Parkland Income Fund Reports Record First Quarter, Announces Increase in Distributions and Announces Unit Split

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Performance Highlights

    -   Record first quarter EBITDA
    -   Completed the acquisition of Neufeld Petroleum & Propane
    -   Completed $50 million bought deal financing
    -   Completed the acquisition of Joy Propane
    -   Announced the acquisition of United Petroleum Products
    -   Monthly distributions increased by four cents ($0.01333 post split)
    -   Initiated unit splitRED DEER, AB, May 4 /CNW/ - Parkland Income Fund today announced its
business performance for the three months ended March 31, 2007. Volumes,
revenue, earnings and EBITDA were all at record levels compared to the first
quarter of any previous year. This allowed the Fund to increase monthly
distributions to $0.29 per unit ($0.0967 post split) after considering the
impact of acquisitions and the outlook for 2007.
    President and CEO Mike Chorlton commented "Parkland's results in the
first quarter were substantially stronger than any previous first quarter
based on performance of our recent acquisition and very strong margins. We
were able to increase monthly distributions for the sixth time in the past
twelve months. The strength of Parkland's operations has prompted the
Directors to initiate a three-for-one unit split."
    The commercial operations added with the acquisition of Neufeld Petroleum
on January 24, 2007 contributed strongly in the winter season as expected. In
addition, fuel margins in the balance of Parkland's business were stronger
than those realized historically during this season. Subsequent to the end of
the quarter Parkland was able to complete the acquisition of Joy Propane Ltd.
for $16.3 million and also announce the signing of a purchase agreement for
United Petroleum Products Inc. for $18.0 million. Given the positive start to
2007 and the new acquisitions the Fund announced a one cent per unit increase
in distributions in conjunction with the Joy Propane acquisition and another
four cents with this first quarter report.

    Executive Summary of First Quarter Results
    ------------------------------------------
    Fuel margins in the first quarter of 2007 started at a seasonally low
level in line with historic performance and then increased significantly in
the latter part of the quarter along with the North America wide market, led
by strong refiners' margins. Margins continue strong as of this date and we
are monitoring their direction as North American refineries resume production
after seasonal maintenance down-time.
    For the balance of 2007 significant management time will be taken with
the integration of the acquired businesses.

    Acquisition of Neufeld Companies ("Neufeld")

    The Neufeld business is described more fully in Parkland's annual report
for 2006. The acquisition was closed on January 24, 2007 and subsequent
earnings included in our first quarter financial statements. The transaction
had an effective date of November 1, 2006 and the net after-tax earnings up to
January 24, 2007 were credited to the purchase price resulting in a net
purchase price of $133 million.
    Based in Grande Prairie, Alberta, Neufeld operates 13 locations in
northern Alberta, northwest British Columbia and the Northwest Territories.
    Neufeld markets fuel, propane and agricultural inputs such as fertilizers
and farm chemicals, along with industrial products such as lubricants and frac
oils to commercial customers. Neufeld also services residential customers for
their home heating needs.
    Neufeld's fuel and propane gross margin contributions are included in our
Fuel Marketing segment and all other contributions are included in our
Commercial segment.

    Acquisition of Joy Propane Ltd. ("Joy")

    On April 24, 2007 Parkland purchased Joy of Dawson Creek, British
Columbia for $16.3 million funded by the issuance of 130,530 Class C Limited
Partnership units with an aggregate value of $5.1 million and $11.2 million in
cash. Joy markets propane to automotive, commercial, agricultural and
residential customers from six locations in northeastern British Columbia and
northwestern Alberta. Annual propane volumes have exceeded 20 million litres
in recent years.
    This acquisition extends the market area established through the Neufeld
acquisition and will provide opportunities for operational synergies.

    Acquisition of United Petroleum Products Inc. ("UPPI")

    On May 2, 2007 Parkland announced it had entered into an agreement to
purchase UPPI of Burnaby, British Columbia, for $18.0 million, subject to
adjustments for working capital. The purchase will be funded by the issuance
of Class C Limited Partnership units with an aggregate value of $7 million and
the balance in cash. The cash portion is expected to be funded from Parkland's
existing credit facility. Closing is anticipated within the next four weeks
with an effective date of May 1, 2007.
    UPPI is an independent fuel and lubricants marketer in British Columbia
with annual fuel sales volumes in the range of 180 million litres distributed
through a network of commercial accounts and independent service station
operators.

    Equity Financing

    In January, 2007 Parkland completed the issuance of 1,360,000 Fund units
for net proceeds of $47.5 million on a bought deal basis through a syndicate
of investment dealers. The proceeds were used in part to fund the purchase of
Neufeld and to repay approximately $10 million of Parkland's term debt.

    Unit Split

    On May 4, 2007, the Directors passed a resolution authorizing the Fund to
provide for a division of its units on a three-for-one unit basis. The Fund
and the Board believe that the three-for-one unit split will enhance the
marketability of Parkland's units and make the units more accessible to a
wider range of investors. The unit split will not change the rights of the
holders of units and each unit outstanding after the unit split will be
entitled to one vote. The unit split will apply to the Class B and C Limited
Partnership units and Fund units equally. The three-for-one split will
increase the number of outstanding units as of March 31, 2007 from
approximately 15.8 million to approximately 47.4 million. The completion of
the unit split is subject to receipt of all regulatory approvals.

    Consolidated Operating and Financial HighlightsFor the three months ended March 31
    ($ millions except volume
     and per unit amounts)                        2007       2006       2005
    -------------------------------------------------------------------------
    Fuel volumes (millions of litres)              440        329        268
    Net sales and operating revenue          $   334.0  $   241.6  $   177.1
    EBITDA                                   $    19.2  $     8.2  $     3.2
    Net earnings                             $    13.2  $     5.6  $     0.8
        Per unit - basic                     $    0.83  $    0.44  $    0.07
        Per unit - diluted                   $    0.82  $    0.43  $    0.06
    -------------------------------------------------------------------------Management's Discussion and Analysis

    The following discussion and analysis of the results of operations and
financial condition of Parkland Income Fund (the "Fund") should be read in
conjunction with the unaudited interim financial statements for the three
month period ended March 31, 2007, Management's Discussion and Analysis and
the audited financial statements for the year ended December 31, 2006 and the
Fund's Annual Information Form dated March 16, 2007.

