True Energy Trust announces second quarter 2009 financial results



    TSX: TUI.UN

    CALGARY, Aug. 6 /CNW/ - (TSX: TUI.UN) True Energy Trust ("True,"
"Company" or the "Trust") announces its financial and operating results for
the three and six months ended June 30, 2009.


    
                                 HIGHLIGHTS
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    FINANCIAL (unaudited)
    (CDN$000s except unit
     and per unit amounts)
    Revenue (before
     royalties and
     hedging(1))               29,805       82,074       61,150      152,107
    Funds flow from
     operations(2)             10,765       26,304       17,254       50,537
      Per basic trust
       unit               $      0.14  $      0.33  $      0.22  $      0.64
      Per diluted trust
       unit(7)            $      0.14  $      0.33  $      0.22  $      0.64
    Net loss                  (99,715)     (21,374)    (108,771)     (39,995)
      Per basic trust
       unit               $     (1.27) $     (0.27) $     (1.39) $     (0.50)
      Per diluted trust
       unit(7)            $     (1.27) $     (0.27) $     (1.39) $     (0.50)
    Distributions declared          -        9,505        1,570       19,012
      Per unit                      -  $      0.12  $      0.02  $      0.24
    -------------------------------------------------------------------------
    Exploration and
     development                1,028        3,475        3,556       11,759
    Corporate and property
     acquisitions                 123          605          351          971
    -------------------------------------------------------------------------
    Capital expenditures
     - cash                     1,151        4,080        3,907       12,730
    Property dispositions
     - cash                    (8,289)     (38,530)      (8,281)     (44,318)
    Other - non-cash           (1,107)      (2,521)      (1,221)      (2,714)
    -------------------------------------------------------------------------
    Total capital
     expenditures - net        (8,245)     (36,971)      (5,595)     (34,302)
    -------------------------------------------------------------------------
    Long-term debt            120,205      125,458      120,205      125,458
    Convertible debentures(3)  82,075       80,253       82,075       80,253
    Working capital excess     (5,563)     (16,357)      (5,563)     (16,357)
    -------------------------------------------------------------------------
    Total net debt(3)         196,717      189,354      196,717      189,354
    -------------------------------------------------------------------------
    Pro-forma total net
     debt after
     Divestiture(4)           111,717          N/A      111,717          N/A
    -------------------------------------------------------------------------
    Total assets              562,854      793,883      562,854      793,883
    Unitholders' equity       296,443      404,062      296,443      404,062
    -------------------------------------------------------------------------

    OPERATING
    Daily sales volumes
      Crude oil,
       condensate
       and NGLs      (bbls/d)   3,816        4,170        3,821        4,506
      Natural gas     (mcf/d)  35,703       46,515       36,312       49,383
      Total oil
       equivalent     (boe/d)   9,767       11,922        9,873       12,737
    Average prices
      Crude oil,
       condensate
       and NGLs       ($/bbl)   53.55       103.14        45.16        86.19
      Crude oil,
       condensate
       and NGLs
       (including
       hedging(1))    ($/bbl)   53.55        82.56        45.16        71.50
      Natural gas     ($/mcf)    3.40         9.94         4.42         8.90
      Natural gas
       (including
       hedging(1))    ($/mcf)    5.18         8.80         5.70         8.37
      Total oil
       equivalent     ($/boe)   33.34        74.85        33.72        64.99
      Total oil
       equivalent
       (including
       hedging(1))    ($/boe)   39.85        63.22        38.43        57.76
    Statistics
      Operating
       netback(5)     ($/boe)   12.52        42.66        11.16        35.54
      Operating
       netback(5)
       (including
       hedging(1))    ($/boe)   19.03        31.01        15.87        28.30
      Transportation  ($/boe)    1.42         2.28         1.58         1.43
      Production
       expenses       ($/boe)   13.41        14.90        14.47        14.31
      General &
       administrative ($/boe)    2.90         4.14         3.03         3.56
      Royalties as a
       % of sales after
       Transportation              19%          21%          20%          22%
    -------------------------------------------------------------------------

    TRUST UNITS
    Trust units
     outstanding           78,496,581   79,095,460   78,496,581   79,095,460
    Trust unit incentive
     rights outstanding     4,234,632    5,006,079    4,234,632    5,006,079
    Units issuable for
     exchangeable shares      312,467      347,254      312,467      347,254
    Units issuable for
     convertible
     debentures(6)           5,390,625    5,390,625    5,390,625    5,390,625
    -------------------------------------------------------------------------
    Diluted trust units
     outstanding           88,434,305   89,839,418   88,434,305   89,839,418
    Diluted weighted
     average trust
     units(7)              78,496,581   79,203,976   78,496,581   79,213,532

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

    TRUST UNIT TRADING STATISTICS
    (CDN$, except volumes) based
     on intra-day trading
    High                         1.08         4.69         1.56         4.69
    Low                          0.66         3.54         0.48         2.94
    Close                        0.77         4.40         0.77         4.40
    Average daily volume      123,853      266,304      147,289      261,833
    -------------------------------------------------------------------------

    (1) The Trust has entered into various commodity risk management
        contracts which are considered to be economic hedges. Per unit
        metrics after hedging includes only the realized portion of gains or
        losses on commodity contracts.

        The Trust does not apply hedge accounting to these contracts. As
        such, these contracts are revalued to fair value at the end of each
        reporting date. This results in recognition of unrealized gains or
        losses over the term of these contracts which is reflected each
        reporting period until these contracts are settled, at which time
        realized gains or losses are recorded. These unrealized gains or
        losses on commodity contracts are not included for purposes of per
        unit metrics calculations disclosed.

    (2) The highlights section contains the term "funds flow from
        operations" (or as commonly referred to as "cash flow from
        operations"), which should not be considered an alternative to, or
        more meaningful than cash flow from operating activities as
        determined in accordance with Canadian generally accepted accounting
        principles ("GAAP") as an indicator of the Trust's performance.
        Therefore reference to diluted funds flow from operations or funds
        flow from operations per trust unit may not be comparable with the
        calculation of similar measures for other entities. Management uses
        funds flow from operations to analyze operating performance and
        leverage and considers funds flow from operations to be a key measure
        as it demonstrates the Trust's ability to generate the cash necessary
        to fund future capital investments and to repay debt. The
        reconciliation between cash flow from operating activities and funds
        flow from operations can be found in the Management Discussion and
        Analysis ("MD&A"). Funds flow from operations per trust unit is
        calculated using the weighted average number of trust units for the
        period.

    (3) Net debt includes the net working capital deficiency (excess) before
        short-term commodity contract assets and liabilities, current portion
        of long-term debt and short-term future income tax assets and
        liabilities. Total net debt also includes the liability component of
        convertible debentures and excludes asset retirement obligations and
        the future income tax liability.

    (4) Pro-forma total net debt after Divestiture is calculated as total net
        debt as of June 30, 2009, reduced by $85 million of net proceeds,
        after purchase adjustments and estimated closing costs, received from
        the divestiture of properties in Saskatchewan and others as disclosed
        further herein.

    (5) Operating netbacks are calculated by subtracting royalties,
        transportation, and operating costs from revenues.

    (6) Units issuable for convertible debentures are calculated as the
        $86.25 million principal amount of the convertible debentures
        divided by the conversion price of $16.00 per unit available to
        debenture holders.

    (7) In computing weighted average diluted earnings per trust unit and
        weighted average diluted funds flow from operations for both the
        three and six month periods ended June 30, 2009 a total of 4,234,632
        (2008: 5,006,079) trust incentive units, 312,467 (2008: 347,254)
        exchangeable shares and 5,390,625 (2008: 5,390,625) trust units
        issuable pursuant to the conversion of convertible debentures were
        excluded from the calculation of diluted earnings per trust unit
        and weighted average diluted funds flow from operations as they were
        not dilutive.

                            REPORT TO UNITHOLDERS
    

    True is pleased to announce that significant progress had been
accomplished in the restructuring of the Trust through the first half of 2009.
The Trust now has a proven team of top tier professional management in all key
operational areas of the organization. The new team has over 175 years of
combined successful experience providing organic growth through full cycle
exploration, exploitation and development.
    The cost control strategy implemented at the start of Q1 2009 is on
target through the second quarter with both operating expenses and G&A
expenses meeting budgets, which represent cuts in excess of 30% from 2008
levels. Production levels have been maintained by diligent field optimization
programs designed to arrest decline. Sales volumes averaged 9,767 boe/d in the
second quarter in spite of plant turnarounds in late May and June and a one
time negative accounting adjustment of 261 boe/d. For the first half of 2009
sales volumes averaged 9,873 boe/d.
    As of June 30, 2009, year to date capital expenditures totalled $3.9
million. True will maintain its $15 million capital budget for 2009 with the
drilling program to be initiated in August. Capital constraints will remain in
place until improved commodity pricing is demonstrated.
    The highly leveraged balance sheet has been addressed through a series of
asset transactions designed to reduce bank indebtedness, thereby providing
True with the ability to move forward with substantially improved financial
flexibility. These efforts include:

    
    -   On July 8, 2009, True announced the divestiture of a majority of its
        oil and natural gas assets in Saskatchewan for gross proceeds of
        $93 million effective May 1, 2009 (the "Divestiture"). On July 30,
        2009 True closed the Divestiture for net proceeds, after purchase
        adjustments, of approximately $86 million. The purchase adjustments
        of approximately $7 million include net operating income, prepaid and
        other items for the interim period from May 1, 2009 to July 30, 2009.
        The Divestiture excludes the Saskatchewan properties of Cypress and
        Mantario. True's interest to the base Belly River in three sections
        in the Ferrier area of West Central Alberta were also disposed of in
        the transaction. The assets sold include production estimated to
        average 3,000 boe/d in Q3 and Q4 in 2009, including 5.3 mmcf/d of
        natural, 128 km(2) of 3D proprietary seismic with 389.7 km of 2D
        proprietary seismic, subject to a royalty free license on the seismic
        in favor of True, and 63,333 net acres of undeveloped mineral leases.

    -   In a separate transaction, on June 30, 2009, True sold 145 boe/d,
        including 0.63 mmcf/d of natural gas, in the Penhold Area of Central
        Alberta for $4.7 million, after purchase adjustments and estimated
        closing costs. In addition, in June 2009, True closed on the
        disposition of certain royalty interests for approximately
        $3.7 million, after purchase adjustments and estimated closing costs
        to undisclosed buyers. The proceeds from these two dispositions were
        also used to reduce True's bank indebtedness.

    -   True's total net debt as of July 31, 2009 after completion of the
        dispositions, excluding an unrealized commodity contract asset of
        $13.8 million, future income taxes and asset retirement obligations
        is approximately $110 million, being approximately $28 million in net
        debt outstanding on the credit facility including working capital
        adjustments and $82 million in convertible debentures (liability
        component).

    -   After completion of the divestitures, True's production is forecast
        to be approximately 6,500 boe/d, comprised of 31.7 mmcf/d of natural
        gas and 1,230 bbls/d of light/medium oil. True is forecasting a 2009
        average production rate of 8,100 boe/d and a 2009 production exit
        rate of 7,000 boe/d based on normal decline rates and risked
        production adds from True's capital program.

    -   Upon completion of the divestitures, 65% of True's natural gas
        production for Q3 - Q4 2009 is forward sold for an average of
        $7.26 CAD/mcf and 21.5% of Q1 - Q2 2010 natural gas production hedged
        at an average of $7.96 CAD/mcf. In addition, 500 bbl/d of oil for
        Q3 - Q4 is hedged by way of a costless collar of $52.30 CAD x $80.70
        CAD. As a result of these hedges, on a go forward basis True has
        approximately 61% of total 2009 production protected through the
        remainder of 2009.

    -   On July 30, 2009, in conjunction with completion of the Divestiture,
        True negotiated a new banking syndicate commitment to replace the
        existing facility, subject to finalization and execution of a
        mutually acceptable credit agreement, that will provide True with a
        credit facility of $85 million. The facility will consist of a
        $10 million demand operating facility provided by one Canadian bank
        and a $75 million extendible revolving term credit facility
        syndicated by one Canadian chartered bank and one Canadian financial
        institution. As of July 31, 2009 there was approximately $28 million
        drawn on True's existing facility.

    The second quarter of 2009 featured continued erosion of natural gas
pricing primarily as a result of the supply demand imbalance associated with
the persistent global economic recession. Second quarter financial results
include:

    -   Funds flow from operations for the second quarter of 2009 was
        $10.8 million on gross sales of $29.8 million compared to funds flow
        from operations for the first quarter of 2009 of $6.5 million on
        gross sales of $31.3 million.

    -   The net loss for the second quarter of 2009 was $99.7 million
        compared to a net loss of $21.4 million for the same period in 2008
        and a net loss of $9.1 million in the first quarter of 2009. The net
        loss for Q2 2009 was primarily the result of a non-cash accounting
        loss on petroleum and natural gas properties held for sale of
        $114.2 million. This amount was calculated as the excess of the
        historical net book value allocated to Saskatchewan oil and gas
        property assets sold as compared to the expected total net proceeds
        received on closing subsequent to quarter-end.

    -   True's total net debt including the liability component of its
        convertible debentures, excluding unrealized commodity contract
        assets and liabilities, future income taxes and asset retirement
        obligations, as at June 30, 2009 was $196.7 million, as compared to
        $213.9 million as at March 31, 2009. After completion of the
        Saskatchewan asset divestiture on July 30, 2009, True's total net
        debt has reduced to approximately $110.0 million.

    -   2009 second quarter sales volumes averaged 9,767 boe/d compared to
        9,981 boe/d in the first quarter of 2009. True initiated a production
        optimization and maintenance program at the beginning of the year.
        This program has not only arrested True's production decline through
        the first and second quarters, but also increased overall
        deliverability without drilling or recompleting wells.

    -   True's natural gas price for the second quarter of 2009, after
        including hedging, was $5.18/mcf compared to $8.80/mcf for the same
        period in 2008.

    -   Capital expenditures for the second quarter of 2009 were $1.2 million
        which were funded by available cash flow.

    -   Following the receipt of net proceeds from the Divestiture closing on
        July 30, 2009, the Trust and operating subsidiaries of the Trust are
        anticipated to have approximately $391 million in tax pools for
        deduction against future income.
    

    True's latest forecast for 2009, as updated for June 30, 2009 year to
date results, recent disposition activity and further assumptions including
production volumes of 6,500 boe/d for August to December 2009, a CAD$/US$
exchange rate of $0.90, and a WTI oil price of US$70.00 and AECO natural gas
price of CAD$4.50/mcf for the third and fourth quarters of 2009, generates
estimated cash flow from operations for fiscal 2009 of $38 million.
    True's drilling program for the third and fourth quarters has commenced
with plans to participate in up to 20 wells operated by True to take advantage
of the Alberta Government Royalty incentive program. True's drilling program
is targeting oil in Mantario, Saskatchewan and natural gas in Alberta
including up to three Notikewan horizontal well tests in West Central Alberta.
True's total capital expenditure program for the 3rd and 4th quarters is
anticipated to be approximately $11.1 million.
    Upon closing of the recent dispositions, True continues to have
approximately 274,000 net acres of undeveloped land with 320 exploitation
drilling opportunities identified representing over 5 years of drilling
inventory. With the Trust's improved financial flexibility, True plans to move
forward with an organic growth model coupled with an M&A mandate to seek
opportunities to consolidate assets that complement its focused asset base
either through geographic fit, technical expertise or future development
potential.

    
    Raymond G. Smith, P. Eng.
    President and CEO
    August 6, 2009


                     MANAGEMENT'S DISCUSSION AND ANALYSIS
    

    August 6, 2009 - The following Management's Discussion and Analysis of
financial results as provided by the management of True Energy Trust ("True"
or the "Trust") should be read in conjunction with the unaudited interim
consolidated financial statements and selected notes for the three and six
months ended June 30, 2009 and the audited consolidated financial statements
of the Trust for the years ended December 31, 2008 and 2007 and the related
Management's Discussion and Analysis of financial results. This commentary is
based on information available to, and is dated as of, August 6, 2009. The
financial data presented is in accordance with Canadian generally accepted
accounting principles ("GAAP") in Canadian dollars, except where indicated
otherwise.
    CONVERSION: The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six thousand
cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) is based
on an energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. All boe
conversions in this report are derived from converting gas to oil in the ratio
of six thousand cubic feet of gas to one barrel of oil.
    NON-GAAP MEASURES: This Management's Discussion and Analysis contains the
term "funds flow from operations" (or also commonly referred to as "cash flow
from operations"), which should not be considered an alternative to, or more
meaningful than "cash flow from operating activities" as determined in
accordance with Canadian GAAP as an indicator of the Trust's performance.
Therefore reference to funds flow from operations or funds flow from
operations per unit may not be comparable with the calculation of similar
measures for other entities. Management uses funds flow from operations to
analyze operating performance and leverage and considers funds flow from
operations to be a key measure as it demonstrates the Trust's ability to
generate the cash necessary to fund future capital investments and to repay
debt. The reconciliation between cash flow from operating activities and funds
flow from operations can be found in the Management's Discussion and Analysis.
Funds flow from operations per unit is calculated using the weighted average
number of units for the period.
    This Management's Discussion and Analysis also contains other terms such
as total net debt and operating netbacks, which are not recognized measures
under Canadian GAAP. Total net debt is calculated as long-term debt plus the
liability component of the convertible debentures and the net working capital
deficiency (excess) before short-term commodity contract assets and
liabilities, current portion of long-term debt and short-term future income
tax assets and liabilities. Operating netbacks are calculated by subtracting
royalties, transportation, and operating expenses from revenues. Management
believes these measures are useful supplemental measures of firstly, the total
amount of current and long-term debt and secondly, the amount of revenues
received after transportation, royalties and operating expenses. Readers are
cautioned, however, that these measures should not be construed as an
alternative to other terms such as current and long-term debt or net income
determined in accordance with GAAP as measures of performance. True's method
of calculating these measures may differ from other entities, and accordingly,
may not be comparable to measures used by other trusts or companies.
    Additional information relating to the Trust, including the Trust's
Annual Information Form, is available on SEDAR at www.sedar.com.

