eagle energy trust

VISION GROWTH INCOME

2010 ANNUAL REPORT

B

Eagle Energy Trust trades on the Toronto Stock Exchange

under the symbol EGL.UN.

EAGLE ANNUAL REPORT 2010

A New Era for Energy Trusts

Eagle Energy Trust is a new, publicly traded trust that pays

monthly distributions to its unitholders. Ours is a tried and

true business, with a new approach. Unaffected by the

tax changes that came into effect for Canadian trusts at

the beginning of 2011, Eagle signals a new era for energy

trusts in Canada.

02 Letter to Our Unitholders 07 Your Investment 09 Our First

Asset 11 Reserves 12 Code of Business Conduct and Ethics

12 Health, Safety and the Environment 13 Directors and Officers

15 Corporate Governance 16 Corporate Information

Eagle is delivering tax advantaged monthly distributions through an innovative business strategy that fits squarely within the new trust regulations.


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Letter to Our UnitholdersOn November 24, 2010, Eagle completed its Initial Public Offering (“IPO”) marking the first new publicly

traded energy trust to be formed in Canada since 2006. For me, this was a deeply personal event. In

part, our IPO marked the conclusion of a creative process which I had begun in November 2006 when

it became apparent that the status quo for Canadian trust investors had changed. More importantly,

Eagle’s IPO represented what I and others believed would be a new era for a tried and true style of

business which investors had embraced for over 20 years and had come to depend on for a portion

of their monthly income. This is why we created Eagle. This is why we were able to attract a dedicated

management team and Board, each with a history and a culture of excellence. This is why you have

entrusted us with your investment.

Our Focus on Yield

We know first-hand how important consistent distributions

are to investors. During the past six months, I have

spoken with many Eagle unitholders and I have heard how

distributions paid by Canadian trusts over the past 20

years have made a measurable difference in their lives. I

have listened as our investors have expressed appreciation

for what we have done in creating Eagle. We have paved

the way toward filling a void in the market, which is

important to me because it impacts people’s livelihoods.

About three-quarters of Eagle units are held by retail

investors and we welcome the opportunity to be part

of the investment portfolio of the average Canadian.

2010 SeptemberPreliminary prospectus and trust documents are finalized and asset due diligence is completed.

Kelly Tomyn joins as Vice President, Finance and CFO.

August Purchase and sale agreement signed to acquire the Salt Flat Field.

Engaged Scotia Capital as lead underwriter for Eagle’s IPO.

May Purchase negotiations commence for the Salt Flat Field.

AprilPeter Churcher joins as Executive Vice President, Engineering and Geosciences.

January Richard Clark completes Eagle’s business plan and begins sourcing suitable assets for Eagle’s IPO.

3

Our Structure

Eagle was developed by our management and Board, along

with leading tax experts; in fact, a lot of the thought process

took place in front of my home computer. Our model is not a

loophole in the tax legislation. We have taken respected and

trusted elements of the former energy trusts and added an

innovative business strategy which fits squarely within the new

trust tax rules.

Eagle has a straight-forward business model with a simple innovation. We are able to deliver tax advantaged distributions because we are a trust and all of our assets are located in the United States.

In a brief explanation, the federal government’s new trust tax

legislation is clear. To qualify for favourable tax treatment, a

trust may be publicly traded if it only holds properties outside

of Canada. This is how we have structured Eagle.

Why the United States

As trust rules were changing in Canada, I observed a few

publicly traded Canadian companies conducting oil and

gas operations in the U.S. and saw how capital for funding

growth appeared to be more accessible in Canada than in

the U.S. This observation led me to a business strategy which

I believed made sense. We could have chosen any country

outside of Canada in which to conduct our operations, but the

U.S. was the obvious choice for many reasons.

