News

AltaGas Generates Record First Quarter Earnings of $11.0 million

May 12, 2004

TSX: ALA.UN

CALGARY--(CCNMatthews - May 12) -

FIRST QUARTER 2004 HIGHLIGHTS

(All financial figures are in Canadian dollars unless otherwise stated.)

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    -  AltaGas Services Inc. delivered record first quarter net income of
       $11.0 million or $0.24 per share, compared to $10.2 million or $0.23
       per share for the same period of 2003. Net income growth for the first
       quarter of 2004 reflects increased throughput in the Gathering and
       Processing and Energy Services segments, partially offset by lower
       margins in the Energy Services segment and warmer weather and
       regulatory adjustments in the Natural Gas Distribution segment.

    -  Funds generated from operations for the first quarter of 2004 were
       $21.6 million compared to $21.9 million the first quarter of 2003.
       These cash flows were used to fund investment of $18.4 million,
       dividends of $5.1 million and reduce AltaGas Services Inc.'s total
       debt by $2.6 million during the quarter. As a result of the debt
       reduction, AltaGas Services Inc.'s debt to total capitalization ratio
       decreased to 51.5 percent from 52.2 percent at December 31, 2003.

    -  Commenting on the quarter, David Cornhill, Chairman and Chief
       Executive Officer, said "We had a very solid first quarter in all of
       our businesses. Producers have been extremely active in many of
       AltaGas' operating areas and we have seen the result of this activity
       in record tie-in rates for the quarter." Mr. Cornhill added, "We
       expect pricing and operations to improve in all of our segments and
       that, looking forward, every quarter this year will surpass last
       year."

    -  On April 29, 2004, the securityholders of AltaGas Services Inc.
       voted 99.9 percent in favour of a plan of arrangement to reorganize
       the business of AltaGas Services Inc. into an income trust called
       AltaGas Income Trust (Trust). The plan of arrangement was approved
       by the Court of Queen's Bench of Alberta on April 30, 2004, and was
       effected on May 1, 2004. The Plan of Arrangement allowed for
       securityholders to receive either Trust Units or limited partnership
       units (Exchangeable Units) that are exchangeable into Trust Units on
       a one-for-one basis. The Trust currently has approximately 33.7
       million Trust Units and 12.2 million Exchangeable Units issued and
       outstanding. The income trust structure will allow the Trust
       to reduce future cash tax liability at the corporate level thereby
       increasing the amount of cash available for distribution to
       unitholders.

    -  The Trust will commence monthly distributions on June 15, 2004 to
       holders of Trust Units and Exchangeable Units of record on
       May 25, 2004. The amount of the distribution on that date will be
       $0.15 for each Trust Unit and each Exchangeable Unit. The Trust's
       Units began trading on May 5, 2004 on the Toronto Stock Exchange (TSX)
       under the trading symbol ALA.UN. The Exchangeable Units do not trade
       on the TSX.

    -  Commenting on the re-organization, David Cornhill, Chairman and Chief
       Executive Officer, said, "On April 1, 2004, AltaGas Services Inc.
       celebrated its tenth anniversary as an operating company. We are very
       proud of the value we have created over the past ten years and we are
       confident that our change in structure will enhance the value creation
       opportunities that AltaGas is pursuing. As AltaGas Income Trust, our
       discipline will continue and our fundamental business strategy will
       remain the same, based on the acquisition and expansion of
       infrastructure-based midstream assets. We expect to continue to be
       efficiently managed by the same qualified team of professionals that
       has grown AltaGas into a leader in the Canadian midstream industry.
       We will remain financially conservative, focused on operational
       excellence, and we will continue to grow our business."

    -  On March 18, 2004, AltaGas Services Inc. announced that it has entered
       into a purchase and sale agreement with BP Canada Energy Resources
       Company (BP) to acquire BP's 48 2/3 percent interest in the Edmonton
       Ethane Extraction Plant located at Edmonton, Alberta for approximately
       $46 million. The acquisition, expected to close during the second
       quarter of 2004, will increase AltaGas' net extraction processing
       capacity to 539 Mmcf/d.


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<<
    CONSOLIDATED FINANCIAL HIGHLIGHTS
                                                 Three Months Ended March 31
    ($ millions)                                                2004  2003(4)
    -------------------------------------------------------------------------
    Revenue                                                    193.5   203.4
    Net revenue (1)                                             57.2    54.4
    EBITDA (2)                                                  31.2    30.7
    Net income                                                  11.0    10.2
    Funds generated from operations                             21.6    21.9
    -------------------------------------------------------------------------

                                                 Three Months Ended March 31
    Results per share (dollars except number of shares)         2004  2003(4)
    -------------------------------------------------------------------------
    EBITDA (2)                                                  0.68    0.68
    Net income                                                  0.24    0.23
    Funds generated from operations                             0.47    0.48
    Dividends paid per share                                    0.11    0.08
    Basic shares outstanding for the period (millions) (3)      45.9    45.3
    Shares outstanding at period end (millions)                 45.9    45.3
    -------------------------------------------------------------------------

    Certain comparative figures have been reclassified to conform to the
    current financial presentation.

    (1) Net revenue is gross revenue less the costs of the purchase of
        natural gas for resale and the costs to purchase power under power
        purchase arrangements.
    (2) Earnings before interest expense, income taxes, and amortization.
        EBITDA is provided to assist investors in determining the ability
        of AltaGas to generate cash from operations. This measure does not
        have any standardized meaning prescribed by generally accepted
        accounting principles and may not be comparable to similar
        measures presented by other companies.
    (3) Based on the weighted average number of shares outstanding for the
        period.
    (4) Prior periods have been restated for the impacts of the adoption of
        CICA Handbook requirement for accounting for asset retirement
        obligations


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CONFERENCE CALL

AltaGas will hold a conference call on May 13, 2004 at 9:00 a.m. (ET) to 
comment on its 2004 first quarter results. The discussion will be followed by 
a question and answer period.

To participate in the conference call, you may dial 416-913-8746 or 1-800-
814-4860 toll-free. Shortly after the conclusion of the live call, the replay 
will be available by dialing 416-640-1917 or 1-877-289-8525. The pass code is 
21047496 followed by the pound key. The replay will expire at midnight (ET) 
on May 20, 2004.

ABOUT ALTAGAS

AltaGas moves energy from its source to the end user, adding value through 
the process. AltaGas has over $900 million of assets and a market 
capitalization of approximately $950 million. Its steadily expanding asset 
base today includes natural gas gathering and processing facilities, 
interests in ethane and natural gas liquids extraction plants, and 
transmission pipelines. AltaGas distributes natural gas to Alberta customers 
through AltaGas Utilities Inc., to customers in the Northwest Territories 
through the Ikhil Gas Project and distributes gas in Nova Scotia through its 
interest in Heritage Gas Limited. AltaGas provides energy services to 
customers, including marketing of natural gas and natural gas liquids and 
sale of power from its power purchase based arrangements.