    Non-GAAP Financial Measures

    In this document there are references to non-GAAP financial measures such
as EBITDA and Cash Available for Distribution. EBITDA refers to Earnings
Before Interest Expense, Income Taxes, Depreciation and Amortization, Loss on
Disposal of Capital Assets as well as the Loss on the Write-down of the
Refinery and can be calculated from the GAAP amounts included in the Fund's
financial statements. Management believes that EBITDA is a relevant measure to
users of its financial information as it provides an indication of pre-tax
earnings available to distribute to debt and equity holders in the Fund. The
Fund's definition of EBITDA may not be consistent with other providers of
financial information and therefore may not be comparable.
    Cash Available for Distribution is defined in the Fund's Deed of Trust
and related documents and generally represents the cash available to be
distributed to the Fund's Unitholders. Cash Available for Distribution is
calculated as EBITDA less interest expense, current income taxes, if any, and
maintenance capital expenditures. EBITDA is as defined above, while interest
expense and current income taxes are GAAP measures. Maintenance Capital
represents capital expenditures made by the Fund to maintain its current
business operations. This differs from growth capital, which represents
capital used to expand the Fund's business operations.

    Three Months Ended March 31, 2007
    ---------------------------------
    Higher fuel volumes, increased station count, higher average fuel
margins, increased convenience store sales and margins and the addition of
profits from the Neufeld business commencing January 24, 2007 all contributed
to higher gross margins in the quarter. EBITDA increased significantly to
$19.2 million from $8.2 million for the same period in 2006. Net earnings were
$13.2 million, also significantly higher than the $5.6 million reported in the
first quarter of 2006.

    Fuel Volumes

    Gasoline and diesel volumes increased by 81 million litres in the first
quarter of 2007 to 410 million litres, an increase of 24 percent. In addition,
another 30 million litres of propane fuel was sold by the Neufeld operations
during the nine week period from January 24 to March 31, 2007. The station
upgrade program, addition of the Esso retail branded distributorship sites and
fuel sales from the Neufeld business continue to generate increased volumes
for the Fund year over year.

    Sales and Cost of Sales

    Sales for the quarter ended March 31, 2007 were $334 million, an increase
of 38 percent over the same period in 2006. Fuel sales revenue increased to
$310 million from $228 million in the prior year as a result of volume
increases and higher average crude prices. Convenience store merchandise sales
also increased with sales during the first quarter of $14.4 million in 2007 as
compared to $13.1 million in 2006. With the acquisition of Neufeld the Fund
now also sells fertilizer, lubes and other agricultural and industrial
products and services. These sales are included in the Commercial segment in
Note 4 to the Interim Consolidated Financial Statements and totaled
$9.1 million for the quarter.
    Fuel cost of sales increased to $279 million in 2007 as compared to
$209 million in 2006. Similar to sales revenue, cost of sales increased as a
result of higher volumes and higher average per litre costs of fuel products.
Convenience store merchandise cost of sales increased to $10.7 million in 2007
from $9.8 million in 2006, consistent with the increase in merchandise sales.
Cost of sales related to fertilizer, lubes and other agricultural and
industrial products and services for the quarter came to $4.7 million.

    Gross Margins

    These factors led to gross margins of $40.0 million in 2007, which was
$17.2 million higher than the $22.8 million achieved in the first quarter of
2006. The largest single contribution to the increase was average fuel margins
rising to 6.8 cents per litre compared to 5.4 cents per litre in the same
period in 2006.

    Operating Expenses

    Site operating costs increased as 39 sites were added under the retail
branded distributorship program. Site operating costs are sensitive to changes
in fuel volume sales and, as a result, total costs were higher than the prior
year. Also affecting site operating costs is the upward pressure on wage
levels that are being experienced in western Canada due to a robust economy
and tight labor supply, specifically for convenience store personnel.
    Marketing, General and Administrative expenses were $7.7 million for the
quarter ended March 31, 2007 compared to $3.8 million in 2006. Drivers of
increased costs included provision for higher variable compensation costs
arising from strong profits, costs related to compliance with the Multilateral
Instrument 52-109 internal controls certification requirements and the
inclusion of overhead costs of the Neufeld business. Increases in staffing
resulted from the integration of the new business. The growth in personnel
will provide the human resources to pursue further acquisitions.

    Earnings

    Net earnings were $13.2 million in 2007 compared to $5.6 million in 2006,
an increase of 136 percent. The increase in Parkland's base fuel business
resulted largely from the combined increase in gross margins and fuel volumes,
offset in part by increased site operating costs and marketing, general and
administrative expenses. The acquisition of the Neufeld business and the
inclusion of nine weeks of earnings in the first quarter of 2007 also
contributed to the increase in earnings compared to the same period in 2006.

    Capital Investments

    During the first quarter the Fund expended $1.7 million net in capital
investments, of which $0.8 million was classified as maintenance capital and
$0.9 million was classified as growth capital. The classification of capital
as growth or maintenance is a subjective determination by management as many
of the Fund's capital projects have components of both. It is the Fund's
policy to treat all capital related to service station upgrades (i.e. Fas Gas
Plus) as maintenance capital even though it includes the expectation of a
financial return, while the construction of a new building on an existing site
is considered growth capital. The replacement of existing trucks and trailers
is treated as maintenance capital whereas an expansion of the fleet is treated
as growth capital.
    The acquisition of the Neufeld business included the purchase of capital
assets at an estimated fair value of $93.5 million. Amortization for
nine weeks on these acquired capital assets plus amortization on intangible
assets totaled $2.9 million, accounting for most of the increase compared to
the first quarter of 2006.