Business costs in the U.S. are comparable to Canada, deal

flow is higher, and average acquisition costs for producing oil

and gas assets are competitive. The proximity to Canada’s

petroleum capital in Calgary minimizes the costs of

doing business internationally. The maturity and diversity

of the oil and gas reserves in the U.S. means Eagle has

more low risk opportunities than it might in other countries.

The presence of Canadian banks and a broad pool of industry

talent also makes it easier to execute our business model in

the U.S., compared to most other countries.

In summary, we can acquire, operate and exploit U.S. oil and gas reserves at competitive costs compared to Canadian reserves.

The U.S. presents many opportunities for a growing trust.

On one end of the industry spectrum, larger companies

are pursuing resource plays and acquiring large blocks of

undeveloped land with little or no existing production. At the

other end, certain upstream companies are pursuing ultra

long-life reserves with less remaining upside. In the middle is a

large swath of assets with low-risk development potential that

are outside our competitors’ areas of interest. When combined

with deal flow that is often many times higher than in Canada,

the opportunity for acquiring assets to sustain distributions

is attractive. Eagle expects to have access to the capital

necessary for us to be competitive in the U.S. market, setting

the stage for accretive acquisitions.

We have taken respected and trusted elements of the former energy trusts and added an innovative business strategy which fits squarely within the new trust regulations.

OctoberProspectus is filed on October 16.

Marketing road show commences.

DecemberKirt Warrack joins Eagle as Chief Accountant in Calgary, along with Danae Parker, Manager, Production Analysis.

First distribution announced.

November 24Closed $130 million IPO, the 1st public energy trust launch since 2006. Eagle units start trading on the TSX.

Closed the acquisition of the Salt Flat Field at attractive metrics.

October/NovemberThree-week cross Canada roadshow with over 75 presentations to major investment houses.

DecemberIPO overallotment raises an additional $19.5 million.

Exit production for the year exceeds 1,300 bbl/d, which is at the upper range of our IPO guidance.

2011


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Our First Asset

Concurrent with the closing of our IPO, we completed the

acquisition of our first asset. The Salt Flat Field in south central

Texas produces high netback, light oil. Up until three years

ago when the first horizontal drilling was initiated, it was an

abandoned field with almost 75% of the original-oil-in-place

still to be recovered. Through a joint venture, and our 80%

field working interest, we have an aggressive re-development

program underway with 23 horizontal wells drilled since

June 1, 2010 with 100% success.

During the past 10 months, our production has increased over

300% to more than 1,300 bbl/d. Based on our 2010 year end

independent reserve report, total field development could see

us drill at least 69 horizontal wells with a proved plus probable

reserve estimate of 7.1 million barrels of light oil. We expect to

drill 21 oil wells in 2011 and our forecast is for production to

average 1,900 to 2,100 bbl/d for the year. The Salt Flat Field

will provide immediate visible growth as we evaluate accretive

acquisitions of other conventional oil and gas assets in select

basins in the U.S.

The Tax Advantage

From an investor’s perspective, the Eagle model is a straight-

forward investment. Our unitholders receive distributions which

are either taxed as interest income, or classified as a return

of capital which does not attract current tax. Eagle units can

also be held within an RRSP, TFSA, or other deferred plan. We

currently estimate that non-taxable (RRSP or TFSA) investors

will earn a yield premium of 3.5% when compared to a peer

group of dividend paying, oil weighted Canadian corporations.

A New Era for Trusts

The innovative thinking behind our business model is balanced

by three important elements: Vision, Growth and Income. Our

vision has created a sustainable energy yield product, which

fills an important niche in the investment landscape.

Over time, our initial asset investment will deliver a cash

flow stream sufficient to fund the capital program in the

field and also to pay our distributions. As we build our asset

base beyond the Salt Flat Field, our focus will be to acquire

conventional and long life reserves that will allow us to grow

our production and deliver predictable monthly income to

our unitholders.

Much has been accomplished since our IPO five months ago.