When used in this press release, the words "anticipate," "estimate," and 
similar expressions are intended to identify forward-looking statements. Such 
statements are subject to certain risks, uncertainties and assumptions that 
could cause actual results to differ materially from those contemplated in 
the forward looking statements. These risks and uncertainties include 
operating performance, regulatory and environmental issues, weather and 
economic conditions, competition and financing availability. For additional 
information on these and other factors see the reports filed by AltaGas with 
Canadian securities regulators. AltaGas disclaims any intention or obligation 
to update or revise any forward looking information whether as a result of 
new information or future event. 

REPORT TO SHAREHOLDERS

FOR THE THREE MONTHS ENDED MARCH 31, 2004

MANAGEMENT'S DISCUSSION & ANALYSIS

The following discussion and analysis dated May 12, 2004 should be read in 
conjunction with the accompanying unaudited consolidated financial statements 
of AltaGas Services Inc. (AltaGas or the Company) for the three months ended 
March 31, 2004 and the notes thereto and with the Management's Discussion and 
Analysis contained in the Company's annual report for the year ended December 
31, 2003.

Prospective data, comments and analysis are also provided wherever 
appropriate to assist existing and new investors to see the business from a 
corporate management viewpoint. Such disclosure is subject to the reasonable 
constraints of maintaining the confidentiality of certain information which, 
if published would probably have an adverse impact on the competitive 
position of the Corporation.

On April 29, 2004, AltaGas' shareholders voted in favor of reorganizing 
AltaGas' business into an income trust. The Plan of Arrangement received 
court approval on April 30, 2004 and was effective May 1, 2004. The AltaGas 
Income Trust (the Trust) began trading on the Toronto Stock Exchange on May 
5, 2004 under the trading symbol ALA.UN.

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    CONSOLIDATED FINANCIAL RESULTS


    CONSOLIDATED OPERATING RESULTS               Three months ended March 31
    ($ millions)                                                2004  2003(1)
    -------------------------------------------------------------------------
    Revenue                                                    193.5   203.4
    Net revenue(2)                                              57.2    54.4
    Net income                                                  11.0    10.2
    Funds generated from operations(2)                          21.6    21.9
    Net additions to capital assets                             14.3     7.5
    -------------------------------------------------------------------------
    (1) Prior periods have been restated for the impacts of the adoption of
        CICA Handbook requirement for accounting for asset retirement
        obligations
    (2) Non-GAAP financial measure. See discussion below.


    COMMON SHARE STATISTICS                      Three months ended March 31
    (dollars except per share amounts)                          2004    2003
    -------------------------------------------------------------------------
    Net income per share(1)                                   $ 0.24  $ 0.23
    Dividends per share(1)                                    $ 0.11  $ 0.08
    Common and preferred shares outstanding (millions)
      Basic                                                     45.9    45.3
      End of period                                             45.9    45.3
    -------------------------------------------------------------------------
    (1) Per share amounts are based on the basic number of shares outstanding
        during the period.

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AltaGas' first quarter 2004 net income is the highest the Company has earned 
in a first quarter of a year since formation and continues the growth trend 
achieved throughout the Corporation's 10 year history.

Revenue for the first quarter of 2004 is 5 percent lower than the same period 
last year due mainly to the lower average prices received for natural gas and 
power sold in the Natural Gas Distribution and Energy Services segments.

Net revenue, which is gross revenue less cost of sales, increased 5 percent 
for the first quarter 2004 compared to first quarter 2003. In the extraction 
component and the Natural Gas Distribution and Energy Services segments, net 
revenue better reflects performance than does revenue, as changes in the 
market price of natural gas and power purchased for resale affect both 
revenue and the cost of goods sold.

Volumes in the Gathering and Processing segment increased in all operating 
components. In the Energy Services segment, power component volumes were 
higher quarter over quarter, due to the addition on April 1, 2003 of volumes 
from the Genesee energy contract. Natural Gas Distribution volumes at AltaGas 
Utilities Inc. declined slightly year over year due to warmer average weather 
in 2004 versus 2003, offsetting an increase in the customer base. Heritage 
Gas activated its natural gas distribution system on December 20, 2003 and 
served its first customer on December 23, 2003. AltaGas' 24.9 percent share 
of Heritage Gas' net earnings did not have a material impact on the 
consolidated results in the first quarter of 2004.

AltaGas' earnings before interest, taxes and amortization increased 2 percent 
for the quarter ended March 31, 2004 compared to the same quarter of 2003. 
Amortization expense was up 2 percent, due mainly to Gathering and Processing 
segment acquisitions and expansions during 2003 and the first quarter of 
2004.

Lower average debt levels and higher interest rates resulted in effectively 
flat interest expense when compared to the same period in 2003.

Income tax expense for the first quarter of 2004 is less than reported for 
the same period of 2003 even though income before tax was higher. The income 
of the company is subject to a variety of tax rates and rate reductions 
currently and in the future. The consolidated income tax rate varies from 
quarter to quarter depending on the mix and the anticipated timing of the 
income stream being subject to taxation. The lower first quarter 2004 income 
tax rate is a result of federal reductions mid-year 2003, a provincial rate 
reduction arising out of the March 19, 2004 Alberta Budget and a higher 
relative proportion of income arising from the Gathering and Processing 
segment, which attracts a lower current rate.

Financial results for the balance of 2004 are expected to continue to 
strengthen in the Gathering and Processing segment. Drilling activity in the 
majority of the company's operating areas is expected to remain strong given 
the favorable commodity pricing environment. In addition, the pursuit of 
exploitation opportunities in existing operating areas and improved processes 
are all expected to increase processed volumes. In the Energy Services 
segment, power prices are expected to be higher providing improved results on 
the unhedged portion of the company's power portfolio.

NON-GAAP FINANCIAL MEASURES

The company provides certain financial measures in this Management Discussion 
and Analysis that do not have any standardized meaning prescribed by Canadian 
generally accepted accounting principles (GAAP). These non-GAAP financial 
measures may not be comparable to similar measures presented by other 
companies.

The purpose of these financial measures and their reconciliation to GAAP 
financial measures is shown below. All of the measures have been calculated 
in accordance with previous disclosures by the Company. All amounts are in 
millions of dollars unless otherwise noted.

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                                                 Three months ended March 31
    FUNDS GENERATED FROM OPERATIONS                 2004      2003  % Change
    Non-GAAP financial measure                      21.6      21.9       (1)
    Add (deduct): Net change in non-cash
     working capital                                 2.6       8.8      (70)
    -------------------------------------------------------------------------
    Cash from operations (GAAP financial measure)   24.2      30.7      (21)
    -------------------------------------------------------------------------

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Funds generated from operations is provided to assist in determining the 
ability of AltaGas to generate cash from operations after interest and taxes 
without regard to changes in the Corporation's working capital in the period.

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                                                 Three months ended March 31
    NET REVENUE                                     2004      2003  % Change
    -------------------------------------------------------------------------
    Non-GAAP financial measure                      57.2      54.4         5
    Add: Cost of goods sold                        136.3     149.0        (9)
    -------------------------------------------------------------------------
    Revenue (GAAP financial measure)               193.5     203.4        (5)
    -------------------------------------------------------------------------

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Net revenue is provided in the extraction component and the Natural Gas 
Distribution and Energy Services segments as net revenue better reflects 
organic growth in the business than does revenue, as changes in the market 
price of natural gas and power purchased for resale affect both revenue and 
the cost of goods sold. This reconciliation shows the difference between 
revenue and net revenue amounts in the table for Financial and Operating 
Results for the Gathering and Processing segment.