    Long-Term Debt and Cash Balances

    For the quarter ended March 31, 2007 interest on long-term debt was
$0.6 million. Most of the Fund's long-term debt bears interest at variable
rates linked to prime.
    In January 2007, the Fund received the terms and conditions of a proposed
financing arrangement with HSBC Bank Canada. The proposed financing
arrangement will provide for an increase in the Fund's credit facility from
$54.0 million to $128.1 million. The proposed financing arrangement is
comprised of $32.0 million for operating debt, $30.0 million for letters of
credit and the remainder for term debt. The proposed arrangement will assist
in the financing of the acquisitions of Joy Propane Ltd. and United Petroleum
Products Inc. As of the date of this report documentation remains to be
completed.
    During the quarter the Fund used a portion of the proceeds from the
equity financing to pay off $9.9 million of long-term debt. Immediately
following the repayment, $3.3 million of long-term debt was refinanced under
similar terms and conditions.
    On March 30, 2007, the Fund borrowed an additional $15.0 million against
its existing capital loan facility. The Fund used the loan proceeds and
existing cash on hand to repay $20.1 million of assumed debt of Neufeld.
    The Fund has available a $40.0 million line of credit to finance letters
of credit and to secure obligations and fund short-term cash flow needs. This
was increased from $32.0 million on April 13, 2007 as a temporary measure
until such time as the proposed financing arrangement is finalized.
    The cash balance at March 31, 2007 of $11.1 million decreased from the
December 31, 2006 balance of $36.5 million largely due to the payment of the
cash portion of the special distributions declared on December 29, 2006 and
paid during the quarter. The cash consideration paid for the acquisition of
Neufeld Petroleum was funded entirely through the new issue of Fund units on
January 24, 2007 and therefore did not impact the cash balance.

    Accounting Estimates

    The financial statements include accounting estimates, the nature of
which is described in the 2006 Annual Report.

    Related Party Transactions

    Following the acquisition of Neufeld, Parkland entered into an agreement
with Neufeld Petroleum and Propane (High Level) Ltd ("NPPHL") to provide labor
and services on a contract basis. During the first quarter this arrangement
was in transition and amounts payable under the agreement were nominal. The
shareholder of NPPHL is Abe Neufeld, a Vice President of Parkland and the
vendor in the Neufeld acquisition. Operational management of the Neufeld
business is in transition to another Vice President.

    Distributions and Income Tax
    ----------------------------
    The Fund is a mutual fund trust for income tax purposes. As such, the
Fund is only taxed on any amount not allocated to unitholders. The Fund
intends to comply with the provisions of the Income Tax Act (Canada) that
permit, amongst other items, the deduction of distributions to unitholders
from the Fund's taxable income.
    The Fund makes monthly distribution payments to its unitholders. As of
the beginning of 2007, monthly distributions were $0.22 per unit. This was
increased on February 15, 2007 to $0.24 per unit. On April 25, 2007 concurrent
with the acquisition of Joy Propane Ltd, Parkland announced an increase of
$0.01 per unit to $0.25 effective June 15, 2007 and with this report is
announcing a further increase of $0.04 to $0.29 per unit ($0.0967 post split)
effective June 15, 2007 to Unitholders of record on May 31, 2007. Estimated
distributions in 2007, assuming continued $0.29 (subject to adjustments for
the split) payments for the duration of the year, would be $49.6 million.
    Although it is typical for the Fund's cash flow to have seasonal
fluctuations, it is management's current intention to pay consistent regular
monthly distributions throughout the year based on estimated annual cash
flows.
    The Directors review distributions quarterly giving consideration to
current performance, historical trends in the business and the expected
sustainability or change in those trends, as well as maintenance capital
requirements to sustain performance.

    Cash Available for Distribution and Reconciliation of EBITDA to Cash from
    -------------------------------------------------------------------------
    Operating Activities
    --------------------For the three months ended March 31
    ($000's)                                                            2007
    -------------------------------------------------------------------------

    Cash from operating activities                                    $4,252
    Net changes in non-cash working capital                           14,849
                                                                     --------
    Funds flow from operations                                        19,101
    Add back (deduct):
        Interest on long-term debt                                       642
        Unit incentive compensation                                     (571)
        Accretion expense                                                (15)
        Current taxes                                                     16
                                                                     --------
    EBITDA                                                            19,173
    Maintenance capital expended                                        (846)
    Current taxes and interest                                          (658)
                                                                     --------
    Cash available for distribution                                  $17,669
    Cash distributed                                                 $11,292
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------Distribution Reinvestment Plan
    ------------------------------
    Parkland Income Fund has established a Distribution Reinvestment Plan
administered by Valiant Trust Company. Details are available from the Fund or
from Valiant Trust Company.

    Internal Controls
    -----------------
    Parkland's Board and management are aware of regulations related to
internal controls certification. As such, there is currently an initiative to
review and enhance existing systems documentation, analyze risks and identify
and test key controls. The project is being managed by consultants and the
controls documentation is substantially complete except for work related to
recent acquisitions: Neufeld Petroleum and Joy Propane. No major controls gaps
have been identified. The Fund believes that it will be able to continue to
comply with regulations as required.

    Accounting Policies
    -------------------
    As a result of the acquisition of Neufeld Petroleum, the Fund has updated
the following significant accounting policies and practices:-   Goodwill
    -   Intangible Assets
    -   Deferred RevenueAll of these updated accounting policies are described in more detail in
Note 1 to the Interim Consolidated Financial Statements. The adoption of these
new standards has had no impact on the Fund's net earnings or cash flows.

