Agenda

• Oil and gas industry

in Canada
o Overview
o Characteristics
o Main risks
• Penn West Exp
o Company profile
o Risk management
• Encana Corporation
o Company profile
o Risk management
• Canadian Oil Sands
o Company profile
o Risk management
 Canada is a Global Energy Player
• Canada is the third owner of crude oil reserves in the
world after Saudi Arabia and Venezuela

• Canada is the third producer of natural gas in the world

• Canada is the sixth largest oil producer in the world

• Canada is second in the world in hydro-electricity

generation.
 Industry overview
Canadian Oil & Gas Statistics (2012)

• 1.31 million barrels per day of conventional oil production

• 1.7 million barrels per day of oil sands production
• 13.7 billion cubic feet per day of natural gas production
• $62 billion in capital spending
• $18 billion in taxes and royalties paid to governments
• Oil and gas industry currently supports 550,000 jobs across Canada
• Oil and gas industry current comprises about 20% of the Toronto Stock
Exchange
 Petroleum regions in Canada

• 1 Western Canada Sedimentary Basin

• 2 Eastern Canada Sedimentary Basins
• 3 Southern Ontario Oil and Natural Gas Fields
• Regions 1 and of western and eastern Canada account for nearly all
of the nation’s current crude oil and natural gas production.
Region 1
Region 2
 Canadian Association of Petroleum
Producers (CAPP)
• The voice of Canada's upstream oil, oil sands
and natural gas industry
• It represents large and small producer
member companies
• Members explore for, develop and produce
natural gas, natural gas liquid, crude oil and
oil sands throughout Canada.
• Produce about 90% of Canada’s natural oil
and gas
• Associate members provide a wide range of
services that support the upstream crude oil
and natural gas industry.
 Main production
• Natural gas
• Natural gas liquids
• Crude oil
• Oil sands
• Elemental sulphur
 Natural gas
• Price determined in an open market
• Supply of natural gas versus the demand for the fuel
• Price Sensitivity
– Residential
– Commercial
– Industrial
– Winter Season
– Higher crude oil prices
– Economic growth
 Natural gas liquids
• Components of natural gas that are separated from the gas
state in the form of liquids. This separation occurs in a field
facility or in a gas processing plant.
• Classified based on their vapor pressure
 Crude oil
• Actively traded commodities

• Oil prices change daily

• Global Trend

– Demand rising steadily over the past 20 years

– 60 million barrels per day to 84 million barrels per day.
– Emerging Economies
 Oil sands
• Oil sand in Alberta is the largest, most developed and utilizes
the most technologically advanced production processes

• A naturally occurring mixture of

sand, clay or other minerals, water
and bitumen, which is a heavy and
extremely viscous oil that must be
treated before it can be used by
refineries to produce usable fuels
such as gasoline and diesel.
Canadian Oil Sands
• Energy Efficiency
Using less energy input.
Reducing energy waste / losses.
Capturing waste heat
Cogeneration power / steam.

• Improved Recovery Processes

Lower temperature extraction.
Additives to reduce use of both
water and energy (steam).
Use of electricity rather than
steam.
Underground combustion rather
than steam.