    FORWARD LOOKING STATEMENTS: Certain information contained herein may
contain forward looking statements including management's assessment of future
plans and operations, drilling and tie-in plans and the timing thereof, plans
regarding wells to be drilled, expected or anticipated average and exit
production rates, hedging strategies, anticipated liquidity of the Trust and
various matters that may impact such liquidity, planned reductions in
operating expenses in 2009 and expected operating expenses, expected
production and transportation expenses and general and administrative
expenses, expected levels of revenues and operating expenses and operating
netbacks in 2009 compared to 2008, the expected effect of dispositions on debt
to funds flow ratios, the effect of the SIFT tax on cash flow levels, the use
of forecast funds flow from operations, the proportion of distributions
anticipated to be taxable, maintenance of productive capacity and capital
expenditures and the nature of capital expenditures and the timing and method
of financing thereof, may constitute forward-looking statements under
applicable securities laws and necessarily involve risks including, without
limitation, risks associated with oil and gas exploration, development,
exploitation, production, marketing and transportation, loss of markets,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, inability to
retain drilling rigs and other services, incorrect assessment of the value of
acquisitions, failure to realize the anticipated benefits of acquisitions,
delays resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external sources. The
recovery and reserve estimates of True's reserves provided herein are
estimates only and there is no guarantee that the estimated reserves will be
recovered. Events or circumstances may cause actual results to differ
materially from those predicted, as a result of the risk factors set out and
other known and unknown risks, uncertainties, and other factors, many of which
are beyond the control of True. In addition, forward-looking statements or
information are based on a number of factors and assumptions which have been
used to develop such statements and information but which may prove to be
incorrect. Included herein is an estimate of True's cash flow from operations
in 2009 and the percentage that 2009 assumed distributions and its planned
capital budget will be of such estimated funds flow from operations. Such
recent financial outlook was approved by management of the Trust on July 8,
2009 and such financial outlook is included herein to provide an assessment of
the ability of the Trust to generate the cash necessary to fund future capital
investments after assumed distributions and to repay debt. Although the Trust
believes that the expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Trust can give no assurance that such
expectations will prove to be correct. In addition to other factors and
assumptions which may be identified herein, assumptions have been made
regarding, among other things: the impact of increasing competition; the
general stability of the economic and political environment in which the Trust
operates; the timely receipt of any required regulatory approvals; the ability
of the Trust to obtain qualified staff, equipment and services in a timely and
cost efficient manner; drilling results; the ability of the operator of the
projects which the Trust has an interest in to operate the field in a safe,
efficient and effective manner; the ability of the Trust to obtain financing
on acceptable terms; field production rates and decline rates; the ability to
replace and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline, storage and
facility construction and expansion and the ability of the Trust to secure
adequate product transportation; future commodity gas prices; currency,
exchange and interest rates; the regulatory framework regarding royalties,
taxes and environmental matters in the jurisdictions in which the Trust
operates; and the ability of the Trust to successfully market its oil and
natural gas products. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been used. As a
consequence, actual results may differ materially from those anticipated in
the forward-looking statements. Additional information on these and other
factors that could effect True's operations and financial results are included
in reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com), at True's website
(www.trueenergytrust.com). Furthermore, the forward-looking statements
contained herein are made as at the date hereof and True does not undertake
any obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required by applicable securities laws.
    The reader is further cautioned that the preparation of financial
statements in accordance with GAAP requires management to make certain
judgments and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses. Estimating reserves is also critical to
several accounting estimates and requires judgments and decisions based upon
available geological, geophysical, engineering and economic data. These
estimates may change, having either a negative or positive effect on net
earnings as further information becomes available, and as the economic
environment changes.

    Overview and Description of the Business

    True Energy Trust is a Canadian trust, formed in 2005 via the reverse
takeover of TKE Energy Trust. The Trust is involved in the exploration,
development and production of petroleum and natural gas in western Canada. The
Trust has a significant multi-year drilling inventory of locations in Alberta,
Saskatchewan and British Columbia.
    True's Trust units and convertible debentures are listed on the Toronto
Stock Exchange under the symbols TUI.UN and TUI.DB, respectively.


    Second Quarter 2009 Financial and Operational Results

    Dispositions

    The Trust's focus in 2009 has been on the restructuring and strengthening
of its balance sheet. The Trust had two minor dispositions in the quarter and
has successfully completed the divestiture of the majority of its petroleum
and natural gas properties in Saskatchewan subsequent to quarter end. Net
proceeds from the dispositions were used to reduce the Trust's bank
indebtedness; these strategic accomplishments will allow the Trust to progress
forward with substantially improved financial flexibility.
    On June 30, 2009, True sold 145 boe/d, including 0.63 mmcf/d of natural
gas, in the Penhold Area of Central Alberta for $4.7 million, after purchase
adjustments and closing costs. In addition, in June 2009, True completed a
disposition of certain royalty interests for approximately $3.7 million, after
purchase adjustments and closing costs. The proceeds from these two
dispositions were used to reduce True's bank indebtedness.
    On July 8, 2009, True announced the divestiture of a majority of its
petroleum and natural gas properties in Saskatchewan (the "Saskatchewan
Divestiture") for gross proceeds of $93 million effective May 1, 2009. The
Saskatchewan Divestiture excludes the Saskatchewan properties of Mantario and
Cypress. True's interest to the base Belly River in three sections in the
Ferrier area of West Central Alberta were also included in the divestiture
package. The transaction was successfully closed on July 30, 2009.
    The assets subject to the Saskatchewan Divestiture have been classified
as held for sale under CICA handbook section 3475 - "Disposal of Long-lived
Assets and Discontinued Operations" as at June 30, 2009 and accounted for
under the guidance of Accounting Guideline 16 - "Oil and Gas Accounting - Full
Cost". Under full cost accounting, if crediting the proceeds from disposition
to costs results in a change of 20 percent or more to the DD&A rate then a
gain or loss should be recognized. When a gain or loss is to be recognized the
total net book value of capitalized costs should be allocated between the
properties sold and the properties retained. The assets held for sale as of
June 30, 2009 are an allocation of the Trust's historical full cost pool based
on a pro-rata ratio of future cash flows of proved reserves associated with
the assets held for sale, discounted at 10%, as compared to all oil and gas
assets. The Trust has recorded a $114.2 million non-cash loss on the assets
held for sale for the excess of the allocated net book value to these assets,
compared to the total estimated net proceeds, after purchase adjustments and
estimated closing costs, of $85 million. The purchase adjustments of
approximately $7 million include net operating income, prepaid and other items
for the interim period from May 1, 2009 to July 30, 2009.

    Sales Volumes

    Sales volumes for the three months ended June 30, 2009 averaged 9,767
boe/d compared to 11,922 boe/d for the same period in 2008, representing a 18%
decrease. In comparison, sales volumes for the first quarter of 2009 averaged
9,981 boe/d. Sales volumes for the six months ended June 30, 2009 averaged
9,873 boe/d as compared to 12,737 boe/d for the same period in 2008,
representing a 22% decrease.
    The decrease in average sales volumes from second quarter 2008 to 2009 is
a result of natural production decline, minimal 2009 capital spending,
dispositions in the second quarter totaling approximately 145 boe/d and
dispositions totaling approximately 1,000 boe/d that were closed during the
second quarter of 2008, partially offset by tuck-in acquisitions completed in
the fourth quarter of 2008 that added approximately 250 boe/d. During the
first quarter of 2009, True implemented a full scale field optimization and
maintenance program throughout True's operated properties. The field
optimization programs were designed to arrest production declines and increase
overall deliverability without drilling or recompleting wells; which is
evidenced by the second quarter average production volumes of 9,767 boe/d in
spite of plant turnarounds in late May and June.


    
    Sales Volumes
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------

    Natural gas    (mcf/d)     35,703       46,515       36,312       49,383
    -------------------------------------------------------------------------

    Heavy oil     (bbls/d)      2,771        2,721        2,646        2,773
    Light oil and
     condensate   (bbls/d)        680        1,116          818        1,253
    NGLs          (bbls/d)        365          333          357          480
    -------------------------------------------------------------------------
    Total crude
     oil and NGLs (bbls/d)      3,816        4,170        3,821        4,506
    -------------------------------------------------------------------------
    Total boe/d      (6:1)      9,767       11,922        9,873       12,737
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the second quarter of 2009, True did not participate in any
drilling.
    For the three months ended June 30, 2009, the weighting towards natural
gas sales averaged 61% compared to 65% in the same period in 2008. Similarly,
for the six month period ended June 30, 2009, the weighting towards natural
gas sales averaged 61% compared to 65% for the same period in 2008. Heavy oil
sales made up 28% of total production for the 2009 second quarter compared to
23% in the 2008 second quarter. In comparison, heavy oil sales made up 25% of
total production for the 2009 first quarter.
    Sales of natural gas averaged 35.7 Mmcf/d for the second quarter of 2009,
compared to 46.5 Mmcf/d in the same 2008 period, a decrease of 23%. Crude oil
and NGL sales for the 2009 second quarter decreased 8% averaging 3,816 bbls/d
compared to 2008 average sales of 4,170 bbls/d.
    For August to December 2009, following completion of the Saskatchewan
Divestiture, production volumes are anticipated to average approximately 6,500
boe/d and a 2009 production exit rate of 7,000 boe/d. The forecast of 2009
production volumes has been updated from the 10,000 boe/d forecast previously
reported to include the recent disposition activity. The forecast is based on
a number of assumptions, including normal production declines and expenditures
under the current planned capital budget of $15 million.

    
    Commodity Prices


    Average Commodity Prices
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                             June 30,                June 30,
                                                   %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------

    Exchange rate (US$/Cdn$)  0.8570  1.0000     (14) 0.8291  0.9989     (17)

    Natural gas:
    NYMEX (US$/mmbtu)           3.81   11.47     (67)   4.13    9.99     (59)
    AECO daily index
     (CDN$/Mcf)                 3.45   10.20     (66)   4.18    9.09     (54)
    AECO monthly index
     (CDN$/Mcf)                 3.47    9.35     (63)   4.64    8.24     (44)
    True's average price
     ($/mcf)                    3.40    9.94     (66)   4.42    8.90     (50)
    True's average price
     (including hedging(1))
     ($/mcf)                    5.18    8.80     (41)   5.70    8.37     (32)

    Crude oil:
    WTI (US$/bbl)              43.31  123.80     (65)  43.31  109.92     (61)
    Edmonton par - light
     oil ($/bbl)               66.16  126.37     (48)  58.16  112.30     (48)
    Bow River - medium/heavy
     oil ($/bbl)               61.69  103.98     (41)  52.73   90.74     (42)
    Hardisty Heavy - heavy
     oil ($/bbl)               58.07   96.34     (40)  48.72   83.20     (41)
    True's average prices
     ($/bbl)
      Light crude oil,
       condensate, and NGLs    47.83  110.23     (57)  44.88   95.92     (53)
      Heavy crude oil          55.71   99.37     (44)  45.29   80.11     (44)
      Total crude oil and
       NGLs                    53.55  103.14     (48)  45.16   86.19     (48)
      Total crude oil and
       NGLs (including
       hedging(1))             53.55   82.56     (35)  45.16   71.50     (37)
    -------------------------------------------------------------------------

    (1) Per unit metrics including hedging include realized gains or losses
        on commodity contracts and exclude unrealized gains or losses on
        commodity contracts.
    

    True's natural gas sales are priced with reference to the daily or
monthly AECO indices. During the 2009 second quarter, the AECO daily and
monthly reference price decreased by 66% and 63%, respectively, compared to
the same period in 2008. Similarly, True's average sales price before hedging
for the 2009 second quarter decreased by 66% compared to the same period in
2008. True's natural gas price after including hedging for the second quarter
of 2009 was $5.18/mcf compared to $8.80/mcf for the same period in 2008.
    The Trust has entered into a natural gas physical delivery sales contract
to sell 5,275 GJ/day at a fixed price of $7.29/GJ and $7.90/GJ for the third
and fourth quarter of 2009, respectively.
    For heavy crude oil, True received an average price before transportation
of $55.71/bbl in the 2009 second quarter, a decrease of 44% over prices in the
same period in 2008. The Bow River reference price and the Hardisty Heavy
reference price both decreased approximately 40% from the 2008 second quarter
to the 2009 second quarter. The majority of True's heavy crude oil density
ranges between 11 and 16 degrees API consistent with the Hardisty Heavy
reference price, although all of True's heavy oil production is sold at
Saskatchewan delivery points.
    For light oil, condensate and NGLs, True recorded an average $47.83/bbl
before hedging in the 2009 second quarter, 57% lower than the average price of
$110.23/bbl received in the same period in 2008. In comparison, the Edmonton
par price decreased by 48% over the same period. The average WTI crude oil US
dollar based price decreased 65% from the second quarter of 2008 to that in
2009. The average US$/Cdn$ foreign exchange rate was 0.86 for the 2009 second
quarter compared to 1.0 during the same period in 2008. The negative
correlation between the Canadian dollar and U.S. dollar denominated WTI oil
prices has softened the impact on the Trust.
    WTI crude oil prices varied greatly throughout 2008, increasing
significantly to a high of US$147/bbl in July and dramatically falling during
the fourth quarter of 2008 with December 2008 prices of under US$40/bbl and
averaging over US$40/bbl for the first and second quarters of 2009. The
pricing outlook in 2009 for crude oil and natural gas remains uncertain given
the current global economic environment.

    Revenue

    Revenue before other income and hedging for the three month period ended
June 30, 2009 was $29.6 million, 64% lower than the $81.2 million in the same
period in 2008. The decrease in revenue for the 2009 period was the result of
lower sales volumes in conjunction with significantly lower commodity prices.


    
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    Light crude oil,
     condensate and NGLs        4,550       14,528        9,548       30,262
    Heavy oil                  14,046       24,608       21,689       40,426
    -------------------------------------------------------------------------
    Crude oil and NGLs         18,596       39,136       31,237       70,688
    Natural gas                11,033       42,067       29,026       79,961
    -------------------------------------------------------------------------
    Total revenue before
     other                     29,629       81,203       60,263      150,649
    Other(1)                      176          871          887        1,458
    -------------------------------------------------------------------------
    Total revenue before
     royalties and hedging     29,805       82,074       61,150      152,107
    -------------------------------------------------------------------------

    (1) Other revenue primarily consists of processing and other third party
        income.
    

    Revenues for the remainder of 2009 are currently expected to be lower
than 2008 due to lower commodity prices and average estimated 2009 year
production of approximately 8,100 boe/d, after adjusting for divestitures
closed during the year.

    Commodity Price Risk Management

    The Trust has a formal risk management policy which permits management to
use specified price risk management strategies as determined by the board of
directors including fixed price contracts, collars and the purchase of floor
price options and other derivative financial instruments and physical delivery
sales contracts to reduce the impact of price volatility and ensure minimum
prices for a maximum of eighteen months beyond the current date. The program
is designed to provide price protection on a portion of the Trust's future
production in the event of adverse commodity price movement, while retaining
significant exposure to upside price movements. By doing this, the Trust seeks
to provide a measure of stability to funds flow from operations, as well as,
to ensure True realizes positive economic returns from its capital
developments and acquisition activities. The Trust will continue its hedging
strategies focusing on maintaining sufficient cash flow to fund True's
operations. Any remaining unhedged production is realized at market prices.
    A summary of the financial hedge volumes and average prices by quarter
currently outstanding as of August 6, 2009 is shown in the following tables:

    
    Natural gas


    Average Volumes (GJ/d)
    -------------------------------------------------------------------------

                                                        Q3 2009      Q4 2009
    -------------------------------------------------------------------------
    Fixed                                                19,500       15,000
    -------------------------------------------------------------------------

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

                              Q1 2010      Q2 2010      Q3 2010      Q4 2010
    -------------------------------------------------------------------------
    Fixed                      10,000        5,000            -            -
    Call option (ceiling
     price)                     5,000        5,000        5,000        5,000
    -------------------------------------------------------------------------
    Total GJ/d                 15,000       10,000        5,000        5,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Average Price ($/GJ AECO C)
    -------------------------------------------------------------------------
                                                        Q3 2009      Q4 2009
    -------------------------------------------------------------------------
    Fixed                                                  5.97         6.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

                              Q1 2010      Q2 2010      Q3 2010      Q4 2010
    -------------------------------------------------------------------------
    Fixed                        7.58         6.59            -            -
    Call option (ceiling
     price)                      8.05         8.05         8.05         8.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Crude oil and liquids


    Average Volumes (bbls/d)
    -------------------------------------------------------------------------

                                                        Q3 2009      Q4 2009
    -------------------------------------------------------------------------
    Costless collars                                        500          500
    -------------------------------------------------------------------------
    Total bbls/d                                            500          500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Average Price (CDN$/bbl WTI)
    -------------------------------------------------------------------------

                                                        Q3 2009      Q4 2009
    -------------------------------------------------------------------------
    Collar ceiling price                                  80.70        80.70
    Collar floor price                                    52.30        52.30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Included in the above natural gas table is a fixed price contract of
$5.90/GJ at 5,000 GJ/d from the second quarter 2009 to fourth quarter 2009
periods which was funded by selling a call option of 5,000 GJ/d at $8.05 for
the 2010 year.
    As of June 30, 2009, the fair value of True's outstanding commodity
contracts is a net unrealized asset of $8.9 million as reflected in the
financial statements. The fair value or mark-to-market value of these
contracts is based on the estimated amount that would have been received or
paid to settle the contracts as at June 30, 2009 and may be different from
what will eventually be realized. Changes in the fair value of the commodity
contracts are recognized in the Consolidated Statements of Loss within the
financial statements.
    The following is a summary of the gain (loss) on commodity contracts for
the three and six months ended June 30, 2009 and 2008 as reflected in the
Consolidated Statements of Loss in the financial statements:


    
    Commodity contracts
    -------------------------------------------------------------------------

                            Crude Oil      Natural      Q2 2009      Q2 2008
    ($000s)                 & Liquids          Gas        Total        Total
    -------------------------------------------------------------------------
    Realized cash gain
     (loss) on contracts            -        5,789        5,789      (12,619)
    Unrealized gain (loss)
     on contracts(1)             (433)      (2,271)      (2,704)     (25,550)
    -------------------------------------------------------------------------
    Total gain (loss) on
     commodity contracts         (433)       3,518        3,085      (38,169)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

                            Crude Oil      Natural     YTD 2009     YTD 2008
    ($000s)                 & Liquids          Gas        Total        Total
    -------------------------------------------------------------------------
    Realized cash gain
     (loss) on contracts            -        8,420        8,420      (16,761)
    Unrealized gain (loss)
     on contracts(1)             (705)       5,845        5,140      (43,237)
    -------------------------------------------------------------------------
    Total gain (loss) on
     commodity contracts         (705)      14,265       13,560      (59,998)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Unrealized gain (loss) commodity contracts represent non-cash
        adjustments for changes in the fair value of these contracts during
        the period.
    