    New Accounting Standards Adopted
    --------------------------------
    On January 1, 2007, the Fund adopted the Canadian Institute of Chartered
Accountants (CICA) handbook sections 1530 "Comprehensive Income", section 3251
"Equity" and section 3855 "Financial Instruments - Recognition and
Measurement". These standards result in changes in the accounting for
financial instruments as well as introduce comprehensive income as a separate
component of unitholders' capital. As required, these standards have been
adopted prospectively and comparative amounts for the prior periods have not
been restated.
    The adoption of these new standards is explained more fully in Note 2 to
the Interim Consolidated Financial Statements.

    Fund Description
    ----------------
    Parkland Income Fund operates retail and wholesale fuels and convenience
store businesses under its Fas Gas Plus, Fas Gas, Race Trac Fuels and Short
Stop Food Stores brands and through independent branded dealers, and
transports fuel through its Petrohaul division. With over 550 locations,
Parkland has developed a strong market niche in western and northern Canadian
non-urban markets. Through Neufeld and Joy the Fund markets propane, gasoline,
diesel, lubricants, industrial fluids, agricultural inputs and delivery
services to commercial and industrial customers in northern Alberta,
northeastern British Columbia and the Northwest Territories. To maximize value
for its unitholders, the Fund is focused on the continuous refinement of its
retail portfolio, increased revenue diversification through growth in non-fuel
revenues and active supply chain management. Parkland operates the Bowden
refinery near Red Deer, Alberta producing drilling fluids on a contract basis.
    The Fund's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit www.parkland.ca.

    Certain information included herein is forward-looking. Forward-looking
statements include, without limitation, statements regarding the future
financial position, business strategy, budgets, projected costs, capital
expenditures, financial results, taxes and plans and objectives of or
involving Parkland. Many of these statements can be identified by looking for
words such as "believe", "expects", "expected", "will", "intends", "projects",
"projected", "anticipates", "estimates", "continues", or similar words and
include but are not limited to, statements regarding the accretive effects of
the acquisition and the anticipated benefits of the acquisition. Parkland
believes the expectations reflected in such forward-looking statements are
reasonable but no assurance can be given that these expectations will prove to
be correct and such forward-looking statements should not be unduly relied
upon. Forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties some of which are described in the
Fund's annual report, annual information form and other continuous disclosure
documents. Such forward-looking statements necessarily involve known and
unknown risks and uncertainties and other factors, which may cause the Fund's
actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. Such factors include, but are not
limited to: general economic, market and business conditions; industry
capacity; competitive action by other companies; refining and marketing
margins; the ability of suppliers to meet commitments; actions by governmental
authorities including increases in taxes; changes in environmental and other
regulations; and other factors, many of which are beyond the control of
Parkland. Any forward-looking statements are made as of the date hereof and
the Fund does not undertake any obligation, except as required under
applicable law, to publicly update or revise such statements to reflect new
information, subsequent or otherwise.

    Conference Call
    ---------------
    Parkland will hold a conference call for Analysts, Brokers and Investors
to discuss first quarter results as follows:Monday, May 7, 2007, 9:00 a.m. (11:00 a.m. Eastern Time)
           Direct: 416-644-3418
           Toll-free: 800-732-9303

           The replay will be available as follows:

               From Monday May 7, 2007, 11:00 a.m. (1:00 p.m. Eastern Time)
               To Monday, May 21, 2007 at 11:59 p.m. (1:59 a.m. Eastern Time)
               Direct: 416-640-1917
               Toll-free: 877-289-8525
               Passcode: 21226722 followed by the number sign

    Webcast
    -------
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1801580


                          Consolidated Balance Sheet


                                                       March 31, December 31,
    ($000's) (Unaudited)                                   2007         2006
    -------------------------------------------------------------------------

    Assets
      Current Assets
        Cash and cash equivalents                   $    11,122  $    36,462
        Accounts receivable                              78,240       40,294
        Inventories                                      30,608       20,351
        Prepaid expenses and other                        9,767        3,874
    -------------------------------------------------------------------------
                                                        129,737      100,981
      Capital assets                                    159,106       68,541
      Other                                               1,285        1,499
      Future income taxes                                 1,324        1,438
      Goodwill (Note 5)                                   1,044            -
      Intangible assets (Note 5)                         15,475            -
    -------------------------------------------------------------------------
                                                    $   307,971  $   172,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities    $    71,056  $    62,124
        Distributions declared and payable                3,797       15,842
        Income tax payable                                2,590          459
        Deferred revenue                                  4,625            -
        Long-term debt - current portion                 17,205       10,145
    -------------------------------------------------------------------------
                                                         99,273       88,570
      Long-term debt                                     17,905        1,651
      Refinery remediation accrual                        3,038        3,038
      Asset retirement obligations                        1,155        1,140
    -------------------------------------------------------------------------
                                                        121,371       94,399
    -------------------------------------------------------------------------

    Unitholders' Capital (Note 3)
      Class B Limited Partners' Capital                  12,655       12,310
      Class C Limited Partners' Capital                  58,466            -
      Unitholders' Capital                              115,479       65,750
    -------------------------------------------------------------------------
                                                        186,600       78,060
    -------------------------------------------------------------------------
                                                    $   307,971  $   172,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



         Consolidated Statements of Earnings and Other Comprehensive
    Income, Accumulated Other Comprehensive Income and Retained Earnings


    For the three months ended March 31
    (000's except per unit amounts)
     (Unaudited)                             2007         2006         2005
    -------------------------------------------------------------------------