• Carbon Capture/Sequestration
Most effective at upgraders.
 Regulation
Government:
• Efficiency and market regulations (National Energy
Board and Office of Energy Efficiency of Natural
Resources Canada)
• Environmental Regulations (Environment Canada)
• Property Regulations (Provincial Government and
Federal Government)
Self-regulation:
• Canadian Association of Petroleum Producers (CAPP)
Total Return Performance of
Canadian Energy Sector
 Recent transactions & trends
• The Canadian transactions market has been very active
• The year's most significant trend is the increased interest
from Asian investors and the high-profile deliberations by the
Canadian government about the implications of foreign
investment in Canada’s oil and gas Industry.
 Traditional risk exposure
• Commodity price volatility
• Business risk (production and sales uncertainty)
• Macroeconomic influence
• Credit risk (Counterparty failures)
• Operational Risk (Pricing)
• Environmental/legal risk(contract enforcement)
(environmental protection and disaster prevention)
 Others
• Pipeline approval
• Access to capital investment
• Global realignment of oil production
• Availability of unconventional hydrocarbon sources
• Underlying commodity supply and demand
fundamentals
• Foreign investment and M&A
 Risk management
• Sensitivity analysis
– On cash flows sensitive to:
• Oil and gas prices
• Interest rates
• FX changes
– Further developed with
• Probability calculations for movements in prices,
interest rates and FX
 Commodity derivatives
• The use of commodity derivatives can mitigate or remove oil
or gas price uncertainty
• Options, futures, swaps, forward contracts…
 Contingent liability derivatives
• On a diversified conventional reserve base with significant
production history, predicting the future production
performance over certain time horizon using type and decline
curves is generally quite accurate
• Companies with this sort of conventional reserve base can
enter into contingent liability derivatives like swaps on a high
percentage of their PDP(proved, developed, and producing)
production with a high degree of confidence that the physical
production to back any hedge liabilities will be there
regardless of availability of future resources like capital and
rigs to drill and complete future wells.
 How to manage risk?
What constitutes a sensible risk management program
depends on context:

• The nature of underlying reserves, the size, scale, maturity,

and sophistication of the company's operations, the
petroleum economics of the underlying asset(s).

• Correctly utilized, hedging tools represent a useful way of

underpinning value, maintaining liquidity, and managing
credit risk. Incorrectly used they can amplify risk significantly.
 Outlook for the Canadian Energy
Industry
• „ Continued investment in the oil sands and other oil assets
• „ Increasing investment in unconventional gas
• „ Continued M&A activity
— Joint ventures, acquisitions, asset transactions
— Continued participation by international companies
• „ Technological advancement expected to continue
• „ Development of global infrastructure, including LNG
• „ Social and environmental issues will continue to be critical
to Canadian operations
PENN WEST EXPLORATION
 Overview of the company
• Founded in 1979 in Calgary, Alberta

• One of the largest conventional oil and natural gas producers in Canada

• One of the S&P/TSX 60, the 60 largest companies on the Toronto Stock
Exchange

• More than 2,000 employees

• Total output: 56% oil and 44% natural gas

• In 2011 the company converted from an income trust (Penn West Energy
Trust) back into an independent corporation (Penn West Exploration).
 Financial scenario
• Market capitalization: 4.22 Billion CAD

• Enterprise value: 7.14 Billion CAD

• Shares outstanding: 489.77 Million CAD

Data from Reuters, Dec 2013

 Development
Penn West's Board of Directors has approved a capital budget of
$900 million for 2014, with two thirds of the investment directed
toward light oil opportunities resulting in the drilling of 210 net
wells. The development program also includes integrated enhanced
oil recovery (“EOR”) investments across our core areas.
In 2014, Penn West will be transitioning to a more “even-flow”
approach to our investment profile during the year. It was certainly
true in 2013 and in the past that Penn West might commit as much
as half of its annual capital budget in the first quarter – an approach
that limits effectiveness, learning transfer and the ability to adjust
programs as situations warrant. Generally, in 2014 and in
subsequent years, we expect our development capital flow will
approximate 25% to 30% of total year spending in quarters one,
three and four with the small remainder dedicated to the spring
break-up period in the second quarter.
Pipeline development
Operating Areas
 Reserves
The reserves estimates have been calculated in compliance with National
Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI
51-101"). Under NI 51-101, proved reserves estimates are defined as
having a high degree of certainty with a targeted 90 percent probability
in aggregate that actual reserves recovered over time will equal or
exceed proved reserve estimates. For proved plus probable reserves
under NI 51-101, the targeted probability is an equal (50 percent)
likelihood that the actual reserves to be recovered will be equal to or
greater than the proved plus probable reserves estimate. The reserves
estimates set forth below are estimates only and there is no guarantee
that the estimated reserves will be recovered. Actual reserves may be
greater than or less than the estimates provided herein.
Reserves
 Historical price