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    RESULTS OF OPERATIONS BY SEGMENT

    OPERATING INCOME                             Three months ended March 31
    ($ millions, unless otherwise noted)            2004    2003(1) % Change
    -------------------------------------------------------------------------
    Gathering and Processing                        12.0       9.7        24
    Energy Services                                  5.3       6.0       (12)
    Natural Gas Distribution                         3.9       5.2       (25)
    -------------------------------------------------------------------------
                                                    21.2      20.9         1
    -------------------------------------------------------------------------
    (1) Prior periods have been restated for the impacts of the adoption of
        CICA Handbook requirements on accounting for asset retirement
        obligations

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Operating income in the Gathering and Processing segment in the first quarter 
2004 showed significant improvement when compared to the same period in 2003, 
while operating income from the Energy Services and Natural Gas Distribution 
segments was lower than in the same quarter of the prior year. Key drivers 
for the business results of each segment are discussed at the component level 
in the information below.

GATHERING AND PROCESSING

The Gathering and Processing segment includes the field gathering and 
processing, extraction, and transmission components, and in the "other" 
component, AltaGas' investments in businesses ancillary to the gathering and 
processing business.

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    FINANCIAL RESULTS                             Three months ended March 31
    ($ millions, unless otherwise noted)            2004   2003(1)  % Change
    -------------------------------------------------------------------------
    Revenue                                         44.7      43.3         3
    Net revenue                                     37.8      34.2        11
    Operating and administrative                    19.5      18.4         6
    Amortization expense                             6.3       6.1         3
    Operating income                                12.0       9.7        24
    -------------------------------------------------------------------------
    (1) Prior periods have been restated for the impacts of the adoption of
        CICA Handbook requirements on accounting for asset retirement
        obligations


    OPERATING STATISTICS                         Three months ended March 31
                                                    2004      2003  % Change
    -------------------------------------------------------------------------
    Field gathering and processing
      Capacity (Mmcf/d)                              901       847         6
      Throughput (gross Mmcf/d)(2)                   560       535         5
      Capacity utilization (percent) (2)              62        63        (2)
      Average working interest (percent) (1)          87        88        (1)
    Extraction
      Inlet capacity (Mmcf/d)                        349       349         -
      Production (Bbls/d)                          9,047     6,416        41
    Transmission Volumes (Mmcf/d) (2)(3)             396       319        24
    -------------------------------------------------------------------------
    (1) As at March 31
    (2) First quarter average
    (3) Excludes condensate pipeline volumes

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AltaGas' natural gas processing capacity ranks it as one of the top ten 
Canadian processors of natural gas and one of the top four largest Canadian 
midstream processors. The Gathering and Processing segment includes more than 
6000 kilometers of gathering lines, 69 processing facilities, interests in 
four extraction facilities and six transmission pipelines. These long-life 
assets provide service to a diverse customer base under arrangements which 
include a significant portion of cost of service, fixed fee and recovery of 
operating cost contracts. Commodity price exposure is minimal and revenues 
are generally volume driven. Future opportunities derive from the requirement 
that all natural gas must be processed to meet downstream pipeline 
specifications en route to the end user. With its extensive gathering 
infrastructure and the ability to quickly redeploy assets due to the mobile 
nature of its field gathering and processing plant, the Company is well 
positioned to offer producers quick access to markets for their natural gas.

For the three months ended March 31, 2004 net revenue for AltaGas' Gathering 
and Processing segment was $37.8 million, compared to $34.2 million for the 
first quarter of 2003. Net revenue growth in this segment was the result of 
increased volumes in the field gathering and processing, extraction and 
transmission components.

Volumes processed in the field gathering and processing component in the 
first quarter of 2004 rose due to the December, 2003 acquisition of the 
Rainbow Lake facilities in northwestern Alberta and from the record number of 
well tie-ins experienced during the quarter. Gas drilling activity in the 
Western Canadian Sedimentary Basin continued to strengthen during the first 
quarter of 2004. A record 155 wells were tied in to AltaGas' field gathering 
and processing facilities compared with 85 during the same period in 2003. 
Previous strong tie-in activity, along with the new volumes from the Rainbow 
Lake facility acquisition more than offset normal natural production declines 
and increased AltaGas' gross average throughput to 560 Mmcf/d during the 
first quarter of 2004 compared to 535 Mmcf/d during the first quarter of 
2003. These volume increases resulted in field gathering and processing net 
revenue of $26.5 million in the first quarter of 2004 compared to $24.3 
million during the same period in 2003.

During the first quarter of 2004, AltaGas continued its program of internal 
expansion, completing three development projects in its field gathering and 
processing areas. At Martin Creek, booster compression was installed, which 
will increase throughput by 5 Mmcf/d. At the company's Doris facilities, 
construction of a pipeline was completed that will open up new access to 
processing areas and increase throughput by 4 Mmcf/d, with the potential to 
double by year-end. During the quarter, AltaGas also purchased the remaining 
25 percent of its Namaka facility bringing its ownership to 100 percent. All 
three development projects are supported by producer commitments designed to 
minimize AltaGas' financial exposure to throughput declines.

In the extraction component, processed volumes for the first quarter of 2004 
increased to 9,047 Bbls/d of ethane and natural gas liquids (NGLs) compared 
to an average of 6,416 Bbls/d for the same period in 2003. The higher average 
production for the first three months of 2004 is a result of modifications to 
the Empress EnCana extraction facility that increased ethane production 
effective the fourth quarter of 2003 and the full quarter impact of the 
Joffre ethane extraction plant commissioning, which was commissioned during 
the first quarter of 2003. As a result of the higher volumes, net revenue for 
the extraction component grew 18 percent during the first quarter of 2004 
compared to the first quarter of 2003, reaching $3.5 million.

Extraction continues to be a vital link in AltaGas' midstream energy value 
chain and AltaGas is committed to growing its extraction asset portfolio. 
Late in the first quarter of 2004, AltaGas entered into a purchase and sale 
agreement with BP Canada Energy Resources Company (BP) for BP's 48 2/3 
percent interest in the Edmonton Ethane Extraction Plant (EEEP) located at 
Edmonton, Alberta. The plant has a licensed inlet capacity of 390 Mmcf/d of 
natural gas and gross natural gas liquids production of approximately 15,000 
Bbls/d of specification ethane and 6,000 Bbls/d of propane-plus product. The 
$46.0 million acquisition, expected to close during the second quarter of 
2004, increases AltaGas' net extraction processing capacity to 539 Mmcf/d. 
AltaGas' share of plant products will be sold under long term contracts and a 
long term gas supply contract provides secure feedstock supply to EEEP.

