors of
Vermilion and subject to applicable legal restrictions, and subject to certain
preferences of holders of Exchangeable Shares, entitled to receive any dividends
declared by the board of directors on the common shares to the exclusion of the
holders of Exchangeable Shares, subject to the proviso that no dividends shall
be paid on the common shares unless all declared dividends on the outstanding
Exchangeable Shares have been paid in full. The holders of common shares will be
entitled to share equally in any distribution of the assets of Vermilion upon
the liquidation, dissolution, bankruptcy or winding-up of Vermilion or other
distribution of its assets among its shareholders for the purpose of winding-up
its affairs. Such participation is subject to the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares and any other
shares having priority over the common shares.

EXCHANGEABLE SHARES

Each Exchangeable Share will have economic rights (including the right to have
the Exchange Ratio adjusted to account for distributions paid to Unitholders)
and voting attributes (through the benefit of the Special Voting Right granted
to the Voting and Exchange Trust Agreement Trustee) as set forth in the
Exchangeable Share Provisions. In addition, holders of Exchangeable Shares will
have the right to receive Trust Units at any time in exchange for their
Exchangeable Shares, on the basis of the Exchange Ratio in effect at the time of
the exchange. Fractional Trust Units will not be delivered on any exchange of
Exchangeable Shares and the Voting and Exchange Trust Agreement. In the event
that the Exchange Ratio in effect at the time of an exchange would otherwise
entitle a holder of Exchangeable Shares to a fractional Trust Unit, the number
of Trust Units to be delivered will be rounded down to the nearest whole number
of Trust Units. Holders of Exchangeable Shares will not receive cash
distributions from the Trust. Rather, the Exchange Ratio will be adjusted to
account for distributions paid to Unitholders in the manner described below.
Holders of Exchangeable Shares may receive dividends from Vermilion at the
discretion of the directors of Vermilion.

The initial Exchange Ratio upon the completion of the Arrangement was equal to
one. On each Distribution Payment Date, the Exchange Ratio will be increased, on
a cumulative basis, in respect of the Distribution on such date by an amount
which assumes the reinvestment of such Distribution in Trust Units at the
then-prevailing Current Market Price of a Trust Unit. The Exchange Ratio will be
decreased in respect of any dividends paid on the Exchangeable Shares by an
amount of such dividend divided by the then-prevailing Current Market Price of a
Trust Unit.

<PAGE>
                                       33


RANKING

The Exchangeable Shares will rank rateably with shares of any other series of
exchangeable shares of Vermilion and prior to any common shares of Vermilion and
any other shares ranking junior to the Exchangeable Shares with respect to the
payment of dividends, if any, that have been declared and the distribution of
assets in the event of the liquidation, dissolution or winding-up of Vermilion.

DIVIDENDS

Holders of Exchangeable Shares will be entitled to receive cash dividends if, as
and when declared by the board of directors of Vermilion. Vermilion anticipates
that it may from time to time declare dividends on the Exchangeable Shares up to
but not exceeding any cash distributions on the Trust Units into which such
Exchangeable Shares are exchangeable. In the event that any such dividends are
paid, the Exchange Ratio will be correspondingly reduced to reflect such
dividends.

CERTAIN RESTRICTIONS

Vermilion will not, without obtaining the approval of the holders of the
Exchangeable Shares as set forth below under the subheading "Amendment and
Approval":

         (a)      pay any dividend on the common shares or any other shares
                  ranking junior to the Exchangeable Shares, other than stock
                  dividends payable in common shares or any other shares ranking
                  junior to the Exchangeable Shares;

         (b)      redeem, purchase or make any capital distribution in respect
                  of the common shares or any other shares ranking junior to the
                  Exchangeable Shares;

         (c)      redeem or purchase any other shares of Vermilion ranking
                  equally with the Exchangeable Shares with respect to the
                  payment of dividends or on any liquidation distribution; or

         (d)      amend the articles or by-laws of Vermilion in any manner that
                  would affect the rights or privileges of the holders of
                  Exchangeable Shares.

The above restrictions in (a), (b) and (c) shall not apply if all declared
dividends on the outstanding Exchangeable Shares shall have been paid in full.

LIQUIDATION OR INSOLVENCY OF VERMILION

In the event of the liquidation, dissolution or winding-up of Vermilion or any
other proposed distribution of the assets of Vermilion among its shareholders
for the purpose of winding up its affairs, a holder of Exchangeable Shares will
be entitled to receive from Vermilion, in respect of each such Exchangeable
Share, that number of Trust Units equal to the Exchange Ratio as at the
effective date of such event.

Upon the occurrence of such an event, the Trust and Trust Subsidiary will each
have the overriding right to purchase all but not less than all of the
Exchangeable Shares then outstanding (other than Exchangeable Shares held by the
Trust or any subsidiary of the Trust) at a purchase price per Exchangeable Share
to be satisfied by the issuance or delivery, as the case may be, of that number
of Trust Units equal to the Exchange Ratio at such time and, upon the exercise
of this right, the holders thereof will be obligated to sell such Exchangeable
Shares to the Trust or Trust Subsidiary, as applicable. This right may be
exercised by either the Trust or Trust Subsidiary.

Upon the occurrence of an Insolvency Event, the Voting and Exchange Trust
Agreement Trustee on behalf of the holders of the Exchangeable Shares will have
the right to require the Trust or Trust Subsidiary to purchase any or all of the
Exchangeable Shares then outstanding and held by such holders at a purchase
price per Exchangeable Share to be satisfied by the issuance or delivery, as the
case may be, of that number of Trust Units equal to the Exchange Ratio at such
time, as described under the subheading "Voting and Exchange Trust Agreement-
Optional Exchange Right".

<PAGE>
                                       34


AUTOMATIC EXCHANGE RIGHT ON LIQUIDATION OF THE TRUST

The Voting and Exchange Trust Agreement provides that in the event of a Trust
liquidation event, as described below, the Trust or Trust Subsidiary will be
deemed to have purchased all outstanding Exchangeable Shares and each holder of
Exchangeable Shares will be deemed to have sold their Exchangeable Shares
immediately prior to such Trust liquidation event at a purchase price per
Exchangeable Share to be satisfied by the issuance or delivery, as the case may
be, of that number of Trust Units equal to the Exchange Ratio at such time.
"Trust liquidation event" means:

         (a)      any determination by the Trust to institute voluntary
                  liquidation, dissolution or winding-up proceedings in respect
                  of the Trust or to effect any other distribution of assets of
                  the Trust among the Unitholders for the purpose of winding up
                  its affairs; or

         (b)      the earlier of, the Trust's receiving notice of and the
                  Trust's otherwise becoming aware of, any threatened or
                  instituted claim, suit, petition or other proceedings with
                  respect to the involuntary liquidation, dissolution or winding
                  up of the Trust or to effect any other distribution of assets
                  of the Trust among the Unitholders for the purpose of winding
                  up its affairs in each case where the Trust has failed to
                  contest in good faith such proceeding within 30 days of
                  becoming aware thereof.