    Royalties

    For the three months ended June 30, 2009, total royalties were $5.3
million, compared to $16.3 million incurred in the same period in 2008.
Overall royalties as a percentage of revenue (after transportation costs) in
the second quarter of 2009 were 19%, compared with 21% over the same period in
2008. Royalties for the six months ended June 30, 2009 were $11.6 million
compared to $31.8 million for the same period in 2008.


    
    -------------------------------------------------------------------------
    Royalties by
     Commodity Type             Three months ended          Six months ended
    ($000s, except                         June 30,                  June 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------

    Light crude oil,
     condensate and NGLs        1,222        2,897        2,583        6,663
      $/bbl                     12.84        21.98        12.14        21.12
      Average light crude
       oil, condensate and
       NGLs royalty rate (%)       24           20           24           23

    Heavy Oil                   2,645        5,341        4,494        7,632
      $/bbl                     10.49        21.57         9.38        15.12
      Average heavy oil
       royalty rate (%)            20           23           22           20

    Natural Gas                 1,457        8,051        4,555       17,494
      $/mcf                      0.45         1.90         0.69         1.95
      Average natural gas
       royalty rate (%)            14           20           16           22

    -------------------------------------------------------------------------
      Total                     5,324       16,289       11,632       31,789
    -------------------------------------------------------------------------
      $/boe                      5.99        15.01         6.51        13.71
    -------------------------------------------------------------------------
      Average total royalty
       rate (%)                    19           21           20           22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Royalties, by Type
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Crown royalties             3,018        9,587        6,091       18,543
    Freehold & GORR             1,230        4,848        3,078        9,711
    Indian Oil and Gas
     Canada royalties             784        1,854        1,973        3,535
    Saskatchewan resource
     surcharge                    292            -          490            -
    -------------------------------------------------------------------------
    Total                       5,324       16,289       11,632       31,789
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Expenses
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Production                 11,916       16,170       25,862       33,166
    Transportation              1,267        2,478        2,830        3,321
    General and
     administrative             2,581        4,492        5,423        8,262
    Interest and financing
     charges                    4,218        3,487        7,520        8,003
    Unit-based compensation       243          160         (360)         429
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Expenses per boe
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($ per boe)                  2009         2008         2009         2008
    -------------------------------------------------------------------------
    Production                  13.41        14.90        14.47        14.31
    Transportation               1.42         2.28         1.58         1.43
    General and
     administrative              2.90         4.14         3.03         3.56
    Interest and financing
     charges                     4.75         3.21         4.21         3.45
    Unit-based compensation      0.27         0.15        (0.20)        0.19
    -------------------------------------------------------------------------
    

    Production Expenses

    For the three months ended June 30, 2009, production expenses totaled
$11.9 million ($13.41/boe), compared to $16.2 million ($14.90/boe) recorded in
the same 2008 period. In comparison, production expenses were $13.9 million
($15.53/boe) in the first quarter of 2009 and $66.6 million ($15.33/boe) for
the 2008 annual period. For the six month period ended June 30, 2009,
production expenses totaled $25.9 million ($14.47/boe) compared to $33.2
million ($14.31/boe) for the same period in 2008.
    True is targeting operating costs of approximately $39.6 million
($12.74/boe) in 2009 which based on assumptions of estimated 2009 annualized
production of approximately 8,100 boe/d, after considering completed
divestitures, planned cost reductions, and cost reductions due to disposition
of high operating cost properties. Forecasted cost reductions are on track
through to the second quarter of 2009.


    
    Production Expenses, by Commodity Type
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except                         June 30,                  June 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Light crude oil,
     condensate and NGLs        2,350        2,193        4,627        5,274
    $/bbl                       24.70        16.64        21.75        16.71

    Heavy oil                   3,412        5,808        8,148       10,843
    $/bbl                       13.53        23.45        17.01        21.49

    Natural gas                 6,154        8,169       13,087       17,049
    $/mcf                        1.89         1.93         1.99         1.90

    -------------------------------------------------------------------------
    Total                      11,916       16,170       25,862       33,166
    -------------------------------------------------------------------------
    $/boe                       13.41        14.90        14.47        14.31
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total                      11,916       16,170       25,862       33,166
    -------------------------------------------------------------------------
    Processing and other
     third party income(1)       (176)        (871)        (887)      (1,458)
    -------------------------------------------------------------------------
    Total after deducting
     processing and other
     third party income        11,740       15,299       24,975       31,708
    -------------------------------------------------------------------------
    $/boe                       13.21        14.10        13.98        13.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Processing and other third party income is included within petroleum
        and natural gas sales on the statement of income.
    

    Transportation

    Transportation expenses for the three month period ended June 30, 2009
were $1.3 million ($1.42/boe) compared to $2.5 million ($2.28/boe) in the same
2008 period. In comparison, transportation was $1.74/boe in the first quarter
of 2009 and $1.62/boe 2008 annual periods, respectively.

    Operating Netback

    For the second quarter of 2009, corporate field operating netback (before
hedging) was $12.52/boe compared to $42.66/boe in the same period in 2008.
This was the result of decreased overall commodity prices, offset somewhat by
lower transportation, royalties and operating expenses. By comparison,
corporate field operating netback (before hedging) for the first quarter of
2009 was $9.81/boe. After including hedging activities, the corporate field
operating netback for the second quarter of 2009 was $19.03/boe compared to
$31.01/boe in the same 2008 period.


    
    Field Operating Netback - Corporate (before hedging)
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($/boe)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                       33.34        74.85        33.72        64.99
    Transportation              (1.42)       (2.28)       (1.58)       (1.43)
    Royalties                   (5.99)      (15.01)       (6.51)      (13.71)
    Production expense         (13.41)      (14.90)      (14.47)      (14.31)
    -------------------------------------------------------------------------
    Field operating netback     12.52        42.66        11.16        35.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Overall, corporate operating netbacks for 2009 are currently expected to
be lower than 2008 due to anticipated lower commodity prices.
    Field operating netback for natural gas in the second quarter of 2009
decreased 85% to $0.85/mcf, compared to $5.77/mcf in the same 2008 period,
primarily reflecting weakening natural gas prices experienced. After including
hedging activities, field operating netback for natural gas in the three
months ended June 30, 2009 was $2.63/mcf compared to $4.62/mcf in the same
period in 2008.


    
    Field Operating Netback - Natural Gas (before hedging)
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($/mcf)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                        3.40         9.94         4.42         8.90
    Transportation              (0.21)       (0.34)       (0.20)       (0.11)
    Royalties                   (0.45)       (1.90)       (0.69)       (1.95)
    Production expense          (1.89)       (1.93)       (1.99)       (1.90)
    -------------------------------------------------------------------------
    Field operating netback      0.85         5.77         1.54         4.94
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Field operating netback for crude oil, condensate and NGLs averaged
$24.11/bbl in the second quarter of 2009, representing a 58% decrease from the
second quarter 2008 operating netback of $57.65/bbl. This compares to a 48%
decrease in the crude oil, condensate and NGLs sales price. After including
hedging activities, field operating netback for crude oil and NGLs in the 2009
second quarter was $24.11/boe compared to $37.08/boe in the same period in
2008.


    
    Field Operating Netback - Crude Oil, Condensate and NGLs (before hedging)
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($/bbl)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Sales                       53.55       103.14        45.16        86.19
    Transportation              (1.72)       (2.69)       (2.15)       (2.83)
    Royalties                  (11.13)      (21.71)      (10.23)      (17.43)
    Production expense         (16.59)      (21.09)      (18.47)      (19.65)
    -------------------------------------------------------------------------
    Field operating netback     24.11        57.65        14.31        46.28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    General and Administrative

    Net general and administrative ("G&A") expenses for the three and six
months ended June 30, 2009 were $2.6 million and $5.4 million, respectively,
compared to $4.5 million and $8.3 million, respectively for the same period in
2008. The decrease in the G&A expense for the 2009 periods compared to the
2008 periods is primarily due to targeted G&A reductions completed in January
2009. True streamlined its operations and reduced head office staffing levels
by one third in January 2009. The reduction in amounts of capitalized G&A for
the 2009 first and second quarter is consistent with a lower capital program.
On a per boe basis, G&A expenses for the three and six months ended June 30,
2009 were $2.90/boe and $3.03/boe, respectively, compared to $4.14/boe and
$3.56/boe, respectively, for the same period in 2008. In comparison, G&A
expenses were $2.8 million or $3.16/boe for the first quarter of 2009.


    
    General and Administrative Expenses
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except                         June 30,                  June 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Gross expenses              3,178        5,508        6,564       10,387
    Capitalized                  (106)        (692)        (212)      (1,199)
    Recoveries                   (491)        (324)        (929)        (926)
    -------------------------------------------------------------------------
    Net G&A expenses            2,581        4,492        5,423        8,262
    -------------------------------------------------------------------------
    Net G&A expenses,
     per unit ($/boe)            2.90         4.14         3.03         3.56
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Interest and Financing Charges

    True recorded $4.2 million of interest and financing charges for the
three months ended June 30, 2009 compared to $3.5 million in the same period
in 2008. For the six months ended June 30, 2009, interest and financing
charges totaled $7.5 million compared to $8.0 million for the same period in
2008. True's total net debt at June 30, 2009 of $196.7 million includes the
$82.1 million liability portion of convertible debentures, $120.2 million of
bank debt and the net balance of a working capital surplus. The convertible
debentures have a maturity date of June 30, 2011.


    
    Interest and Financing Charges
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except                         June 30,                  June 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Interest and financing
     charges                    4,218        3,487        7,520        8,003
    Interest and financing
     charges ($/boe)             4.75         3.21         4.21         3.45

    Debt to funds flow
     from operations ratio
     (annualized)(2)
    Total net debt(1) at
     quarter end              196,717      189,354      196,717      189,354
    Total net debt to
     periods funds flow
     from operations ratio
     (annualized)                4.6x         1.8x         5.7x         1.9x

    Net debt(1) (excluding
     convertible debentures)
     at quarter end           114,642      109,101      114,642      109,101
    Net debt to periods
     funds flow from
     operations ratio
     (annualized)(2)             2.7x         1.1x         3.3x         1.1x

    Debt to funds flow
     from operations
     ratio (trailing)(3)
    Total net debt to
     periods funds flow
     from operations ratio
     (trailing)                  3.2x         2.2x         3.2x         2.2x
    Net debt to periods
     funds flow from
     operations ratio
     (trailing)                  1.8x         2.0x         1.8x         2.0x
    -------------------------------------------------------------------------

    (1) Net debt includes the net working capital deficiency (excess) before
        short-term commodity contract assets and liabilities, current portion
        of long-term debt and short-term future tax assets and liabilities.
        Total net debt also includes the liability component of convertible
        debentures and excludes asset retirement obligations and the future
        income tax liability.
    (2) Total net debt and net debt to periods funds flow from operations
        ratio (annualized) is calculated based upon annualizing funds flow
        from operations for the three and six month periods ended June 30,
        2009, respectively.
    (3) Trailing periods funds flow from operations is based on the trailing
        twelve month period ended June 30, 2009 and 2008.
    

    These ratios for the remainder of 2009 are expected to be lower following
reduction to bank indebtedness associated with the Saskatchewan Divestiture
closing on July 30, 2009.

    Unit-Based Compensation

    Non-cash unit-based compensation expense for the six month period ended
June 30, 2009 was a recovery of $0.4 million compared to expense of $0.4
million in 2008. The decrease in the expense for the six month period ended
June 30, 2009 reflects a reduction in the estimated weighted average fair
value of incentive rights granted for more recent options, and a reduction to
the 2009 expense of $0.7 million for a reversal of prior year unit-based
compensation expense for 2009 forfeitures of unvested incentive rights.

    Depletion, Depreciation and Accretion

    Depletion, depreciation and accretion expense for the three months ended
June 30, 2009 was $27.4 million ($30.80/boe), compared to the $33.2 million
($30.61/boe) in the same period in 2008, which reflects lower production
volumes combined with reduced carrying costs in the 2009 period as compared to
2008.
    For the three months ended June 30, 2009, True has included $62.5 million
for future development costs in the depletion calculation and excluded from
the depletion calculation $26.6 million for undeveloped land and $37.9 million
for estimated salvage.


    
    Depletion, Depreciation and Accretion Costs
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except                         June 30,                  June 30,
     where noted)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Depletion and
     Depreciation              26,714       32,696       53,307       68,444
    Accretion                     660          513        1,322        1,068
    -------------------------------------------------------------------------
      Total                    27,374       33,209       54,629       69,512
    -------------------------------------------------------------------------
    Per unit ($/boe)            30.80        30.61        30.57        29.99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Income Taxes

    For the six months ended June 30, 2009, the Trust has recorded no capital
tax expense compared to $1.1 million expensed in the same period in 2008.
Prior to January 1, 2009, capital taxes were based on a combination of debt
and equity levels of the Trust at the end of the year in addition to a
resource surcharge component of Saskatchewan provincial taxes calculated as a
percentage of revenues. Effective for True's 2009 taxation year, this
Saskatchewan tax has been changed such that it is calculated solely as a
percentage of revenues. Accordingly, this Saskatchewan tax is grouped with
royalties on a prospective basis.
    Future income taxes arise from differences between the accounting and tax
bases of the Trust's assets and liabilities. For the six months ended June 30,
2009, the Trust recognized a future income tax recovery of $38.3 million
compared to a recovery of $23.3 million in the same period in 2008.
    Under our current structure, the operating entities may make interest and
royalty payments to the Trust, which transfers taxable income to the Trust to
eliminate income subject to corporate and other income taxes in the operating
entities. Alternatively, the Trust's operating company may claim discretionary
tax deductions to reduce taxable income. Under the SIFT tax (as defined and
referred to below), amounts transferred to the Trust could be taxable
beginning in 2011 as distributions will no longer be deductible for income tax
purposes. At that time, True could claim discretionary tax deductions in its
operating companies, reduce the income transferred to the Trust, and pay all
or a portion of distributions as a return of capital. Until 2011, under the
terms of its trust indenture, the Trust is required to distribute amounts at
least equal to its taxable income. In the event that the Trust has
undistributed taxable income in a taxation year (prior to 2011), an additional
special taxable distribution, subject to certain withholding taxes for
non-resident holders, would be required under the trust indenture.
    The SIFT tax is not expected to directly affect our cash flow levels and
distribution policies until 2011 at the earliest.

    Enactment of the Tax on Income Trusts

    On June 22, 2007, the legislation implementing a new tax (the "SIFT tax")
on publicly traded income trusts and limited partnerships, referred to as
"specified investment flow-through" ("SIFTs") entities (Bill C-52) received
Royal Assent. As a result, the SIFT tax was considered to be enacted for
accounting purposes in June 2007, which resulted in a $1.2 million future
income tax recovery amount being recorded in 2007 to reflect current temporary
differences between the book and tax basis of assets and liabilities expected
to be remaining in the Trust in 2011. The SIFT tax announcement and the
related future income tax recovery did not affect cash flow or distributions
and is not expected to affect distribution policies until 2011 at the
earliest.
    SIFTs are certain publicly traded income and royalty trusts and limited
partnerships including True. For SIFTs in existence on October 31, 2006 the
SIFT tax will be effective in 2011, unless certain rules related to "undue
expansion" are not adhered to. Under the guidance provided, True can increase
its equity by approximately $737 million between 2006 and 2011 without
prematurely triggering the SIFT tax.
    In June 2008, Bill C-50, which contained legislation to adjust the deemed
provincial component of the SIFT tax on distributions from SIFTs expected to
apply to the Trust commencing in 2011, received Royal Assent. Under
regulations now enacted, instead of basing the provincial component of the
SIFT tax on a flat rate of 13%, the provincial component will instead be based
on the general provincial corporate income tax rate in each province in which
the SIFT has a permanent establishment. For purposes of calculating this
component of the tax, the general corporate taxable income allocation formula
will be used. Specifically, the Trust's taxable distributions will be
allocated to provinces by taking the pro rata of:

    
    -   that proportion of the Trust's taxable distributions for the year
        that the Trust's wages and salaries in the province are of its total
        wages and salaries in Canada; and

    -   that proportion of the Trust's taxable distributions for the year
        that the Trust's gross revenues in the province are of its total
        gross revenues in Canada.
    