    Net sales and operating revenue    $   334,006  $   241,552  $   177,081
    Cost of sales and operating
     expenses                              294,011      218,783      162,772
    -------------------------------------------------------------------------
    Gross margin                            39,995       22,769       14,309
    -------------------------------------------------------------------------
    Expenses
      Operating and direct costs            13,122       10,753        8,711
      Marketing, general and
       administrative                        7,700        3,830        2,355
      Amortization                           5,209        2,043        1,995
      Interest on long-term debt               642          250          198
      Loss on disposal of capital assets         7          258          186
    -------------------------------------------------------------------------
                                            26,680       17,134       13,445
    -------------------------------------------------------------------------
    Earnings before income taxes            13,315        5,635          864
    -------------------------------------------------------------------------
    Income tax expense
      Current                                   16           44            -
      Future                                   114           25           40
    -------------------------------------------------------------------------
                                               130           69           40
    -------------------------------------------------------------------------
    Net earnings                            13,185        5,566          824
    Other comprehensive income                   -            -            -
    -------------------------------------------------------------------------
    Comprehensive income               $    13,185  $     5,566  $       824
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive
     income, beginning of year         $         -  $         -  $         -
    -------------------------------------------------------------------------
    Comprehensive income                         -            -            -
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income, end of period             $         -  $         -  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of year                           $         -  $         -  $         -
    Allocation of net earnings to
     Class B Limited Partners               (2,401)      (1,306)        (271)
    Allocation of net earnings to
     Class C Limited Partners               (1,316)           -            -
    Allocation of earnings to
     Unitholders                            (9,468)      (4,260)        (553)
    -------------------------------------------------------------------------
    Retained earnings, end of period   $         -  $         -  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per unit
      - basic                          $      0.83  $      0.44  $      0.07
      - diluted                        $      0.82  $      0.43  $      0.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                     Consolidated Statement of Cash Flows

    For the three months ended March 31
    (000's) (Unaudited)                      2007         2006         2005
    -------------------------------------------------------------------------
    Cash Provided By Operations
      Net earnings                     $    13,185  $     5,566  $       824
        Add back non-cash items
           Amortization                      5,209        2,043        1,995
           Loss on disposal of capital
            assets                               7          258          186
           Accretion expense                    15           15           15
           Non-cash unit based incentive
            compensation                       571           48           44
           Future taxes                        114           25           40
    -------------------------------------------------------------------------
      Funds flow from operations            19,101        7,955        3,104
      Net changes in non-cash
       working capital (Note 6)            (14,849)       6,487       (1,926)
    -------------------------------------------------------------------------
      Cash from operating activities         4,252       14,442        1,178
    -------------------------------------------------------------------------

    Financing Activities
      Proceeds from long-term debt          27,950            -          158
      Long-term debt repayments            (33,468)      (1,208)      (1,108)
      Distributions to Class B
       Limited Partners                     (2,056)      (1,483)      (1,816)
      Distributions to Class C
       Limited Partners                     (1,127)           -            -
      Distributions to Unitholders          (8,109)      (4,837)      (3,699)
      Fund units issued, net of
       issue costs                          47,233        1,059          629
      Net changes in non-cash
       working capital (Note 6)            (12,045)      (1,234)           6
    -------------------------------------------------------------------------
      Cash provided by (used for)
       financing activities                 18,378       (7,703)      (5,830)
    -------------------------------------------------------------------------

    Investing Activities
      Acquisition of Neufeld Petroleum
       (Note 5)                            (46,001)           -            -
      Change in other assets                  (214)         163           31
      Purchase of capital assets            (2,458)      (2,322)        (513)
      Proceeds on sale of capital assets       703          157            -
      Refinery remediation expenditures          -            -          (10)
    -------------------------------------------------------------------------
      Cash used for investing activities   (47,970)      (2,002)        (492)
    -------------------------------------------------------------------------

    (Decrease) increase in cash            (25,340)       4,737       (5,144)
    Cash and cash equivalents,
     beginning of year                      36,462        8,290        5,286
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                     $    11,122  $    13,027  $       142
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash interest paid                 $       642  $       250  $       198
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash taxes paid                    $        16  $        44  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Notes to Consolidated Financial Statements

    1.  Update to Accounting Policies

    The consolidated interim financial statements have been prepared
    following the same accounting policies and methods of computation as the
    most recent annual financial statements dated December 31, 2006, except
    as noted below. These financial statements should be read in conjunction
    with the annual financial statements and notes.

        Goodwill

    The Fund must record goodwill relating to a corporate acquisition when
    the total purchase price exceeds the fair value for accounting purposes
    of the net identifiable assets and liabilities of the acquired company.
    The goodwill balance is assessed for impairment annually at year-end or
    as events occur that could result in an impairment. Impairment is
    recognized based on the fair value of the reporting entity compared to
    the book value of the reporting entity. If the fair value of the Fund is
    less than the book value, impairment is measured by allocating the fair
    value of the Fund to the identifiable assets and liabilities as if the
    Fund has been acquired in a business combination for a purchase price
    equal to its fair value. Any excess of the book value of goodwill over
    the implied value of goodwill is the impairment amount. Impairment is
    charged to earnings and is not tax affected, in the year in which it
    occurs. Goodwill is stated at cost less impairment and is not amortized.

        Intangible Assets

    Customer relationships and tradenames acquired during the acquisition of
    Neufeld Petroleum are recorded at estimated fair value and will be
    amortized using the straight-line method over their estimated useful
    lives of 5 years. The value of the non-compete agreement acquired during
    the acquisition of Neufeld Petroleum was recorded at estimated fair value
    and will be amortized using the straight-line method over the term of the
    agreement. Intangible assets are tested for impairment when conditions
    exist which may indicate that the estimated future net cash flows from
    the asset will be insufficient to cover its carrying value.

        Deferred Revenue

    Deferred revenue consists of deposits and prepayments by customers for
    the purchase of product not yet delivered and not recorded as revenue by
    the Fund.