RETRACTION OF EXCHANGEABLE SHARES BY HOLDERS AND RETRACTION CALL RIGHT

Subject to the Retraction Call Right of the Trust and Trust Subsidiary described
below, a holder of Exchangeable Shares will be entitled at any time to require
Vermilion to redeem any or all of the Exchangeable Shares held by such holder
for a retraction price (the "Retraction Price") per Exchangeable Share equal to
the value of that number of Trust Units equal to the Exchange Ratio as at the
date of redemption (the "Retraction Date"), to be satisfied by the delivery of
such number of Trust Units. Fractional Trust Units will not be delivered. Any
amount payable on account of the Retraction Price that includes a fractional
Trust Unit will be rounded down to the nearest whole number of Trust Units.
Holders of the Exchangeable Shares may request redemption by presenting to
Vermilion or the transfer agent for the Exchangeable Shares a certificate or
certificates representing the number of Exchangeable Shares the holder desires
to have redeemed, together with a duly executed retraction request and such
other documents as may be reasonably required to effect the redemption of the
Exchangeable Shares. Subject to extension as described below, the redemption
will become effective on the Retraction Date, which will be seven business days
after the date on which Vermilion or the transfer agent receives the retraction
notice. Unless otherwise requested by the holder and agreed to by Vermilion, the
Retraction Date will not occur on such seventh business day if such day would
occur between any Distribution Record Date and the Distribution Payment Date
that corresponds to such Distribution Record Date. In this case, the Retraction
Date will instead occur on such Distribution Payment Date. The reason for this
is to ensure that the Exchange Ratio used in connection with such redemption is
increased to account for the Distribution.

When a holder requests Vermilion to redeem the Exchangeable Shares, the Trust
and Trust Subsidiary will have an overriding right (the "Retraction Call Right")
to purchase on the Retraction Date all but not less than all of the Exchangeable
Shares that the holder has requested Vermilion to redeem at a purchase price per
Exchangeable Share equal to the Retraction Price, to be satisfied by the
delivery of that number of Trust Units equal to the Exchange Ratio at such time.
At the time of a Retraction Request by a holder of Exchangeable Shares,
Vermilion will immediately notify the Trust and Trust Subsidiary. The Trust or
Trust Subsidiary must then advise Vermilion within two business days as to
whether the Retraction Call Right will be exercised. A holder may revoke his or
her Retraction Request at any time prior to the close of business on the last
business day immediately preceding the Retraction Date, in which case the
holder's Exchangeable Shares will neither be purchased by the Trust or Trust
Subsidiary nor be redeemed by Vermilion. If the holder does not revoke his or
her Retraction Request, the Exchangeable Shares that the holder has requested
Vermilion to redeem will on the Retraction Date be purchased by the Trust or
Trust Subsidiary or redeemed by Vermilion, as the case may be, in each case at a
purchase price per Exchangeable Share equal to the Retraction Price. In
addition, a holder of Exchangeable Shares may elect to instruct the Voting and
Exchange Trust Agreement Trustee to exercise the optional exchange right (the
"Optional Exchange Right") to require the Trust or Trust Subsidiary to acquire
such holder's Exchangeable Shares in

<PAGE>
                                       35


circumstances where neither the Trust nor Trust Subsidiary have exercised the
Retraction Call Right. See "Voting and Exchange Trust Agreement-Optional
Exchange Right".

The Retraction Call Right may be exercised by either the Trust or Trust
Subsidiary. If, as a result of solvency provisions of applicable law, Vermilion
is not permitted to redeem all Exchangeable Shares tendered by a retracting
holder, Vermilion will redeem only those Exchangeable Shares tendered by the
holder as would not be contrary to such provisions of applicable law. The holder
of any Exchangeable Shares not redeemed by Vermilion will be deemed to have
required the Trust to purchase such unretracted Exchangeable Shares in exchange
for Trust Units on the Retraction Date pursuant to the Optional Exchange Right.
See "Voting and Exchange Trust Agreement- Optional Exchange Right".

REDEMPTION OF EXCHANGEABLE SHARES

Subject to applicable law and the Redemption Call Right of the Trust and Trust
Subsidiary, Vermilion:

         (a)      will, on the tenth anniversary of the Effective Date, subject
                  to extension of such date by the board of directors of
                  Vermilion (the "Automatic Redemption Date"), redeem all but
                  not less than all of the then outstanding Exchangeable Shares
                  for a redemption price per Exchangeable Share equal to the
                  value of that number of Trust Units equal to the Exchange
                  Ratio as at the last business day prior to that Redemption
                  Date (as that term is defined below) (the "Redemption Price"),
                  to be satisfied by the delivery of such number of Trust Units;
                  and

         (b)      may, at any time when the aggregate number of issued and
                  outstanding Exchangeable Shares is less than 500,000 (other
                  than Exchangeable Shares held by the Trust and its
                  subsidiaries and as such shares may be adjusted from time to
                  time) (the "De Minimus Redemption Date" and, collectively with
                  the Automatic Redemption Date, a "Redemption Date"), redeem
                  all but not less than all of the then outstanding Exchangeable
                  Shares for the Redemption Price per Exchangeable Share (unless
                  contested in good faith by the Trust).

Vermilion will, at least 45 days prior to any Redemption Date, provide the
registered holders of the Exchangeable Shares with written notice of the
prospective redemption of the Exchangeable Shares by Vermilion.

The Trust and Trust Subsidiary will have the right (the "Redemption Call
Right"), notwithstanding a proposed redemption of the Exchangeable Shares by
Vermilion on the applicable Redemption Date, pursuant to the Exchangeable Share
Provisions, to purchase on any Redemption Date all but not less than all of the
Exchangeable Shares then outstanding (other than Exchangeable Shares held by the
Trust or its subsidiaries) in exchange for the Redemption Price per Exchangeable
Share and, upon the exercise of the Redemption Call Right, the holders of all of
the then outstanding Exchangeable Shares will be obliged to sell all such shares
to the Trust or Trust Subsidiary, as applicable. If either the Trust or Trust
Subsidiary exercises the Redemption Call Right, then Vermilion's right to redeem
the Exchangeable Shares on the applicable Redemption Date will terminate. The
Redemption Call Right may be exercised by either the Trust or Trust Subsidiary.

VOTING RIGHTS

Except as required by applicable law, the holders of the Exchangeable Shares are
not entitled as such to receive notice of or attend any meeting of the
shareholders of Vermilion or to vote at any such meeting. Holders of
Exchangeable Shares will have the notice and voting rights respecting meetings
of the Trust that are provided in the Voting and Exchange Trust Agreement. See
"Voting and Exchange Trust Agreement - Voting Rights".