    Under the regulations, the Trust would be considered to have a permanent
establishment only in Alberta, where the provincial tax rate in 2011 is
expected to be 10%. As of March 4, 2009, the regulations are substantively
enacted.
    On July 14, 2008, the Department of Finance released proposed amendments
(the "Conversion Rules") to the Income Tax Act (Canada) to facilitate the
conversion of existing SIFTs into corporations. In general, the proposed
amendments will permit a conversion to be tax deferred for both the
unitholders and the SIFT if completed before 2013. These rules were
subsequently revised and introduced as part of Bill C-10 as part of the Budget
Implementation Act, 2009 on February 6, 2009 and received Royal Assent on
March 12, 2009.
    The True Board of Directors and Management continue to review the impact
of this tax on business strategy as well as the Conversion Rules in
considering alternatives available. At the present time, True believes some or
all of the following actions will or could result due to the enactment of the
SIFT tax:

    
    -   If structural or other similar changes are not made if and to the
        extent that the Trust makes distributions to unitholders, the
        distribution yield net of the SIFT tax in 2011 and beyond to taxable
        Canadian investors will remain approximately the same; however, the
        distribution yield to tax-deferred Canadian investors (RRSPs, RRIFs,
        pension plans, etc.) would fall by an estimated 26.5 percent in 2011
        and 25.0 percent in 2012 and beyond. For U.S. investors, the
        distribution yield net of the SIFT and withholding taxes would fall
        by an estimated 25.3 percent in 2011 and 25.1 percent in 2012 and
        beyond;
    -   If and to the extent that the Trust makes distributions to
        unitholders, a portion of True's cash flow could be allocated to the
        payment of the SIFT tax, or other forms of tax, and would not be
        available for distribution or re-investment;
    -   True could convert to a corporate structure to facilitate investing a
        higher proportion or all of its cash flow in exploration and
        development projects. Such a conversion and change to capital
        programs could result in a significant continued elimination of
        distributions and/or dividends;
    -   True might determine that it is more economic to remain in the trust
        structure, at least for a period of time, and shelter its taxable
        income using discretionary tax deductions and, if and to the extent
        that it reinstates the payments of distributions, pay all or a
        portion of its distributions (if any) on a return of capital basis,
        likely at a lower payout ratio.
    

    The Trust is reviewing all organizational structures and alternatives to
minimize the impact of the SIFT tax on our unitholders. While there can be no
assurance that the negative effect of the tax can be minimized or eliminated,
True and its advisors will continue to review these issues.
    As at June 30, 2009, the operating subsidiaries and the Trust itself have
a total net future income tax liability balance of $5.7 million. Canadian GAAP
requires that a future income tax liability be recorded when the book value of
assets exceeds the balance of tax pools.
    At June 30, 2009, the Trust and operating subsidiaries of the Trust had
approximately $476 million in tax pools available for deduction against future
income as follows:


    
    -------------------------------------------------------------------------
                                                      Operating
    ($000s)                                  Trust subsidiaries        Total
    -------------------------------------------------------------------------
    Intangible resource pools               15,000      306,000      321,000
    Undepreciated capital cost                   -      123,000      123,000
    Loss carryforwards (expire through 2027)     -       30,000       30,000
    Unit issue costs                         2,000            -        2,000
    -------------------------------------------------------------------------
                                            17,000      459,000      476,000
    -------------------------------------------------------------------------
    

    Following the receipt of net proceeds from the Divestiture closing on
July 30, 2009, the Trust and operating subsidiaries of the Trust are
anticipated to have approximately $391 million in tax pools for deduction
against future income.

    Net Loss and Funds Flow from Operations

    True generated funds flow from operations of $10.8 million ($0.14 per
diluted unit) for the three month period ended June 30, 2009, down 59% from
$26.3 million ($0.33 per diluted unit) for the second quarter of 2008. The
decrease in funds flow for the 2009 period compared to the same period in 2008
was primarily the result of a significant decrease in commodity prices, in
combination with lower sales volumes. Funds flow from operations for the
second quarter of 2009 increased 66% from first quarter 2009 funds flow from
operations of $6.5 million. Funds flow from operations for the six month
period ended June 30, 2009 was $17.3 million ($0.22 per diluted unit), down
from the $50.5 million ($0.64 per diluted unit) for the same period in 2008.
    True maintains a commodity price risk management program to provide a
measure of stability to funds flow from operations. Unrealized mark-to-market
gains or losses are non-cash adjustments to the current fair market value of
the contract over its entire term and are included in the calculation of net
loss.
    True generated a net loss of $99.7 million ($1.27 per diluted unit) in
the second quarter of 2009 compared to a net loss of $21.4 million ($0.27 per
diluted unit) in 2008. The increase in the net loss is primarily a result of
the $114.2 million non-cash accounting loss recorded on the assets held for
sale.


    
    Funds Flow From Operations and Net Loss
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except per                     June 30,                  June 30,
     unit amounts)               2009         2008         2009         2008
    -------------------------------------------------------------------------

    Funds flow from
     operations                10,765       26,304       17,254       50,537
      Basic ($/unit)             0.14         0.33         0.22         0.64
      Diluted ($/unit)           0.14         0.33         0.22         0.64

    Net loss                  (99,715)     (21,374)    (108,771)     (39,995)
      Basic ($/unit)            (1.27)       (0.27)       (1.39)       (0.50)
      Diluted ($/unit)          (1.27)       (0.27)       (1.39)       (0.50)
    -------------------------------------------------------------------------


    Reconciliation of Cash Flow from Operating Activities and Funds Flow from
    Operations
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except per                     June 30,                  June 30,
     unit amounts)               2009         2008         2009         2008
    -------------------------------------------------------------------------

    Cash flow from
     operating activities       6,467       19,892       15,778       37,735

    Asset retirement costs
     incurred                     313          123        1,051          712

    Change in non-cash
     working capital            3,985        6,289          425       12,090
    -------------------------------------------------------------------------

    Funds flow from
     operations                10,765       26,304       17,254       50,537
    -------------------------------------------------------------------------

    Capital Expenditures

    True planned for a very modest capital program for the first half of 2009.
Second quarter 2009 capital spending was $1.2 million, as compared to $4.1
million for the same period in 2008.


    Capital Expenditures
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------
    Lease acquisitions
     and retention                225          415          308          965
    Geological and
     geophysical                   40          (55)          51           12
    Drilling and completion
     costs                        141        2,382        1,447        9,157
    Facilities and
     equipment                    622          734        1,750        1,626
    -------------------------------------------------------------------------
      Exploration and
       development(1)           1,028        3,475        3,556       11,759
    Corporate and property
     acquisitions                 123          605          351          971
    -------------------------------------------------------------------------
      Total capital
       expenditures - cash      1,151        4,080        3,907       12,730
    Property dispositions
     - cash                    (8,289)     (38,530)      (8,281)     (44,318)
    -------------------------------------------------------------------------
      Total net capital
       expenditures - cash     (7,138)     (34,450)      (4,374)     (31,588)
    -------------------------------------------------------------------------
    Other - non-cash(2)        (1,107)      (2,521)      (1,221)      (2,714)
    -------------------------------------------------------------------------
      Total net capital
       expenditures(1)         (8,245)     (36,971)      (5,595)     (34,302)
    -------------------------------------------------------------------------

    (1) Excludes capitalized costs related to asset retirement obligation
        expenditures incurred during the year.
    (2) Other includes non-cash adjustments for current period's asset
        retirement obligations and unit based compensation capitalized.
    

    The $1.2 million capital program for the three months ended June 30,
2009, was financed entirely with funds flow from operations.
    Based on the current economic conditions and True's operating forecast
for the remainder of 2009, the Trust has budgeted a 2009 capital program of
$15 million and is anticipating capital expenditures of approximately $11.1
million for the remainder of 2009. True's drilling program for the third and
fourth quarters has commenced with plans to participate in up to 20 wells
operated by True to take advantage of the Alberta Government Royalty incentive
program. True's drilling program is targeting oil in Mantario, Saskatchewan
and natural gas in Alberta including up to three Notikewan horizontal well
tests in West Central Alberta.

    Land

    True's net mineral leases in Alberta, British Columbia and Saskatchewan
as of June 30, 2009 decreased to approximately 338,000 net acres from 358,000
net acres established on March 31,2009. Upon closing of the recent
dispositions, True continues to have approximately 274,000 net acres of
undeveloped land with 320 exploitation drilling opportunities identified
representing over 5 years of drilling inventory.

    Ceiling Test

    The Trust calculates a ceiling test quarterly and annually to place a
limit on the aggregate carrying value of its capitalized costs, which may be
amortized against revenues of future periods. The ceiling test is performed in
accordance with the requirements of the Canadian Institute of Chartered
Accountants ("CICA") AcG-16 "Oil and Gas Accounting - Full Cost", a two step
process.
    The Trust performed a ceiling test calculation at June 30, 2009 resulting
in undiscounted cash flows from proved reserves and the undeveloped properties
not exceeding the carrying value of oil and gas assets. Consequently, True
performed stage two of the ceiling test assessing whether discounted future
cash flows from production of proved plus probable reserves plus the carrying
cost of undeveloped properties, net of any impairment allowance, exceeds the
carrying value of its petroleum and natural gas properties. No impairment in
oil and gas assets was identified as at June 30, 2009.
    The ceiling test calculation will be updated in 2009 on a quarterly and
annual basis based upon the latest available data, including but not limited
to an updated annual external reserve engineering report which incorporates a
full evaluation of reserves or internal reserve updates at quarterly periods,
and the latest commodity pricing deck. Estimating reserves is very complex,
requiring many judgments based on available geological, geophysical,
engineering and economic data. Changes in these judgments could have a
material impact on the estimated reserves. These estimates may change, having
either a negative or positive effect on net earnings as further information
becomes available and as the economic environment changes.

    Asset Retirement Obligations

    As at June 30, 2009, the Trust has recorded an Asset Retirement
Obligation ("ARO") of $33.7 million, compared to $26.3 million at June 30,
2008 for future abandonment and reclamation of the Trust's properties. For the
six months ended June 30, 2009, the overall ARO balance remained approximately
the same as a result of accretion expense of $1.3 million, $1.0 million net
changes in estimates and liabilities incurred on development activities,
offset by $1.3 million of liabilities released on dispositions and $1.0
million of liabilities settled. The asset retirement obligation associated
with the Saskatchewan Divestiture of $9.6 million has been classified as a
current liability.

    Distributions

    For the six months ended June 30, 2009 Trust declared distributions as
follows:


    
    -------------------------------------------------------------------------
    ($000s, except per unit amount)                Distribution
    Six months ended June 30, 2009                     Per Unit        Total
    -------------------------------------------------------------------------

    Distributions declared                          $      0.02  $     1,570
    -------------------------------------------------------------------------

    Distribution Paid History(1)

    Distributions comprise a taxable portion and a return of capital portion
(tax deferred). The return of capital component reduces the cost basis of the
trust units held, as described below. For additional information, please see
our website at www.trueenergytrust.com.


    -------------------------------------------------------------------------
                                     Distributions      Taxable    Return of
    Calendar Year                         per unit      Portion      Capital
    -------------------------------------------------------------------------
    2005 (two months)(2)               $     0.480  $     0.456  $     0.024
    2006                               $     2.640  $     2.033  $     0.607
    -------------------------------------------------------------------------
    Cumulative to Dec. 31, 2006        $     3.120  $     2.489  $     0.631
    -------------------------------------------------------------------------
    2007 year                          $     0.960  $     0.960            -
    -------------------------------------------------------------------------
    Cumulative to Dec. 31, 2007        $     4.080  $     3.449  $     0.631
    -------------------------------------------------------------------------
    2008 year                          $     0.460  $     0.460            -
    -------------------------------------------------------------------------
    Cumulative to December 31, 2008    $     4.540  $     3.909  $     0.631
    -------------------------------------------------------------------------
    2009 year to date (one month)(3)   $     0.020
    -----------------------------------------------
    Cumulative to June 30, 2009        $     4.560
    -----------------------------------------------

    (1) Applies to unitholders who are residents of Canada and hold their
        trust units as capital property.
    (2) Based upon the distributions paid in the 2005 calendar year, after
        the November 2, 2005 Arrangement with TKE Energy Trust.
    (3) It is currently estimated that the approximate taxable portion of the
        January 2009 distribution to Canadian unitholders will be 100%.

        In consultation with its U.S. tax advisors, True believes that its
        Trust units should be "qualified dividends" for U.S. federal
        purposes. As such, the portion of distributions made during 2009 that
        are considered dividends for U.S. federal purposes should qualify for
        the reduced rate of tax applicable to long-term capital gains.
        Unitholders or potential unitholders should consult their own legal
        or tax advisors as to their particular income tax consequences of
        holding True units. Please review our February 19, 2009 press release
        addressing this.

    Monthly Distributions

    Actual distributions paid and declared per Trust unit along with relevant
payment dates for 2009 to date are as follows:


    -------------------------------------------------------------------------
                                                                Distribution
    Ex-distribution Date   Record Date          Payment Date        per unit
    -------------------------------------------------------------------------
    December 29, 2008      December 31, 2008    January 15, 2009        0.02
    January 28, 2009       January 30, 2009     February 17, 2009       0.02
    -------------------------------------------------------------------------
    

    During the first six months of 2009, funding requirements for
distributions declared was 9% of funds flow from operations.
    As announced on March 17, 2009, due to the continued deterioration in
economic conditions, including the significant decline in crude oil and
natural gas prices, a weakening outlook for natural gas demand and heightened
risk in the credit markets, True has deemed it prudent to suspend
distributions, until further notice, to maintain corporate liquidity during
the current financial turmoil and prevailing commodity price environment.
Distributions remain suspended until such time as the Board of Directors
determines otherwise. Pursuant to True's credit facility, distributions to
unitholders (other than by way of the issuance of Trust units) require the
approval of True's lenders if the funds to pay such distributions are received
from True Energy Inc. ("True Energy").

    Foreign Ownership Update

    Based on information from Trust records and information provided by
intermediaries holding Trust units for others, the Trust estimates that, as of
July 20, 2009 approximately 25 percent of unitholders are non-Canadian
residents with the remaining 75 percent being Canadian residents.
    In order that the Trust maintains its status as a "mutual fund trust"
under the Income Tax Act (Canada), certain provisions of the Income Tax Act
(Canada) require that the trust not be established or maintained primarily for
the benefit of non-residents of Canada ("non-residents"). The trust indenture
for the Trust provides that if the Trust or its administrator becomes aware
that the activities of the Trust and ownership of Trust units by non-residents
may threaten the status of the Trust under the Income Tax Act (Canada) as a
"unit trust" or "mutual fund trust", the Trust is authorized to take action as
may be necessary to maintain the status of the Trust as a unit trust and a
mutual fund trust, including the imposition or restrictions on the issuance by
the Trust, or the transfer by any unitholder, of Trust units to a
non-resident.