    2.  Changes in Accounting Policies

    On January 1, 2007, the Fund adopted the Canadian Institute of Chartered
    Accountants (CICA) handbook sections 1530 "Comprehensive Income", section
    3251 "Equity" and section 3855 "Financial Instruments - Recognition and
    Measurement". These standards result in changes in the accounting for
    financial instruments as well as introduction of comprehensive income as
    a separate component of unitholders' capital. As required, these
    standards have been adopted prospectively and comparative amounts for the
    prior periods have not been restated.

     a) Comprehensive Income

        Comprehensive income is comprised of net earnings or loss and other
        comprehensive income ("OCI"). OCI represents the change in capital
        for a period that arises from unrealized gains and losses on
        available for sale securities and changes in the fair value of
        derivative instruments designated as cash flow hedges. The Fund does
        not currently have any OCI.

     b) Equity

        This section establishes the standards for presentation of capital
        and changes in capital during the period. It requires separate
        presentation of changes in unitholders' capital for the period
        arising from net income, OCI, contributed surplus, retained earnings,
        unitholders' capital and reserves. Accumulated OCI would be included
        in the consolidated balance sheet as a separate component of
        unitholders' capital.

     c) Financial Instruments

        This section establishes standards for the recognition and
        measurement of financial instruments: which is comprised of financial
        assets, financial liabilities, derivatives and non-financial
        derivatives.

        A financial asset is cash or a contractual right to receive cash or
        another financial asset, including equity, from another party. A
        financial liability is the contractual obligation to deliver cash or
        another financial asset to another party.

        A derivative is a financial instrument whose value changes in
        response to a specified variable, requires little or no net
        investment and it is settled at a future date. An embedded derivative
        is a derivative that is a part of a non-derivative contract and not
        directly related to that contract. Under this standard, embedded
        derivatives must be accounted for as a separate financial instrument.
        A non-financial derivative is a contract that can be settled net in
        cash or another financial instrument.

        Under this standard, all financial instruments are initially recorded
        at fair value and are subsequently accounted for based on one of four
        classifications: held for trading, held-to-maturity, loans and
        receivables or available-for-sale. The classification of a financial
        instrument depends on its characteristics and the purpose for which
        it was acquired. Fair values are based upon quoted market prices
        available from active markets or are otherwise determined using a
        variety of valuation techniques and models.

        Under this standard, all guarantees upon inception are required to be
        recognized on the balance sheet at their fair value. No subsequent
        re-measurement is required to fair value each guarantee at each
        subsequent balance sheet date unless the guarantee is considered a
        derivative.

           i) Held for trading

              Held for trading financial instruments are financial assets or
              financial liabilities that are purchased with the intention of
              selling or repurchasing in the near term. Any financial
              instrument can be designated as held for trading as long as its
              fair value can be reliably measured. A derivative is classified
              as held for trading, unless designated as and considered an
              effective hedge. Held for trading instruments are recorded at
              fair value with any subsequent gains or losses from changes in
              the fair value recorded directly into earnings.

              All of the Fund's cash and cash equivalents, accounts
              receivable, accounts payable and accrued liabilities and
              distributions declared and payable are designated as held for
              trading and are recorded at fair value.

          ii) Held-to-maturity

              Held-to-maturity investments are financial assets with fixed or
              determinable payments and a fixed maturity that the Fund has
              the intent and ability to hold to maturity. These financial
              assets are measured at amortized cost using the effective
              interest method. Any gains or losses arising from the sale of a
              held-to-maturity investment are recorded directly into
              earnings.

              The Fund has not designated any financial instruments as held-
              to-maturity.

         iii) Loans and receivables and other financial liabilities

              Loans and receivables and other financial liabilities are
              accounted for at amortized cost using the effective interest
              method of amortization.

              The fair value of other assets and long-term debt approximate
              their carrying values due to their floating interest rates.

          iv) Available-for-sale

              Available-for-sale assets are those assets that are not
              classified as held for trading, held-to-maturity or loans and
              receivables. Available-for-sale instruments are recorded at
              fair value. Any gains or losses arising from the change in fair
              value is recorded in OCI and upon the sales of the instrument
              or other-than-temporary impairment, the cumulative gain or loss
              is transferred into earnings.

              The Fund has not designated any financial instruments as
              available-for-sale.

        The methods used by the Fund in determining fair value of financial
        instruments are unchanged as a result of implementing the new
        standard.

    3.  Unitholders' Capital

                                       Three months           Year ended
                                   ended March 31, 2007    December 31, 2006
                                      Units                 Units
                                     (000's)   ($000's)    (000's)   ($000's)
    -------------------------------------------------------------------------

    Class B Limited Partnership
     Units
      Balance, beginning of period    2,855  $  12,310      2,908  $  13,055
      Allocation of retained
       earnings                           -      2,401          -     13,581
      Distribution to partners            -     (2,056)         -    (12,934)
      Exchanged for Fund units            -          -        (53)    (1,392)
    -------------------------------------------------------------------------
    Balance, end of period            2,855  $  12,655      2,855  $  12,310
    -------------------------------------------------------------------------

    Class C Limited Partnership Units
      Balance, beginning of period        -  $       -          -  $       -
      Issued on capital acquisition,
       net of issue costs             1,566     58,277          -          -
      Allocation of retained earnings     -      1,316          -          -
      Distribution to partners            -     (1,127)         -          -
    -------------------------------------------------------------------------
    Balance, end of period            1,566  $  58,466          -  $       -
    -------------------------------------------------------------------------

    Fund Units
      Balance, beginning of period   10,006  $  65,750      9,430  $  45,046
      Allocation of retained
       earnings                           -      9,468          -     45,010
      Issued on vesting of
       restricted units                   8          -          -          -
      Unit incentive compensation         -        571          -        341
      Issued for cash, net of
       issue costs                    1,360     47,233          -          -
      Issued pursuant to the
       distribution reinvestment
       plan                               5        194         21        491
      Issued under unit option plan      22        372        113      1,744
      To be issued pursuant to
       special distribution               -          -        389     14,963
      Distribution to unitholders         -     (8,109)         -    (43,237)
      Exchange of Limited
       Partnership units                  -          -         53      1,392
    -------------------------------------------------------------------------
    Balance, end of period           11,401  $ 115,479     10,006  $  65,750
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                     15,822  $ 186,600     12,861  $  78,060
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Unit Option Plan