AMENDMENT AND APPROVAL

The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be changed only with the approval of the holders
thereof. Any such approval or any other approval or consent to be given by the
holders of the Exchangeable Shares will be sufficiently given if given in
accordance with applicable law and subject to a minimum requirement that such
approval or consent be evidenced by a resolution passed by not less than
two-thirds of the votes cast thereon (other than shares beneficially owned by
the Trust, or any of its subsidiaries and other

<PAGE>
                                       36


affiliates) at a meeting of the holders of the Exchangeable Shares duly called
and held at which holders of at least 5% of the then outstanding Exchangeable
Shares are present in person or represented by proxy. In the event that no such
quorum is present at such meeting within one-half hour after the time appointed
therefor, then the meeting will be adjourned to such place and time (not less
than ten days later) as may be determined at the original meeting and the
holders of Exchangeable Shares present in person or represented by proxy at the
adjourned meeting will constitute a quorum thereat and may transact the business
for which the meeting was originally called. At the adjourned meeting, a
resolution passed by the affirmative vote of not less than two-thirds of the
votes cast thereon (other than shares beneficially owned by the Trust or any of
its subsidiaries and other affiliates) will constitute the approval or consent
of the holders of the Exchangeable Shares.

ACTIONS BY THE TRUST UNDER THE SUPPORT AGREEMENT AND THE VOTING AND EXCHANGE
TRUST AGREEMENT

Under the Exchangeable Share Provisions, Vermilion will agree to take all such
actions and do all such things as are necessary or advisable to perform and
comply with its obligations under, and to ensure the performance and compliance
by the Trust with its obligations under, the Support Agreement and the Voting
and Exchange Trust Agreement.

NON-RESIDENT AND TAX-EXEMPT HOLDERS

Exchangeable Shares will not be issued to persons who are Non-Residents or who
are exempt from tax under Part I of the Tax Act.

VOTING AND EXCHANGE TRUST AGREEMENT

VOTING RIGHTS

In accordance with the Voting and Exchange Trust Agreement, the Trust will issue
a Special Voting Right to Computershare Trust Company of Canada, the Voting and
Exchange Trust Agreement Trustee, for the benefit of the holders (other than the
Trust and Trust Subsidiary) of the Exchangeable Shares. The Special Voting Right
will carry a number of votes, exercisable at any meeting at which Unitholders
are entitled to vote, equal to the number of Trust Units (rounded down to the
nearest whole number) into which the Exchangeable Shares are then exchangeable
multiplied by the number of votes to which the holder of one Trust Unit is then
entitled. With respect to any written consent sought from the Unitholders, each
vote attached to the Special Voting Right will be exercisable in the same manner
as set forth above.

Each holder of an Exchangeable Share on the record date for any meeting at which
Unitholders are entitled to vote will be entitled to instruct the Voting and
Exchange Trust Agreement Trustee to exercise that number of votes attached to
the Special Voting Right which relate to the Exchangeable Shares held by such
holder. The Voting and Exchange Trust Agreement Trustee will exercise each vote
attached to the Special Voting Right only as directed by the relevant holder
and, in the absence of instructions from a holder as to voting, will not
exercise such votes.

The Voting and Exchange Trust Agreement Trustee will send to the holders of the
Exchangeable Shares the notice of each meeting at which the Unitholders are
entitled to vote, together with the related meeting materials and a statement as
to the manner in which the holder may instruct the Voting and Exchange Trust
Agreement Trustee to exercise the votes attaching to the Special Voting Right,
at the same time as the Trust sends such notice and materials to the
Unitholders. The Voting and Exchange Trust Agreement Trustee will also send to
the holders copies of all information statements, interim and annual financial
statements, reports and other materials sent by the Trust to the Unitholders at
the same time as such materials are sent to the Unitholders. To the extent such
materials are provided to the Voting and Exchange Trust Agreement Trustee by the
Trust, the Voting and Exchange Trust Agreement Trustee will also send to the
holders all materials sent by third parties to Unitholders, including dissident
proxy circulars and tender and exchange offer circulars, as soon as possible
after such materials are first sent to Unitholders.

All rights of a holder of Exchangeable Shares to exercise votes attached to the
Special Voting Right will cease upon the exchange of all such holder's
Exchangeable Shares for Trust Units. With the exception of administrative
changes for the purpose of adding covenants for the protection of the holders of
the Exchangeable Shares, making

<PAGE>
                                       37


necessary amendments or curing ambiguities or clerical errors (in each case
provided that the board of directors of Trust Subsidiary and Vermilion are of
the opinion that such amendments are not prejudicial to the interests of the
holders of the Exchangeable Shares), the Voting and Exchange Trust Agreement may
not be amended without the approval of the holders of the Exchangeable Shares.

OPTIONAL EXCHANGE RIGHT

Upon the occurrence and during the continuance of:

         (c)      an Insolvency Event; or

         (d)      circumstances in which the Trust or Trust Subsidiary may
                  exercise a Call Right, but elect not to exercise such Call
                  Right;

a holder of Exchangeable Shares will be entitled to instruct the Trustee to
exercise the Optional Exchange Right with respect to any or all of the
Exchangeable Shares held by such holder, thereby requiring the Trust or Trust
Subsidiary to purchase such Exchangeable Shares from the holder. Immediately
upon the occurrence of (i) an Insolvency Event, (ii) any event which will, with
the passage of time or the giving of notice, become an Insolvency Event, or
(iii) the election by the Trust and Trust Subsidiary not to exercise a Call
Right which is then exercisable by the Trust and Trust Subsidiary, Vermilion,
the Trust or Trust Subsidiary will give notice thereof to the Trustee. As soon
as practicable thereafter, the Trustee will then notify each affected holder of
Exchangeable Shares (who has not already provided instructions respecting the
exercise of the Optional Exchange Right) of such event or potential event and
will advise such holder of its rights with respect to the Optional Exchange
Right.

The purchase price payable by the Trust or Trust Subsidiary for each
Exchangeable Share to be purchased under the Optional Exchange Right will be
satisfied by the issuance of that number of Trust Units equal to the Exchange
Ratio as at the last business day prior to the day of closing of the purchase
and sale of such Exchangeable Share under the Exchange Right (the "Exchange
Price").

If, as a result of solvency provisions of applicable law, Vermilion is unable to
redeem all of a holder's Exchangeable Shares which such holder is entitled to
have redeemed in accordance with the Exchangeable Share Provisions, the holder
will be deemed to have exercised the Optional Exchange Right with respect to the
unredeemed Exchangeable Shares and the Trust or Trust Subsidiary will be
required to purchase such shares from the holder in the manner set forth above.

SUPPORT AGREEMENT

THE TRUST SUPPORT OBLIGATION

Under the Support Agreement, the Trust will agree that:

         (a)      the Trust will take all actions and do all things necessary to
                  ensure that Vermilion is able to pay to the holders of the
                  Exchangeable Shares the Liquidation Amount in the event of a
                  liquidation, dissolution or winding-up of Vermilion, the
                  Retraction Price in the event of the giving of a Retraction
                  Request by a holder of Exchangeable Shares, or the Redemption
                  Price in the event of a redemption of Exchangeable Shares by
                  Vermilion; and

         (b)      the Trust will not vote or otherwise take any action or omit
                  to take any action causing the liquidation, dissolution or
                  winding-up of Vermilion.