13/12/13 Price = 9.10

TSX

NYSE 13/12/13
Price = 8.61
 Management profile
David E. Roberts
President and Chief Executive Officer
Mr. Roberts brings more than 30 years of operational experience in the
upstream oil and gas business most recently as former Executive Vice
President and Chief Operating Officer of Marathon Oil Corporation

Todd H. Takeyasu
Executive Vice President and Chief Financial Officer
Todd is a Chartered Accountant with more than 25 years of oil and natural gas
industry and public accounting experience. He has been with Penn West since
1994 in various positions

Mark P. Fitzgerald
Senior Vice President, Development
Mark is a Professional Engineer who joined Penn West in 2008. Prior to his current
role of Senior Vice President, Development, Mark was Senior Vice President of
Production and Senior Vice President of Operations for Penn West.
 Risk management at Penn West
Penn West is exposed to a group of risks correlated to the activity it
promotes in the sector of oil and natural gas production.
Commodity price risk, foreign currency risk, credit risk, interest rate
risk, liquidity risk, environmental and climate change.
The company has got the aim to mitigate these risks throughout
business strategies and management controls using determined
financial instruments.

As at December 31, 2012 and 2011, the only asset or liability measured
at fair value on a recurring basis was the risk management asset and
liability, which was valued based on “Level 2 inputs” being quoted prices
in markets that are not active or based on prices that are observable for
the asset or liability.
 Hedging at Penn West
“Penn West considers price hedging of oil and natural gas
production to be a useful tool of risk management.
Penn West continues to employ derivative instruments on a
portion of its production volumes spanning several quarters
into the future.
The company also secured hedges to fix the costs of electric
power at its oilfield operations, improving its ability to project
operating costs, netbacks and cash flows.
Penn West is careful and judicious in its hedging activities in
order to preserve exposure to commodity price upside and
avoid unreasonable opportunity costs”
 Commodity price risk

• The most important risk to hedge

• This kind of risk is managend by using swaps, collars

and other financial instruments

• Limited to max of 50% of forecast sales volumes for

current year plus 1 year forward and up to max of 25%
for additional year thereafter.
Sensitivity analysis
Commodity price risk
 Credit risk
• There is risk if the counterparts does not pay back its
obligation

• There is Right to recover unpaid receivables by receiving

the partner’s share of production where Penn West is the
operator

• For oil and gas sales, financial derivatives: limit credit risk
by transacting only with institutions within credit facility,
with high credit ratings, obtaining financial security.
 Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its
financial liabilities as they come due. Management utilizes short and
long-term financial and capital forecasting programs to ensure credit
facilities are sufficient relative to forecast debt levels, dividend and
capital program levels are appropriate, and that financial covenants will
be met. Management also regularly reviews capital markets to identify
opportunities to optimize the debt capital structure on a cost effective
basis. In the short term, liquidity is managed through daily cash
management activities, short-term financing strategies and the use of
collars and other financial instruments to increase the predictability of
cash flow from operating activities.
 Foreign exchange rate risk
Prices received for crude oil are referenced to US dollars, thus Penn West’s
realized oil prices are impacted by Canadian dollar to US dollar exchange rates. A
portion of the Company’s debt capital is denominated in US dollars, thus the
principal and interest payments in Canadian dollars are also impacted by
exchange rates. When considered appropriate, the Company may use financial
instruments to fix or collar future exchange rates to fix the Canadian dollar
equivalent of crude oil revenues or to fix US denominated long-term debt
principal repayments.
 Interest rate risk
A portion of the Company’s debt capital is held in floating-rate bank facilities
which results in exposure to fluctuations in short-term interest rates which
remain at lower levels than longer-term rates. From time to time, Penn West may
increase the certainty of its future interest rates by entering fixed interest rate
debt instruments or by using financial instruments to swap floating interest rates
for fixed rates or to collar interest rates.