    The table below represents the status of the Fund's Unit Options Plan as
    at March 31, 2007 and the changes therein for the period then ended:

                                        Three months           Year ended
                                   ended March 31, 2007    December 31, 2006
                                    Number of  Weighted  Number of  Weighted
                                      Options   average    Options   average
                                       Units   exercise     Units   exercise
                                      (000's)     price    (000's)     price
    -------------------------------------------------------------------------

    Balance, beginning of year           409   $  18.59       550   $  18.09
    Cancelled                              -          -       (28)     21.03
    Exercised                            (22)     16.64      (113)     15.54
    -------------------------------------------------------------------------
    Balance, end of period               387   $  18.70       409   $  18.59
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable options, end of period   376   $  17.79       271   $  16.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exercise prices for outstanding options at March 31, 2007 have the
    following ranges: 80,967 from $12.45 - $15.71, 109,669 from $17.62 -
    $18.97 and 198,000 from $20.05 - $21.80. These issue prices represent the
    market value at the time of issue.

    The corresponding remaining contractual life for these options range from
    5 - 9 years.

    The Fund accounts for its grants of options using the fair value based
    method of accounting for stock based compensation. The total cost to be
    reported is $530,710. The compensation cost that has been charged against
    income for the three months ended March 31, 2007 is $26,463 (March 31,
    2006 - $48,159, March 31, 2005 - $44,226).

    Restricted Unit Plan

    Effective January 1, 2006, the Fund adopted a Restricted Unit Plan to
    complement the Option Plan and Unit Distribution Rights Plan. Under the
    Plan the units vest over a five year period and are subject to entity
    performance criteria.

    Details of the Plan are set out in the Notice of Annual and Special
    Meeting of Unitholders dated March 19, 2006.

    The table below represents the status of the Fund's Restricted Unit Plan
    as at March 31, 2007 and the changes therein for the period then ended:

                                       Three months           Year ended
                                   ended March 31, 2007    December 31, 2006
                                               Weighted             Weighted
                                                Average              Average
                                      Number       Unit    Number       Unit
                                    of Units      Price  of Units      Price
                                      (000's)   ($/unit)   (000's)   ($/unit)
    -------------------------------------------------------------------------

    Balance, beginning of year            44   $  19.81         -   $      -
    Granted                               47      37.13        46      19.80
    Issued                                (8)     19.81         -          -
    Cancelled                              -          -        (2)     19.65
    -------------------------------------------------------------------------
    Balance, end of period                83   $  28.80        44  $   19.81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Restricted Unit Plan

    The Fund accounts for its grants of restricted units over the graded
    vesting schedule of each grant. Each grant of restricted units is treated
    as if the grant were a series of awards rather than a single award. The
    fair value of the award is determined based on the different expected
    lives for the restricted units that vest each year. The total cost to be
    reported for the restricted units granted in 2007 is $1.7 million. The
    compensation cost that has been included in marketing, general and
    administrative expenses for the three months ended March 31, 2007 is
    $0.6 million.

    4.  Segmented Information

    The Fund's operations have been predominantly in fuel marketing and
    convenience store sales in western Canada. With the acquisition of
    Neufeld Petroleum on January 24, 2007, the Fund now sells propane,
    fertilizer, lubes and other agricultural inputs and industrial products
    and services. The Fund's operating segments have been adjusted to reflect
    these changes.

    Fuel Marketing includes sales of gasoline, diesel, heating oil, propane
    fuel and variable rents derived from service station sites. Convenience
    Store Merchandise continues to include the operations of the Fund owned
    and operated convenience stores that are integrated into fuel marketing
    properties and bear common operating costs. Commercial includes primarily
    the non-fuel components of the Neufeld Petroleum business as noted in the
    previous paragraph.

    Due to the amount of common operating and property costs it is not
    practical to report these segments below their respective gross margins.


                                             Convenience
    For the three months ended       Fuel       Store
    ($ 000's) (Unaudited)         Marketing  Merchandise  Commercial   Total
    -------------------------------------------------------------------------

    March 31, 2007
      Net sales and operating
       revenue                    $ 310,488  $  14,375  $   9,143  $ 334,006
      Cost of sales                 278,631     10,709      4,671    294,011
    -------------------------------------------------------------------------
      Gross margin                $  31,857  $   3,666  $   4,472  $  39,995
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    March 31, 2006
      Net sales and operating
       revenue                    $ 228,437  $  13,115  $       -  $ 241,552
      Cost of sales                 209,014      9,769          -    218,783
    -------------------------------------------------------------------------
      Gross margin                $  19,423  $   3,346  $       -  $  22,769
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    March 31, 2005
      Net sales and operating
       revenue                    $ 167,620  $   9,461  $       -  $ 177,081
      Cost of sales                 155,701      7,071          -    162,772
    -------------------------------------------------------------------------
      Gross margin                $  11,919  $   2,390  $       -  $  14,309
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The segregation of capital expenditures and total assets is not practical
    as the reportable segments represent product sales that are generated
    from multiple locations.