During the first quarter of 2004, net revenue in AltaGas' transmission 
component grew 13 percent to $7.0 million from $6.2 million in the first 
quarter of 2003. AltaGas' total average transmission volumes increased to 396 
Mmcf/d for the first quarter of 2004 from 319 Mmcf/d for the same period in 
2003. This is primarily a result of increased drilling and completion 
activities in the Suffield area.

Net additions to capital assets in the Gathering and Processing segment were 
$10.9 million during the first quarter of 2004, up from $5.3 million in 2003. 
In 2004 $8.7 million was invested in acquisitions and expansions, including 
approximately $7.0 million for a deposit on BP Canada Energy Resources 
Company's 48 2/3 percent interest in EEEP. The balance of $2.2 million in 
2004 was spent to maintain throughput at existing field gathering and 
processing, extraction and transmission facilities and pipelines.

ENERGY SERVICES

The Energy Services segment is comprised of the power services, gas services 
and oil and gas production components. The financial results of the power 
services component account for 94 percent of overall segment financial 
results and as such the commentary in this section will be restricted to the 
contributions from power services.

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    Financial Results                             Three months ended
                                                       March 31
    ($ millions, unless otherwise noted)            2004      2003   % Change
    -------------------------------------------------------------------------
    Revenue                                        133.4     148.8       (10)
    Net revenue(1)                                   9.8       9.7         1
    Operating income(2)                              5.3       6.0       (12)
    -------------------------------------------------------------------------
    (1) Gross revenue less cost of sales
    (2) Gross revenue less costs of sales less operating and general and
        administration expense and amortization


    Operating Statistics                          Three months ended
                                                       March 31
                                                    2004      2003   % Change
    -------------------------------------------------------------------------
    Volume of power sold (thousands of MWh)          863       660        31
    Average price received on the sale of power
     ($/MWh) (1)                                   45.78     46.07        (1)
    Alberta Power Pool average spot price
     ($/MWh) (1)                                   48.78     83.85       (42)
    -------------------------------------------------------------------------
    (1) Average for the period

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The Energy Services segment generated net revenue of $9.8 million for the 
first quarter of 2004 compared to $9.7 million for the same period in 2003. 
In the first quarter of 2004 AltaGas had 453 megawatts of power capacity 
which represents approximately 6 percent of Alberta's power capacity. Power 
supply was 100 megawatts higher than first quarter of 2003 as a result of the 
addition of the Genesee energy contract volumes on April 1, 2003.

Increases in revenues in this segment resulting from the additional volumes 
were partially offset by higher transmission and interconnection charges from 
Sundance B, outages at both the Sundance and Genesee plants during the first 
quarter of 2004 and to true ups on transmission charges by the Alberta 
Electric System Operator (AESO or the Operator - formerly the Transmission 
Authority). AESO is entitled to recover or refund variances between revenues 
collected through transmission charges and expenses incurred by the Operator 
through true up adjustments calculated quarterly. For first quarter of 2004, 
the adjustment resulted in a charge to income while in the first quarter of 
2003 the adjustment was in AltaGas' favour.

AltaGas does not engage in speculative trading of power but reduces its 
exposure to power price volatility by using a balanced portfolio of contracts 
to lock in power margins. The average price AltaGas received from power sales 
in the first quarter of 2004 was $45.78 per MWh compared to $46.07 per MWh in 
the first quarter of 2003. Average Alberta Power Pool spot prices were $48.78 
per MWh and $83.85 per MWh in the first quarters 2004 and 2003 respectively.

In this segment, the Corporation also reports the results of the oil and gas 
production component and the gas services component. AltaGas is not in the 
business of exploration and development of natural gas reserves. However, 
associated with certain of its facility acquisitions, AltaGas has accumulated 
a portfolio of oil and natural gas reserves that it continues to hold and 
produce.

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    NATURAL GAS DISTRIBUTION

    The Natural Gas Distribution segment includes AltaGas Utilities Inc.
(AltaGas Utilities or AUI), AltaGas' one-third interest in Inuvik Gas Ltd.
(Inuvik Gas) and its 24.9 percent interest in Heritage Gas Limited    
(Heritage Gas).

    Financial Results                             Three months ended
                                                       March 31
    ($ millions, unless otherwise noted)            2004      2003   % Change
    -------------------------------------------------------------------------
    Revenue                                         48.1      58.3       (17)
    Net revenue(1)                                   9.7      10.6        (8)
    Operating income(2)                              3.9       5.2       (25)
    -------------------------------------------------------------------------
    (1) Gross revenue less cost of sales
    (2) Gross revenue less costs of sales less operating and general and
        administration expense and amortization


    Operating Statistics(1)                       Three months ended
                                                       March 31
                                                    2004      2003   % Change
    -------------------------------------------------------------------------
    Volume of natural gas distributed
      Sales (Bcf)                                    5.5       5.9        (7)
      Transportation (Bcf)                           3.0       1.9        58
    Degree day variance (percent)(2)                 2.0       9.2       (78)
    Number of customers(3)                        59,528    58,700         1
    -------------------------------------------------------------------------
    (1) AUI only
    (2) Variance from 20 year average. Positive variances are favorable
    (3) At March 31

/T/

In the first quarter of 2004, net revenue in AltaGas' Natural Gas 
Distribution segment was $9.7 million compared to $10.6 million for the same 
period in 2003. This decrease is due partially to warmer weather in 2004 
compared to the first quarter of 2003 and to the impact of completion of 
negotiations on AUI's general rate application filed with the Alberta 
utilities regulator. AUI and Heritage Gas are provincially regulated as to 
natural gas rates and terms and conditions of service. Customer rates are 
based on anticipated sales as well as the revenue required to recover 
estimated cost of service and an allowed return on rate base. Rate base 
generally consists of the aggregate of the utility's approved investment in 
plant, property and equipment in service, less accumulated deprecation plus 
an allowance for working capital. Return on rate base is comprised of 
regulatory allowed financing costs and return on common equity. The recent 
negotiations resulted in final allowable rates for interest expense and 
return on equity lower than AUI anticipated and a charge to net income of 
$0.5 million in the first quarter of 2004 related to previously recorded 2003 
results.

The natural gas distribution business is highly seasonal with the majority of 
natural gas deliveries occurring during the winter heating season. Gas sales 
during the winter typically account for approximately two-thirds of annual 
distribution net revenue, resulting in strong first and fourth quarter 
results and second and third quarters that show either small profits or 
losses.

Net additions to capital assets in the Natural Gas Distribution segment were 
$1.8 million during the quarter ended March 31, 2004 compared to $1.4 million 
for the same period in 2003. Of the additions in 2004, $1.0 million were 
related to costs associated with routine system betterment projects and new 
business development.

LIQUIDITY

Funds generated from operations were $21.6 million in the first quarter of 
2004 compared to $21.9 million for the same period in 2003.

In the first quarter of 2004 $16.5 million of the funds generated from 
operations were used to acquire and expand facilities, up slightly from $9.1 
million in the first quarter of 2003. AltaGas invested $2.2 million in the 
first quarter of 2004 to acquire additional Taylor NGL Limited Partnership 
units. Dividend payments in first quarter 2004 of $5.1 million were higher 
than the first quarter 2003 payments of $3.6 million due to the strength and 
sustainability of AltaGas earnings.

