May 16, 2006
Mr. Steven W. Sinclair
Senior Vice President
ARC Energy Trust
2100, 440 2nd Avenue S.W.
Calgary, Alberta, Canada T2P 5E9
Re: ARC Energy Trust
Form 40-F for Fiscal Year Ended December 31, 2005
Filed March 29, 2006
File No. 333-06184
Dear Mr. Sinclair:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Please provide a written response to
our
comments. Please be as detailed as necessary in your explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 40-F for Fiscal Year Ended December 31, 2005
General
1. Please correct your Commission File Number indicated on the
cover
of your annual report to be 333-06184, rather than 0-30514.
Controls and Procedures, page 3
2. You state, "the Chief Executive Officer and Chief Financial
Officer concluded that, as of the evaluation date, the design and
operations of the Registrants disclosures controls and procedures
the
Company`s disclosure controls and procedures were effective in
ensuring that material information relating to the Registrant and
its
consolidated subsidiaries would be made known to them by others
within those entities, particularly during the period in which
this
report was being prepared." Please revise to state, if true, that
your officers concluded that your disclosure controls and
procedures
are effective to ensure that information required to be disclosed
in
the reports that you file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods
specified in the rules and forms of the SEC. Refer to the
definition
of disclosure controls and procedures at paragraph (e) of Exchange
Act Rules 13a-15 and 15d-15.
Financial Statements
Statements of Cash Flows
3. We note that you present changes in non-cash working capital as
components of cash flows from investing and financing activities.
Ordinarily, changes in working capital accounts are presented as
adjustments to reconcile net income to net cash provided by or
used
in operating activities. Please explain to us why you have
classified changes in certain working capital accounts in the
investing and financing activities sections of your statements of
cash flows.
Note 3 - Corporate Acquisitions
4. We note that you have accounted for all corporate acquisitions
as
asset acquisitions in accordance with EIC-124. It is unclear from
your disclosures why you have accounted for the purchase of these
entities as asset acquisitions rather than acquisitions of
businesses. It appears these transactions would be accounted for
as
acquisitions of businesses under US GAAP. Please address this
difference in accounting within your reconciliation note
disclosure,
or tell us why no revision is necessary. In addition, please
explain
to us how you concluded these transactions represent asset
acquisitions for Canadian GAAP purposes.
5. We note that you will adopt SFAS 123R on January 1, 2006 and
will
be required to measure compensation costs associated with your
share
based payment plans at fair value. Further we note that for
Canadian
GAAP purposes you use the Black Scholes option pricing model to
calculate fair value for rights outstanding under the Trust Unit
Incentive Rights Plan. Due to the significance of your periodic
distributions, coupled with the inherent limitations of the Black-
Scholes model, for U.S. GAAP purposes you will need to utilize an
alternate option pricing model, such as a binomial lattice model
that
is designed to value options over securities having significant
recurring distributions. Please ensure that your disclosure about
the impact the adoption of SFAS 123R will have on your U.S. GAAP
financial information, and your subsequent accounting for U.S.
GAAP
purposes and the related notes that accompany your reconciliation
between Canadian and U.S. GAAP, address this difference.
Closing Comments
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested information. Detailed letters greatly facilitate our
review. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tracie Towner at (202) 551-3744, or Jenifer
Gallagher at (202) 551-3706, if you have questions regarding
comments on the financial statements and related matters. Please
contact me at (202) 551-3686 with any other questions.
Sincerely,
Karl Hiller
Branch Chief
Mr. Steven W. Sinclair
ARC Energy Trust
May 16, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
MAIL STOP 7010