Alberta s s Energy Industry will the growth continue? Marcel Coutu President, Chief Executive Officer Canadian Oil Sands Limited, Manager of Canadian Oil Sands Trust O C T O B E R 2 4, 2 0 0 7
Forward-looking information Certain statements and graphs throughout this presentation contain forward-looking statements.. Forward-looking statements in this presentation include, but are not limited to, statements and graphs (collectively statements )) with respect to: 2007 expected payments to the Alberta government royalties; the amount of oil and gas investment in 2007 and beyond; levels and sources of Canadian oil production in the future; the expectation as to Canada s placement relative to the rest of the world for crude oil production and reserves; the forecast relating to future sustaining capital and operating cost; the forecast regarding combined expenditures; future royalties, provincial and federal corporate taxes and specifics regarding housing and workforce demand particularly in the Wood Buffalo region. You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Trust believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this presentation include, but are not limited to: labour productivity issues; the difficulties and risks involved in starting up new projects and use of new technology; the general complexity in operating a large oil sands mining or SAGD and refinery operations; product supply and demand for crude oil and its impact on projects being implemented or as expected; pipeline capacity; general economic conditions that impact the supply of labor and natural gas in the Fort McMurray area; technological changes and improvements; the imprecision in estimating reserves and resources; imprecision in estimating future productive capacity and operating costs; changes in regulations, especially in the area of environmental matters. You are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this presentation are made as of the date e of this presentation, and we do not undertake any obligation to update publicly or to revise any of the included forwardf orward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. All comments with regard to future crude oil prices are my personal opinion and not that of Canadian Oil Sands Trust. 2
Agenda Who are Syncrude and Canadian Oil Sands Trust? Significance of the energy industry to our economy The role of the oil sands sector Implications for employment, population growth and housing Crude oil outlook Key challenges 3
The Syncrude project Athabasca Peace River Ft. McMurray Cold Lake Edmonton Calgary 4
Syncrude joint venture ownership Imperial 25% 36.74% Canadian Oil Sands Petro-Canada 12% Conoco/Phillips 9.03% 5% 7.23% 5% Nexen Mocal Murphy Oil COS.UN only pure play on Syncrude 5
The Syncrude project Mildred Lake upgrading facility 6
The Syncrude project An oil sands mining operation 7
Syncrude s economic contribution $50 billion spent on capital and operating expenditures directly into the economies of Alberta and the rest of Canada -- between 1979 and 2006 $4.2 billion in total economic contribution in 2006 with about $3.7 billion benefiting the Alberta economy alone $1.1 billion in Crown royalties estimated to be paid to Alberta government in 2007 Syncrude employs about 4,530 people in Alberta and provides jobs for thousands of additional contractors 8
Importance of Oil and Natural Gas Industry to Canadian Economy Industry expected to pay $26 billion to governments in 2007 Oil and Gas now accounts for 25% of private sector investment in Canada 30% of value on the Toronto Stock Exchange Projected to invest $45 billion in Canada in 2007 Largest single private sector investor in Canada Oil and gas trade accounts for 81% of Canada s s trade surplus and 14% of total exports Employment near 500,000 in Canada Source: CAPP 9
Global Crude Oil Reserves billion barrels 300 250 200 150 100 260 179 Includes 174 billion barrels of oil sands reserves 136 115 Canada, with 174 billion barrels in oil sands reserves, ranks 2 nd only to Saudi Arabia in global oil reserves 99 92 80 60 50 41 36 22 0 Saudi Arabia Canada Iran Iraq Kuwait Abu Dhabi Venezuela Russia Libya Nigeria United States Source: CAPP and Oil & Gas Journal Dec. 2005 10
Canadian Oil Production 5,500 5,000 Actual Forecast thousand barrels per day 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Oil Sands Production: 2006 = 1.1 million b/d 2015 = 3.0-3.4 mm b/d 2020 = 3.8-4.4 mm b/d Western Canadian Conventional Oil Offshore Oil Sands Moderate Growth Case 1995 2000 2005 2010 2015 2020 Source: CAPP 11
Top 10 World Crude Oil Producers in 2006 Russia Saudi Arabia USA Iran China Mexico Canada 2006 UAE Oil sands growth is projected to move Canada from #7 to #4 in the world by 2015 Venezuela Norway 0 2 4 6 8 10 Million Barrels per Day Source: EIA & CAPP 12
30,000 Sustaining Capital & Operating Costs Forecast 2007 Forecast: all Alberta oil sands related projects including mines, insitu, upgraders, pipeline and co-gen plants. 100% all announced case. $ million Cdn 25,000 20,000 15,000 Sustaining Capital: Year 2007 - $2.0B Year 2017 - $5.0 B Operating Costs: Year 2007 $9.0 B Year 2017 - $22.6 B Actual Forecast 10,000 Operating Costs 5,000 - Sustaining Capital 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sustaining Capital Operating Costs Source: Athabasca Regional Issues Working Group (RIWG) and Nichols Applied Management 13
