Abbreviations

Conversions

The following table sets forth certain standard conversions between Standard Imperial Units and the International System of Units (or metric units).

Glossary

ABCA

means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder.

Acquireco

means the one or more entities, which may be formed by the Trust as wholly owned entities to acquire corporate facilities and other types of oil and natural gas related acquisitions in addition to Canadian resource properties.

Acquireco Distributions

means cash distributions made to the Trust from Acquireco, which distributions will be distributed to Unitholders, after deduction of all required deductions.

Acquisition Fee

means the acquisition fees payable to the Manager pursuant to the Management Agreement.

Additional Properties

means working interests in oil and natural gas rights acquired by us from time to time.

Additional Royalties

means Royalty Interests in oil and natural gas rights acquired by us from time to time, including the royalty, fee simple mineral and net profit interests derived from the Partnership Interests.

ARC

means credits and rebates in respect of Crown royalties which are paid or credited by the Crown, including those paid or credited under the Alberta Corporate Tax Act which are commonly known as "Alberta Royalty Credits".

Asset Value

means, for any property at any time, the present value of all of the estimated pre-tax net cash flow from the net proved plus probable reserves shown in the most recent engineering report relating to such property, discounted at 10% and using forecast price and cost assumptions.

Business Day

means a day, which is not a Saturday, Sunday or statutory holiday, when banks in the City of Calgary are generally open for the transaction of commercial banking business.

CN Pension Trust Funds

means the pension trust funds for employees of Canadian National Railway Company.

Canpar

means Canpar Holdings Ltd., a wholly-owned subsidiary of the CN Pension Trust Funds.

Cash Distribution Date

means the date Distributions to Unitholders are paid, being the 15th day following any Record Date.

COGE Handbook

means the "Canadian Oil and Gas Evaluation Handbook" prepared jointly by The Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society), as amended from time to time.

Debt Service Charges

means all interest and principal repayments and other costs, expenses and disbursements relating to the borrowing of funds by us.

Deferred Purchase Price Obligation

means the ongoing obligation of the Trust to pay to Freehold Resources, to the extent of the Trust's available funds, an amount equal up to 99% of the cost of, or any amount outstanding in respect of money borrowed by Freehold Resources to acquire, any additional "Canadian resource property" (as defined in the Tax Act) acquired by Freehold Resources and of the cost of, or any amount borrowed by Freehold Resources to fund, certain designated capital expenditures as partial consideration for the Freehold Resources Royalty. See "Description of Properties - Freehold Resources Royalty - Deferred Purchase Price Obligation.

Distributions to Unitholders

means, for any particular period, the HB Lands Royalties, Additional Royalties, the Freehold Resources Royalty and Acquireco Distributions received by the Trust plus the interest income from Permitted Investments and ARC, if any, received by the Trust less the Trust's share of Crown royalties (other than Crown royalties which are deducted in the computation of the Royalty), expenses and withholding payable by the Trust and less other amounts reasonably determined by Freehold Resources to be retained for the purposes of the Trust.

FCT Trusts

means the FCT1 Trust and the FCT2 Trust, commercial trusts formed under the laws of Alberta, of which the Trust is the sole beneficiary, which acquired the Partnership Interests.

FCT1 Trust

means Freehold Royalty Acquisition Trust 1, a commercial trust formed under the laws of Alberta, of which the Trust is the sole beneficiary.

FCT2 Trust

means Freehold Royalty Acquisition Trust 2, a commercial trust formed under the laws of Alberta, of which the Trust is the sole beneficiary.

Freehold Resources

means Freehold Resources Ltd., a corporation incorporated under the ABCA and a wholly owned subsidiary of the Trust.

Freehold Resources Notes

means notes issued in certain circumstances including on a redemption of Trust Units.

Freehold Resources Properties

means the working, royalty or other interest of Freehold Resources from time to time in any oil and natural gas rights, tangibles and miscellaneous interests, including the Working Interest Properties and Additional Properties.

Freehold Resources Royalty

means the royalty payable by Freehold Resources to the Trust pursuant to the Freehold Resources Royalty Agreement which equals 99% of Freehold Resources Royalty Income.

Freehold Resources Royalty Agreement

means the agreement regarding the creation and sale of the Freehold Resources Royalty dated November 25, 1996 between Freehold Resources and the Trustee as trustee for and on behalf of the Trust, as amended from time to time.