The Support Agreement will also provide that the Trust will not issue or
distribute to the holders of all or substantially all of the outstanding Trust
Units:

         (a)      additional Trust Units or securities convertible into Trust
                  Units;

         (b)      rights, options or warrants for the purchase of Trust Units;
                  or

<PAGE>
                                       38


         (c)      units or securities of the Trust other than Trust Units,
                  evidences of indebtedness of the Trust or other assets of the
                  Trust;

unless the same or an equivalent distribution is made to holders of Exchangeable
Shares, an equivalent change is made to the Exchangeable Shares, or the approval
of Vermilion and holders of Exchangeable Shares has been obtained.

In addition, the Trust may not subdivide, reduce, consolidate, reclassify or
otherwise change the terms of the Trust Units unless an equivalent change is
made to the Exchangeable Shares or the approval of the holders of Exchangeable
Shares has been obtained.

In the event of any proposed takeover bid, or similar transaction affecting the
Trust Units and supported by the Trust, the Trust will use reasonable efforts to
take all actions necessary or desirable to enable holders of Exchangeable Shares
to participate in such transaction to the same extent and on an economically
equivalent basis as the Unitholders.

The Support Agreement also provides that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other than the Trust or
any of its respective subsidiaries and other affiliates, the Trust will, unless
approval to do otherwise is obtained from the holders of Exchangeable Shares,
remain the direct or indirect beneficial owner collectively of more than 50% of
all of the issued and outstanding voting securities of Vermilion, provided that
the Trust will not be in violation of this obligation if a party acquires all or
substantially all of the assets of the Trust. With the exception of
administrative changes for the purpose of adding covenants for the protection of
the holders of the Exchangeable Shares, making certain necessary amendments or
curing ambiguities or clerical errors (in each case provided that the board of
directors of Vermilion and the Trustee are of the opinion that such amendments
are not prejudicial to the interests of the holders of the Exchangeable Shares),
the Support Agreement may not be amended without the approval of the holders of
the Exchangeable Shares.

Under the Support Agreement, the Trust will agree to not exercise any voting
rights attached to the Exchangeable Shares owned by it or any of its
subsidiaries and other affiliates on any matter considered at meetings of
holders of Exchangeable Shares (including any approval sought from such holders
in respect of matters arising under the Support Agreement).

DELIVERY OF TRUST UNITS

The Trust will agree to make such filings and seek such regulatory consents and
approvals as are necessary so that the Trust Units issuable upon the exchange of
Exchangeable Shares will be issued in compliance with applicable securities laws
in Canada and may be traded freely on the TSX or such other exchange on which
the Trust Units may be listed, quoted or posted for trading from time to time.

NOTES

The following summary of the material attributes and characteristics of the
Notes does not purport to be complete and is qualified in its entirety by
reference to the provisions of a note indenture (the "Note Indenture") dated
January 16, 2003 and made between Vermilion Acquisition Ltd. (prior to its
amalgamation with Vermilion under the Arrangement) and Computershare Trust
Company of Canada, as trustee (the "Note Trustee"), which contains a complete
statement of such attributes and characteristics. The Notes have been issued
under the Note Indenture.

TERMS AND ISSUE OF NOTES

Pursuant to the Arrangement, Notes were issued to the Trust and to former
holders of common shares and options of Vermilion. Notes issued to such former
holders were transferred by such holders to the Trust in return for Trust Units.
As a result, the Trust holds all of the issued and outstanding Notes.

The Notes are unsecured and bear interest from the date of issue at 13% per
annum. Interest will be payable for each month during the term on the 15th day
of the month following such month. The first interest payment will be due on
March 15, 2003 for the period commencing on the Effective Date and ending on
February 28, 2003.

<PAGE>
                                       39


Although pursuant to the terms of the Note Indenture Vermilion is permitted to
make payments against the principal amount of the Notes outstanding from time to
time without notice or bonus, Vermilion is not required to make any payment in
respect of principal until December 31, 2028, subject to the terms of any
secured financing and subject to extension in the limited circumstances provided
in the Note Indenture.

In contemplation of the possibility that Notes may be distributed to Unitholders
upon the redemption of their Trust Units, the Note Indenture provides that if
persons other than the Trust (the "Non-Fund Holders") own Notes having an
aggregate principal amount in excess of $1,000,000, either the Trust or the
Non-Fund Holders shall be entitled, among other things, to require the Note
Trustee to exercise the powers and remedies available under the Note Indenture
upon an event of default and, with the Trust, the Non-Fund Holders may provide
consents, waivers or directions relating generally to the variance of the Note
Indenture and the rights of noteholders. The Note Indenture will allow the Trust
flexibility to delay payments of interest or principal otherwise due to it while
payment is made to other noteholders, and to allow other noteholders to be paid
out before the Trust. Any delayed payments will be due 5 days after demand.

Principal and interest on the Notes will be payable in lawful money of Canada
directly to the holders of Notes at their address set forth in the register of
holders of Notes.

RANKING

The Notes will be unsecured debt obligations of Vermilion and will rank PARI
PASSU with all other unsecured indebtedness of Vermilion, but subordinate to all
secured debt.

EVENTS OF DEFAULT

The Note Indenture will provide that any of the following shall constitute an
Event of Default: (a) default in payment of the principal of the Notes when
required; (b) the failure to pay all of the interest obligations on the Notes
for a period of three months; (c) if Vermilion has defaulted and a demand for
payment has been made under any material instrument, indenture or document
evidencing indebtedness of more than $5 million and Vermilion has failed to
remedy such default within applicable curative periods; (d) certain events of
winding-up, liquidation, bankruptcy, insolvency, receivership or seizure; (e)
default in the observance or performance of any other covenant or condition of
the Note Indenture and continuance of such default for a period of 30 days after
notice in writing has been given by the Note Trustee to Vermilion specifying
such default and requiring Vermilion to rectify the same; (f) Vermilion ceasing
to carry on its business; and (g) material default by Vermilion under material
agreements if property is liable to forfeiture or termination.

ROYALTY AGREEMENT

Coincident with the Arrangement becoming effective, the Partnership and the
Trust entered into the Royalty Agreement pursuant to which the Partnership
granted the Royalty to the Trust. As owner of the Royalty, the Trust is entitled
to cash distributions of approximately 99% of the cash flow from all present and
future oil and gas properties and related tangibles owned by the Partnership
after certain costs, expenditures and deductions which include 99% of: (i) all
amounts of interest and principal payable by Vermilion on account of or in
respect of its credit facilities (ii) specified amounts of interest and
principal payable by Vermilion on account of or in respect of its indebtedness
to the Trust; (iii) the Partnership's share of operating costs and capital
expenditures; (iv) amounts required to be paid to certain reserves; (v) general
and administrative expenses; and (vi) acquisition costs of future oil and gas
properties and related tangibles. Such cash distributions are to be paid on or
about the 15th day of the second month following the month to which the
distribution relates.