    Liquidity and Capital Resources

    As an oil and gas business, the Trust has a declining asset base and
therefore relies on ongoing development and acquisitions to replace production
and add additional reserves. Future oil and natural gas production and
reserves are highly dependent on the success of exploiting the Trust's
existing asset base and in acquiring additional reserves. To the extent the
Trust is successful or unsuccessful in these activities; funds flow could be
increased or reduced.
    Global financial markets continued to remain fragile during the first and
second quarters of 2009. The economic crisis continues to put a strain on
credit and equity markets as characterized by a decline in liquidity and
higher borrowing costs. Access to capital markets has become constrained and
significantly more expensive for the Trust along with other oil and gas
entities. The current global economic environment has continued to create
volatility in commodity prices, tempered somewhat by the growing US to
Canadian dollar exchange rate. Given the continuing uncertain economic
conditions, the Trust has maintained a 2009 capital budget of $15 million and
has suspended distributions until further notice. The Trust continues to
monitor forecasted debt levels to manage its operations within forecasted cash
flow. In addition, the Trust will continue to monitor developments within the
global economic environment to consider the impacts on current or future
lending arrangements.
    Liquidity risk is the risk that the Trust will not be able to meet its
financial obligations as they fall due. The Trust actively manages its
liquidity through daily and longer-term cash, debt and equity management
strategies. Such strategies encompass, among other factors: having adequate
sources of financing available through its bank credit facilities, estimating
future cash generated from operations based on reasonable production and
pricing assumptions, analysis of economic hedging opportunities, and
maintaining sufficient cash flows for compliance with debt covenants. The
Trust is fully compliant with all of its debt covenants.
    The Trust generally relies on operating cash flows and its credit
facilities to fund capital requirements and provide liquidity. Future
liquidity depends primarily on cash flow generated from operations, existing
credit facilities and the ability to access debt and equity markets. From time
to time, the Trust accesses capital markets to meet its additional financing
needs and to maintain flexibility in funding its capital programs. There can
be no assurance that debt or equity financing, or cash generated by operations
will be available or sufficient to meet these requirements or for other
corporate purposes or, if debt or equity financing is available, that it will
be on terms acceptable to the Trust. The inability of the Trust to access
sufficient capital for its operations could have a material adverse effect on
the Trust's business financial condition, results of operations and prospects.
    Credit risk is the risk of financial loss to the Trust if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Trust's trade receivables from
joint venture partners, petroleum and natural gas marketers, and financial
derivative counterparties.
    A substantial portion of the Trust's accounts receivable are with
customers and joint interest partners in the petroleum and natural gas
industry and are subject to normal industry credit risks. The Trust sells
substantially all of its production to eight primary purchasers under standard
industry sale and payment terms. Purchasers of the Trust's natural gas, crude
oil and natural gas liquids are subject to a periodic internal credit review
to minimize the risk of non-payment. The Trust has continued to closely
monitor and reassess the creditworthiness of its counterparties, including
financial institutions. This has resulted in the Trust reducing or mitigating
its exposures to certain counterparties where it is deemed warranted and
permitted under contractual terms.
    The Trust may be exposed to third party credit risk through its
contractual arrangements with its current or future joint venture partners,
marketers of its petroleum and natural gas production and other parties. In
the event such entities fail to meet their contractual obligations to the
Trust, such failures may have a material adverse effect on the Trust's
business, financial condition, results of operations and prospects. In
addition, poor credit conditions in the industry and of joint venture partners
may impact a joint venture partner's willingness to participate in the Trust's
ongoing capital program, potentially delaying the program and the results of
such program until the Trust finds a suitable alternative partner.
    During 2009, the Trust has been executing several strategies for dealing
with these uncertain times.
    True's corporate thrust in 2009 is to continue to improve the Trust's
balance sheet by reducing total outstanding debt and streamlining its
operating cost structure. In 2009, True has limited its capital program to $15
million in an effort to maintain production and increase financial flexibility
to fund operations. This compares to the $43 million capital program employed
in 2008. As a consequence of a reduced capital program and strategic
divestitures completed in 2008 and 2009, total net debt levels decreased by
$42.7 million from $239.4 million at March 31, 2008 to $196.7 million at June
30, 2009. Total net debt excludes unrealized commodity contract assets and
liabilities, future income taxes and asset retirement obligations.
    On July 30, 2009, the Trust successfully completed the divestiture of the
majority of its Saskatchewan assets for net proceeds, after purchase
adjustments of $86 million. These proceeds have been used to reduce the
Trust's bank indebtedness. On July 30, 2009, in conjunction with completion of
the Saskatchewan Divestiture, True negotiated a new banking syndicate
commitment to replace the existing bank facility, subject to finalization and
execution of a mutually acceptable credit agreement, that will provide True
with a credit facility of $85 million. The facility will consist of a $10
million demand operating facility provided by one Canadian bank and a $75
million extendible revolving term credit facility syndicated by one Canadian
chartered bank and one Canadian financial institution. The revolving period on
the revolving term credit facility will end on June 30, 2010, unless extended
for a further 364 day period. Should the facilities not be renewed they will
convert to 366 day non-revolving term facilities on the renewal date. The
borrowing base will be subject to renewal on March 31, 2010.
    The strategic dispositions accomplished in the year allow the Trust to
progress forward with substantially improved financial flexibility.
    Combined funding requirements for the January distribution declared and
True's capital expenditures represented 11% and 32% of funds flow from
operations in the three and six months ended June 30, 2009, respectively.
    As a result of the continued deterioration in economic conditions,
including the significant decline in crude oil prices seen earlier in 2009, a
weakening outlook for natural gas demand and a heightened risk in the credit
markets, True has deemed it prudent to suspend distributions to maintain
corporate liquidity during the current financial turmoil and prevailing
commodity price environment. Distributions remain suspended until such time as
the Board of Directors determines otherwise. Pursuant to True's credit
facility, distributions to unitholders (other than by way of the issuance of
Trust units) generally require the approval of True's lenders if the funds to
pay such distributions are received from True Energy.
    True continues to tighten its cost structure in the current economically
challenging climate with forecasted cuts from 2008 levels of 30% to total
operating expenses which includes G&A and lease operating costs in 2009. The
results through the first half of 2009 are on track.
    True's operating forecast for 2009 which assumes a CAD$/US$ exchange rate
of $0.90, a WTI oil price of US$70.00/bbl, AECO natural gas price of
CAD$4.50/GJ ($4.95/mcf) and production volumes of 6,500 boe/d for August to
December 2009, generates cash flow from operations of $38 million. Based on
the foregoing assumptions and assuming 2009 distributions of $1.6 million
coupled with the planned capital budget of $15 million the Trust would utilize
approximately 44% of the Trust's forecasted funds flow from operations.
    As an added layer of protection of its cash flow forecast, upon
completion of the divestitures, True's hedging represents approximately 65% of
its estimated natural gas production for the third and fourth quarter of 2009
at an average price of $6.60 CAD per GJ ($7.26/mcf) and 21.5% of the first
quarter of 2010 through to the second quarter of 2010 at an average of $7.25
CAD per GJ ($7.96/mcf). In addition, 500 bbl/d of oil for the third and fourth
quarter of 2009 are hedged by way of a costless collar of $52.30 CAD x $80.70
CAD. True maintains an active commodity price risk management program focused
on maintaining sufficient cash flow to fund its operations.
    Pursuant to True's existing credit facility, distributions from True
Energy to the Trust during the remaining term of the facilities is restricted
other than: (i) distributions by True Energy to the Trust to permit the
regular semi-annual interest payments by the Trust on June 30, 2009, December
31, 2009 and June 30, 2010 in respect of the convertible debentures issued by
the Trust on or before April 1, 2009; and (ii) distributions from True Energy
to the Trust to permit cash distributions in respect of Trust unit
redemptions, if and only if and to the extent that the total cash amount
payable in respect of all unit redemptions in a month does not exceed
$250,000; provided in each case that the foregoing distributions shall not be
permitted if a borrowing base shortfall has occurred and is continuing, a
demand for payment has been made and remains outstanding, a default or an
event of default is then in existence or could reasonably be expected to
result from such distribution, or the distribution could impair the ability of
True Energy to satisfy its covenants and obligations to the lenders under the
credit facility.
    There are currently no commitments, other than those associated with the
Trust's credit facilities outlined above, its 2009 capital program of $11.1
million for the remaining second half of 2009, and the off-balance sheet
arrangements outlined below. The Trust continually monitors its capital
spending program in light of the recent volatility with respect to commodity
prices and Canadian dollar exchange rates with the aim of ensuring the Trust
will be able to meet future anticipated obligations incurred from normal
ongoing operations with funds flow from operations and draws on the Trust's
syndicated facility, as necessary. As announced on March 17, 2009, Trust unit
distributions have been suspended until further notice.
    On June 15, 2006 the Trust completed a bought deal public offering of
86,250 7.5% convertible unsecured subordinated debentures at a price of $1,000
per debenture for aggregate gross proceeds of $86,250,000. The debentures have
a face value of $1,000 per debenture and a maturity date of June 30, 2011. The
debentures bear interest at an annual rate of 7.50% payable semi-annually on
June 30 and December 31 in each year commencing December 31, 2006. The
debentures are convertible at anytime at the option of the holders into Trust
units of the Trust at a conversion price of $16.00 per trust unit. The Trust
will have the right to redeem all or a portion of the debentures at a price of
$1,050 per debenture after June 30, 2009 and on or before June 30, 2010 and at
a price of $1,025 per debenture after June 30, 2010 and before the maturity
date. Upon maturity or redemption of the debentures, the Trust may, subject to
notice and regulatory approval, pay the outstanding principal and premium (if
any) on the debentures in cash or through the issue of additional Trust units
at 95% of the weighted average trading price of the Trust units.
    As at July 22, 2009, the Trust had outstanding a total of 4,377,132
incentive units exercisable at an average exercise price of $2.36 per unit,
294,026 exchangeable shares (convertible, as at July 22, 2009 into an
aggregate of 312,467 Trust units, subject to further adjustments based on
distributions made on Trust units), $86.25 million principal amount of
debentures convertible into trust units (at a conversion price of $16.00 per
Trust unit) and 78,496,581 Trust units.

    
    Commitments

    Off-Balance Sheet Arrangements
    

    The Trust has certain lease agreements, including primarily office space
leases, which were entered into in the normal course of operations. All leases
have been treated as operating leases whereby the lease payments are included
in operating expenses or G&A expenses depending on the nature of the lease. No
asset or liability value has been assigned to these leases in the balance
sheet as of June 30, 2009.

    Business Prospects and 2009 Year Outlook

    The Trust continues to develop its core assets and conduct some
exploration programs utilizing its large inventory of geological prospects. In
addition, the Trust will continue to explore potential acquisition
opportunities. Currently, the Trust's producing properties are located in
Saskatchewan, Alberta and British Columbia.
    Upon closing of the recent dispositions, True continues to have
approximately 274,000 net acres of undeveloped land with 320 exploitation
drilling opportunities identified representing over 5 years of drilling
inventory.
    True continues to monitor its cost structure in the current economically
challenging climate and as a result, completed G&A reductions in January 2009.
True streamlined its operations and reduced head office staffing levels by one
third compared to 2008 levels. True's capital program for 2009 remains at $15
million. Production volumes are estimated to average 6,500 boe/d through
August to December 2009 as a result of recent dispositions, with an expected
2009 average production rate of 7,000 boe/d.
    As an added layer of protection of its cash flow forecast, upon
completion of divestitures, True's hedging represents approximately 65% of its
estimated natural gas production for the third and fourth quarter of 2009 at a
combined fixed price of $6.60 CAD per GJ ($7.26/mcf ) and 21.5% of the first
quarter of 2010 through to the second quarter of 2010 at an average of $7.25
CAD per GJ ($7.96/mcf). In addition, 500 bbl/d of oil for the third and fourth
quarter of 2009 are hedged by way of a costless collar of $52.30 CAD x $80.70
CAD.
    True's operating forecast for 2009 which assumes a CAD$/US$ exchange rate
of $0.90, a WTI oil price of US$70.00/bbl, AECO natural gas price of
CAD$4.50/GJ ($4.95/mcf) and production volumes of 6,500 boe/d for August to
December 2009, generates cash flow from operations of $38 million. Based on
the foregoing assumptions and assuming 2009 distributions of $1.6 million
coupled with the planned capital budget of $15 million the Trust would utilize
approximately 44% of the Trust's forecasted funds flow from operations.
    True's 2009 capital program is not expected to exceed $15 million and
will limit the second half 2009 capital program to $11.1 million. Given the
nature of True's lands and their inherent advantage of year round access, True
currently plans to spread its 2009 capital program evenly through the full
year of 2009 to take advantage of reduced service costs during non-peak times.
True will continue to focus on opportunities to increase its farm-out activity
in non-core areas. If the 2009 outlook for commodity prices improves, True
would plan to increase its capital spending later in 2009 dependant upon cash
flow.
    On July 30, 2009 True announced that it has negotiated a new banking
syndicate commitment to replace its existing bank facility, subject to
finalization and execution of a mutually acceptable credit agreement, with a
revolving period of June 30, 2010 and a maturity date of June 2011. The next
borrowing base review under the new facility will be scheduled for March 31,
2010.

    
    Financial Reporting Update

    Goodwill and intangible assets
    

    In February 2008, the CICA issued a new accounting standard, Section 3064
- Goodwill and Intangible Assets, which replaces Section 3062 - Goodwill and
Other Intangible Assets, and Section 3450 - Research and Development costs.
The new section establishes standards for the recognition, measurement and
disclosure of goodwill and intangible assets. The section was effective for
the Trust beginning January 1, 2009. Application of the new section does not
currently have any impact on the Trust's financial statements.

    International Financial Reporting Standards ("IFRS")

    On February 13, 2008 the CICA Accounting Standards Board announced that
Canadian public reporting issuers will be required to report under
International Financial Reporting Standards ("IFRS"), which will replace
Canadian generally accepted accounting principles ("GAAP") for years beginning
on or after January 1, 2011. The transition date of January 1, 2011 will
require restatement for comparative purposes, of amounts reported by the Trust
for its year ended December 31, 2010, and of the opening balance sheet as at
January 1, 2010. An internal project team has been set up to manage this
transition and to ensure successful implementation within the required time
frame. Current economic conditions may require re-allocation of resources
available for the IFRS conversion project. The Trust has completed a high
level analysis to determine the areas impacted by the conversion and is
assessing the financial reporting impacts on the adoption of IFRS and, at this
time, the impact on future financial position and results of operations has
not yet been determined. On July 23, 2009 the IASB published amendments to
IFRS 1 - "First-time Adoption of International Financial Reporting Standards"
which will allow an election to measure oil and gas assets at the date of
transition to IFRS at the amount determined under Canadian GAAP. The Trust
anticipates a significant increase in disclosures resulting from the adoption
of IFRS and is continuing to assess the level of this disclosure required and
any necessary systems changes to gather and process the information. We will
continue to monitor any changes in the adoption of IFRS and will update plans
as necessary.

    Business Risks and Uncertainties

    The reader is advised that True continues to be subject to various types
of business risks and uncertainties as described in the Management, Discussion
and Analysis for the year ended December 31, 2008 and the Trust's Annual
Information Form for the year ended December 31, 2008.

    Critical Accounting Estimates

    The reader is advised that the critical accounting estimates, policies,
and practices as described in the Trust's Management's Discussion and Analysis
for the year ended December 31, 2008 continue to be critical in determining
True's unaudited financial results as at June 30, 2009. There were no changes
in accounting policies for the six month period ended June 30, 2009, except
for the adoption of a new accounting standard, Section 3064 - Goodwill and
Intangible Assets, which does not have any impact on the Trust's financial
statements.

    Legal, Environmental Remediation and Other Contingent Matters

    The Trust reviews legal, environmental remediation and other contingent
matters to both determine whether a loss is probable based on judgment and
interpretation of laws and regulations and determine that the loss can
reasonably be estimated. When the loss is determined, it is charged to
earnings. The Trust's management monitor known and potential contingent
matters and make appropriate provisions by charges to earnings when warranted
by the circumstances.

    
    Controls and Procedures

    Disclosure Controls and Procedures
    

    The Trust's Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, disclosure
controls and procedures to provide reasonable assurance that: (i) material
information relating to the Trust is made known to the Trust's Chief Executive
Officer and Chief Financial Officer by others, particularly during the period
in which the annual and interim filings are being prepared; and (ii)
information required to be disclosed by the Trust in its annual filings,
interim filings or other reports filed or submitted by it under securities
legislation is recorded, processed, summarized and reported within the time
period specified in securities legislation.

    Internal Control over Financial Reporting

    The Trust's Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, internal control
over financial reporting to provide reasonable assurance regarding the
reliability of the Trust's financial reporting and the preparation of
financial statements for external purposes in accordance with the Canadian
GAAP.
    The Trust is required to disclose herein any change in the Trust's
internal control over financial reporting that occurred during the period
beginning on April 1, 2009 and ended on June 30, 2009 that has materially
affected, or is reasonably likely to materially affect, the Trust's internal
control over financial reporting. No material changes in the Trust's internal
control over financial reporting were identified during such period, that has
materially affected, or are reasonably likely to materially affect, the
Trust's internal control over financial reporting.
    It should be noted that a control system, including the Trust's
disclosure and internal controls and procedures, no matter how well conceived,
can provide only reasonable, but not absolute, assurance that the objectives
of the control system will be met and it should not be expected that the
disclosure and internal controls and procedures will prevent all errors or
fraud.

    Standardized Distributable Cash

    The Canadian Securities Administrators revised and re-issued in July 2007
National Policy 41-201 "Income Trusts and Other Indirect Offerings", which
includes disclosures regarding distributable cash for Income Trusts. Further,
the Canadian Institute of Chartered Accountants ("CICA") issued the
Interpretive Release "Standardized Distributable Cash in Income Trusts and
Other Flow-Through Entities: Guidance on Preparation and Disclosure" (the
"Release"). In this guidance, sustainability concepts are discussed and
standardized distributable cash is defined as cash flow from operating
activities less adjustments for productive capacity maintenance, long-term
unfunded contractual obligations and the effect of any foreseeable financing
matters, related to debt covenants, which could impair True's ability to pay
distributions or maintain productive capacity. This Management Discussion and
Analysis is in all material respects in accordance with the recommendations
provided in CICA's Release and NP 41-201.