Freehold Resources Royalty Income

in respect of any period for which Freehold Resources Royalty Income is calculated means: (a) the amount received in such period in respect of the sale of Petroleum Substances collected from the Freehold Resources Properties (including the share reserved to the Crown) and any other revenue received in such period other than the proceeds from the sale of the Freehold Resources Properties; less (b) the aggregate of the following costs and expenses paid in such period: (i) all costs and expenses (including both operating costs and capital costs) in respect of the Freehold Resources Properties, except to the extent that such costs or expenses are funded by borrowing and in the case of capital costs, except to the extent designated as Deferred Purchase Price Obligations, including, without limitation, the costs of gathering, compressing, processing, transporting and marketing all Petroleum Substances produced from the Freehold Resources Properties and all other amounts paid to third parties which are calculated with reference to production from the Freehold Resources Properties including, without limitation, gross overriding royalties and lessor's royalties, but excepting Crown royalties and other Crown charges; (ii) income, capital and other direct taxes in respect of the Freehold Resources Properties; (iii) Debt Service Charges; (iv) General and Administrative Costs to the extent not paid from the residual income of Freehold Resources; (v) net contributions to Freehold Resources' reclamation fund; (vi) the amount paid to the Trust to purchase Trust Units to satisfy its obligations under the Management Agreement and (vii) all other costs and expenses relating to the Freehold Resources Properties. Any income derived from Freehold Resources Properties which are not working interests in "Canadian resource properties" (as defined in the Tax Act), will not be included as Freehold Resources Royalty Income and will be used to defray capital expenditures and other expenses of Freehold Resources.

General and Administrative Costs

means the amount in aggregate representing all expenditures and costs incurred under the Management Agreement in respect of Freehold Resources, the Trust or the HB Lands Royalties, Additional Royalties or the Freehold Resources Royalty or in the management and administration of Freehold Resources, the Trust or the HB Lands Royalties, Additional Royalties or the Freehold Resources Royalty including, without limitation: (a) all reasonable costs and expenses relating to Freehold Resources, the Trust and the HB Lands Royalties, Additional Royalties or the Freehold Resources Royalty paid to third parties by or on behalf of Freehold Resources, the Trust or their affiliates, including, without limitation, Trustee's fees; and (b) all reasonable costs and expenses incurred specifically for Freehold Resources or the Trust relating to Freehold Resources, the Trust or the HB Lands Royalties, Additional Royalties or the Freehold Resources Royalty including, without limitation, auditing, accounting, bookkeeping, rent and other leasehold expenses, legal, land administration, engineering, travel, telephone, data processing, reporting, executive and management time, salaries and all of those costs and expenses incurred by the Manager in discharging its obligations under the Management Agreement in respect of Freehold Resources, the Trust or the HB Lands Royalties, Additional Royalties or the Freehold Resources Royalty (other than the Acquisition Fee).

Gross

means: (i) in relation to production and reserves, our working interest (operating and non-operating) share before deduction of royalties and without including any royalty interests of the Trust; (ii) in relation to wells, the total number of wells in which we have an interest; and (iii) in relation to properties, the total area of properties in which we have an interest.

HB Lands Royalties

means the royalties representing the right to receive revenue from the lands from which the HB Lands royalties are derived from all formations to the base of the deepest formation which was producing Petroleum Substances or potash at January 1, 1996 with respect to each mineral title or royalty assumption property acquired by us from Canpar pursuant to the Royalty Sale Agreement.

Management Agreement

means the agreement dated November 25, 1996 as renewed between the Manager, Freehold Resources and the Trustee for and on behalf of the Trust pursuant to which the Manager provides management services to Freehold Resources and the Trust.

Management Fees

means the fees payable to the Manager pursuant to the Management Agreement.

Manager

means Rife Resources Management Ltd.

Net

means: (i) in relation to production and reserves, our working and non-working interest (operating and non-operating) share after deduction of royalty obligations, plus our Royalty Interests, (ii) in relation to wells, the number of wells obtained by aggregating our working interest in each of its gross wells; and (iii) in relation to our interest in a property, the total area in which we have an interest multiplied by the working interest owned by us.

NI 51-101

means National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Partnership

means Petrovera Resources, a general partnership acquired by the FCT Trusts on May 10, 2005.

Partnership Acquisition

means the acquisition of the Partnership by the FCT Trusts on May 10, 2005, pursuant to the Partnership Purchase Agreement.

Partnership Interests

means the royalty, fee simple mineral, working and net profit interests owned by the Partnership.

Partnership Lands

means all of the lands from which the Partnership Interests are derived.