AltaGas reduces financing costs and minimizes the effect of future interest 
rate movements on its cash flows through the use of interest rate swaps. The 
total amount of debt with variable interest rates that was fixed through 
interest rate swaps at March 31, 2004 was $230.0 million. At March 31, 2004 
interest rates had been fixed on approximately 84 percent of the 
Corporation's total debt, including the swaps and AltaGas' $100.0 million of 
medium term notes.

CONTRACTUAL OBLIGATIONS

There have been no material changes to AltaGas' contractual obligations, 
including payments due for each of the next five years and thereafter, since 
December 31, 2003. For further information on these contractual obligations, 
refer to Management's Discussion and Analysis in AltaGas' 2003 Annual Report.

CAPITAL RESOURCES

AltaGas believes that its access to debt and equity markets, unutilized bank 
credit facilities and cash generated from operations will provide it with 
sufficient capital resources and liquidity to fund existing operations, 
future AltaGas Income Trust distributions, and certain acquisition and 
expansion opportunities in 2004. A description of the AltaGas' credit 
facilities can be found in Notes 7 and 8 to the consolidated financial 
statements included in AltaGas' 2003 Annual Report.

The use of debt or equity funding is determined on the basis of capital 
structure. AltaGas' capital structure is determined by considering the norms 
and risks associated with each of its business components and segments. 
AltaGas funds all subsidiary borrowings.

At March 31, 2004, AltaGas had total debt outstanding of $394.3 million, 
compared to $396.9 million at December 31, 2003. This $2.6 million debt 
reduction, after investing activities of $18.4 million and dividends of $5.1 
million demonstrates the cash flow generation capability of AltaGas' assets. 
AltaGas' debt to total capitalization ratio decreased to 51.5 percent at 
March 31, 2004 from 52.2 percent at December 31, 2003. As an income trust, 
AltaGas will continue to decrease debt as a proportion of its capital 
structure and will target a debt to total capitalization ratio between 45 
percent and 50 percent.

OFF BALANCE SHEET ARRANGEMENTS

The Corporation is not party to any contractual arrangement under which an 
unconsolidated entity may have any obligation under certain guarantee 
contracts, a retained or contingent interest in assets transferred to an 
unconsolidated entity or similar arrangement that serves as credit, liquidity 
or market risk support to that entity for such assets. The Corporation has no 
obligation under derivative instruments, nor under a material variable 
interest in an unconsolidated entity that provides financing, liquidity, 
market risk or credit risk support to the registrant, or engages in leasing, 
hedging or research and development services with the registrant.

RELATED PARTIES

On March 19, 2004 AltaGas purchased 320,000 units of Taylor NGL Limited 
Partnership (Taylor) at a cost of $2.2 million. Taylor's business is the 
ownership and operatorship of facilities in the midstream sector of the 
Western Canadian natural gas industry including a fifty percent interest in 
the Joffre ethane extraction plant. AltaGas owns the other 50 percent 
interest in that plant. AltaGas' interest in Taylor after this purchase is 
18.5 percent.

PROPOSED TRANSACTIONS

On April 29, 2004, AltaGas' shareholders voted in favour of reorganizing 
AltaGas' business into an income trust. The Plan of Arrangement received 
court approval on April 30, 2004 and was effective May 1, 2004. The AltaGas 
Income Trust began trading on the Toronto Stock Exchange on May 5, 2004 under 
the trading symbol ALA.UN. As a mutual fund trust, AltaGas Income Trust owns 
AltaGas' business and will make regular monthly cash distributions to 
unitholders.

On March 18, 2004, AltaGas announced that it had entered into a purchase and 
sale agreement with BP Canada Energy Resources Company (BP) to acquire BP's 
48 2/3 percent interest in the Edmonton Ethane Extraction Plant located at 
Edmonton, Alberta for approximately $46 million. The transaction is expected 
to close during the second quarter of 2004 after the receipt of provincial 
government approval of the transfer of operator licenses to AltaGas.

CHANGES IN ACCOUNTING POLICY

Effective January 1, 2004, the Company prospectively adopted the provisions 
of the CICA's new Accounting Guideline "Hedging Relationships" that specifies 
the circumstances in which hedge accounting is appropriate, including the 
identification, documentation, designation and effectiveness of hedges, and 
the discontinuance of hedge accounting. The Company has determined the 
effectiveness of the hedges are well above thresholds required in the 
provisions and therefore there has been no impact on the consolidated 
financial statements.

Also effective January 1, 2004, AltaGas retroactively adopted the provisions 
of the CICA Handbook Section 3870 regarding stock based compensation and 
other stock based payments, which results in expensing of stock options 
granted to employees. Implementation of this Section resulted in a decrease 
to the first quarter 2004 net income of $0.1 million and an adjustment to 
shareholders' equity accounts of $0.5 million.

CRITICAL ACCOUNTING ESTIMATES

Since a determination of many assets, liabilities, revenues and expenses is 
dependent upon future events, the preparation of the Company's consolidated 
financial statements requires the use of estimates and assumptions which have 
been made using careful judgment. AltaGas' critical accounting estimates 
continue to be amortization expense, asset retirement obligations and asset 
impairment assessment. For further information on these critical accounting 
estimates, refer to Management's Discussion and Analysis in AltaGas' 2003 
Annual Report.

FINANCIAL INSTRUMENTS

AltaGas enters into financial derivative contracts such as swaps and collars 
to manage exposure to fluctuations in commodity prices particularly in the 
power component and interest rates on debt. These contracts are designed as 
hedges and gains and losses relating to such contracts are deferred and 
recognized in the same period and financial statement category as the 
corresponding hedged transaction.

The most significant impact of these contracts on 2004 business has been to 
provide revenue stability in the power component. Power Pool monthly average 
spot prices ranged in the first quarter of 2004 from $45.46 per MWh to $56.51 
per MWh. Through the use of financial hedges on the portion of its portfolio 
deemed optimal by management, AltaGas moderated the impact of this 
volatility.

OUTSTANDING SHARE DATA

AltaGas common and preferred shares outstanding at March 31, 2004 were 
45,927,793, up from 45,716,844 at December 31, 2003. The most significant 
change during the period related to the issue of shares for cash on the 
exercise of options. At March 31, 2003 45,331,342 common and preferred shares 
were outstanding.

Under the terms of the restructuring of AltaGas into an Income Trust 
effective May 1, 2004, AltaGas securityholders exchanged their shares in the 
company for mutual fund trust units and eligible securityholders also 
received exchangeable units that are exchangeable into mutual fund trust 
units on a one for one basis. At May 1, 2004 a total of 45,928,293 units were 
outstanding comprising 3,394,216 Limited Partnership No. 1 exchangeable 
units, 8,866,009 Limited Partnership No. 2 exchangeable units and 33,668,068 
mutual fund trust units. The mutual fund trust units trade on the TSX under 
the symbol ALA.UN. The exchangeable units do not trade on the TSX.