    
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    ($000s, except per unit                June 30,                  June 30,
     amounts and ratios)         2009         2008         2009         2008
    -------------------------------------------------------------------------

    Net loss                  (99,715)     (21,374)    (108,771)     (39,995)
    -------------------------------------------------------------------------

    Cash flow from operating
     activities                 6,467       19,892       15,778       37,735
    Productive capacity
     maintenance(1)            (1,028)      (3,654)      (3,556)     (12,107)
    -------------------------------------------------------------------------
    Standardized distributable
     cash                       5,439       16,238       12,222       25,628
    Proceeds on sale of
     property, plant and
     equipment                  8,289       38,530        8,281       44,318
    Corporate and property
     acquisition and other
     capital expenditures        (123)        (426)        (351)        (623)
    Repurchase of trust units
     under normal course
     issuer bid                     -         (596)           -         (596)
    Bank borrowings (debt
     repayment) and working
     capital changes and
     other                    (13,605)     (44,241)     (18,582)     (49,715)
    -------------------------------------------------------------------------
    Cash Distributions
     declared                       -        9,505        1,570       19,012
    Accumulated distributions,
     beginning of period      253,071      224,674      251,501      215,167
    -------------------------------------------------------------------------
    Accumulated distributions,
     end of period            253,071      234,179      253,071      234,179
    -------------------------------------------------------------------------
    Standardized distributable
     cash per unit - basic      $0.09        $0.21        $0.16        $0.32
    Standardized distributable
     cash  per unit - diluted   $0.09        $0.21        $0.16        $0.32
    -------------------------------------------------------------------------
    Standardized distributable
     cash payout ratio(2)         N/A         0.59         0.13         0.74
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributions declared per
     unit for outstanding units
     in the period                  -        $0.12        $0.02        $0.24
    Accumulated distributions
     per unit, beginning of
     period                      4.56         4.20         4.54         4.08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accumulated distributions
     per unit, end of period    $4.56        $4.32        $4.56        $4.32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Excess (shortfall) of net
     income over cash
     distributions declared   (99,715)     (30,879)    (110,341)     (59,007)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Excess of cash flow from
     operating activities over
     cash distributions
     declared                   6,467       10,387       14,208       18,723
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Please refer to the discussion of productive capacity maintenance
        below
    (2) Represents cash distributions declared divided by standardized
        distributable cash
    

    True strives to fund both distributions (if any) and maintenance capital
primarily from funds flow from operations.
    Productive capacity is the amount of capital funds required in a period
for an enterprise to maintain its ability to generate future cash flow from
operating activities at a constant level. As commodity prices can be volatile
and short-term variations in production levels are often experienced in the
oil and gas industry, True defines production capacity as production on a
barrel of oil equivalent basis. A quantifiable measure for these short-term
variations is not objectively determinable or verifiable due to various
factors including the inability to distinguish natural production declines
from the effect of production additions resulting from capital and
optimization programs, and the effect of temporary production interruptions.
As a result, the adjustment for productive capacity maintenance in True's
calculation of standardized distributable cash is True's capital expenditures
excluding the cost of any asset acquisition, corporate asset acquisitions or
proceeds of any asset disposition. True believes that its capital programs
based on 40% to 60% of forecasted funds flow including its current view of
True's assets and opportunities and True's outlook for commodity prices and
industry conditions in the medium term, should be sufficient to maintain
True's productive capacity in the medium term. True sets its hurdle rates for
evaluating potential development and optimization projects according to these
parameters. Due to the risks inherent in the oil and natural gas industry,
particularly True's exploration and development activities and inherent
variations in commodity prices, there can be no assurance that capital
programs, whether limited to excess of cash flow over distributions or not,
will be sufficient to maintain or increase True's production levels or cash
flow from operating activities. True's capital expenditures and production can
be impacted by the timing of the capital program and spring break up
associated with certain operating areas of its properties. As True strives to
maintain sufficient credit facilities and appropriate levels of bank debt,
this seasonality is not expected to influence True's distribution policies.
    True's calculation of standardized distributable cash has no adjustment
for long-term unfunded contractual obligations. True's only material long-term
unfunded contractual obligation at this time is for asset retirement
obligations. True's abandonment obligations are being funded on an annual
basis with cash flow from operating activities. Cash flow from operating
activities, used in our standardized distributable cash calculation, includes
a deduction for abandonment expenditures incurred in the year. True regularly
monitors its current forecast debt levels to ensure debt covenants are not
exceeded.
    Distributions, if paid, typically exceed net income as a result of
non-cash items such as unit-based compensation, depletion, depreciation and
accretion, unrealized loss (gain) on commodity contracts, and future income
tax expense (recovery). These non-cash items generally result in a reduction
to net income, with no impact to cash flow from operating activities.
Therefore, distributions, if paid, will exceed net income in most periods. In
the event distributions exceed cash flow from operating activities and the
requirements of True's capital program, the shortfall would typically be
funded by a combination of available bank facilities, equity or debt issues,
or the sale proceeds from non-core assets.
    The Board of Directors and management regularly review the level of
distributions. The board considers a number of factors, including expectations
of future current commodity prices, hedge positions, production volumes,
capital expenditure requirements, market conditions, the availability of debt
and equity capital and other factors. As announced on March 17, 2009, as a
result of the continued deterioration in economic conditions, including the
significant decline in crude oil and natural gas prices and heightened risk in
the credit markets, the Trust has suspended its distributions until further
notice. Pursuant to True's existing credit facility, distributions to
unitholders (other than by way of the issuance of Trust units) generally
require the approval of True's lenders if the funds to pay such distributions
are received from True Energy. It is expected that these restrictions will
continue to exist under the new credit facility.


    
    -------------------------------------------------------------------------
    ($000s, except ratios)                                  To June 30, 2009
    -------------------------------------------------------------------------
    Cumulative distributable cash from operations(1)                  78,655
    Proceeds on sale of property, plant and equipment                108,943
    Corporate and property acquisitions and other capital
     expenditures                                                    (26,537)
    Net proceeds from issue of trust units                            54,375
    Proceeds from issue of convertible debentures, net of issue
     costs                                                            82,261
    Repurchase of trust units under normal course issuer bid          (4,194)
    Funding from DRIP                                                 42,909
    Bank borrowings (debt repayment) and working capital changes
     and other                                                       (83,341)
    -------------------------------------------------------------------------
    Cumulative cash distributions declared(1)                        253,071
    -------------------------------------------------------------------------
    Standardized distributable cash payout ratio(2)                     3.22
    -------------------------------------------------------------------------
    (1) Subsequent to the November 2, 2005 reverse takeover of TKE Energy
        Trust
    (2) Represents cumulative distributions declared divided by cumulative
        standardized distributable cash
    

    Sensitivity Analysis

    The table below shows sensitivities to funds flow as a result of product
price and operational changes. This is based on actual average prices received
for the second quarter of 2009 and average production volumes of 9,767 boe/d
during that period, as well as the same level of debt outstanding at June 30,
2009. Diluted weighted average Trust units is based upon the second quarter of
2009. These sensitivities are approximations only, and not necessarily valid
under other significantly different production levels or product mixes.
Hedging activities can significantly affect these sensitivities. Changes in
any of these parameters will affect funds flow as shown in the table below:


    
    -------------------------------------------------------------------------
                                                                       Funds
                                                          Funds    Flow from
                                                      Flow from   Operations
                                                     Operations  Per Diluted
                                                    (annualized)        Unit
    -------------------------------------------------------------------------
    Sensitivity Analysis                                 ($000s)          ($)
    -------------------------------------------------------------------------
    Change of US $1/bbl WTI                               1,300         0.02
    Change of $0.10/mcf                                   1,100         0.01
    Change of US $0.01 Cdn/US exchange rate                 700         0.01
    Change in prime of 1%                                 1,200         0.02
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Selected Quarterly Consolidated Information

    The following table sets forth selected consolidated financial information
of the Trust for the most recently completed quarters ending at June 30, 2009.


    -------------------------------------------------------------------------
    2009 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     31,345       29,805
    Funds flow from
     operations(1)              6,489       10,765
    Funds flow from
     operations per unit(1)
      Basic                     $0.08        $0.14
      Diluted                   $0.08        $0.14
    Net income (loss)          (9,056)     (99,715)
    Net income (loss) per unit
      Basic                    $(0.12)      $(1.27)
      Diluted                  $(0.12)      $(1.27)
    Net capital expenditures
     (cash)                     2,764       (7,138)
    Distributions declared      1,570            -
    Distributions per unit      $0.02            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    2008 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30     Sept. 30      Dec. 31
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     70,033       82,074       72,225       41,053
    Funds flow from
     operations(1)             24,233       26,304       21,491        5,865
    Funds flow from
     operations per unit(1)
      Basic                     $0.31        $0.33        $0.27        $0.07
      Diluted                   $0.30        $0.33        $0.27        $0.07
    Net income (loss)         (18,621)     (21,374)      29,939       (9,534)
    Net income (loss) per unit
      Basic                    $(0.24)      $(0.27)       $0.38       $(0.12)
      Diluted                  $(0.24)      $(0.27)       $0.38       $(0.12)
    Net capital expenditures
     (cash)                     2,862      (34,450)      13,779       16,471
    Distributions declared      9,507        9,505        9,474        7,848
    Distributions per unit      $0.12        $0.12        $0.12        $0.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    2007 - Quarter ended
     (unaudited) ($000s,
     except per unit
     amounts)                March 31      June 30     Sept. 30      Dec. 31
    -------------------------------------------------------------------------
    Revenues before
     royalties and hedging     71,196       74,991       50,547       61,756
    Funds flow from
     operations(1)             29,988       34,192       17,478       19,514
    Funds flow from
     operations per unit(1)
      Basic                     $0.43        $0.47        $0.22        $0.25
      Diluted                   $0.42        $0.45        $0.22        $0.25
    Net income (loss)          (8,571)       1,741      (17,003)        (434)
    Net income (loss) per unit
      Basic                    $(0.12)       $0.02       $(0.21)      $(0.01)
      Diluted                  $(0.12)       $0.02       $(0.21)      $(0.01)
    Net capital expenditures
     (cash)                    27,915        6,739        7,562       14,828
    Distributions declared     16,866       18,376       19,132       19,077
    Distributions per unit      $0.24        $0.24        $0.24        $0.24
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Refer to "Non-GAAP Measures" in respect of the term "funds flow from
        operations" and "funds flow from operations per unit".



    TRUE ENERGY TRUST
    CONSOLIDATED BALANCE SHEETS
    As at June 30 and December 31 (unaudited)
    -------------------------------------------------------------------------

    ($000s)                                                2009         2008
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Accounts receivable                           $    22,787  $    28,119
      Marketable securities (note 4)                          -          120
      Deposits and prepaid expenses                       4,345        5,969
      Commodity contract asset (note 15)                  9,571        3,726
      Petroleum and natural gas properties held for
       sale (note 5)                                     94,578            -
                                                   --------------------------
                                                        131,281       37,934
    Property, plant and equipment (note 5)              431,573      698,183
                                                   --------------------------
    Total assets                                    $   562,854  $   736,117
                                                   --------------------------
                                                   --------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities      $    21,569  $    34,128
      Distribution payable to unitholders                     -        1,570
      Commodity contract liability  (note 15)               705            -
      Future income taxes (note 13)                       2,610        1,100
      Bank debt (note 6)                                120,205            -
      Asset retirement obligations related to
       petroleum and natural gas properties held
       for sale (note 5)                                  9,578            -
                                                   --------------------------
                                                        154,667       36,798
    Long-term debt (note 6)                                   -      132,388
    Convertible debentures (note 7)                      82,075       81,124
    Asset retirement obligations (note 8)                24,141       33,682
    Future income taxes (note 13)                         3,076       42,777
                                                   --------------------------
    Total liabilities                                   263,959      326,769
                                                   --------------------------

    NON-CONTROLLING INTEREST
      Exchangeable shares of subsidiary (note 9)          2,452        2,887

    UNITHOLDERS' EQUITY
      Unitholders' capital (note 10)                    917,012      917,012
      Equity component of convertible debentures          5,119        5,119
      Contributed surplus (note 11)                      27,943       28,240

      Accumulated other comprehensive income                  -         (620)
      Deficit                                          (653,631)    (543,290)
                                                   --------------------------
                                                       (653,631)    (543,910)
                                                   --------------------------

                                                   --------------------------
    Total unitholders' equity                           296,443      406,461
                                                   --------------------------
    Total liabilities and unitholders' equity       $   562,854  $   736,117
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF LOSS  AND COMPREHENSIVE LOSS
    For the three and six months ended June 30 (unaudited)

                        Three months ended June 30, Six months ended June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    REVENUES
      Petroleum and natural
       gas sales          $    29,805  $    82,074  $    61,150  $   152,107
      Royalties                (5,324)     (16,289)     (11,632)     (31,789)
      Gain (loss) on
       commodity contracts
       (note 15)                3,085      (38,169)      13,560      (59,998)
                         ----------------------------------------------------
                               27,566       27,616       63,078       60,320

    EXPENSES
      Production               11,916       16,170       25,862       33,166
      Transportation            1,267        2,478        2,830        3,321
      General and
       administrative           2,581        4,492        5,423        8,262
      Interest and
       financing charges        4,218        3,487        7,520        8,003
      Unit-based
       compensation
       (recovery)
       (notes 10 and 11)          243          160         (360)         429
      Depletion,
       depreciation and
       accretion               27,374       33,209       54,629       69,512
      Loss on sale of
       marketable
       securities (note 4)        501            -          501            -
      Loss on petroleum
       and natural gas
       properties held
       for sale (note 5)      114,182            -      114,182            -
                         ----------------------------------------------------
                              162,282       59,996      210,587      122,693

    LOSS BEFORE TAXES        (134,716)     (32,380)    (147,509)     (62,373)

    TAXES
      Capital taxes                 -          651            -        1,114
      Future income tax
       recovery (note 13)     (34,602)     (11,562)     (38,303)     (23,316)
                         ----------------------------------------------------
                              (34,602)     (10,911)     (38,303)     (22,202)

    NET LOSS BEFORE
     NON-CONTROLLING
     INTEREST                (100,114)     (21,469)    (109,206)     (40,171)
      Non-controlling
       interest                  (399)         (95)        (435)        (176)
                         ----------------------------------------------------

    NET LOSS                  (99,715)     (21,374)    (108,771)     (39,995)
     Realized loss on
      available for
      sale marketable
      securities                  509            -          620            -
                         ----------------------------------------------------

    COMPREHENSIVE LOSS    $   (99,206) $  (21,374) $  (108,151) $   (39,995)
                         ----------------------------------------------------

    Net loss per trust
     unit
      Basic               $     (1.27) $     (0.27) $     (1.39) $     (0.50)
      Diluted             $     (1.27) $     (0.27) $     (1.39) $     (0.50)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
    For the three and six months ended June 30 (unaudited)

                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    UNITHOLDERS' CAPITAL
      Balance, beginning
       of period          $   917,012  $   925,735  $   917,012  $   925,573
      Repurchased under
       normal course issuer
       bid                          -       (1,577)           -       (1,577)
      Exchangeable shares
       converted                    -            -            -          162
                         ----------------------------------------------------
      Balance, end of
       period                 917,012      924,158      917,012      924,158
                         ----------------------------------------------------

    EQUITY COMPONENT OF
     CONVERTIBLE DEBENTURES
                         ----------------------------------------------------
      Balance, beginning
       and end of period        5,119        5,119        5,119        5,119
                         ----------------------------------------------------

    CONTRIBUTED SURPLUS
      Balance, beginning
       of period               27,670       19,872       28,240       19,454
      Unit-based
       compensation
       expense
       (note 10 and 11)           175          562          390        1,165
      Adjustment of prior
       period unit-based
       compensation expense
       for forfeitures of
       unvested incentive
       units                       98         (257)        (687)        (442)
      Adjustment for
       repurchase of units
       under normal course
       Issuer bid                   -          981            -          981
                         ----------------------------------------------------
      Balance, end of
       period                  27,943       21,158       27,943       21,158
                         ----------------------------------------------------

    DEFICIT
      Balance, beginning
       of period             (553,916)    (515,494)    (543,290)    (487,366)
      Net loss                (99,715)     (21,374)    (108,771)     (39,995)
      Distributions
       declared                     -       (9,505)      (1,570)     (19,012)
                         ----------------------------------------------------
      Balance, end of
       period                (653,631)    (546,373)    (653,631)    (546,373)
                         ----------------------------------------------------

    ACCUMULATED OTHER
     COMPREHENSIVE INCOME
      Balance, beginning
       of period                 (509)           -         (620)           -
      Realized loss on
       sale of marketable
       securities (note 4)        509            -          620            -
                         ----------------------------------------------------
      Balance, end of
       period                       -            -            -            -
                         ----------------------------------------------------

    -------------------------------------------------------------------------
    TOTAL UNITHOLDERS'
     EQUITY               $   296,443  $   404,062  $   296,443  $   404,062
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    TRUE ENERGY TRUST
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the three and six months ended June 30 (unaudited)

                                Three months ended          Six months ended
                                           June 30,                  June 30,
    ($000s)                      2009         2008         2009         2008
    -------------------------------------------------------------------------

    Cash provided by (used
     in):
    CASH FLOW FROM
     OPERATING ACTIVITIES
    Net loss              $   (99,715) $   (21,374) $  (108,771) $   (39,995)
    Items not involving
     cash:
      Non-controlling
       interest (note 9)         (399)         (95)        (435)        (176)
      Depletion,
       depreciation and
       accretion               27,374       33,209       54,629       69,512
      Unit-based
       compensation
       (recovery)
       (notes 10 and 11)          243          160         (360)         429
      Unrealized loss
       (gain) on commodity
       contracts (note 15)      2,704       25,550       (5,140)      43,237
      Accretion on
       convertible
       debentures                 477          416          951          846
      Future income tax
       recovery (note 13)     (34,602)     (11,562)     (38,303)     (23,316)
      Loss on sale of
       marketable securities
       (note 4)                   501            -          501            -
      Loss on petroleum
       and natural gas
       properties held for
       sale (note 5)          114,182            -      114,182            -
      Asset retirement
       costs incurred
       (note 8)                  (313)        (123)      (1,051)        (712)
      Change in non-cash
       working capital
       (note 12)               (3,985)      (6,289)        (425)     (12,090)
                         ----------------------------------------------------
                                6,467       19,892       15,778       37,735

    CASH FLOW FROM (USED IN)
     FINANCING ACTIVITIES
      Decrease in bank debt   (11,417)     (46,392)     (12,183)     (43,017)
      Repurchase of trust
       units under normal
       course issuer bid            -         (596)           -         (596)
      Distributions
       declared                     -       (9,505)      (1,570)     (19,012)
                         ----------------------------------------------------
                              (11,417)     (56,493)     (13,753)     (62,625)
      Change in non-cash
       working capital
       (note 12)                  709           50         (809)      (3,110)
                         ----------------------------------------------------
                              (10,708)     (56,443)     (14,562)     (65,735)

    CASH FLOW FROM (USED IN)
     INVESTING ACTIVITIES
      Additions to property,
       plant and equipment     (1,151)      (4,080)      (3,907)     (12,730)
      Proceeds on sale of
       property, plant and
       equipment                8,289       38,530        8,281       44,318
      Proceeds on sale of
       marketable
       securities                 349            -          349            -
                         ----------------------------------------------------
                                7,487       34,450        4,723       31,588
      Change in non-cash
       working capital
       (note 12)               (3,246)       2,101       (5,939)      (3,588)
                         ----------------------------------------------------
                                4,241       36,551       (1,216)      28,000

      Change in cash                -            -            -            -

      Cash, beginning
       of period                    -            -            -            -
    -------------------------------------------------------------------------

      Cash, end of period $         -  $         -  $         -  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying selected notes to the consolidated financial statements.