From time to time upon notice from the Partnership, the Trust has an obligation
(the "Deferred Purchase Price Obligation") to pay the Partnership, as additional
consideration for the Royalty, such portion of the acquisition cost of future
oil and gas properties and capital expenditures including amounts borrowed by
Vermilion to fund such costs and expenditures as may be designated by the
Partnership. The Trust's obligation to pay amounts as a Deferred Purchase Price
Obligation is subject to it having available funds from certain designated
sources.

<PAGE>
                                       40


The Partnership is entitled to make farmouts or other similar dispositions of
specific interests in any part of the properties subject to the Royalty, and
upon the farmee or other participant earning its interest pursuant to the
farmout or other disposition, the Royalty shall burden only the working interest
retained by or reserved to the Partnership. Any net proceeds from the sale of
properties subject to the Royalty (to the extent allocable to petroleum and
natural gas rights) shall be allocated to the Trust as to 99%. The remaining 1%
and all amounts allocated to tangibles and miscellaneous interests shall be
allocated to the Partnership.

Under the Royalty Agreement, the Trust is obligated to reimburse the Partnership
in respect of 99% of certain non-deductible crown royalties paid by the
Partnership; and the Partnership shall be entitled to set off such amounts
reimbursable to it against payments to the Trust on account of the Royalty.

The Royalty does not constitute an interest in land. Except upon the insolvency
of the Partnership, the Trust is not entitled to take its share of production in
kind or to separately sell or market its share of petroleum substances.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The Trust's Management's Discussion and Analysis relating to the Trust's
consolidated financial statements for the fiscal years ended December 31, 2003
and 2002, which is contained on pages 25 to 39 of the Trust's 2003 annual
report, is incorporated by reference.


      MARKET FOR, PRICE RANGE AND TRADING VOLUME OF SECURITIES

The outstanding Trust Units of the Trust are listed and posted for trading on
the TSX under the symbol VET.UN. The following table sets forth the closing
price range and trading volume of the Trust Units as reported by the TSX for the
periods indicated:

PERIOD                          HIGH               LOW            VOLUME (000's)
--------------                 ------            -------          --------------
2003

First Quarter                  $12.85            $11.20               40,097
Second Quarter                 $13.70            $12.05               18,532
Third Quarter                  $15.25            $13.50               15,585
Fourth Quarter                 $15.35            $14.15               15,406,

2004

January                        $16.79            $15.34                7,705
February                       $17.90            $15.85                6,491
March                          $18.46            $17.86                5,398


                              CONFLICTS OF INTEREST

The directors and officers of Vermilion are engaged in and will continue to
engage in other activities in the oil and natural gas industry and, as a result
of these and other activities, the directors and officers of Vermilion may
become subject to conflicts of interest. The ABCA provides that in the event
that a director has an interest in a contract or proposed contract or agreement,
the director shall disclose his interest in such contract or agreement and shall
refrain from voting on any matter in respect of such contract or agreement
unless otherwise provided under the ABCA. To the extent that conflicts of
interest arise, such conflicts will be resolved in accordance with the
provisions of the ABCA.

As at the date hereof, neither the Trust nor Vermilion is aware of any existing
or potential material conflicts of interest between the Trust and Vermilion and
a director or officer of Vermilion.

           INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Neither the Trustee, Vermilion nor any director or officer of Vermilion, nor any
other insider of the Trust, or Vermilion, nor any associate or affiliate of any
one of them has or has had, at any time since the year ended

<PAGE>
                                       41


December 31, 2003, any material interest, direct or indirect, in any transaction
or proposed transaction that has materially affected or would materially affect
the Trust or Vermilion.

                                LEGAL PROCEEDINGS

 The Trust is not party to any legal proceedings as of the date of this filing.

                               MATERIAL CONTRACTS

The Trust has not entered into any material contracts outside its normal course
of business.

                              INTERESTS OF EXPERTS

As at the date hereof, the partners and associates of Deloitte & Touche LLP, the
auditors of the Trust, as a group, did not beneficially own any of the
outstanding Trust Units.

As at the date hereof, principals of GLJ, the independent engineers for the
Trust, personally disclosed in certificates of qualification that they neither
had nor expected to receive any of the outstanding Trust Units.

                          TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Trust Units is Computershare Trust
Company of Canada at its principal offices in Calgary, Alberta and Toronto,
Ontario.

                                  RISK FACTORS

The following is a summary of certain risk factors relating to the business of
Vermilion and the Trust. The following information is a summary only of certain
risk factors and is qualified in its entirety by reference to, and must be read
in conjunction with, the detailed information appearing elsewhere in this annual
information form. Unitholders and potential Unitholders should consider
carefully the information contained herein and, in particular, the following
risk factors.

RESERVE ESTIMATES

The reserve and recovery information contained in the GLJ Report is only an
estimate and the actual production and ultimate reserves from the properties may
be greater or less than the estimates prepared by GLJ.

VOLATILITY OF OIL AND NATURAL GAS PRICES

The Trust's operational results and financial condition, will be dependent on
the prices received by Vermilion for oil and natural gas production. Oil and
natural gas prices have fluctuated widely during recent years and are determined
by supply and demand factors, including weather and general economic conditions
as well as conditions in other oil and natural gas regions. Any decline in oil
and natural gas prices could have an adverse effect on Vermilion's ability to
satisfy its obligations under the Notes and on amounts, if any, payable by the
Partnership to the Trust under the Royalty Agreement thereby decreasing the
amount of Distributable Cash to be distributed to holders of Trust Units.

CHANGES IN LEGISLATION

There can be no assurance that income tax laws and government incentive programs
relating to the oil and gas industry, such as the status of mutual fund trusts
and the resource allowance, will not be changed in a manner which adversely
affects Unitholders.

<PAGE>
                                       42


INVESTMENT ELIGIBILITY

If the Trust ceases to qualify as a mutual fund trust, the Trust Units will
cease to be qualified investments for registered retirement savings plans,
registered retirement income funds, deferred profit sharing plans and registered
education savings plans ("Exempt Plans") which will have adverse tax
consequences to Exempt Plans or their annuitants or beneficiaries. Notes or
Redemption Notes acquired on a redemption of Trust Units may not be qualified
investments for Exempt Plans.

OPERATIONAL MATTERS

The operation of oil and gas wells involves a number of operating and natural
hazards which may result in blowouts, environmental damage and other unexpected
or dangerous conditions resulting in damage to Vermilion and possible liability
to third parties. Vermilion will maintain liability insurance, where available,
in amounts consistent with industry standards. Business interruption insurance
may also be purchased for selected facilities, to the extent that such insurance
is available. Vermilion may become liable for damages arising from such events
against which it cannot insure or against which it may elect not to insure
because of high premium costs or other reasons. Costs incurred to repair such
damage or pay such liabilities may impair Vermilion's ability to satisfy its
obligations under the Notes or reduce the amount receivable by the Trust from
the Partnership under the Royalty Agreement.