Holders of limited partnership units issued under the reorganization are 
reminded that in order to obtain tax-deferred treatment (in full or in part) 
with respect to the transfer of your common shares of AltaGas Services Inc., 
there is a requirement to complete the applicable income tax election form(s) 
and submit that form (or those forms) to Computershare Trust Company of 
Canada within 90 days of May 1, 2004, as more particularly set forth in 
Section 2.4 of the Plan of Arrangement attached as Schedule A to Appendix C 
to the Information Circular and Proxy Statement of AltaGas Services Inc. 
dated March 26, 2004.

 /T/

                            ALTAGAS SERVICES INC.
                         CONSOLIDATED BALANCE SHEETS

    ($ thousands)
    -------------------------------------------------------------------------
                                                       March 31     December
                                                           2004           31
                                                       (unaudited)      2003
    -------------------------------------------------------------------------
    ASSETS
    Current assets
      Accounts receivable                              $   86,046  $  88,463
      Inventory                                               321      1,879
      Other                                                 1,569      5,806
    -------------------------------------------------------------------------
                                                           87,936     96,148
    Capital assets                                        683,741    677,911
    Energy services arrangements and contracts             99,541    101,035
    Goodwill                                               18,860     18,860
    Future income taxes                                       207        208
    Investments and other assets                           26,991     25,098
    -------------------------------------------------------------------------
                                                       $  917,276  $ 919,260
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Accounts payable and accrued liabilities         $   65,946  $  74,726
      Short-term debt                                      10,582      4,493
      Other                                                 8,491      7,857
    -------------------------------------------------------------------------
                                                           85,019     87,076
    -------------------------------------------------------------------------
    Long-term debt                                        383,732    392,358
    Asset retirement obligations                           14,230     13,962
    Future income taxes                                    63,058     62,537
    -------------------------------------------------------------------------
                                                          461,020    468,857
    -------------------------------------------------------------------------
    Shareholders' equity
      Share capital (note 3)                              269,826    268,040
      Contributed surplus (note 2)                            468          -
      Retained earnings                                   100,943     95,287
    -------------------------------------------------------------------------
                                                          371,237    363,327
    -------------------------------------------------------------------------
                                                       $  917,276  $ 919,260
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements


                            ALTAGAS SERVICES INC.
           CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                                 (unaudited)

    ($ thousands except per share amounts)
    -------------------------------------------------------------------------
                                                          Three months ended
                                                                March 31
    -------------------------------------------------------------------------
                                                                        2003
                                                                   (restated,
                                                             2004     note 6)
    -------------------------------------------------------------------------
    REVENUE
      Operating                                         $ 193,129  $ 203,456
      Other                                                   390         22
    -------------------------------------------------------------------------
                                                          193,519    203,478
    -------------------------------------------------------------------------
    EXPENSES
      Cost of sales                                       136,329    149,112
      Operating and administrative                         26,048     23,727
      Amortization                                          9,990      9,762
    -------------------------------------------------------------------------
                                                          172,367    182,601
    -------------------------------------------------------------------------
    Operating income                                       21,152     20,877
    Interest expense
      Short-term debt                                         107        697
      Long-term debt                                        5,428      4,853
    -------------------------------------------------------------------------
    Income before income taxes                             15,617     15,327
    Income taxes                                            4,578      5,087
    -------------------------------------------------------------------------
    Net income                                             11,039     10,240
    Retained earnings, beginning of period                 95,287     74,256
    Change in accounting policy (note 2)                     (332)
    Dividends                                              (5,051)    (3,627)
    -------------------------------------------------------------------------
    Retained earnings, end of period                    $ 100,943  $  80,869
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income per share (note 3)
      Basic                                             $    0.24  $    0.23
      Diluted                                           $    0.24  $    0.22

    See accompanying notes to the consolidated financial statements


                            ALTAGAS SERVICES INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (unaudited)

    ($ thousands)
    -------------------------------------------------------------------------
                                                          Three months ended
                                                                March 31
    -------------------------------------------------------------------------
                                                                       2003
                                                                   (restated,
                                                            2004     note 6)
    -------------------------------------------------------------------------
    Cash from operations
      Net income                                        $  11,039  $  10,240
      Items not involving cash:
        Amortization                                        9,990      9,762
        Accretion of asset retirement obligations             183        219
        Stock option compensation (note 2)                    136          -
        Future income taxes                                   521      1,603
        Loss on sale of assets and investments                 77          2
        Equity income                                        (453)       (24)
        Other                                                  65        136
    -------------------------------------------------------------------------
    Funds generated from operations                        21,558     21,938
    Decrease in deferred revenue and other                      -          7
    Net change in non-cash working capital                  2,613      8,792
    -------------------------------------------------------------------------
                                                           24,171     30,737
    -------------------------------------------------------------------------
    Investing activities
      Acquisition of capital assets                       (16,483)    (9,074)
      Disposition of capital assets                             -        196
      Acquisition of energy services arrangements
       and contracts                                          (12)       (14)
      Acquisition of investments and other assets          (2,173)      (425)
      Disposition of investments and other assets             300      1,480
    -------------------------------------------------------------------------
                                                          (18,368)    (7,837)
    -------------------------------------------------------------------------
    Financing activities
    Decrease in operating loans                            (2,538)   (19,945)
    Dividends                                              (5,051)    (3,627)
    Net proceeds from issuance of common shares (note 3)    1,786        672
    -------------------------------------------------------------------------
                                                           (5,803)   (22,900)
    -------------------------------------------------------------------------
    Change in cash                                              -          -
    Cash, beginning of period                                   -          -
    -------------------------------------------------------------------------
    Cash, end of period                                 $       -  $       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the consolidated financial statements


    SELECTED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)
    ($ thousands except per share amounts or where otherwise noted)

    1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        The interim consolidated financial statements of AltaGas Services
    Inc. (the Company) have been prepared by management in accordance with
    Canadian generally accepted accounting principles. The accounting
    policies applied are consistent with those outlined in the Company's
    annual consolidated financial statements for the fiscal year ended
    December 31, 2003, except as noted below in note 2. These interim
    consolidated financial statements for the quarter ending March 31, 2004
    do not include all of the disclosures required in the annual financial
    statements, and should be read in conjunction with the audited
    consolidated financial statements included in AltaGas' 2003 Annual
    Report.

    2.  CHANGE IN ACCOUNTING POLICY

        Effective January 1, 2004, the Company adopted the new Canadian
    Institute of Chartered Accountants standard for accounting for
    stock-based compensation ("Section 3870"), which requires the use of the
    fair value method to account for stock options. Based on the
    Black-Scholes option valuation model, stock options are valued at the
    date of the grant and recognized as compensation expense over their
    expected life.

        This change in accounting policy has been adopted retroactively
    without prior period restatement. In accordance with Section 3870, only
    stock options issued on, or after, the initial adoption date of the
    section are recognized in the financial statements. No compensation
    expense is recorded for stock options issued and outstanding prior to
    January 1, 2002. This change in accounting policy resulted in a
    reduction of opening retained earnings for 2004 and a charge to income in
    the first quarter of 2004 as presented below as increases (decreases) in
    the affected categories of the Consolidated Balance Sheets and
    Consolidated Statements of Income and Retained Earnings.