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    (unaudited)
    -------------------------------------------------------------------------

    1.  STRUCTURE OF THE TRUST

        True Energy Trust ("True" or the "Trust") is an open-ended,
        unincorporated investment trust governed by the laws of the Province
        of Alberta.

        The purpose of the Trust is to indirectly explore for, develop and
        hold interests in petroleum and natural gas properties, through
        investments in securities of subsidiaries and net profits interests
        in oil and natural gas properties. The business of the Trust is
        carried on by True Energy Inc. and its indirect wholly owned
        subsidiary True Energy Peru S.A.C. The Trust owns, directly and
        indirectly, 100% of the common shares, (excluding the exchangeable
        shares - see note 9) of True Energy Inc. and True Energy Peru S.A.C.
        The activities of True Energy Inc. are financed through interest
        bearing notes from the Trust and third party debt.

    2.  SIGNIFICANT ACCOUNTING POLICIES

        The interim consolidated financial statements of the Trust have been
        prepared by management in accordance with generally accepted
        accounting policies in Canada. The unaudited interim consolidated
        financial statements have been prepared following the same accounting
        policies and methods of computation as the consolidated financial
        statements for the fiscal year ended December 31, 2008, except as
        described in note 3. The interim consolidated financial statement
        note disclosures do not include all of those required by Canadian
        generally accepted accounting principles ("GAAP") applicable for
        annual financial statements. Accordingly, the interim consolidated
        financial statements should be read in conjunction with the
        consolidated financial statements and the notes thereto as at and for
        the year ended December 31, 2008.

    3.  RECENT ACCOUNTING PRONOUNCEMENTS

        Effective January 1, 2009, the Trust adopted the following new
        accounting standard:

           Goodwill and intangible assets

           The CICA issued a new accounting standard, Section 3064 - Goodwill
           and Intangible Assets, which replaces Section 3062 - Goodwill and
           Other Intangible Assets, and Section 3450 - Research and
           Development costs. The new section establishes standards for the
           recognition, measurement and disclosure of goodwill and intangible
           assets. Application of the new section does not have any impact on
           the Trust's financial statements.

        International Financial Reporting Standards ("IFRS")

        On February 13, 2008 the CICA Accounting Standards Board announced
        that Canadian public reporting issuers will be required to report
        under International Financial Reporting Standards ("IFRS"), which
        will replace Canadian generally accepted accounting principles for
        years beginning on or after January 1, 2011. Currently, we are
        assessing the effects of adoption and developing a plan accordingly.
        We will continue to monitor any changes in the adoption of IFRS and
        will update plans as necessary.

    4.  MARKETABLE SECURITIES

        The Trust's investment in Veraz Petroleum Ltd. was sold in May 2009
        for proceeds of $0.3 million and a realized loss on sale of
        $0.5 million was recognized in the second quarter.

    5.  PROPERTY, PLANT AND EQUIPMENT


        ($000s)
        ---------------------------------------------------------------------
                                                    Accumulated
                                                  depletion and     Net book
        June 30, 2009                         Cost depreciation        value
        ---------------------------------------------------------------------
        Petroleum and natural gas
         properties                    $ 1,370,748  $   846,482  $   524,266
        Less: Petroleum and natural gas
               properties held for sale   (434,933)    (340,355)     (94,578)
        ---------------------------------------------------------------------
                                           935,815      506,127      429,688
        Office furniture and equipment       3,994        2,109        1,885
        ---------------------------------------------------------------------
                                       $   939,809  $   508,236  $   431,573
        ---------------------------------------------------------------------

        December 31, 2008
        ---------------------------------------------------------------------
        Petroleum and natural gas
         properties                    $ 1,375,331  $   679,196  $   696,135
        Office furniture and equipment       3,955        1,907        2,048
        ---------------------------------------------------------------------
                                       $ 1,379,286  $   681,103  $   698,183
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Trust has included $62.5 million (December 31, 2008:
        $62.8 million) for future development costs and excluded
        $26.6 million (December 31, 2008: $31.3 million) for undeveloped land
        and $37.9 million (December 31, 2008: $42.5 million) for estimated
        salvage from the depletion calculation during the six month period
        ended June 30, 2009.

        For the six month period ended June 30, 2009, the Trust capitalized
        $0.2 million of general and administrative expenses and $0.06 million
        of unit-based compensation expense directly related to exploration
        activities.

        Petroleum and Natural Gas Properties Held for Sale

        The Trust entered into an agreement for the divestiture of the
        majority of its petroleum and natural gas properties in Saskatchewan
        (the "Saskatchewan Divestiture") for gross proceeds of $93 million,
        subject to closing adjustments, effective May 1, 2009. This
        disposition closed on July 30, 2009. The disposition meets the
        criteria under CICA handbook section 3475 - "Disposal of Long-lived
        Assets and Discontinued Operations" and Accounting Guideline 16 -
        "Oil and Gas Accounting - Full Cost", and as a result, the Trust has
        classified the group of assets as assets held for sale. Under full
        cost accounting, if crediting the proceeds from disposition to costs
        results in a change of 20 percent or more to the DD&A rate then a
        gain or loss should be recognized. When a gain or loss is to be
        recognized the total net book value of capitalized costs should be
        allocated between the properties sold and the properties retained.
        The assets held for sale as of June 30, 2009 are an allocation of the
        Trust's historical full cost pool based on a pro-rata ratio of future
        cash flows of proved reserves associated with the assets held for
        sale, discounted at 10%, as compared to all oil and gas assets. The
        Trust has recorded a $114.2 million loss on the assets held for sale
        for the excess of the allocated net book value to the these assets,
        compared to the total estimated net proceeds, after purchase
        adjustments and closing costs, of $85 million. The associated asset
        retirement obligation for these properties of $9.6 million has been
        classified as a current liability.

    6.  Bank Debt


        ---------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2009         2008
        ---------------------------------------------------------------------
        ($000s)
        ---------------------------------------------------------------------

        Operating facility                          $     3,696  $     7,388

        Revolving term facility                         116,509      125,000
        ---------------------------------------------------------------------

        Balance, end of period                      $   120,205  $   132,388

        Pro-forma bank debt after Saskatchewan Divestiture as of June 30,
        2009, was reduced by approximately $86 million of net proceeds, after
        purchase adjustments. The bank facility outstanding at June 30, 2009
        had a borrowing base of $134 million and matures on June 30, 2010.
        Pursuant to True's existing credit facility, distributions to
        unitholders (other than by way of the issuance of Trust units)
        generally require the approval of True's lenders if the funds to pay
        such distributions are received from True Energy Inc.

        In conjunction with completion of the Saskatchewan Divestiture on
        July 30, 2009, True has negotiated a new banking syndicate commitment
        to replace the existing bank facility, subject to finalization and
        execution of a mutually acceptable credit agreement, that will
        provide True with a credit facility of $85 million. The facility will
        consist of a $10 million demand operating facility provided by one
        Canadian bank and a $75 million extendible revolving term credit
        facility syndicated by one Canadian chartered bank and one Canadian
        financial institution. The revolving period on the new revolving term
        credit facility will end on June 30, 2010, unless extended for a
        further 364 day period. Should the facilities not be renewed they
        will convert to 366 day non-revolving term facilities on the renewal
        date. The borrowing base will be subject to renewal on March 31,
        2010.

    7.  CONVERTIBLE DEBENTURES

        The following table shows the convertible debenture activities for
        the six month period ended June 30, 2009 and the year ended December
        31, 2008:


        ---------------------------------------------------------------------
                                                           Debt       Equity
                                         Number of    Component    Component
                                        Debentures       ($000s)      ($000s)
        ---------------------------------------------------------------------
        Balance, December 31, 2007          86,250  $    79,407  $     5,119
        Accretion                                -        1,717            -
        ---------------------------------------------------------------------
        Balance, December 31, 2008          86,250  $    81,124  $     5,119
        ---------------------------------------------------------------------
        Accretion                                -          951            -
        ---------------------------------------------------------------------
        Balance, June 30, 2009              86,250  $    82,075  $     5,119
        ---------------------------------------------------------------------

        In November 2008, the Trust received Toronto Stock Exchange approval
        for its normal course issuer bid program ("NCIB") to repurchase up to
        10% of the issued and outstanding 7.50% convertible unsecured
        subordinated debentures of the Trust from December 1, 2008 to
        November 30, 2009. As of June 30, 2009 there have been no repurchases
        of convertible debentures under the NCIB. Commencing April 1, 2009,
        repurchase of convertible debentures requires the consent of the
        lenders of the long-term debt.

    8.  ASSET RETIREMENT OBLIGATIONS

        The Trust's asset retirement obligations result from net ownership
        interests in petroleum and natural gas assets including well sites,
        gathering systems and processing facilities. The Trust estimates the
        total undiscounted amount of cash flows required to settle its asset
        retirement obligations is approximately $75.6 million which will be
        incurred between 2009 and 2053. Approximately $13.4 million of
        undiscounted cash flows required for the settlement of asset
        retirement obligations will be disposed of as part of the
        Saskatchewan Divestiture. A credit-adjusted risk-free rate of 8
        percent and an inflation rate of 2.4 percent were used to calculate
        the fair value of the asset retirement obligation.


        ---------------------------------------------------------------------
                                                        June 30, December 31,
        ($000s)                                            2009         2008
        ---------------------------------------------------------------------
        Balance, beginning of period                $    33,682  $    28,373
        Liabilities incurred on development activities       30          784
        Changes in prior period estimates                   995        8,302
        Liabilities released on dispositions             (1,259)      (3,333)
        Liabilities settled during the period            (1,051)      (2,603)
        Accretion expense                                 1,322        2,159
        ---------------------------------------------------------------------
        Sub-total                                        33,719       33,682
        ---------------------------------------------------------------------
        Obligations related to petroleum and natural
         gas assets held for sale (note 5)               (9,578)           -
        ---------------------------------------------------------------------
        Balance, end of period                      $    24,141  $    33,682
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    9.  EXCHANGEABLE SHARES OF SUBSIDIARY/NON-CONTROLLING INTEREST


        ---------------------------------------------------------------------
                                 June 30, 2009           December 31, 2008
                               Number       Amount       Number       Amount
                                            ($000s)                   ($000s)
        ---------------------------------------------------------------------
        Balance, beginning
         of period            294,026  $     2,887      390,276  $     3,922
        Non-controlling
         interest recovery          -         (435)           -          (83)
        Exchanged for trust
         units                      -            -      (96,250)        (952)
        ---------------------------------------------------------------------
        Balance, end of
         period               294,026  $     2,452      294,026  $     2,887
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The exchange ratio is calculated monthly based on the five day
        weighted average trust unit trading price preceding the monthly
        effective date. The exchangeable shares are not eligible for cash
        distributions; however cash distributions will increase the exchange
        ratio. As at June 30, 2009, the exchange ratio was 1.0627 (2008:
        1.0218).

    10. UNITHOLDERS' CAPITAL

        a. Trust Units


        ---------------------------------------------------------------------
                                 June 30, 2009           December 31, 2008
                               Number       Amount       Number       Amount
                                            ($000s)                   ($000s)
        ---------------------------------------------------------------------
        Balance, beginning
         of period         78,496,581  $   917,012   79,216,046  $   925,573
        Repurchased under
         normal course
         issuer bid                 -            -     (814,300)      (9,513)
        Exchangeable shares
         converted                  -            -       94,835          952
        ---------------------------------------------------------------------
        Balance, end of
         period            78,496,581  $   917,012   78,496,581  $   917,012
        ---------------------------------------------------------------------

        In August 2008, the Trust announced approval of the renewal of its
        normal course issuer bid ("NCIB") program to repurchase up to
        7.8 million of its outstanding trust units during the period August
        28, 2008 through August 27, 2009, subject to certain restrictions. As
        of June 30, 2009, the Trust has purchased 615,100 trust units at a
        weighted average price of $2.74 per trust unit under the NCIB renewed
        on August 28, 2008. No repurchases have taken place in the six month
        period ended June 30, 2009. Commencing April 1, 2009, repurchase of
        trust units requires the consent of the lenders of the long-term
        debt.

        b. Trust Unit Incentive Plan

        The following tables summarize information regarding trust unit
        incentive rights for the six month period ended June 30, 2009:


        Unit Rights Continuity
        ---------------------------------------------------------------------
                                               Weighted Average
                                               Exercise Price(a)      Number
        ---------------------------------------------------------------------
        Balance, December 31, 2008                  $      3.97    2,700,500
        Granted                                     $      1.48    2,546,800
        Forfeited                                   $      4.34   (1,012,668)
        ---------------------------------------------------------------------
        Balance, June 30, 2009                      $      2.38    4,234,632
        ---------------------------------------------------------------------

        (a) Exercise prices reflect grant prices less reduction in exercise
            prices.


    Unit Rights Outstanding, June 30, 2009
    -------------------------------------------------------------------------
                                      Outstanding            Exercisable

                                  Weighted
                                   Average  Weighted
                                  Exercise   Average                Exercise
    Exercise                         Price  Remaining                  Price
    Price                  At       Net of  Contrac-          At      Net of
    Net of            June 30,       Price     tual      June 30,      Price
    Reductions           2009   Reductions     Life         2009  Reductions
    -------------------------------------------------------------------------
    $ 0.65          1,327,881       $ 1.10      4.7            -           -
      - $ 1.50
     $ 1.64         2,002,585       $ 2.05      4.3      181,986      $ 2.47
      - $ 2.47
     $ 2.58           227,000       $ 3.60      3.9       49,832      $ 3.66
      - $ 4.29
     $ 4.23           652,166       $ 5.03      2.9      424,484      $ 5.05
      - $ 5.57
     $16.95            25,000       $16.95      1.4       25,000      $16.95
      - $16.95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
     $ 0.65         4,234,632       $ 2.38      4.2      681,302      $ 4.69
      - $16.95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        c. Employee Trust Unit Savings Plan

        Effective October 1, 2006, the Trust introduced an employee trust
        unit savings plan for the benefit of all employees. Under the savings
        plan, employees may elect to contribute up to 10 percent of their
        salary and contributions are used to fund the acquisition of trust
        units. The Trust matches employee contributions at a rate of $1.00
        for each $1.00 contributed. Trust units are purchased in the open
        market by the plan administrator, an investment firm, on behalf of
        the participants in the plan. For the six month period ended June 30,
        2009, the Trust matched $0.1 million (2008 - $0.2 million) under the
        plan. Effective for March 2009, the Trust suspended matching
        contributions under the plan until further notice.

    11. CONTRIBUTED SURPLUS


        ---------------------------------------------------------------------
                                                        June 30, December 31,
        ($000s)                                            2009         2008
        ---------------------------------------------------------------------
        Balance, beginning of period                $    28,240  $    19,454
        Unit-based compensation expense                     390        1,869
        Incentive units voluntarily surrendered               -          466
        Adjustment of prior period unit-based
         compensation expense for forfeitures of
         unvested incentive units                          (687)        (526)
        Adjustment for repurchase of units under NCIB         -        6,977
        ---------------------------------------------------------------------
        Balance, end of period                      $    27,943  $    28,240
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Unit-based Compensation Expense

        During the six months ended June 30, 2009, the Trust granted
        2,546,800 unit incentive rights to employees, directors and officers.
        Of the 2,546,800 unit incentive rights granted during the period,
        2,054,520 unit incentive rights have an exercise price that is higher
        than the Trust's unit market price on the grant date. The unit
        incentive rights for which the exercise price is higher than the
        Trust's unit market price on the grant date have a weighted average
        fair value of $0.25 per unit and an average exercise price of $1.69.
        The remaining unit incentive rights have a weighted average fair
        value of $0.39 per unit. During the six month period ended June 30,
        2009, the Trust recorded unit-based compensation of $0.4 million, of
        which $0.1 million was capitalized to property, plant and equipment.