Many people have contributed to the launch of Eagle and

I would like to offer my personal thanks for their effort and

support, including our Board of Directors and the Eagle team

in both Canada and the U.S. Experience and innovation led to

Eagle’s launch. An evolved trust model, grounded by proven

and respected components that both investors and capital

markets know and trust, will be our legacy.

Richard W. Clark

President and Chief Executive Officer

April 14, 2011

JanuaryEagle announces $23 million 2011 capital budget for the Salt Flat Field. Acquired 500+ additional acres in the Salt Flat Field.

Jo-Anne Bund joins as General Counsel.

AprilProduction growth is on track with 23 wells drilled since June 1, 2010.

Continue to evaluate low risk, high netback growth opportunities.

MarchThe field operations grow to include Bernadette Jurica, Drilling Engineer, and Justin Prichard-Jones, Production Engineer, based in Luling, Texas.

MarchThe Eagle team expands with Bob Cunningham, Vice President, Business Development in Houston and Executive Assistant, Donna Caron in Calgary.

FebruaryDusty Dumas joins as our U.S. Controller in Houston.

Distribution, Reinvestment and Premium DistributionTM Plan implemented.

FebruaryPress release of 2010 year end reserves. 300% of 2010 production was replaced with new reserve additions.

Making the simple complicated is commonplace; making the complicated simple — awesomely simple — that’s creativity! Jazz musician, Charles Mingus

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Current production is 100% light oil from low risk redevelopment of a formerly abandoned field in south central Texas.

Eagle Energy Trust


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Vision To create wealth for our investors by combining innovation,

expertise and opportunity.

Growth To ensure long term sustainability, we are targeting growth

in production and reserves through our capital program and

accretive acquisitions.

Income In a market starved of income products, our goal is to

maintain predictable monthly distributions.

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Your InvestmentEagle is a Yield-focused Mutual Fund Trust

Under Canada’s new tax legislation for trusts which came into

effect in January 2011, Eagle is not taxable at the trust level

due to one strategic element in our business model — all of

our properties are outside of Canada. We structured Eagle

to comply with the new trust legislation in order to fill an

important niche in the Canadian investment landscape, a lack

of yield-focused energy products for investors. Eagle is not a

SIFT trust.

Income Tax Treatment for Investors

For Canadian residents, Eagle units can be held in an RRSP,

a TFSA, or other deferred plan. A portion of the distribution

to unitholders is treated as income and the balance is treated

as a return of capital, which reduces the adjusted cost base

in the units. For 2010, no distributions were required to be

included in the income of unitholders. In the coming years, we

expect the taxable component to be approximately 40% to

50% of the total distribution. In addition, Canadian residents

are not required to file a U.S. tax return.

For U.S. investors, a portion of Eagle’s distributions will be

treated as qualified dividends in the U.S., with the balance as a

return of capital, which reduces the adjusted cost base in

the units.

You will have a 15% withholding on the entire distribution, which

you may be able to recover as a foreign tax credit. (1)

Our Business Strategy

As a trust, our goal is to target accretive acquisitions with

remaining upside, which allows us to add reserves and

production through low risk exploitation. We see a large

number of properties within those acquisition parameters.

In addition, there is a high percentage of U.S. oil and gas

reserves held privately by non-industry investors that offer

consolidation potential.

The costs of doing business in the U.S. are competitive

compared to Canada, including acquisition metrics. We

believe we can acquire, operate and exploit U.S. reserves at

competitive costs compared to Canadian reserves.

The market is starved for yield investment product. That void was one impetus for the founding of Eagle. In 2011, we are targeting an annual distribution of $1.05 per unit, or $0.0875 per unit monthly.

Patterson 128 rig drilling on the Salt Flat Field.

(1) This is general information only and we encourage investors to consult their own tax advisors.


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In the sedimentary basins we are targeting, we are seeing

competitive operating costs. At our Salt Flat Field, 2011

operating costs are expected to be in the $10.00 to $11.50

per barrel range, which is competitive compared to average

operating costs for similarly sized Canadian producers.