                                                                    March 31
                                                                        2004
    -------------------------------------------------------------------------
      Consolidated Balance Sheet
      Contributed surplus                                           $    468
      Opening retained earnings                                         (332)
    -------------------------------------------------------------------------

      Consolidated Income Statement
      Operating and administrative                                  $    136
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    3.  SHARE CAPITAL

    Authorized:

    -  an unlimited number of common shares without nominal or par value.
    -  an unlimited number of preferred shares without nominal or par value.

                                                        Number
    Common Shares Issued:                            of Shares        Amount
    -------------------------------------------------------------------------
    December 31, 2003                               36,716,844    $  179,076
    Issued for cash on exercise of options             208,949         1,747
    Issued for compensation                              2,000            39
    -------------------------------------------------------------------------
    March 31, 2004                                  36,927,793    $  180,862
    -------------------------------------------------------------------------

    Preferred Shares Issued:                            Number
                                                     of Shares        Amount
    -------------------------------------------------------------------------
    December 31, 2003 and March 31, 2004             9,000,000    $   88,964
    -------------------------------------------------------------------------
    Total shares issued                             45,927,793    $  269,826
    -------------------------------------------------------------------------

        The Company has an employee stock option plan under which both
    employees and directors are eligible to receive grants. At
    March 31, 2004 3,800,000 common shares were reserved for issuance under
    the plan. To March 31, 2004 options granted under the plan generally had
    a term of ten years to expiry and vested no longer than over a four year
    period. Options outstanding under the plan have a weighted average
    exercise price of $9.31 and a weighted average remaining contractual life
    of 8.29 years.

                                                                    Weighted
                                                                     Average
                                                        Number      Exercise
                                                    of Options         Price
    -------------------------------------------------------------------------
    Stock options outstanding, December 31, 2003     1,506,362    $     8.74
    Granted                                            107,000         15.07
    Exercised                                         (208,949)         8.37
    Cancelled                                          (19,925)         7.24
    -------------------------------------------------------------------------
    Stock options outstanding, March 31, 2004        1,384,488    $     9.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable at March 31, 2004                      451,025    $     7.53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        The basic number of shares outstanding for the three months ended
    March 31, 2004 was 45.9 million (March 31, 2003 - 45.3 million) and the
    diluted number of shares outstanding for the three months ended
    March 31, 2004 was 46.6 million (March 31, 2003 - 45.7 million).


    4.  RELATED PARTY TRANSACTIONS

        During 2003, AltaGas acquired a 19.2 percent interest in the
    outstanding limited partnership units of Taylor NGL Limited Partnership
    ("Taylor") for total consideration of $18.1 million.

    On March 18, 2004, AltaGas purchased an additional 320,000 limited
    partnership units of Taylor for $2.2 million. The purchase resulted in a
    dilution of AltaGas' ownership in Taylor to 18.5 percent and an
    unrealized dilutive gain of $192 thousand.

    5.  SEGMENTED INFORMATION

        AltaGas is a midstream energy company with a portfolio of assets and
    services used to move energy from the source to the end-user. The
    Company has three reportable segments:

        Gathering and Processing - natural gas gathering and processing,
    natural gas transmission, and ethane and natural gas liquids extraction.

        Energy Services - power services, gas services and oil and natural
    gas production.

        Natural Gas Distribution - natural gas distribution to end users and
    related services.

                                               Natural      Inter-
    For the three      Gathering                   Gas    segment
    months ended             and     Energy     Distri-     Elimi-
    March 31, 2004    Processing   Services     bution     nation      Total
    -------------------------------------------------------------------------
    Revenue            $  44,692  $ 133,409  $  48,129  $ (32,711) $ 193,519
    Cost of sales         (6,900)  (123,649)   (38,387)    32,607   (136,329)
    Operating and
     administrative
     expenses            (19,545)    (2,332)    (4,275)       104    (26,048)
    Amortization          (6,276)    (2,132)    (1,582)         -     (9,990)
    -------------------------------------------------------------------------
    Operating income   $  11,971  $   5,296  $   3,885  $       -  $  21,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net additions to
     capital assets    $  12,107  $     302  $   1,845             $  14,254
    Segment assets     $ 629,007  $ 154,126  $ 134,143             $ 917,276
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the three
    months ended                               Natural      Inter-
    March 31, 2003     Gathering                   Gas    segment
    (restated,               and     Energy     Distri-     Elimi-
      note 6)         Processing   Services     bution     nation      Total
    -------------------------------------------------------------------------
    Revenue            $  43,367  $ 148,803  $  58,274  $ (46,966) $ 203,478
    Cost of sales         (9,133)  (139,121)   (47,710)    46,852   (149,112)
    Operating and
     administrative
     expenses            (18,515)    (1,551)    (3,775)       114    (23,727)
    Amortization          (6,052)    (2,168)    (1,542)         -     (9,762)
    -------------------------------------------------------------------------
    Operating income   $   9,667  $   5,963  $   5,247  $       -  $  20,877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net additions to
     capital assets    $   5,270  $     859  $   1,395             $   7,524
    Segment assets     $ 596,220  $ 176,680  $ 145,754             $ 918,654
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    6.  COMPARATIVE FIGURES

        Certain comparative figures have been reclassified to conform to the
    current financial statement presentation. Prior periods have been
    restated for the impacts of the December 31, 2003 adoption of CICA
    Handbook Section on accounting for asset retirement obligations.

    7.  SEASONALITY

        The natural gas distribution business is highly seasonal with the
    majority of natural gas deliveries occurring during the winter heating
    season. Gas sales during the winter typically account for approximately
    two-thirds of annual gas distribution revenue, resulting in strong first
    and fourth quarter results and second and third quarters that show either
    small profits or losses.

    8.  SUBSEQUENT EVENTS

        On April 29, 2004, AltaGas' shareholders voted in favour of
    reorganizing AltaGas' business into an income trust. The Plan of
    Arrangement received regulatory and court approvals on April 30, 2004 and
    the Trust began trading on the Toronto Stock Exchange on May 5, 2004
    under the trading symbol ALA.UN. As a new open-ended investment trust,
    AltaGas Income Trust owns AltaGas' existing business and will make
    regular monthly cash distributions to unitholders.

        On March 18, 2004, AltaGas announced that it entered into a purchase
    and sale agreement with BP Canada Energy Resources Company ("BP") to
    acquire BP's 48 2/3 percent interest in the Edmonton Ethane Extraction
    Plant located at Edmonton, Alberta for approximately $46 million. The
    transaction is expected to close during the second quarter of 2004 after
    receipt of the provincial government approval of the transfer of operator
    licenses to AltaGas.