Partnership Purchase Agreement

means the purchase agreement dated April 20, 2005 between the FCT Trusts and the vendors of the Partnership and the Partnership Interests pursuant to which the FCT Trusts acquired the Partnership.

Permitted Investments

means: (i) loan advances to Freehold Resources; (ii) interest-bearing accounts of a Canadian chartered bank or the Trustee; (iii) guaranteed investment certificates issued by a Canadian chartered bank or the Trustee; (iv) investment grade money market instruments or funds; (v) Government of Canada Treasury Bills; and (vi) Additional Royalties which are direct royalty interests in petroleum and natural gas rights; provided that an investment will not be a Permitted Investment if it would result in the Trust holding more than 8% of its assets at any particular time in the securities of any person other than the Government of Canada, any province or any municipality.

Petroleum Substances

means petroleum, natural gas and related hydrocarbons (except coal) including, without limitation, all liquid hydrocarbons, and all other substances, including sulphur, whether gaseous, liquid or solid and whether hydrocarbon or not, produced in association with such petroleum, natural gas or related hydrocarbons.

Proved reserves

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

Probable reserves

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

Record Date

means the last day of each calendar month.

Replacement Properties

means properties, whether Additional Royalties or Additional Properties, which were acquired by us by means of an exchange of properties owned by us or using funds obtained through the prior sale of HB Lands Royalties and/or Freehold Resources Properties.

Reserve Life Index

is an index reflecting the theoretical production life of a property if the remaining reserves were to be produced out at current rates. The index is calculated by dividing the reserves in the selected reserve category at a certain date by the estimated production for the following 12 month period.

Rife

means Rife Resources Ltd., a wholly-owned subsidiary of the CN Pension Trust Funds.

Royalty Income

means income to the Trust from the HB Lands Royalties, Additional Royalties and the Freehold Resources Royalty.

Royalty Interest

means the percentage of the gross proceeds from the sale of the produced substances, or that same percentage of the produced substances delivered in-kind to the royalty owner as may be provided for by the lease agreement between the royalty owner(s) and the lessee(s).

Royalty Lands

means the lands from which the HB Lands Royalties and the Additional Royalties are derived.

Royalty Lands Royalty Income

means the income derived from the HB Lands Royalties and the Additional Royalties.

Royalty Sale Agreement

means the purchase and sale agreement between Canpar and the Trust which provided for the purchase by the Trust from Canpar of the HB Lands Royalties.

Special Resolution

means a resolution passed by a majority of not less than 66⅔% of the votes cast, either in person or by proxy, at a meeting of Unitholders, called for the purpose of approving such resolution, or approved in writing by the holders of not less than 66⅔% of the Trust Units entitled to be voted on such resolution.

Tax Act

means the Income Tax Act (Canada) and the regulations thereunder.

Trimble

means Trimble Engineering Associates Ltd., independent qualified reserves evaluators.

Trimble Report

means the report dated January 30, 2006 prepared by Trimble, evaluating the oil, natural gas, natural gas liquids and sulphur reserves attributable to the Royalty Interest properties and the Freehold Resources Properties as at December 31, 2005.

"Trust", "us", "we", "our" or "Freehold"

means Freehold Royalty Trust, a trust established under the laws of Alberta pursuant to the Trust Indenture. All references to the "Trust", "us", "we", "our" or "Freehold", unless the context otherwise requires, are references to Freehold Royalty Trust, its predecessors, and its subsidiaries.

Trustee

means Computershare Trust Company of Canada, or its successor as trustee of the Trust.

Trust Indenture

means the amended and restated trust indenture dated May 1, 2002 between the Trustee and Freehold Resources as amended from time to time, including the amendment effective April 18, 2005.

Trust Units

means the units of the Trust, each unit representing an equal undivided beneficial interest therein.

Unanimous Shareholders Agreement

means the amended and restated unanimous shareholders agreement dated December 31, 2004 among Freehold Resources, the Manager and the Trustee for and on behalf of Unitholders.

Unitholders

means holders of our Trust Units.

Working Interest Properties

means the properties and assets acquired by Freehold Resources from each of Canpar and Rife pursuant to the Working Interest Sale Agreements, and additional working interests acquired.

Working Interest Sale Agreements

means the purchase and sale agreement between Freehold Resources and Rife and the purchase and sale agreement between Freehold Resources and Canpar which provided for the purchase by Freehold Resources from Rife and Canpar of the Working Interest Properties.

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