As we build a production and reserve base, the type of

assets we acquire is critical for the long term sustainability

of distributions. We are targeting oil and gas properties

with a total proved reserve life of eight years or more, with

predictable cash flows. Our assets must also have low risk

development upside where we can profitably add production

and reserves. We will also maintain control over capital

spending, either through directly operating a property, or

through our operating agreements with partners.

All of our assets will be located onshore in the United States,

predominantly in the producing sedimentary basins in Texas,

the Midcontinent, the Rockies, North and South Dakota and

Montana. Our initial asset is 100% light oil, reflecting a focus

on near term profitability. Future acquisitions may be mixed

between oil and natural gas depending on profitability.

$0.00

$4.00

$8.00

$12.00

$16.00

$20.00

20082007200620052004

Canada USA

Operating Costs ($/bbl)

0 5 10 15 20 25 30 35$0

$50,000

$100,000

$150,000

$200,000

$250,000

Canadian Oil

Aquisition Metrics ($/bbl/day)

Permian Oil

* Source: IHS Herold Inc.

RLI

Cash Distribution Model

Eagle plans to distribute approximately 50% of its net

operating cash flow to unitholders in 2011 with the balance

dedicated to development drilling in the Salt Flat Field

and potential acquisitions. Eagle is targeting an annual

distribution of $1.05 per unit for 2011, or $0.0875 per

unit monthly.

• Drilling• Potential acquisitions

Cash Flow

50%

$50%

$ Unitholders

U.S. vs Canada*

Q1 2011Q4 2010Q3 2010Q2 2010

1,300

320438

726

Average Daily Production (bbl/d)

Q1 2011Q4 2010Q3 2010

6

13

23

Cumulative Wells Drilled (gross)

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Our First AssetLocated in Caldwell County in south central Texas, the Salt

Flat Field is producing light oil from the Edwards limestone

formation. Eagle closed the acquisition of an 80% working

interest in the field on November 24, 2010, with an effective

date of June 1, 2010. The field is undergoing re-development

after being discovered in 1928, explored with over 500 vertical

wells and then shut-in during the 1960s. An estimated 26% of

the original recoverable reserves in the field were produced by

these old vertical wells. Since 2008, more than 35 horizontal

wells have been drilled which have derisked the development

program. Analogue fields next door that have been on

production since the 1930s suggest that up to 42% of

the original oil in place can be recovered.

Full field development, based on a report by our independent

reserve evaluators, outlined 69 horizontal drilling locations

remaining to be drilled after June 1, 2010. At year end 2010,

56 wells remained to be drilled, primarily moving reserves from

the proved undeveloped category to the producing reserves

category. Before the recent run up in oil prices, 7.1 million

barrels of proved plus probable reserves were valued at

$173 million (at a 10% discount).

2011 Capital Program

This year’s capital spending in the Salt Flat Field is aimed at

visible growth. Eagle plans to invest $23 million for the drilling

of 21 horizontal wells and five water disposal wells, along with

associated facilities. We expect the spud to tie-in cycle time to

be reduced to less than three weeks following completion of

an electricity trunk line in the second quarter of 2011. Eagle’s

working interest production is expected to average 1,900 to

2,100 bbl/d in 2011.

In 2011, we expect to have average production ranging from 1,900 to 2,100 bbl/d of light oil.

Upper Edwards Formation

Drilling Rig

Tank Battery

Lower Edwards Formation

Impermeable Layer

Salt WaterInjector

Oil

Water

2,000+ feet

2,700 feet

3,000 feet


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Horizontal wells completed in the Upper Edwards produce oil, water and small amounts of gas, which is processed at a nearby tank battery. Water is disposed of down hole in the Lower Edwards via a vertical well.

The Opportunity

• 100% light oil, 36 degree API.

• Premium netbacks (2010 – $48.00/bbl at US$88.00 WTI).