As at December 31, 2012, four percent of the Company’s long-term debt

instruments were exposed to changes in short-term interest rates (2011 – 19
percent).

As at December 31, 2012, a total of $1.9 billion (2011 – $2.0 billion) of fixed
interest rate debt instruments was outstanding with an average remaining term
of 5.5 years (2011 – 6.5 years) and an average interest rate of 5.8 percent (2011 –
5.9 percent), including the effects of interest rate swaps.
Safety, environmental and regulatory risks
Penn West is committed to minimizing the environmental impacts of our
operations and to involving our stakeholders throughout the exploration,
development, production and abandonment phases. Our environmental
programs encompass stakeholder communication, impact minimization,
resource conservation, and site abandonment and reclamation.

Safety is an integral part of Penn West's activities. Safety programs protect not
only the Company and its employees, but also friends, families, fellow workers,
the public and the environment, from the far-reaching effects of serious
accidents.
Penn West's senior management is committed to continually improving safety
standards, programs, training, awareness – and, most importantly, the safety of
its employees and contractor's employees
Consolidated balance sheets
Consolidated statement of earnings
Consolidated statement of cash flows
 Overview
• Sector: oil, natural gas, natural gas liquids and condensate
• In striving to be the lowest-cost natural gas producer
• The company plans to continue focusing capital investment in oil
and liquids rich natural gas plays, minimizing investment in dry
natural gas plays and attracting third party capital investments
• In 2013 expectation of liquids production between 50,000 and
60,000 barrels per day
• Strong liquidity position: in 2012 $3.2 billion in cash and cash
equivalent
• Stable dividends
• Joint venture with subsidiaries of Mitsubishi Corporation,
PetroChina Company Limited and Toyota Tsusho Corporation
 Management
Doug Suttles
President & Chief Executive Officer
Before joining Encana, Doug held a number of senior leadership posts at
BP, including Chief Operating Officer, BP Exploration & Production, and
President, BP Alaska.
Doug graduated from the University of Texas at Austin in 1983 with a B.S.,
Mechanical Engineering.
Sherri Brillon
Executive Vice-President & Chief Financial Officer
She served as Director of the Canadian Chamber of Commerce.
Ms. Brillon holds an Economics degree from University of Calgary in 1981.

Bob Grant
Executive Vice-President, Corporate Development, EH&S & Reserves
With over 30 years of experience in the oil and natural gas industry, Bob
joined one of Encana’s predecessor companies in 1985.
Bob graduated from Dalhousie University with a Bachelor of Science
degree in engineering in 1975 and from Nova Scotia Technical College
with a Bachelor in mechanical engineering in 1978.
Operating Areas
 Businesses
Based on the Company’s operations and geographic locations as follows:
•Canadian Division includes the exploration for, development of, and
production of natural gas, oil and NGLs and other related activities within
Canada.
•ƒUSA Division includes the exploration for, development of, and production
of natural gas, oil and NGLs and other related activities within the U.S.
•ƒMarket Optimization is primarily responsible for the sale of the Company’s
proprietary production. These results are included in the Canadian and USA
Divisions. Market optimization activities include third party purchases and
sales of product that provide operational flexibility for transportation
commitments, product type, delivery points and customer diversification.
•ƒCorporate and Other mainly includes unrealized gains or losses recorded
on derivative financial instruments.
Canadian Division
USA Division
 Resource play hub model
Utilizes highly integrated production facilities and is
used to develop resources by drilling multiple wells
from central pad sites
 Historical prices