Continuing production from a property, and to some extent the marketing of
production therefrom, are largely dependent upon the ability of the operator of
the property. To the extent the operator fails to perform these functions
properly, revenue may be reduced. Payments from production generally flow
through the operator and there is a risk of delay and additional expense in
receiving such revenues if the operator becomes insolvent. Although satisfactory
title reviews are generally conducted in accordance with industry standards,
such reviews do not guarantee or certify that a defect in the chain of title may
not arise to defeat the claim of Vermilion or its subsidiaries to certain
properties. Such circumstances could impair Vermilion's ability to satisfy its
obligations under the Notes or reduce the amount receivable by the Trust from
the Partnership under the Royalty Agreement.

ENVIRONMENTAL CONCERNS

The oil and natural gas industry is subject to environmental regulation pursuant
to local, provincial and federal legislation. A breach of such legislation may
result in the imposition of fines or issuance of clean up orders in respect of
Vermilion or its assets. Such legislation may be changed to impose higher
standards and potentially more costly obligations on Vermilion. Although the
Trust has established a reclamation fund for the purpose of funding its
currently estimated future environmental and reclamation obligations based on
its current knowledge, there can be no assurance that the Trust will be able to
satisfy its actual future environmental and reclamation obligations.

KYOTO PROTOCOL

Canada, France and Trinidad and Tobago are signatories to the United Nations
Framework Convention on Climate Change and both have ratified the Kyoto Protocol
established thereunder. Canada and France, as Annex B parties to the Kyoto
Protocol, and France as a party to the European Union Regional Integration
Organization, are required to set legally binding targets to reduce nation-wide
emissions of carbon dioxide, methane, nitrous oxide and other so-called
"greenhouse gasses".

Vermilion's exploration and production facilities and other operations and
activities in Canada and France will emit a small amount of greenhouse gasses
which may subject Vermilion to legislation regulating emissions of greenhouse
gases and which may include a requirement to reduce emissions or emissions
intensity from Vermilion's operations and facilities. The direct or indirect
costs of complying with emissions regulations may adversely affect the business
of Vermilion in Canada and France.

Trinidad and Tobago is not an Annex B party to the Kyoto Protocol is therefore
not required under the Kyoto Protocol to set legally binding targets to regulate
greenhouse gas emissions.

<PAGE>
                                       43


DEBT SERVICE

Vermilion may, from time to time, finance a significant portion of its
operations through debt (other than the Notes). Amounts paid in respect of
interest and principal on debt incurred by Vermilion may impair Vermilion's
ability to satisfy its obligations under the Notes or reduce the amount received
by the Trust under the Royalty Agreement. Variations in interest rates and
scheduled principal repayments could result in significant changes in the amount
required to be applied to debt service before payment by Vermilion of its
obligations under the Notes or the Royalty Agreement. Ultimately, this may
result in lower levels of Distributable Cash for the Trust.

Lenders will be provided with security over substantially all of the assets of
Vermilion its Subsidiaries and the Trust. If Vermilion becomes unable to pay its
debt service charges or otherwise commits an event of default such as
bankruptcy, a lender may foreclose on or sell the assets of Vermilion its
Subsidiaries and the Trust.

DELAY IN CASH DISTRIBUTIONS

In addition to the usual delays in payment by purchasers of oil and natural gas
to the operators of the properties, and by the operator to Vermilion, payments
between any of such parties may also be delayed by restrictions imposed by
lenders, delays in the sale or delivery of products, delays in the connection of
wells to a gathering system, blowouts or other accidents, recovery by the
operator of expenses incurred in the operation of the properties or the
establishment by the operator of reserves for such expenses.

TAXATION OF VERMILION

Vermilion is subject to taxation in each taxation year on its income for the
year, after deducting interest paid to the Trust pursuant to the Note Indenture
and after deducting payments, if any, made to the Trust with respect to the
Royalty Agreement. During the period that Exchangeable Shares issued by
Vermilion are outstanding, a portion of the cash flow from operations will be
subject to tax to the extent that there are not sufficient resource pool
deductions, capital cost allowance or utilization of prior years non-capital
losses to reduce taxable income to zero. Vermilion intends to deduct, in
computing its income for tax purposes, the full amount available for deduction
in each year associated with the income tax resource pools, undepreciated
capital cost ("UCC") and non-capital losses carried forward from Vermilion, if
any, plus resource pools and UCC created by capital expenditures of Vermilion.
If there are not sufficient resource pools, UCC and non-capital losses carried
forward or other deductions to shelter the income of Vermilion, then cash taxes
may be payable by Vermilion. In addition, there can be no assurance that
taxation authorities will not seek to challenge the amount of interest expense.
If such a challenge were to succeed against Vermilion, it could materially
adversely affect the amount of Distributable Cash available.

Further, interest on the Notes accrues at the Trust level for income tax
purposes whether or not actually paid. The Trust Indenture provides that an
amount equal to the taxable income of the Trust will be distributed each year to
Unitholders in order to reduce the Trust's taxable income to zero. Where
interest payments on the Notes are due but not paid in whole or in part, the
Trust Indenture provides that any additional amount necessary to be distributed
to Unitholders may be distributed in the form of Units rather than in cash.
Unitholders will be required to include such additional amount in income even
though they do not receive a cash distribution.

DEPLETION OF RESERVES

The Trust has certain unique attributes which differentiate it from other oil
and gas industry participants. Distributions of Distributable Cash in respect of
properties, absent commodity price increases or cost effective acquisition and
development activities, will decline over time in a manner consistent with
declining production from typical oil, natural gas and natural gas liquids
reserves. Vermilion will not be reinvesting cash flow in the same manner as
other industry participants. Accordingly, absent capital injections or
acquisitions of additional oil and gas properties, Vermilion's initial
production levels and reserves will decline.

Vermilion's future oil and natural gas reserves and production, and therefore
its cash flows, will be highly dependent on Vermilion's success in exploiting
its reserve base and acquiring additional reserves. Without reserve additions
through acquisition or development activities, Vermilion's reserves and
production will decline over time as reserves are exploited.

<PAGE>
                                       44


NET ASSET VALUE

The net asset value of the assets of the Trust from time to time will vary
dependent upon a number of factors beyond the control of management, including
oil and gas prices. The trading prices of the Trust Units from time to time is
also determined by a number of factors which are beyond the control of
management and such trading prices may be greater than the net asset value of
the Trust's assets.

RETURN OF CAPITAL

Trust Units will have no value when reserves from the underlying assets of the
Trust can no longer be economically produced and, as a result, cash
distributions do not represent a "yield" in the traditional sense as they
represent both return of capital and return on investment.