Combined Expenditures Forecast 2007 Forecast: All Alberta oil sands related projects including mines, insitu, upgraders, pipeline and co-gen plants. 100% all announced case. 45,000 2007 2017 40,000 Construction Capital $15.8B $7.3B Actual Forecast 35,000 30,000 Operating Costs $9.0B $22.6B Construction Capital $ million Cdn 25,000 20,000 Sustaining Capital TOTAL $2.0B $26.8B $5.0B $34.9B 15,000 Operating Costs 10,000 5,000 - Sustaining Capital 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sustaining Capital Operating Costs Construction Capital Expenditure Source: CAPP, Nichols Applied Management 14
10,000 Royalties, Provincial & Federal Corporate Taxes 2007 Forecast: Based on oil price of WTI US$60/bbl. 100% all announced case. $ million Cdn 9,000 8,000 7,000 6,000 5,000 4,000 Year 2007: AB Corp. Tax - $794M Fed. Corp. Tax - $887M Royalties - $1.8B Year 2017: AB Corp. Tax - $2.4B Fed. Corp. Tax - $3.7B Royalties - $4.4B Actual Forecast Federal Corporate Tax AB Corporate Tax 3,000 2,000 1,000 Royalties - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oil Sands Royalties Corporate Tax Payments Alberta Corporate Tax Payments Federal Source: Nichols Applied Management; Input assumes $0.87 exchange rate 15
Construction Workforce Outlook Synenco Northern Lights Phases 1 & 2 IOL Mackenzie Gas Project Syncrude Northwest OPTI Canada/ Nexen Upgrader North American Syncrude UE1 & SERP Petro Canada Joslyn Albian Sands Jackpine & Upgrader Expansion Suncor Firebag & Voyageur IOL Cold Lake CNRL Horizon Phases 1 &2 PC/UTS Fort Hill Conoco Surmont Source: CAPP and Construction Owners Association of Alberta (COAA) Oct 2006 16
Oil Sands Permanent Operations Jobs 2007 Forecast: Cumulative permanent operations jobs for oil sands projects located in the Wood Buffalo Region (does not include construction jobs) 25,000 Cumulative New Operations Jobs 20,000 15,000 10,000 5,000 0 1998 ~ 6,600 people directly employed by oil sands 2007 ~ Over 5,000 new jobs ~ nearly double 1998 jobs 2017 ~ 18,500 new jobs ~ nearly triple 1998 jobs 1998 1999 Actual Forecast 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Nichols Applied Management 2009 2010 2011 2012 2013 2014 2015 2016 2017 17
140,000 Wood Buffalo Urban Population Forecast 2007 Forecast Urban Population Fort McMurray Urban Service Area/Saprae Creek. Does not include over 20,000 workers currently in work camps and hotels/motels 120,000 RIWG s population forecast process has been approved by a third party audit performed by Deloitte Touche Actual Forecast 100,000 Population 80,000 60,000 67,067 Average annual population increase of 9% over past 7 years and expected average through to 2010 40,000 20,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Census-Fort McMurray/Saprae Cr. Discounted Case Total Development Case Source: RMWB Census & Nichols Applied Management 18
Wood Buffalo Urban Housing Demand Forecast # Housing Units Required 35,000 30,000 25,000 20,000 15,000 10,000 2007 Cumulative housing demand forecast for Fort McMurray Current Avg. SF House Price 1 Fort McMurray $605,495 Edmonton $417,150 Calgary $505,920 Current Avg. Rent 2 bdrm 2 Fort McMurray $1,680 Edmonton $ 877 Calgary $1,037 Supply / Demand Gap indicated by high and rising housing costs Timely land release plays a critical role in the solution 5,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Built Total Demand Source: Nichols Applied Management; 1 Fort McMurray, Edmonton, Calgary Real Estate Boards July 07, 2 CMHC Spring 07 19
Job and population growth outlook for Alberta Population In 2006, Alberta s s population grew at a nation-leading 3.0% - triple the Canadian growth rate Employment In 2006, Alberta had the highest labour force participation rate among the provinces at 73.4%, 6.2% higher than the national average. At the same time, Alberta also had the highest employment rate among the provinces at 70.8% and the lowest unemployment rate at 3.4% 20
Economic Benefits from Oil Sands 2000 2020 Study Period GDP Activity Distribution ($885 Billion) Employment Impact Distribution (6.6 Million person-years) $53 $96 17% 56% $102 11% Alberta Other Canada Ontario Foreign $634 16% Alberta Other Canada Ontario Foreign Source: CAPP and CERI Economic Impacts of Alberta s Oil Sands, Oct 2005 21
Canadian Governments Revenue from Oil Sands (2000 2020) $140 By Jurisdiction $123 Billion By Source $120 $100 14% 9% Municipalities Other Provinces Personal Income Tax 25% Property Tax 18% $80 $60 $40 $20 $ Billions 36 % 41 % Alberta Govt Federal Govt Indirect Tax 15% Royalty 22% Corporate Tax 20% $0 Source: CERI Economic Impacts of Alberta s Oil Sands, Oct 2005 22
Aug-98 Dec-98 Apr-99 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Historical crude oil prices Historical Monthly Average WTI - April 1998 to September 2007 US$WTI C$WTI 23 Aug-99 Dec-99 Apr-00 Aug-00 Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-98 WTI
Crude oil prices in the future? Expect prices to remain strong because Economies can sustain oil prices of US$50/bbl + Transportation fuel demand is robust Global spare capacity less than 1 MM bpd (1%) Supply disruption vulnerability is extreme New prospect availability/access is scarce Crude oil reservoirs on average decline at 5-15% 5 15% annually OPEC can only protect price downside 24
Key challenges Trust taxation New environmental measures (CO 2 emissions) Crown royalties review Other changes to fiscal regime (accelerated capital cost allowance already gone ) Tight supply of skilled labour Pressures on regional infrastructure 25
Conclusion Oil sands are a key driver of the economy Growth is expected to continue Outlook for crude oil prices remains positive But we need a supportive royalty and fiscal regime 26