    5.  Acquisition of Neufeld Petroleum and Propane Ltd. and Neufeld
        Holdings Ltd.

    On January 24, 2007, the Fund acquired all of the outstanding shares of
    Neufeld Petroleum & Propane Ltd. and Neufeld Holdings Ltd. ("Neufeld
    Petroleum"). The transaction was accounted for using the purchase method
    with the allocation of the purchase price as follows:

                                                                     ($000's)
    Estimated fair value of net assets acquired:
    Capital assets                                               $  93,487.1
    Working capital, net (excluding bank indebtedness)              22,623.8
    Intangible asset - customer relationships                       10,400.0
    Intangible asset - tradenames                                    4,900.0
    Intangible asset - non compete agreement                           700.0
    Goodwill                                                         1,043.9
    -------------------------------------------------------------------------
                                                                 $ 133,154.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consideration:
    Cash paid to vendor                                          $  23,841.8
    Class C Limited Partnership Units                               58,322.1
    Bank indebtedness assumed                                        2,137.8
    Shareholder loans paid out                                      17,828.0
    Management bonus paid out                                        4,331.1
    Long-term debt assumed                                          26,694.0
    -------------------------------------------------------------------------
                                                                 $ 133,154.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The effective date on the transaction was November 1, 2006. The interim
    period net earnings after tax to January 24, 2007 of $3,995.4 have been
    credited to the purchase price. The above purchase price allocation is
    subject to change.

    6.  Net Changes in Non-Cash Working Capital

    For the three months ended March 31
    (000's) (Unaudited)                          2007       2006       2005
    -------------------------------------------------------------------------

    Accounts receivable                      $  (9,428) $   2,480  $  (7,520)
    Inventories                                 (1,822)       (37)      (650)
    Prepaid expenses and other                  (5,878)       328        476
    Accounts payable                            (1,509)     3,716      5,768
    Deferred revenue                             4,587          -          -
    Income taxes payable                          (799)         -          -
    -------------------------------------------------------------------------
      Subtotal for operating activities      $ (14,849)  $  6,487  $  (1,926)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions declared and payable       $ (12,045)  $ (1,234) $       6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    7.  Financial Instruments

    The Fund's exposure under its financial instruments is limited to
    financial assets and liabilities, all of which are included in the
    financial statements. The fair values of financial assets and liabilities
    that are included in the balance sheet approximate their carrying
    amounts.

    The Fund's accounts receivables are subject to normal credit risks.

    The Fund is exposed to interest rate risk to the extent that bank debt is
    at a floating rate of interest.

    8.  Subsequent Events

    Acquisition of Joy Propane Ltd

    On April 24, 2007, the Fund acquired all of the outstanding shares of Joy
    Propane Ltd., a significant player in the northern British Columbia and
    northern Alberta propane supply business, for consideration of
    $16.3 million. The purchase was funded through the issuance of
    $5.1 million of Class C Limited Partnership units and the balance to be
    drawn from cash and incremental borrowing. The effective date on the
    transaction was February 28, 2007 and the interim earnings to April 24,
    2007 will be credited to the purchase price.

    Acquisition of United Petroleum Products Inc.

    On May 2, 2007, the Fund entered into a purchase and sale agreement to
    acquire all of the outstanding shares of United Petroleum Products Inc.,
    a distributor of fuel, lubricants and auto accessories in British
    Columbia, for consideration of approximately $18 million. The purchase is
    expected to be completed before May 31, 2007 and be funded through the
    issuance of $7 million of Class C Limited Partnership units and the
    balance to be drawn from cash and incremental borrowing.

    Unit Split

    On May 4, 2007, the Directors passed a resolution authorizing the Fund to
    provide for a division of its units on a three-for-one unit basis. The
    unit split will not change the rights of the holders of units and each
    unit outstanding after the unit split will be entitled to one vote. The
    three-for-one split will increase the number of outstanding units from
    approximately 15.8 million to approximately 47.4 million. The completion
    of the unit split is subject to receipt of all regulatory approvals.

    Distributions

    As of the beginning of 2007, monthly distributions were $0.22 per unit.
    This was increased on February 15th to $0.24 per unit. On April 25th,
    concurrent with the acquisition of Joy Propane Ltd, the Fund announced an
    increase of $0.01 per unit to $0.25 effective June 15th and on May 4th
    the Fund announced a further increase of $0.04 to $0.29 per unit
    effective June 15th. Estimated distributions in 2007, assuming continued
    $0.29 (subject to adjustments for the unit split) payments for the
    duration of the year, would be $49.6 million.

    9.  Comparative Figures

    Certain comparative figures have been reclassified to comply with the
    presentation adopted in the current period.

    Supplementary Information

    For the three months
     ended March 31 (Unaudited)                  2007       2006       2005
    -------------------------------------------------------------------------

    Volume (millions of litres)
      Retail fuel                                  132        118        116
      Wholesale fuel                               278        211        152
      Propane                                       30          -          -
    -------------------------------------------------------------------------
    Total volume                                   440        329        268
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net sales and operating revenue ($000's)
      Retail fuel                            $  97,077  $  89,323  $  79,280
      Wholesale fuel                           200,063    139,114     88,340
      Propane                                   13,348          -          -
      Convenience store merchandise sales       14,375     13,115      9,461
      Other sales                                9,143          -          -
    -------------------------------------------------------------------------
    Total net sales and operating revenue      334,006  $ 241,552  $ 177,081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross margin ($000's)                    $  39,995  $  22,769  $  14,309

    Less: Convenience store merchandise
           gross margin                      $   3,666  $   3,346  $   2,390
          Other revenue included in
           gross margin                          6,409      1,652      1,629
    -------------------------------------------------------------------------
    Fuel and propane gross margin            $  29,920  $  17,771  $  10,290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cents per litre                          $  0.0680  $  0.0540  $  0.0384
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Station counts:

    Retail (Parkland and commission operated)
      Fas Gas                                       87        110        160
      Fas Gas Plus                                  92         96         53
      Esso                                           6          1          -
    -------------------------------------------------------------------------
                                                   185        207        213
    -------------------------------------------------------------------------

    Wholesale (Independent dealer)
      Race Trac Fuels                              178        204        237
      Fas Gas Plus                                  23          3          -
      Esso                                         180        141          -
    -------------------------------------------------------------------------
                                                   381        348        237
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total stations                                 566        555        450
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; John G. Schroeder, Vice President and CFO, (403) 357-6400; If
you prefer to receive Company news releases via e-mail, please request at
corpinfo@parkland.ca