TSX NYSE

13/12/2013 Price = 19.23 13/12/2013 Price = 18.15

Dividends
 Hedging philosophy
• Encana partially mitigates its exposure to financial risks
through the use of various financial instruments and physical
contracts.
• The use of derivative financial instruments is governed under
formal policies and is subject to limits established by the
Board of Directors.
• All derivative financial agreements are with major financial
institutions in Canada and the U.S. or with counterparties
having investment grade credit ratings.
• The Company’s policy is not to utilize derivative financial
instruments for speculative purposes.
 Risk Management
• Financial risks:
Market pricing of natural gas and liquids
ƒCredit
Liquidity
ƒForeign exchange rates
ƒInterest rates
• ƒOperational risks
• ƒSafety, environmental and regulatory risks
Unrealized Risk Management Positions
Earnings on Risk Management Positions
 Commodity risk
To partially mitigate commodity price risk, the Company may enter into
transactions that fix or set a floor and cap on prices. To help protect against
regional price differentials, Encana executes transactions to manage the price
differentials between its production areas and various sales points.
•Natural Gas - To partially mitigate the natural gas commodity price risk, the
Company uses NYMEX swaps and options. To help protect against widening
natural gas price differentials in various production areas, Encana has entered
into basis swaps to manage the price differentials between these production
areas and various sales points.
•Crude Oil - To help protect against widening crude oil price differentials
between North American and world prices, Encana has entered into fixed
price contracts and basis swaps.
•Power - The Company has entered into Canadian dollar denominated
derivative contracts to help manage its electricity consumption costs.
Commodity price positions
 Sensitivity analysis
The Company has used a 10 percent variability to assess the potential impact of
commodity price changes. Fluctuations in commodity prices could have resulted in
unrealized gains (losses) impacting pre-tax net earnings as at December 31 as
follows:

Forecasts for 2014:

 Credit risk
• Counterparty and credit risks are regularly and proactively
managed.
• Credit exposure with customers in the oil and gas industry or
financial institutions.
• This credit exposure is mitigated through the use of Board-
approved credit policies governing the Company’s credit portfolio,
including credit practices that limit transactions and grant payment
terms according to counterparties’ credit quality.
• As at December 31, 2012, approximately 88 percent (95 percent as
at December 31, 2011) of Encana’s accounts receivable and
financial derivative credit exposures were with investment grade
counterparties.
• As at December 31, 2012, Encana had two counterparties
accounted for 22 percent and 15 percent of the fair value of the
outstanding in-the-money net risk management contracts.
 Liquidity risk
• Access to cash equivalents and a wide range of funding
alternatives at competitive rates through commercial
paper, committed revolving bank credit facilities and debt
capital markets.
• Minimizes its liquidity risk by managing its capital structure.
• It may adjust capital spending, adjust dividends paid to
shareholders, purchase shares for cancellation pursuant to
normal course issuer bids, issue new shares, issue new debt
or repay existing debt.
 Foreign exchange rate risk

• As a means of mitigating the exposure to fluctuations in the

U.S./Canadian dollar exchange rate, Encana may enter into foreign
exchange contracts.
• Realized gains or losses on these contracts are recognized on
settlement.
• By maintaining U.S. and Canadian operations, Encana has a natural
hedge.
• Encana also maintains a mix of both U.S. dollar and Canadian dollar
debt, which helps to offset the exposure to the fluctuations in the
U.S./Canadian dollar exchange rate.
• In addition to direct issuance of U.S. dollar denominated debt, the
Company may enter into cross currency swaps on a portion of its
debt as a means of managing the U.S./Canadian dollar debt mix.
Foreign exchange rate risk
 Interest rate risk
• The Company may partially mitigate its
exposure to interest rate changes by holding a
mix of both fixed and floating rate debt and
entering into interest rate swap transactions.
• As at December 31, 2012, the Company had
no floating rate debt. Accordingly, the
sensitivity in net earnings for each one
percent change in interest rates on floating
rate debt was nil (2011 - nil; 2010 - nil).
 Operational risks
• Operational risks are the risk of loss or lost opportunity from:
 Reserves and resources replacement
 ƒCapital activities
 ƒOperating activities
• If Encana fails to acquire or find additional natural gas and liquids
reserves and resources, its reserves, resources and production will
decline materially from their current levels and, therefore, its cash
flows are highly dependent upon it.
• To mitigate these risks, as part of the capital approval process, the
Company’s projects are evaluated on a fully risked basis, including
geological risk and engineering risk.
• Encana also mitigates operational risks through a number of other
policies, systems and processes as well as by maintaining a
comprehensive insurance program.
Safety, environmental and regulatory
risks
• Encana’s operations are subject to regulation and
intervention by governments that can affect or
prohibit the drilling, completion, including
hydraulic fracturing and tie-in of wells,
production, the construction or expansion of
facilities and the operation and abandonment of
fields.
• Changes in government regulation could impact
the Company’s existing and planned projects as
well as impose a cost of compliance.
Consolidated Statement of Earnings
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet (1/2)
Consolidated Balance Sheet (2/2)
Consolidated Statement of Cashflow (1/2)
Consolidate Statement of Cashflow (2/2)
CANADIAN OIL SANDS
 Overview of the company

