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GroupSadanand KMagdaleneAkshay AgShadab AkPranit Naik

CANADA

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OVERVIEW

OIL

Production (2011)-3.592 mbbl/day of production (6th), 1.355 mbbl/da

Reserves (3rd)- 180 billion barrels (171 bbl. of bitumen in oil sands)

Consumption- 1.6 million barrels per day

Prices- $94.21 (US$/bbl.)

1.7 -2.5 tbl of probable/possible oil sands reserves

NATURAL GAS Production- 13.7 billion cubic feet per day

Reserves- 70.4 trillion cubic feet

Consumption- 7.9 billion cubic feet per day

Prices- 2012 - $2.85/mmbtu

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3rd largest NG producer- 700-1,300 tcf for100+ years

6th largest crude oil producer- Canada is rthird in the world in crude oil reserves, aftVenezuela and Saudi Arabia

5th largest energy producer

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MAJOR OIL COMPANIES

Canadian Natural Resources Ltd.

Encana

Husky Energy

Imperial Oil

Laricina Energy

Nalcor Energy

Nexen

Reform Energy Service

Niko Resources Ltd

Pacific Rubiales Energy

Penn West Exploration

PetroKazakhstan

Suncor Energy

Syncrude

Talisman Energy

ShaMaran Petroleum Corp.

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REGULATORY FRAMEWORK

National Energy Board (NEB), 1959, Minister of Natural Resothe Parliament of Canada

Independent federal regulatory agency (Canadian energy in

Primary Responsibilities

Inter-provincial and international oil and gas pipelines and p

lines,

Export and import of natural gas under long-term licenses aterm orders,

Oil exports under long-term licenses and short-term orders

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REGULATORY FRAMEWORK

PROVINCIAL/TERRITORIAL Producing Provinces- Royalties and Taxes on O&G productio

incentives, grant permits and licenses to construct and operfacilities

Consuming Provinces- Regulate distribution systems and ov

the retail price of gas to consumers

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Petroleum, Natural Gas under the jurisdiction oprovinces

Intergovernmental conflicts sometimes arise Energy consuming provinces elect federal

governments

Energy producing provinces exercise authority

natural resources

Federal government- Foreign treaties requirecooperation of provincial governments

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PROVINCIAL CROWN LEASES A

LICENCES

Relationship b/w Provincial Crown and O&G companies Governed by Provincial Crown PNG Lease

Term of five years

Right to explore and drill

In exchange for rental fees and royalty interests

Freehold PNG lease

Lease automatically extended if there is continuous productexpire at the end of term

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CORPORATE TAXES

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FEDERAL ROYALTIES

1% of gross revenue (GR)first 18 months of production

2% of GR19thto 36thmonths

3% of GR37thto 54thmonths

4% of GR55thto 72ndmonths

5% of GR73rdto last production month preceding payout

Petroleum royalty after payout has occurred are the greater of 35

Revenues and 5% of GR.

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NEW BRUNSWICK

For Collecting shale gas royalties- If the industry develops Two-tier system

1stTier-Lower royalties when companies are setting up

2ndTier-Higher ratesWhen it reaches maturity phase

Ranges from 5% to 12% depending on amount of productio

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ALBERTA

Royalties rates range from 0% to 50% dependent on oil pricproduction. Max payable at 120$/barrel.

Before reaching pay-out- 1% to 9% on gross revenue After becoming profitable- Net Royalty rate of 25%-40% on

revenue

Oil price will influence the royalty rates as follows

Less than $55/barrelprepay out phase1% of revenues

Up to 9% when oil prices reach $120/barrel or higher.

Post-payout -> 25% (oil price < $55) to 40% (oil price >120$)

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Source: http://www.pwc.com/en_CA/ca/e

utilities/publications/pwc-oil-gas-taxation-

http://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdfhttp://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-oil-gas-taxation-2012-10-en.pdf

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M&A, JVs, minority investments involving foreign investors Canadian O&G companies common

Post Economic Crisis and the period of volatile oil price M&Aincrease

Natural gas- oversupply- technological enhancements (shaleprices depressed

M&A deals- Focus on oil reserves in Syria, Egypt, UK, China, offshore West Africa

O&G entities having non-Canadian assets operate Reason-Canada's proven legal and regulatory regime

Strong and mature capital markets

Efficient way to acquire foreign assets