Environment

During the second quarter of 2010, Vermilion approved a plan to wind up its reclamation fund.  Vermilion had previously established the reclamation fund to provide for the ultimate payout of its environmental and site restoration costs on its asset base.

After an extensive review, the Trust concluded that the reclamation fund assets would be more effectively employed supporting Vermilion's operations.  In July 2010, the reclamation fund assets were liquidated and the proceeds will initially be used to reduce outstanding bank indebtedness and will ultimately help support the Trust's capital programs.  Vermilion will fund future reclamation costs out of current resources as they become due, consistent with standard industry practice.

As a result, the Trust has included the reclamation fund assets with short-term investments on the consolidated balance sheet as at June 30, 2010.