• Canadian Based company.

• The Company provides investment opportunity in the oil sands through its
36.74% interest in the Syncrude Project.

• The Company is the joint venture owner of the Syncrude Joint Venture
(Syncrude), a producer of low sulphur, light, synthetic crude oil (SCO).

• In 1978, Syncrude produced its first barrel of oil.

• During the year ended December 31, 2011, Canadian Oil Sands estimates
Syncrude’s proved plus probable reserves at 4.8 billion barrels (1.8 billion
barrels net to the Company)
 Management Key People
Marcel R. Coutu
•Mr.Marcel has been Chief Executive Officer and President of Canadian Oil Sands
Limited since August 24, 2001
•Chairman of the Board of Syncrude Canada Ltd
•More than 25 years of experience in the energy sector
Ryan M. Kubik
•Mr. Ryan has been Chief Financial Officer of Canadian Oil Sands Limited since April
2007
•He served as Treasurer of Canadian Oil Sands Limited from September 1, 2002 to
April 2007 and served as its Acting Controller from July 2005 to July 2006.
•More than 25 years of exeperience.
Allen R. Hagerman
•Mr. Allen has been Executive Vice President at Canadian Oil Sands Limited since
April 2007
•He served as the Chief Financial Officer of Canadian Oil Sands Limited from June
1, 2003 to April 2007.
•More than 25 years of experience in the financial management of energy
companies .
Syncrude Project At-a-Glance
 Reserves and Resources
Based on independent reserves and resources estimates
by GLJ Petroleum Consultants Ltd. as of December 31,
2012.
 Historical Prices
COS.TO on Toronto Stock Exchange
Historical Prices
Historical Prices
 Risk Management Philosophy
• COS approach Risk Management through process to identify, categorize
and assess risk.

• Syncrude canada, As operator of syncrude , Identify and assess the

operational risk, Environmental Risk, Health& Safety risk that may impact
its operations.

• Risks are categorized based on their probability of occurrence and their

potential impact o COS’ Future cash flows from operations, Net Income,
Corporate reputation and H&S performance.

• COS takes number of actions when risk have been identified and
categorized including avoidance, Mitigation, Risk transfer and Acceptance.
 Crude Oil Price Risk
•The financial condition, operating results and future growth of Canadian Oil
Sands are substantially dependent on prevailing and expected prices of oil.

•Prices for oil are subject to large fluctuations in response to changes in the
supply of and demand for oil, market uncertainty and a variety of additional
factors, including access to markets and sufficient transportation capacity, all of
which are beyond the control of Canadian Oil Sands. Prices are influenced by
global and regional supply and demand factors

•Canadian Oil Sands prefers to remain unhedged on crude oil prices; however,
during periods of significant capital spending and financing requirements,
management may hedge prices to reduce cash flow volatility. Canadian Oil Sands
did not have any crude oil price hedges in place during 2012 or 2011; instead, a
strong balance sheet was used to mitigate the risk around crude oil price
movements.
 Operational Risk
• Equipment failures

• Operator errors

• Weather-related shutdowns

• Catastrophic events

• Project delay and failure to achieve objectives.