• Low operating costs (excluding transportation, 2010 – $10.25/bbl).

• 80% field working interest.

• Reserve Life Index 14.6 years (proved plus probable).

Activity Update

• Adjusted purchase price $127 million.

• Current production is 1,300 bbl/d, up more than 300% from June 1, 2010.

• Field development program of 69 horizontal wells; no fracture or acid stimulation is required.

• 23 wells drilled from June 1, 2010 to date.

• Forecast 2011 average production of 1,900 to 2,100 bbl/d.

Eagle has begun the commercial re-development of the Salt Flat Field. 23 horizontal wells have been drilled since June 1, 2010 with 100% success. Initial production per well has averaged 170 bbl/d.

The play has also been derisked by drilling success in two nearby oil fields, Darst Creek and Luling Branyon, where more than 150 wells have been drilled since 1992.

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ReservesThe independent engineering firm of GLJ Petroleum

Consultants Ltd. evaluated 100% of Eagle’s reserves.

Eagle’s reserve estimates have been calculated in

accordance with National Instrument 51-101 Standards

of Disclosure for Oil and Gas Activities and are disclosed

in Eagle’s Annual Information Form for the year ended

December 31, 2010, which is available on SEDAR and

on our website. Proved reserves have at least a 90%

probability that quantities actually recovered will equal or

exceed the proved reserves estimates. Probable reserves

estimates have at least a 50% probability that the quantities

actually recovered will equal or exceed the sum of the

proved plus probable reserves estimate.

2010 Year End Reserve Report Highlights

• Total proved plus probable reserves of approximately 7.1 million barrels of oil, 43% of which are categorized as proved.

• Total reserve additions of 318 Mbbls over the seven months since the June 1, 2010 effective acquisition date, resulting in 300% of volumes produced from June 1 to December 31, 2010 being replaced.

• A US$44 million increase in proved plus probable reserves value since June 1, 2010, after having produced 99.5 Mbbls.

• A current Reserve Life Index of 14.6 years based on January 2011 average production of 1,327 bbl/d.

• 100% of the reserves are light oil.

Reserves Category 0% 5% 10% 15% 20%

(US$000) (US$000) (US$000) (US$000) (US$000)

Proved

Developed producing 47,718 38,762 32,885 28,787 25,784

Developed non producing 21,611 17,593 14,893 12,982 11,566

Undeveloped 55,108 41,947 33,159 26,984 22,456

Total proved 124,438 98,302 80,938 68,753 59,807

Total probable 192,528 129,054 92,361 69,510 54,376

Total proved plus probable 316,966 227,356 173,299 138,263 114,183

Notes: (1) Estimates of after-tax future net revenue are not presented because the Trust will not be subject to taxes in Canada.(2) It should not be assumed that the present values of estimated future net revenue shown above are representative of the fair market value

of the reserves. There is no assurance that such price and costs assumptions will be attained and variances could be material. The recovery and reserves estimates of crude oil reserves provided are estimates only and there is no guarantee that the reserves, as estimated, will be recovered. Actual reserves may be greater than or less than the estimates provided.

(3) Present values of estimated future net revenue shown above are based on GLJ’s escalated price forecast as of December 31, 2010, which assumes a base 2011 oil price of US$88/bbl.

(4) Totals may not add due to rounding.

Summary of Net Present Value of Future Net Revenue

Net Present Value of Future Net Revenue Before Income Taxes Discounted at (%/year) (1)

In just seven months, Eagle replaced 300% of 2010 production through development drilling.


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Total 7,073 Mbbl

3,051 Mbbl

Proved

Probable

4,023 Mbbl

Company Gross(1)

Reserves Category (Mbbl)

Proved

Developed producing 987

Developed non producing 464

Undeveloped 1,600

Total proved 3,051

Total probable 4,023

Total proved plus probable 7,073

Notes:(1) Gross reserves are Eagle’s total working interest share

before the deduction of any royalties and without including any royalty interest of Eagle.