        The fair values of all incentive rights granted are estimated on the
        date of grant using the Black-Scholes option-pricing model. The
        weighted average fair market value of incentive rights granted during
        the six month period ended June 30, 2009 and the assumptions used in
        their determination are as noted below:


        ---------------------------------------------------------------------
                                                                        2009
        ---------------------------------------------------------------------
        Assumptions:
          Risk free interest rate (%)                                      2
          Expected life (years)                                            5
          Expected volatility (%)                                      69-71
        ---------------------------------------------------------------------
        Results:
          Weighted average fair value of each incentive right
           granted                                               $      0.27
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    12. SUPPLEMENTAL CASH FLOW INFORMATION


        Cash Interest and Taxes Paid
        ---------------------------------------------------------------------
                        Three months ended June 30, Six months ended June 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------
        Cash paid:
          Interest        $     4,280  $     5,580  $     5,174  $     8,085
          Taxes (net of
           refunds)                 1  $       246  $      (273) $       531
        ---------------------------------------------------------------------


        Change in Non-cash Working Capital
        ---------------------------------------------------------------------
                        Three months ended June 30, Six months ended June 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------
        Changes in non-cash
         working capital
         items:
          Accounts
           receivable     $     2,787  $     4,352  $     5,332  $    (4,822)
          Deposits and
           prepaid expenses     1,722        1,446        1,624        1,065
          Accounts payable
           and accrued
           liabilities        (11,031)      (9,935)     (12,559)     (11,862)
          Distribution
           payable to
           unitholders              -           (1)      (1,570)      (3,169)
        ---------------------------------------------------------------------
                          $    (6,522) $    (4,138) $    (7,173) $   (18,788)
        ---------------------------------------------------------------------
        Changes related to:
          Operating
           activities     $    (3,985) $    (6,289) $      (425) $   (12,090)
          Financing
           activities             709           50         (809)      (3,110)
          Investing
           activities          (3,246)       2,101       (5,939)      (3,588)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
                          $    (6,522) $    (4,138) $    (7,173) $   (18,788)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    13. INCOME TAXES

        The Trust is a mutual fund trust as defined under the Income Tax Act
        (Canada). All taxable income earned by the Trust has been allocated
        to unitholders and such allocations are deducted for income tax
        purposes.

        In June 2007, the government legislation implementing the new tax
        (the "SIFT tax") on publicly traded income trust and limited
        partnerships (Bill C-52) received third reading in the House of
        Commons and Royal Assent. For existing income trusts and limited
        partnerships, the SIFT tax will be effective in 2011 unless certain
        rules related to "undue expansion" are not adhered to. As such, the
        Trust would not be subject to the new measures until the 2011
        taxation year provided the Trust continues to meet certain
        requirements.

        As at June 30, 2009, the total "temporary difference" (tax basis
        exceeds accounting basis) in the Trust is $8.7 million. As at June
        30, 2009, the Trust's subsidiaries have a tax basis of approximately
        $459 million that is available to shelter future taxable income.
        Included in this tax basis are estimated non-capital loss carry
        forwards of approximately $30 million that expire in years through
        2027. In addition, the Trust itself has approximately $17 million of
        tax basis.

    14. PER TRUST UNIT AMOUNTS


        ---------------------------------------------------------------------
                        Three months ended June 30, Six months ended June 30,
                                 2009         2008         2009         2008
        ---------------------------------------------------------------------
        Basic trust units
         outstanding       78,496,581   79,095,460   78,496,581   79,095,460
        Dilutive effect of:
          Trust unit
           incentive rights
           outstanding      4,234,632    5,006,079    4,234,632    5,006,079
          Units issuable for
           exchangeable
           shares             312,467      347,254      312,467      347,254
          Units issuable for
           convertible
           debentures       5,390,625    5,390,625    5,390,625    5,390,625
        ---------------------------------------------------------------------
        Diluted trust units
         outstanding       88,434,305   89,839,418   88,434,305   89,839,418
        ---------------------------------------------------------------------
        Weighted average
         trust units
         outstanding       78,496,581   79,203,976   78,496,581   79,213,532
        Dilutive effect of
         exchangeable shares,
         trust unit
         incentive plan and
         convertible
         debentures(1)              -            -            -            -
        ---------------------------------------------------------------------
        Diluted weighted
         average trust units
         outstanding       78,496,581   79,203,976   78,496,581   79,213,532
        ---------------------------------------------------------------------

        (1) A total of 4,234,632 (2008: 5,006,079) trust incentive units,
            312,467 (2008: 347,254) exchangeable shares and 5,390,625 (2008:
            5,390,625) trust units issuable pursuant to the conversion of
            convertible debentures were excluded from the calculation for the
            three and six month period ended June 30, 2009 as they were not
            dilutive.

    15. FINANCIAL RISK MANAGEMENT

        a. Credit risk

        As at June 30, 2009, accounts receivable was comprised of the
        following:


        ---------------------------------------------------------------------
        ($000s)
        ---------------------------------------------------------------------
        Trade accounts receivable                                      5,014
        Accrued and other accounts receivable                         17,773
        ---------------------------------------------------------------------
                                                                      22,787
        ---------------------------------------------------------------------

        The carrying amount of accounts receivable and derivative assets
        represents the maximum credit exposure. The Trust has an allowance
        for doubtful accounts as at June 30, 2009 of $0.6 million.

        As at June 30, 2009 the Trust estimates its trade accounts
        receivables to be aged as follows:


        ---------------------------------------------------------------------
        Aging ($000s)
        ---------------------------------------------------------------------
        Not past due (less than 90 days)                               1,896
        Past due (90 or more days)                                     3,118
        ---------------------------------------------------------------------
        Total                                                          5,014
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        After considering June 30, 2009 trade accounts payable from the same
        companies and cash receipts received subsequent to June 30, 2009, the
        Trust's trade receivables aged 90 or more days of approximately
        $3.1 million are reduced to a net balance of approximately
        $1.7 million.

        Included in accrued and other accounts receivable are approximately
        $4.7 million of amounts aged 90 or more days.

        b. Liquidity risk

        The following are the contractual maturities of financial liabilities
        as at June 30, 2009:


        ---------------------------------------------------------------------
        Financial          (less than)
         liability ($000s)     1 Year    1-2 Years    2-5 Years   Thereafter
        ---------------------------------------------------------------------
        Accounts payable and
         accrued liabilities   21,569            -            -            -
        Distribution payable
         to unitholders             -            -            -            -
        Bank debt -
         principal(1)         120,205            -            -            -
        Convertible
         debentures -
         principal                  -            -       86,250            -
        ---------------------------------------------------------------------
        Total                 141,774            -       86,250            -
        ---------------------------------------------------------------------

        (1) The current facility is due on June 30, 2010. Refer to note 6 for
            further details.

        The Trust's convertible debentures outstanding at June 30, 2009 bear
        interest at a coupon rate of 7.5%, which currently requires total
        annual interest payments of $6.5 million. Interest due on the bank
        credit facility is calculated based upon floating rates.

        c. Commodity price risk

        Commodity price risk is the risk that the fair value or future cash
        flows will fluctuate as a result of changes in commodity prices.
        Commodity prices for petroleum and natural gas are impacted by not
        only the relationship between the Canadian and United States dollar,
        as outlined above, but also world economic events that dictate the
        levels of supply and demand.

        The Trust utilizes both financial derivatives and physical delivery
        sales contracts to manage commodity price risks. All such
        transactions are conducted in accordance with the risk management
        policy that has been approved by the Board of Directors.

        The Trust's formal risk management policy permits management to use
        specified price risk management strategies including fixed price
        contracts, costless collars and the purchase of floor price options,
        other derivative financial instruments, and physical delivery sales
        contracts to reduce the impact of price volatility and ensure minimum
        prices for a maximum of eighteen months beyond the current date. The
        program is designed to provide price protection on a portion of the
        Trust's future production in the event of adverse commodity price
        movement, while retaining significant exposure to upside price
        movements. By doing this, the Trust seeks to provide a measure of
        stability to funds flows from operations, as well as, to ensure True
        realizes positive economic returns from its capital developments and
        acquisition activities.

        As at June 30, 2009, the Trust had entered into commodity price risk
        management arrangements as follows:


    -------------------------------------------------------------------------
                                                     Price       Price
    Type                  Period        Volume       Floor     Ceiling  Index
    -------------------------------------------------------------------------
    Natural Gas March 1, 2009 to  4,500 GJ/day  $ 5.00 CDN  $ 5.00 CDN   AECO
     fixed        Sept. 30, 2009

    Natural Gas March 1, 2009 to  5,000 GJ/day  $ 5.90 CDN  $ 5.90 CDN   AECO
     fixed         Dec. 31, 2009

    Natural Gas  July 1, 2009 to  5,000 GJ/day  $ 5.41 CDN  $ 5.41 CDN   AECO
     fixed        Sept. 30, 2009

    Natural Gas  July 1, 2009 to  5,000 GJ/day  $ 7.49 CDN  $ 7.49 CDN   AECO
     fixed        Sept. 30, 2009

    Natural Gas  Oct. 1, 2009 to  5,000 GJ/day  $ 8.09 CDN  $ 8.09 CDN   AECO
     fixed         Dec. 31, 2009

    Natural Gas  Oct. 1, 2009 to  5,000 GJ/day  $ 6.26 CDN  $ 6.26 CDN   AECO
     fixed         Dec. 31, 2009

    Natural Gas  Jan. 1, 2010 to  5,000 GJ/day  $ 7.16 CDN  $ 7.16 CDN   AECO
     fixed        March 31, 2010

    Natural Gas  Jan. 1, 2010 to  5,000 GJ/day  $ 8.00 CDN  $ 8.00 CDN   AECO
     fixed        March 31, 2010

    Natural Gas  Jan. 1, 2010 to  5,000 GJ/day           -  $ 8.05 CDN   AECO
     call option   Dec. 31, 2010

    Natural Gas April 1, 2010 to  5,000 GJ/day  $ 6.59 CDN  $ 6.59 CDN   AECO
     fixed         June 30, 2010

    Oil collar  March 1, 2009 to     500 bbl/d  $52.30 CDN  $80.70 CDN    WTI
                   Dec. 31, 2009
    -------------------------------------------------------------------------

        For the three and six months ended June 30, 2009 and 2008, the gain
        (loss) on commodity contracts was comprised of the following:


        ---------------------------------------------------------------------
                        Three months ended June 30, Six months ended June 30,
        ($000s)                  2009         2008         2009         2008
        ---------------------------------------------------------------------

        Gain (loss) on
         commodity
         contracts
          Realized(1)     $     5,789  $   (12,619) $     8,420  $   (16,761)
          Unrealized(2)        (2,704)     (25,550)       5,140      (43,237)
        ---------------------------------------------------------------------
                          $     3,085  $   (38,169) $    13,560  $   (59,998)
        ---------------------------------------------------------------------

        (1) Realized gains and losses on commodity contracts represent actual
            cash settlements and other amounts paid under these contracts.

        (2) Unrealized gains and losses on commodity contracts represent non-
            cash adjustments for changes in the fair value of these contracts
            during the period.

        The Trust has entered into a natural gas physical delivery sales
        contract to sell 5,275 GJ/day at a fixed price of $7.29/GJ and
        $7.90/GJ for the third and fourth quarter of 2009, respectively.

        d. Interest rate risk

        The Trust had no interest rate swap or financial contracts in place
        during the three and six months period ended June 30, 2009.

        e. Capital management

        The Trust's policy is to maintain a strong capital base so as to
        maintain investor, creditor and market confidence and to sustain the
        future development of the business. The Trust manages its capital
        structure and makes adjustments to it in the light of changes in
        economic conditions and the risk characteristics of the underlying
        petroleum and natural gas assets. The Trust considers its capital
        structure to include unitholders' equity, bank debt, convertible
        debentures and working capital. In order to maintain or adjust the
        capital structure, the Trust may from time to time issue trust units,
        adjust its capital spending, and/or dispose of certain assets to
        manage current and projected debt levels.

        The Trust monitors capital based on the ratio of total net debt to
        annualized funds flow (the "ratio"). This ratio is calculated as
        total net debt, defined as outstanding bank debt, plus the liability
        component of convertible debentures, plus or minus working capital
        (excluding commodity contract assets and liabilities, current portion
        of long-term debt and future income tax assets or liabilities),
        divided by funds flow from operations (cash flow from operating
        activities before changes in non-cash working capital and deductions
        for asset retirement costs) for the most recent calendar quarter,
        annualized (multiplied by four). The total net debt to annualized
        funds flow ratio may increase at certain times as a result of
        acquisitions, fluctuations in commodity prices, timing of capital
        expenditures and other factors. In order to facilitate the management
        of this ratio, the Trust prepares annual capital expenditure budgets
        and sets unitholder distributions on a monthly basis. Capital
        expenditure budgets and levels of monthly unitholder distributions
        are reviewed and updated as necessary depending on varying factors
        including current and forecast prices, successful capital deployment
        and general industry conditions. The annual and updated budgets and
        monthly unitholder distributions are approved by the Board of
        Directors.

        Given the continuing uncertain economic conditions, the Trust has
        suspended unit distributions in order to maintain financial
        flexibility. The Trust plans to continue to monitor forecasted debt
        levels to manage its operations within forecasted funds flow. The
        Trust expects the total net debt to annualized funds flow ratio to
        reflect the economic burdens experienced as a result of the recent
        downturn in the global economic environment. The Trust will continue
        to monitor developments within the global economic environment to
        consider the impacts on the current or future lending arrangements.

        The Trust's long-term strategy, under a more stable economic
        environment, is to target a total net debt to annualized funds flow
        ratio of 2.0 times. As at June 30, 2009, the Trust's ratio of total
        net debt to annualized funds flow based on second quarter results was
        4.6 times. The total net debt to annualized funds flow ratio as at
        June 30, 2009 decreased from that at December 31, 2008 of 9.2 times
        due to higher funds flow from operations in the second quarter in
        addition to lower total net debt. The Trust expects this ratio to
        decrease in the third quarter of 2009 as total net debt levels are
        reduced by the estimated net proceeds of $85 million from the closing
        of the Saskatchewan Divestiture on July 30, 2009; True continues to
        take a balanced approach to the priority use of funds flows. The
        Debentures have a maturity date of June 30, 2011. Upon maturity, the
        Trust may settle the principal in cash or issuance of additional
        Trust units. Excluding Debentures, net debt to annualized funds flow
        based on second quarter results was 2.7 times.

        The calculation of total net debt and total net debt to cash flow is
        as follows:


        ---------------------------------------------------------------------
                                Three months ended          Six months ended
        ($000s, except                     June 30,                  June 30,
         where noted)            2009         2008         2009         2008
        ---------------------------------------------------------------------
        Long-term debt        120,205      125,458      120,205      125,458
        Convertible
         debentures (liability
         component)            82,075       80,253       82,075       80,253
        Working capital
         excess                (5,563)     (16,357)      (5,563)     (16,357)
        ---------------------------------------------------------------------
        Total net debt(1) at
         year end             196,717      189,354      196,717      189,354

        Debt to funds flow
         from operations ratio
         (annualized)(2)
        Funds flow from
         operations
         (annualized)          43,060      105,216       34,508      105,216
        Total net debt(1)
         to periods funds
         flow from
         operations ratio
         (annualized)            4.6x         1.8x         5.7x         1.8x

        Net debt(1)
          excluding
          convertible
          debentures) at
          quarter end         114,642      109,101      114,642      109,101
        Net debt to
         periods funds flow
         from operations
         ratio (annualized)      2.7x         1.1x         3.3x         1.1x

        Debt to funds flow
         from operations
         ratio (trailing)(3)
        Total net debt to
         periods funds flow
         from operations ratio
         (trailing)              3.2x         2.2x         3.2x         2.2x
        Net debt to periods
         funds flow from
         operations ratio
         (trailing)              1.8x         2.0x         1.8x         2.0x

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

        (1) Net debt includes the net working capital deficiency (excess)
            before short-term commodity contract assets and liabilities,
            current portion of long-term debt and short-term future income
            tax assets and liabilities. Total net debt also includes the
            liability component of convertible debentures and excludes asset
            retirement obligations and the future income tax liability.
        (2) Debt to funds flow from operations ratio (annualized) is
            calculated based upon second quarter funds flow from operations
            annualized.
        (3) Trailing periods funds flow from operations is based on the
            trailing twelve-months period ended June 30, 2009 and 2008.

        The Trust's credit facility is based on petroleum and natural gas
        reserves (see note 6). The credit facility outlines limitations on
        percentages of forecasted production, from external reserve engineer
        data, which may be hedged through financial commodity risk management
        contracts and limitations on property dispositions without prior
        consent of the lenders. The Trust also has outstanding normal course
        issuer bids for its convertible debentures and trust units, as
        detailed in note 7 and 10, respectively.

        f. Fair value of financial instruments

        The Trust's financial instruments as at June 30, 2009 include
        accounts receivable, deposits, marketable securities, commodity
        contract liability, accounts payable and accrued liabilities,
        distributions payable, long-term debt and convertible debentures. The
        fair value of accounts receivable, accounts payable and accrued
        liabilities and distributions payable approximate their carrying
        amounts due to their short-terms to maturity.

        The fair value of commodity contracts is determined by discounting
        the difference between the contracted price and published forward
        price curves as at the balance sheet date, using the remaining
        contracted petroleum and natural gas volumes.

        Long-term bank debt bears interest at a floating market rate and
        accordingly the fair market value approximates the carrying value.

        The fair value of the convertible debentures of $65.1 million is
        based on exchange traded values.
    

    True Energy Trust is a Calgary-based oil and natural gas trust. True is
an open-ended, incorporated investment trust governed by the laws of the
Province of Alberta. The purpose of the Trust is to indirectly explore for,
develop and hold interests in petroleum and natural gas properties, through
investments in securities of subsidiaries and net profits interests. The trust
structure allows individual unitholders to participate in the cash flow of the
business. Cash flow is realized from the Trust's subsidiaries' ownership of
natural gas and petroleum properties and related facilities. Trust units and
convertible debentures of True trade on the Toronto Stock Exchange ("TSX")
under the symbols TUI.UN and TUI.DB, respectively.





For further information:

For further information: Raymond G. Smith, P.Eng., President and CEO,
(403) 750-2420; or Edward J. Brown, CA, Vice President, Finance and CFO, (403)
750-2655; or Troy Winsor, Investor Relations, (800) 663-8072; True Energy
Trust, 2300, 530 - 8th Avenue SW, Calgary, Alberta, Canada, T2P 3S8, Phone:
(403) 266-8670, Fax: (403) 264-8163, www.trueenergytrust.com


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