• COS reduces exposure to some operational risks by maintaining

appropriate level of Insurance.(e.g Approximately 1.2$ Billion
Property Insurance.)
 Capital Expenditure Risk
• The demand for skilled labour and other limited resources
impacting operating expenses is having a similar effect on capital
expenditures.

• There is also a risk that capital maintenance at Syncrude will be

required more often than currently planned, or that significant
capital projects could arise that were not previously anticipated.

• In addition, COS exposed to financing risks associated with funding

its share of Syncrude’s capital program.

• COS historically minimized this risk by diversifying its funding

sources, which include credit facilities and cash flow from
operations.
 Foreign Currency Risk
• Canadian Oil Sands’ results are affected by fluctuations in the U.S./Cdn
currency exchange rates, as sales generated are based on a WTI benchmark
price in U.S. dollars while operating expenses and capital expenditures are
denominated primarily in Canadian dollars.

• Our sales exposure is partially offset by U.S. dollar obligations, such as

interest costs on U.S.dollar-denominated long-term debt and our share of
Syncrude’s U.S. dollar vendor payments.

• In the past, the Corporation has hedged foreign currency exchange rates by
entering into fixed rate currency contracts. The Corporation did not have
any foreign currency hedges in place at December 31, 2011, and as at 2012,
they do not intend to enter into any new currency hedge positions. The
Corporation may, however, hedge foreign currency exchange rates in the
future, depending on the business environment and growth opportunities.
 Interest Rate Risk
• Financial Results Impacted by U.S. and Canadian interest rate
changes because its credit facilities and investments are exposed
to its floating interest rate.

• COS is exposed to the refinancing of maturing long-term debt at

prevailing interest rates .

• As at December 31, 2012, There was no drawn on the credit

facilities (no amounts drawn on the credit facilities at December 31,
2011) and the next long-term debt maturity is in 2013.

• COS did not has significant exposure to Interest rate risk due to
short term nature of its Investment.
 Liquidity Risk
• Liquidity risk is the risk that Canadian Oil Sands will not be able to meet its
financial obligations as they come due.

• Canadian Oil Sands actively manages its liquidity through cash, debt and
equity management strategies.
 Credit Risk
• Canadian Oil Sands is exposed to credit risk primarily through its
trade accounts receivable balances with customers, with financial
counterparties with whom the Corporation has invested its cash and
from whom it has purchased term deposits, and with its insurance
providers in the event of an outstanding claim.

• Mitigated as accounts receivable with customers typically are settled

in the month following the sale and Max exposure to any customer
or counterparty is unchanged by credit policy.

• The Corporation’s maximum credit exposure related to customer

receivables was $311 million at December 31, 2011 and $376 million
at Dec 31, 2012 (2009 - $329 million).
Syncrude Joint Venture Ownership Risk

• Syncrude is a joint venture currently owned by seven participants. Each

participant is entitled to one vote.

• Operating decisions and those matters require a 51 per cent majority

with at least three participants’ approving while major growth decisions
outside of the original scope of the operations as well as producing
multiple products rather than a single product require unanimous
approval.

• Canadian Oil Sands has a representative who chairs Syncrude’s

Management Committee, which is a committee of the participants that
determines the oversight of Syncrude.

• Syncrude’s future plans will depend on such agreement and may depend
on the financial strength and views of the other participants at the time
such decisions are made.
 Sensitivity Analysis

• Canadian Oil Sands anticipates recording approximately $350 million in

current taxes in 2013. These sensitivities are after the impact of taxes.
• These sensitivities assume Canadian Oil Sands remains in minimum
royalty in 2013.
Consolidated balance sheets
Consolidated statement of earnings
Consolidated statement of cash flows
THANK YOU FOR YOUR ATTENTION