(2) Totals may not add due to rounding

Summary of Oil Reserves

Health, Safety and the EnvironmentHigh standards of health and safety and a commitment

to the environment (HS&E) are an integral part of Eagle’s

strategic and economic decision making.

Prior to acquiring a property, Eagle conducts a thorough

review to ensure the asset has no significant safety or

environmental liabilities. While Eagle does not currently

operate drilling programs or field production, a core

business strategy is to partner with respected operators

with technical and field experience in areas where we hold

assets, and those with a demonstrated record of high

standards of performance with regards to HS&E.

Eagle recognizes that health and safety are paramount for

our operational partners and contractors in both the drilling

and production phases, and for all those who come in

contact with our operations, including landowners and local

communities. Our due diligence in working with an operator

includes ensuring they have a record of compliance with

government regulations and industry standards. Eagle also

requires assurance that drilling projects are designed and

conducted, and facilities constructed and operated in a

manner that minimizes environmental impacts and promotes

the health and safety of all those who could be impacted by

our operations.

This emphasis on high standards of HS&E is important

to Eagle, as well as being integral for our partners,

contractors, the residents and stakeholders near our

operations and, ultimately, for our unitholders.

Code of Business Conduct and EthicsEagle has adopted a written code of business conduct and

ethics that encourages and promotes a culture of ethical

business conduct by its directors, management, employees

and consultants.

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Board of Directors

David M. FitzpatrickChairman of the Board

Mr. Fitzpatrick is a geological engineer with more than 30 years industry experience including being a founder, President and Chief Executive Officer of Shiningbank Energy Income Fund, a TSX listed Canadian energy trust. Mr. Fitzpatrick is currently a director of Pinecrest Energy Inc., Compton Petroleum Corporation and Twin Butte Energy Ltd.

Bruce K. GibsonAudit Committee Chair

Mr. Gibson was formerly the Vice President and Chief Financial Officer of Shiningbank Energy Income Fund. His 35 years of industry experience includes oil and gas financial management, commodity marketing and public equity market issues. Prior to Shiningbank, Mr. Gibson was the Chief Financial Officer of Magrath Energy Corp. and Northridge Exploration Ltd.

Warren D. SteckleyReserves & Governance Committee Chair

Mr. Steckley combines more than 32 years of oil and gas industry experience with financial and investment expertise. Mr. Steckley is currently President, Chief Operating Officer and a Director of Barnwell of Canada, Limited, an oil and gas company and wholly owned subsidiary of Barnwell Industries Inc., a public company listed on the American Stock Exchange.

Joseph W. BlandfordCompensation Committee Chair

Mr. Blandford has over 35 years of oil and gas industry experience, and was the Chairman and Chief Executive Officer of Atlantia Offshore Limited, a Houston based company. Mr. Blandford is a member of the Independent Petroleum Association of America, the American Petroleum Institute and the American Society of Civil Engineers. Although retired since 2003, Mr. Blandford also serves on the University of Texas Chancellor’s Council and the University of Texas Development Board.

Richard W. Clark President, Chief Executive Officer and Director

Mr. Clark’s career includes over 19 years in the legal profession, first as a founding partner at a boutique oil and gas firm and then for 10 years at a national law firm in Canada, where he specialized in the areas of corporate finance, securities, mergers and acquisitions and venture capital. He has extensive experience in the royalty trust sector and was a key contributor to the governance, capital markets, finance and growth strategy at Shiningbank Energy Income Fund.

Richard W. Clark President, Chief Executive Officer and Director

Mr. Clark’s career includes over 19 years in the legal profession, first as a founding partner at a boutique oil and gas firm and then for 10 years at a national law firm in Canada, where he specialized in the areas of corporate finance, securities, mergers and acquisitions and venture capital. He has extensive experience in the royalty trust sector and was a key contributor to the governance, capital markets, finance and growth strategy at Shiningbank Energy Income Fund.