NATURE OF TRUST UNITS

The Trust Units do not represent a traditional investment in the oil and natural
gas sector and should not be viewed by investors as shares in Vermilion. The
Trust Units represent a fractional interest in the Trust. As holders of Trust
Units, Unitholders will not have the statutory rights normally associated with
ownership of shares of a corporation including, for example, the right to bring
"oppression" or "derivative" actions. The Trust's sole assets will be its shares
in Vermilion, the Notes, the Royalty Agreement and other investments in
securities. The price per Trust Unit is a function of anticipated Distributable
Cash, the underlying assets of the Trust and management's ability to effect
long-term growth in the value of the Trust. The market price of the Trust Units
will be sensitive to a variety of market conditions including, but not limited
to, interest rates and the ability of the Trust to acquire suitable oil and
natural gas properties. Changes in market conditions may adversely affect the
trading price of the Trust Units.

The Trust Units are not "deposits" within the meaning of the CANADA DEPOSIT
INSURANCE CORPORATION ACT (Canada) and are not insured under the provisions of
that Act or any other legislation. Furthermore, the Trust is not a trust company
and, accordingly, is not registered under any trust and loan company legislation
as it does not carry on or intend to carry on the business of a trust company.

UNITHOLDERS LIMITED LIABILITY

The Trust Indenture provides that no Unitholders will be subject to any
liability in connection with the Trust or its obligations and affairs and, in
the event that a court determines Unitholders are subject to any such
liabilities, the liabilities will be enforceable only against, and will be
satisfied only out of the Trust's assets. Pursuant to the Trust Indenture, the
Trust will indemnify and hold harmless each Unitholder from any costs, damages,
liabilities, expenses, charges and losses suffered by a Unitholder resulting
from or arising out of such Unitholder not having such limited liability.

The Trust Indenture provides that all written instruments signed by or on behalf
of the Trust must contain a provision to the effect that such obligation will
not be binding upon Unitholders personally. Personal liability may also arise in
respect of claims against the Trust that do not arise under contracts, including
claims in tort, claims for taxes and possibly certain other statutory
liabilities. The possibility of any personal liability of this nature arising is
considered unlikely.

The operations of the Trust will be conducted, upon the advice of counsel, in
such a way and in such jurisdictions as to avoid as far as possible any material
risk of liability on the Unitholders for claims against the Trust.

ACCOUNTING WRITE-DOWNS AS A RESULT OF GAAP

Canadian Generally Accepted Accounting Principles ("GAAP") require that
management apply certain accounting policies and make certain estimates and
assumptions which affect reported amounts in the consolidated financial
statements of the Trust. The accounting policies may result in non-cash charges
to net income and write-downs of net assets in the financial statements. Such
non-cash charges and write-downs may be viewed unfavourably by the capital
markets and result in an inability to borrow funds and/or may result in a
decline in the Trust Unit price.

<PAGE>
                                       45


Emerging GAAP surrounding hedge accounting may result in non-cash charges
against net income as a result of changes in the fair market value of hedging
instruments. A decrease in the fair market value of the hedging instruments as
the result of fluctuations in commodity prices and foreign exchange rates may
result in a write-down of net assets and a non-cash charge against net income.
Such write-downs and non-cash charges may be temporary in nature if the fair
market value subsequently increases.

VARIATIONS IN INTEREST RATES AND FOREIGN EXCHANGE RATES

Variations in interest rates could result in a significant change in the amount
the Trust pays to service debt, potentially impacting distributions to
Unitholders.

In addition, the exchange rate for the Canadian dollar versus the U.S. dollar
has increased significantly over the last 12 months, resulting in the receipt by
the Trust of fewer Canadian dollars for its production which may affect future
distributions. VRL has initiated certain hedges to mitigate these risks. The
increase in the exchange rate for the Canadian dollar and future Canadian/United
States exchange rates may impact future distributions and the future value of
the Trust's reserves as determined by independent evaluators.

MUTUAL FUND TRUST STATUS

It is intended that the Trust continue to qualify as a mutual fund trust for the
purposes of the Income Tax Act (Canada) (the "Tax Act"). The Trust may not,
however, always be able to satisfy any future requirement for the maintenance of
mutual fund trust status. Should the status of the Trust as a mutual fund trust
be lost or successfully challenged by a relevant tax authority, certain adverse
consequences may arise for the Trust and Unitholders. Some of the significant
consequences of losing mutual fund trust status are as follows:

         o        By virtue of its status as a mutual fund trust, the Trust has
                  been accepted for registration as a "registered investment"
                  for registered retirement savings plans ("RRSPs"), registered
                  retirement income funds ("RRIFs"), and deferred profit sharing
                  plans (collectively, "Exempt Plans"). As such, Trust Units are
                  qualified investments for Exempt Plans as well as registered
                  education savings plans ("RESPs") and if the Trust's status as
                  a "registered investment" is revoked in any year by virtue of
                  ceasing to be a "mutual fund trust" the Trust Units would
                  remain as qualified investments for Exempt Plans and RESPs
                  until the end of the year following such year.

         o        Where at the end of any month an Exempt Plan or a RESP holds
                  Trust Units that are not qualified investments, the Exempt
                  Plan or RESP must, in respect of that month, pay a tax under
                  Part XI.1 of the Tax Act equal to 1 percent of the fair market
                  value of the Trust Units at the time such Trust Units were
                  acquired by the Exempt Plan or RESP. An RRSP or RRIF holding
                  Trust Units that are not qualified investments would become
                  taxable on income attributable to the Trust Units while they
                  are not qualified investments (including the entire amount of
                  any capital gain arising on a disposition of the non-qualified
                  investment). RESPs which hold Trust Units that are not
                  qualified investments may have their registration revoked by
                  the Canada Customs and Revenue Agency.

         o        Trust Units would become foreign property for registered
                  pension plans upon the Trust ceasing to be a mutual fund
                  trust. If the Trust's "registered investment" status is
                  revoked by virtue of it ceasing to be a mutual fund trust,
                  then the Trust Units would also become foreign property for
                  Exempt Plans.

         o        The Trust would be taxed on certain types of income
                  distributed to Unitholders, including income generated by the
                  royalty held by the Trust. Payment of this tax may have
                  adverse consequences for some Unitholders, particularly
                  Unitholders that are not residents of Canada and residents of
                  Canada that are otherwise exempt from Canadian income tax.

         o        The Trust would cease to be eligible for the capital gains
                  refund mechanism available under the Tax Act.

<PAGE>
                                       46


         o        Trust Units held by Unitholders that are not residents of
                  Canada would become taxable Canadian property. These
                  non-resident holders would be subject to Canadian income tax
                  on any gains realized on a disposition of Trust Units held by
                  them.

In addition, the Trust may take certain measures in the future to the extent the
Trust believes such measures are necessary to ensure the Trust maintains its
status as a mutual fund trust. These measures could be adverse to certain
holders of Trust Units.