    OTHER INFORMATION

    FINANCIAL SUMMARY BY BUSINESS SEGMENT
    ($ millions )                      Q1/04  Q4/03   Q3/03   Q2/03   Q1/03
    -------------------------------------------------------------------------
    Revenue
      Gathering and Processing
        Field gathering and processing  27.8    29.0    26.5    24.8    25.1
        Extraction                      10.4    10.3     8.8     8.6    12.1
        Transmission                     7.0     6.7     6.7     6.4     6.2
        Intercomponent elimination      (0.5)   (0.5)   (0.9)   (0.5)   (0.1)
      Energy Services                  133.4   125.1   114.1   121.1   148.8
      Natural Gas Distribution(1)       48.1    34.7    12.9    23.5    58.3
      Intersegment elimination         (32.7)  (26.3)  (10.2)  (15.3)  (47.0)
    -------------------------------------------------------------------------
                                       193.5   179.0   157.9   168.6   203.4
    -------------------------------------------------------------------------
    Net revenue
      Gathering and Processing
        Field gathering and processing  27.8    29.0    26.5    24.8    25.1
        Extraction                       3.5     3.6     2.2     2.3     3.0
        Transmission                     7.0     6.7     6.7     6.4     6.2
        Intercomponent elimination      (0.5)   (0.5)   (0.9)   (0.5)   (0.1)
      Energy Services                    9.8    13.1    14.0    12.5     9.7
      Natural Gas Distribution(1)        9.7     9.2     4.9     5.8    10.6
      Intersegment elimination          (0.1)   (0.1)   (0.1)   (0.1)   (0.1)
    -------------------------------------------------------------------------
                                        57.2    61.0    53.3    51.2    54.4
    -------------------------------------------------------------------------
    Operating income
      Gathering and Processing          12.0    13.5    10.2     9.0     9.7
      Energy Services                    5.3     8.7     9.5     8.3     6.0
      Natural Gas Distribution(1)        3.9     3.7    (0.5)    0.3     5.2
    -------------------------------------------------------------------------
                                        21.2    25.9    19.2    17.6    20.9
    -------------------------------------------------------------------------
    (1) Q2 and Q3 2003 financial results and natural gas distributed (Bcf)
        reflect the normal lower seasonal demand for natural gas in the
        Natural Gas Distribution segment.

    Notes: Certain comparative figures have been reclassified to conform to
           the current financial statement presentation.
           AltaGas adopted CICA Handbook guidelines on asset retirement
           obligations in 2003. Prior year information has been restated for
           the effect of this adoption.


    OPERATING SUMMARY BY BUSINESS SEGMENT
                                      Q1/04   Q4/03   Q3/03   Q2/03   Q1/03
    -------------------------------------------------------------------------
    Gathering and Processing
      Field gathering and processing
        Processing capacity
         (gross Mmcf/d) (1)              901     861     835     838     847
        Processed throughput
         (gross Mmcf/d) (2)              560     523     514     510     535
        Capacity utilization
         (percent) (1)                    62      61      62      61      63
        Average working interest
         (percent) (1)                    87      90      88      88      88
      Extraction
        Inlet capacity (Mmcf/d) (1)      349     349     349     349     349
        Production (Bbls/d) (2)        9,047   8,182   5,440   6,195   6,416
      Transmission volumes (Mmcf/d)
       (2) (4)                           396     403     347     321     319
    Energy Services
      Volume of power sold
       (thousands of MWh)                863     873     872     861     660
      Price received on the sale of
       power ($/MWh) (2)               45.78   46.97   48.28   46.55   46.07
      Average Alberta Power Pool prices
       ($/MWh) (2)                     48.78   54.78   62.39   50.88   83.85
    Natural Gas Distribution(5)
      Customers                       59,528  59,543  58,941  58,671  58,700
      Volume of natural gas distributed
        Sales (Bcf) (6)                  5.5     4.5     1.3     2.1     5.9
        Transportation (Bcf)             3.0     3.0     2.6     2.2     1.9
      Degree day variance (percent) (3)  2.0     3.4    (5.9)   15.4     9.2
    -------------------------------------------------------------------------
    (1) At period end.
    (2) Quarter average.
    (3) Variance from 20-year average. Positive variances are favourable.
    (4) Excludes condensate transmission volumes.
    (5) Excludes Inuvik Gas Ltd. and Heritage Gas Limited operating
        statistics.
    (6) Q2 and Q3 2003 financial results and natural gas distributed (Bcf)
        reflect the normal lower seasonal demand for natural gas in the
        Natural Gas Distribution segment.

/T/



DIVIDENDS

On January 11, 2001 the Corporation declared its first quarterly cash 
dividend per fully paid common share and participating share in the capital 
stock of the Company, which was paid on March 31, 2001. No dividends were 
paid on any shares of AltaGas from the date of its incorporation to the end 
of December 2000. The following table summarizes AltaGas' dividend history.

/T/

    (dollars)                                 2004     2003     2002    2001
    -------------------------------------------------------------------------
    First quarter                           $ 0.11   $ 0.08   $ 0.06  $ 0.03
    Second quarter                  not applicable     0.08     0.06    0.03
    Third quarter                   not applicable     0.11     0.08    0.06
    Fourth quarter                  not applicable     0.11     0.08    0.06
    -------------------------------------------------------------------------
                                            $ 0.11   $ 0.38   $ 0.28  $ 0.18

/T/

On April 29, 2004, AltaGas announced that AltaGas Income Trust will commence 
monthly distributions on June 15, 2004 to holders of Trust Units and holders 
of Exchangeable Units of record on May 25, 2004. The amount of the 
distribution will be $0.15 for each Trust Unit and each Exchangeable Unit.

Distribution levels will be reviewed periodically by the Board of Directors 
giving consideration to AltaGas' growth-related initiatives, financial 
position, financing requirements, cash flow and other relevant factors. 

EARNINGS COVERAGE RATIO

The following table sets forth AltaGas Services Inc.'s earnings coverage 
ratio which is provided in connection with its continuous offering of medium 
term notes. The financial ratio has been calculated based on Canadian 
generally accepted accounting principles.

/T/

                                                     March 31    December 31
                                                         2004           2003
    -------------------------------------------------------------------------
    Earnings coverage on short and long term debt        3.8x           3.8x
    -------------------------------------------------------------------------



    DEFINITIONS

    Bbls/d        barrels per day
    Bcf           billion cubic feet
    Mmcf/d        million cubic feet per day
    MW            megawatt
    MWh           megawatt-hour
    Net revenue   gross revenue less the costs of the purchase of natural gas
                  for resale and the costs to purchase power under power
                  purchase arrangements

/T/ 

When used in this report, the words "outlook", "anticipate," "estimate," and 
similar expressions are intended to identify forward-looking statements. Such 
statements are subject to certain risks, uncertainties and assumptions that 
could cause actual results to differ materially from those contemplated in 
the forward-looking statements. These risks and uncertainties include 
operating performance, regulatory and environmental issues, weather and 
economic conditions, competition and financing availability. For additional 
information on these and other factors see the reports filed by AltaGas with 
Canadian securities regulators. AltaGas disclaims any intention or obligation 
to update or revise any forward looking information whether as result of new 
information or future events.

 


Media:
Dennis Dawson
(403) 691-7534
Email: dennis_dawson@altagas.ca


or


Investment Community:
Marilyn Pfaefflin
(403) 691-7540
Email: marilyn_pfaefflin@altagas.ca
Website: www.altagas.ca