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Peter L. ChurcherExecutive Vice President, Engineering and Geosciences

Mr. Churcher is a petroleum professional with over 24 years of varied geological, engineering and business experience in the global oil and gas industry, most recently as Global Head of Upstream Business Development with the Abu Dhabi National Energy Company (TAQA). Prior to joining TAQA, he was the Manager of Business Development for PrimeWest Energy Trust. Mr. Churcher has lived, worked and transacted in the U.S. and has extensive experience with the technical and business environment in the U.S.

Kelly A. TomynVice President, Finance and Chief Financial Officer

Ms. Tomyn has over 21 years experience in the oil and gas industry developing and executing financial strategies primarily for publicly traded companies, including Diamond Tree Energy Inc., Ranchgate Energy Inc., Saddle Resources Inc., WestPoint Energy Inc. and most recently as Vice President, Finance and Chief Financial Officer with Aduro Resources Ltd., a private company.

Management

Robert J. Cunningham Vice President, Business Development

Mr. Cunningham has over 25 years of oil and gas experience including business development, finance, energy banking and risk management. Most recently, he was Vice President, Finance and Business Development of Zone Energy, LLC, a privately held oil and gas company. He holds a Bachelor of Business Administration degree in Finance from The University of Houston.

Dusty J. Dumas U.S. Controller

Mr. Dumas has over 20 years of financial experience including roles as Controller and Chief Financial Officer for both publicly traded as well as private enterprises. Dusty has led merger and acquisition projects and participated in several public offering transactions. Dusty is a Certified Public Accountant (CPA) and a Certified Management Accountant (CMA). He holds both a Bachelor of Business Administration in Accounting and a Master of Business Administration in Finance.

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Corporate GovernanceAt Eagle, we believe that corporate governance is fundamental

to all of our business dealings, our reputation with unitholders

and within the larger investment community and, ultimately,

is crucial to our success. Both management and the Board

are committed to high standards of corporate governance

in all aspects of our business and our operations, including

regular and open communication with unitholders and full

and transparent disclosure in our business transactions and

financial reporting.

Duties of the Board

The Board is responsible for the stewardship of Eagle.

The Board has direct responsibility for such matters as

strategic planning, assessing opportunities and risks of the

business, and ensuring that systems are in place to manage

those risks. The Board approves annual operating and capital

budgets, equity issues and has established long-term debt

parameters within which Eagle is expected to operate.

The Board meets regularly to consider matters of a wide

ranging nature, including the level of monthly distributions,

and to decide on matters that could have a major impact

on our operations, such as acquisitions, financing decisions

and material corporate matters. Management operates the

business on a day-to-day basis, in accordance with such

specific responsibilities and expectations as are set by the

Board. These include conducting business in a cost-effective

manner and the execution of a growth strategy to sustain

Eagle’s distribution-focused model. There is regular contact

between the directors and management, which allows for

open and timely dialogue and decision making.

Board Composition

Each year, directors are elected by unitholders at the Annual

General Meeting. The Board is responsible for nominating

new directors with appropriate experience and skill sets. To

ensure non-partisan leadership, the Board is comprised of one

management member and four independent directors.

All directors and committees, individually or as a whole,

have the right to retain independent legal counsel or other

professional advisors. The Board also has the right to, and

regularly does, meet without management present. All of

the independent directors serve on a committee. Each

committee meets as required, and all directors are asked

to attend each Board meeting, and meetings of a committee

on which they serve.

Board Committees

To help discharge its responsibilities, the Board

operates with three committees, all comprised of

non-management directors.

Reserves & Governance CommitteeThe Reserves & Governance Committee is responsible

for reviewing the year-end reserves evaluation report

prepared by independent engineers and, subject to this

review, recommending its acceptance to the Board. Its

second mandate is to ensure that the process of corporate

governance is ingrained in the structure and functioning of

the Board. This committee is also charged with ensuring

the Board is aware of new developments and current

legislation regarding corporate governance and the

responsibilities of directors.