                             ADDITIONAL INFORMATION

Additional information relating to the Trust may be found on SEDAR at
WWW.SEDAR.COM. Additional information related to the remuneration and
indebtedness of the directors and officers of VRL, and the principal holders of
Trust Units and Rights to purchase Trust Units and securities authorized for
issuance under the Trust's equity compensation plans, where applicable, are
contained in the information circular of the Trust in respect of its most recent
annual meeting of Unitholders. Additional financial information is provided in
the Trust's audited financial statements and management's discussion and
analysis for the year ended December 31, 2003.



<PAGE>
                                       47



                                  SCHEDULE "A"

                             REPORT ON RESERVES DATA
                                       BY
                         INDEPENDENT QUALIFIED RESERVES
                              EVALUATOR OR AUDITOR


To the board of directors of Vermilion Energy Trust (the "Company"):

1.       We have prepared an evaluation of the Company's reserves data as at
         January 1, 2004. The reserves data consist of the following:

              (a)  (i)  proved and proved plus probable oil and gas
                        reserves estimated as at January 1, 2004, using
                        forecast prices and costs; and

                   (ii) the related estimated future net revenue; and

              (b)  (i)  proved oil and gas reserves estimated as at January 1,
2004, using constant prices and costs; and

                   (ii) the related estimated future net revenue.

2.       The reserves data are the responsibility of the Company's management.
         Our responsibility is to express an opinion on the reserves data based
         on our evaluation.

              We carried out our evaluation in accordance with standards set out
              in the Canadian Oil and Gas Evaluation Handbook (the "COGE
              Handbook") prepared jointly by the Society of Petroleum Evaluation
              Engineers (Calgary Chapter) and the Canadian Institute of Mining,
              Metallurgy & Petroleum (Petroleum Society).

3.       Those standards require that we plan and perform an evaluation to
         obtain reasonable assurance as to whether the reserves data are free of
         material misstatement. An evaluation also includes assessing whether
         the reserves data are in accordance with principles and definitions in
         the COGE Handbook.

4.       The following table sets forth the estimated future net revenue (before
         deduction of income taxes) attributed to proved plus probable reserves,
         estimated using forecast prices and costs and calculated using a
         discount rate of 10 percent, included in the reserves data of the
         Company evaluated by us for the year ended December 31, 2003, and
         identifies the respective portions thereof that we have audited,
         evaluated and reviewed and reported on to the Company's board of
         directors:

<TABLE>
<CAPTION>
                                LOCATION OF
                                 RESERVES
           DESCRIPTION AND      (COUNTRY OR
         PREPARATION DATE OF      FOREIGN          NET PRESENT VALUE OF FUTURE NET REVENUE - $MM
              EVALUATION        GEOGRAPHIC         (BEFORE   INCOME  TAXES,   10%  DISCOUNT RATE)
                                               ----------------------------------------------------
                REPORT             AREA)        AUDITED         EVALUATED      REVIEWED       TOTAL
         --------------------   ------------    -------         ---------      --------      ------
         <S>                    <C>             <C>             <C>            <C>           <C>
           January 31, 2004       Canada          $0            $431.3           $0          $431.3
           January 31, 2004       France          $0            $209.2           $0          $209.2
            April 20, 2004       Trinidad         $0            $171.8           $0          $171.8
                                   Total          $0            $812.3           $0          $812.3
</TABLE>

5.       In our opinion, the reserves data respectively evaluated by us have, in
         all material respects, been determined and are in accordance with the
         COGE Handbook.

<PAGE>
                                       48


6.       We have no responsibility to update this evaluation for events and
         circumstances occurring after the preparation dates.

7.       Because the reserves data are based on judgements regarding future
         events, actual results will vary and the variations may be material.



Executed as to our report referred to above:



Gilbert Laustsen Jung Associates Ltd.,                     Dated  APRIL 20, 2004
Calgary, Alberta, Canada


/s/ Keith M. Braaten

Keith M. Braaten


<PAGE>
                                       49



                                  SCHEDULE "B"
                       REPORT OF MANAGEMENT AND DIRECTORS
                     ON RESERVES DATA AND OTHER INFORMATION
                                 (FORM 51-101F3)

TERMS TO WHICH A MEANING IS ASCRIBED IN NATIONAL INSTRUMENT 51-101 HAVE THE SAME
MEANING HEREIN.

Management of Vermilion Energy Trust (the "Company") are responsible for the
preparation and disclosure, or arranging for the preparation and disclosure of
information with respect to the Company's oil and gas activities in accordance
with securities regulatory requirements. This information includes reserves
data, which consist of the following:

         (a)      (i)      Proved and Proved plus probable oil and gas reserves
                           estimated as at December 31, 2003 using forecast
                           prices and costs; and

                  (ii)     the related estimated future net revenue; and

         (b)      (i)      Proved oil and gas reserves estimated as at December
                           31, 2003 using constant prices and costs; and

                  (ii)     the related estimated future net revenue.

Independent qualified reserves evaluators have evaluated and reviewed the
Company's reserves data. The report of the independent qualified reserves
evaluators is presented in Schedule A to the Annual Information Form of the
Company for the year ended December 31, 2003.

The Reserves Committee of the Board of Directors of the Company has:

         (c)      reviewed the Company's procedures for providing information to
                  the independent qualified reserves evaluators;

         (d)      met with the independent qualified reserves evaluator(s) to
                  determine whether any restrictions affected the ability of the
                  independent qualified reserves evaluators to report without
                  reservation; and

         (e)      reviewed the reserves data with Management and the independent
                  qualified reserves evaluators.

The Reserves Committee of the Board of Directors has reviewed the Company's
procedures for assembling and reporting other information associated with oil
and gas activities and has reviewed that information with Management. The Board
of Directors has, on the recommendation of the Audit and Reserves Committee,
approved:

         (f)      the content and filing with securities regulatory authorities
                  of the reserves data and other oil and gas information;

         (g)      the filing of the report of the independent qualified reserves
                  evaluator(s) on the reserves data; and

         (h)      the content and filing of this report.

<PAGE>
                                       50


Because the reserves data are based on judgements regarding future events,
actual results will vary and the variations may be material.

                "Lorenzo Donadeo"
          -------------------------------------------------
                 President and Chief Executive Officer


                "Curtis Hicks"
          -------------------------------------------------
                 V.P. Finance and CFO


                "Claudio Ghersinich"
          -------------------------------------------------
                 Director


                "Jeff Boyce"
          -------------------------------------------------
                 Director


April 20, 2004



Additional copies of this annual information form may be obtained from
Vermilion. Please contact:

         Vermilion Energy Trust
         c/o Vermilion Resources Ltd.
         2800, 400-4th Avenue S.W.
         Calgary, Alberta  T2P 0J4

         Telephone:        (403) 269-4884
         Fax:              (403) 269-6767
         Toll Free:        1-866-895-8101



</TEXT>
</DOCUMENT>
