Pengrowth Energy Trust
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Pengrowth Energy Trust
Pengrowth Corporation

Pengrowth Corporation

January 12, 2006 21:24 ET

Pengrowth Corporation Announces Guidance for 2006 and Details of Capital Expenditure Program

CALGARY, ALBERTA--(CCNMatthews - Jan. 12, 2006) - Pengrowth Corporation (TSX:PGF.A) (TSX:PGF.B) (NYSE:PGH) ("Pengrowth"), administrator of Pengrowth Energy Trust, is pleased to provide initial guidance for 2006 based on a budget, approved by its Board of Directors, which includes a $236 million capital expenditure program for 2006.

When converting natural gas to equivalent barrels of oil within this news release, Pengrowth uses the international standard of 6 thousand cubic feet (mcf) to one barrel of oil equivalent (boe).

All amounts are stated in Canadian dollars unless otherwise specified. All production figures stated are based on Company Interest before the deduction of royalties.



Summary of 2006 Guidance

Planned Capital Expenditures ($ millions) (% of Total)
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Drilling expenditures $131 56%
Facilities and maintenance $64 27%
Land and seismic $21 9%
Recompletions and workovers $12 5%
Other $8 3%
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TOTAL $236 100%
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Average daily production volume (boe / day) 54,000 - 56,000(1)
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Operating costs per boe $11.00(2)
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(1) Includes the divestiture of approximately 1,300 to 1,400 boe per day of current production in the first quarter of 2006 comprised of volumes associated with previously disclosed purchase and sale agreements, as well as the divestment of approximately 1,000 boe per day of production related to the Monterey Exploration Ltd. transactions announced on January 12, 2006. The 2006 estimate excludes potential additions through acquisition.

(2) Assuming the production targets for 2006 are achieved and an
average full year power price estimate of $80.00 per Megawatt hour.

Highlights of the 2006 Capital Expenditure Program include:

- A $131 million drilling program involving approximately 280 gross wells (132 net wells), mainly targeting natural gas prone plays.

- Participation in a high impact gas well at Quirk Creek.

- More than 40 gross (25 net) re-completions and reactivations.

- Initiation of a $6 million CO2 pilot project at Judy Creek to study and test the feasibility of a CO2 miscible flood and the potential for increased recovery.

- Development activity of $12 million targeting Pengrowth's coalbed methane resources located in Central and Southern Alberta.

- An approximate $20 million investment in Pengrowth's heavy oil properties.

Capital Program

At $236 million, Pengrowth's planned capital expenditures for 2006 comprise the largest capital program in Pengrowth's history and represent an increase in expenditures of approximately 30 percent compared with estimated 2005 full year capital expenditures of $181 million.

Pengrowth's 2006 capital program targets the furtherance of Pengrowth's short, medium and long-term objectives, reflecting Pengrowth's focus on pursuing a balanced approach to the development of its key assets. While the most significant portion of Pengrowth's 2006 capital program will involve the continued development and maintenance of existing production and properties, a key element of the 2006 program will be further development of mid and longer term plays or projects in coalbed methane, heavy oil and enhanced recovery.

Pengrowth's 2006 drilling program, estimated at $131 million, will include the drilling of an estimated 280 gross wells (132 net wells). Drilling activity will include approximately 60 net wells planned for Pengrowth's shallow gas prone Southern business unit, of which 11 net wells are planned for coalbed methane development. An additional 44 net wells will be drilled in relation to the further development of Pengrowth's heavy oil resources. Also included in the program are 17 net wells planned for Pengrowth's Central business unit, largely in the Judy Creek area. In addition to the 2006 drilling program, there are planned expenditures of approximately $12 million for major workovers and the re-completion and reactivation of over 40 gross (25 net) wells.

Pengrowth expects to complete the drilling of a deep foothills development well in Quirk Creek, which was spudded in early January. Production testing will commence in the second quarter of 2006 pending the success of the development well. Pengrowth holds a 68 percent working interest in this Imperial Oil operated opportunity.

In keeping with Pengrowth's focus of enhancing recovery from long-life, large reserve pools, a pilot CO2 injection project is planned for 2006 in the Judy Creek Beaverhill Lake "A" pool. The pilot is being initiated to test the feasibility of CO2 injection as the next phase of Judy Creek development. The 2006 cost of the pilot is estimated at $6 million.

During 2006, Pengrowth plans to spend approximately $30 million net capital at the Sable Offshore Energy Project. These monies will be used to participate in one well and to enhance ongoing production performance by installing compression facilities. The new compression facilities are expected to come on-line in the fourth quarter of 2006.

Ongoing maintenance capital spending across all facilities is expected to be approximately $30 million, with the majority being spent in the Judy Creek area on an ongoing program to replace some of the old pipeline infrastructure and to install an acid gas injection system to eliminate acid gas flaring at the gas plant.

Pengrowth has also allocated approximately $21 million in 2006 for land and seismic expenditures in anticipation of opportunities to add incrementally to our existing land position in core areas and to improve our knowledge of new and existing pools through use of enhanced 3D seismic technologies.



Summary of Pengrowth Capital Expenditure Program

Planned Capital Expenditures by Type 2004 2005 2006
($ millions) (Actual) (Expected) (Budget)
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Drilling expenditures $105 $127 $131
Facilities and maintenance $41 $31 $64
Land and seismic $2 $5 $21
Recompletions and workovers $7 $13 $12
Other $6 $5 $8
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TOTAL $161 $181 $236
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Planned Capital Expenditures by Area 2004 2005 2006
($ millions) (Actual) (Expected) (Budget)
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Northeast BC & W6 Alberta $26 $35 $43
Central Alberta (plus Weyburn) $64 $79 $101
Southern Alberta $32 $22 $42
Heavy oil $7 $9 $20
Other $32 $36 $30
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TOTAL $161 $181 $236
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Drilling Activity 2004 2005 2006
(gross wells) (Actual) (Expected) (Budget)
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Natural gas 351 240 185
Oil 47 79 95
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TOTAL 398 319 280
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Production

Daily production levels for 2006 are expected to average between 54,000 and 56,000 boe per day. This estimate takes into account the recent divestiture of approximately 1,300 to 1,400 boe per day of current production in the first quarter of 2006 comprised of volumes associated with previously disclosed purchase and sale agreements, as well as the divestment of approximately 1,000 boe per day of production related to the Monterey Exploration Ltd. transactions announced on January 12, 2006. The 2006 estimate makes no adjustment for potential additions through acquisition. No significant facility or pipeline outages impacting Pengrowth production are forecast for 2006
Operating Costs

Operating costs are expected to increase to approximately $11.00 per boe for the full year of 2006 representing an increase of between 5 and 10 percent over anticipated full year operating costs in 2005. Continued cost pressure across the sector and in all aspects of Pengrowth's field operations, particularly power costs, have led to the expected increase. Pengrowth's current estimate assumes production targets for 2006 are achieved and an average full year power price of $80.00 per Megawatt hour.

This news release contains forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Although Pengrowth believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Pengrowth's business prospects and performance. Please refer to Pengrowth's public disclosure documents for more information on these risks and uncertainties as they apply to Pengrowth. Except for the historical and present factual information contained herein, the matters set forth in this news release, including words such as "expects", "forecasts", "projects", "plans", "outlook" and similar expressions are forward-looking statements. Pengrowth undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.

PENGROWTH CORPORATION

James S. Kinnear, President

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