Audit CommitteeThe Audit Committee is responsible for overseeing Eagle’s

accounting and financial reporting processes. The committee

meets with management to review the quarterly financial

statements and directly with Eagle’s external auditors to review

the annual financial statements, both prior to presentation to

the Board for approval.

Compensation CommitteeThe Compensation Committee is charged with recommending

reasonable compensation for directors and management and

implementing the equity-based and incentive compensation

plans, policies and programs. These recommendations are

presented to the Board for review and approval.


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Corporate InformationBoard of DirectorsDavid Fitzpatrick

Chairman of the Board

Bruce K. Gibson (2)

Director

Warren D. Steckley (1)

Director

Joseph W. Blandford (3)

Director

Richard W. Clark

President, Chief Executive Officer and Director

(1) Reserves & Governance Committee Chair

(2) Audit Committee Chair

(3) Compensation Committee Chair

Annual General Meeting Unitholders are cordially invited to attend the Annual

General Meeting to be held on May 18, 2011 at 3 p.m.

(MDT) in the Devonian Room at the Calgary Petroleum Club,

319 – 5th Avenue SW, Calgary, Alberta.

Design: Bryan Mills Iradesso

Officers Richard W. Clark

President, Chief Executive Officer and Director

Peter L. Churcher

Executive Vice President, Engineering and Geosciences

Kelly A. Tomyn

Vice President, Finance and Chief Financial Officer

Robert J. Cunningham

Vice President, Business Development

Dusty J. Dumas

U.S. Controller

Auditors PricewaterhouseCoopers LLP

Trustee and Transfer Agent Computershare Trust Company of Canada

Engineering ConsultantsGLJ Petroleum Consultants Ltd.

Bankers Bank of Nova Scotia

Legal CounselMcCarthy Tétrault LLP

Forward-looking Statements Certain of the statements made and information contained in this Annual Report are forward-looking statements and forward-looking information (collectively referred to as “forward-looking statements”) within the meaning of Canadian securities laws. Statements relating to the volumes and future net revenue of “reserves” are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future.

This Annual Report also contains forward-looking statements pertaining to, and which rely on assumptions as to, the estimated volumes and estimated value of Eagle’s reserves, forecasted production levels, future oil prices and the expected timing of tying in the remaining wells. These forward-looking statements are based on Eagle’s current beliefs as well as assumptions made by, and information currently available to Eagle, including the accuracy of the estimates of Eagle’s reserves volumes, future commodity prices and costs assumptions, future production levels, the ability to obtain equipment in a timely manner to carry out development activities, the ability to market oil successfully, and the ability to obtain financing on acceptable terms to fund Eagle’s planned expenditures. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

These assumptions necessarily involve known and unknown risks and uncertainties inherent in the oil and gas industry such as geological, technical, drilling and processing problems and other risks and uncertainties, as well as the business risks discussed in Eagle’s Annual Information Form dated March 9, 2011 under the heading “Risk Factors.”

Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward looking statements will not occur. Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date the forward-looking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to Eagle and its unitholders. Eagle does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.

Unlike fixed income securities, Eagle has no obligation to distribute any fixed amount, and reductions in, or suspensions of cash distributions may occur that would reduce future yield.

All material information pertaining to Eagle Energy Trust may be found at www.sedar.com or on Eagle’s website at www.eagleenergytrust.com.

Calgary OfficeEagle Energy Inc. Suite 900, 639-5th Avenue SW Calgary, Alberta T2P 0M9

Phone: (403) 531-1575 Fax: (403) 266 4124 Email: [email protected]

www.eagleenergytrust.com

Houston OfficeEagle Hydrocarbons LLC Suite 3005, 333 Clay Street Houston, Texas 77002

Phone: (713) 300-3245 Fax: (713) 300-3240

TSX : EGL.UN

eagle energy trust

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