Review of Consolidated Results

Revenues, after Crude Oil Purchases, Transportation and Marketing Expense

1. The sum of sales revenue and currency hedging gains equals Revenues on the Trust's consolidated statement of income.

2. Sales revenue, after crude oil purchases, transportation and marketing expense divided by SSB sales volumes, net of crude oil volumes purchased.

Following the expiry of the marketing services agreement between Canadian Oil Sands and EnCana Corporation (“EnCana”) on August 31, 2006, Canadian Oil Sands marketed its share of Syncrude’s production utilizing its own marketing department. The costs of this new marketing group are included in Administration expenses. These in-house expenses are expected to be comparable to the costs Canadian Oil Sands previously paid to EnCana to market its crude oil and related products, which were included in “Transportation and marketing expense”.

Also commencing in the third quarter of 2006, the Trust started to separately disclose its crude oil purchases, which had previously been netted from sales revenue. Prior year information has been reclassified for comparative purposes. Canadian Oil Sands purchases crude oil from third parties to fulfill sales commitments with customers when there are shortfalls in Syncrude’s production forecasts and to expand and develop long-term markets for our synthetic crude oil to support the sales of our SSB product. In addition, we buy crude oil to execute purchase and sales transactions mainly to facilitate crude oil location swaps, meet single shipper pipeline requirements or utilize a third party’s pipeline capacity or preferred tariff. The majority of the crude oil purchases in 2006 related to purchase and sales transactions, which involved selling crude oil to a counterparty and then buying a similar volume of oil back as part of a physical crude oil swap with minimal price risk.

The $469 million increase in 2006 revenues, after crude oil purchases, transportation and marketing expense and before currency hedging, reflected both an increase in sales volumes and a higher average realized SSB selling price. Sales volumes net of purchases averaged 91,800 barrels per day in 2006 compared to 76,000 barrels per day in 2005. This 21% increase reflects the increase in Syncrude production during the year, as explained in the “Review of Syncrude Operations” section of this MD&A.  The year-over-year 3% increase in the average realized selling price before currency hedging gains is a result of a 17% rise in average WTI prices to US$66.25 per barrel in 2006, offset considerably by a weakening of our net realized selling price relative to WTI and a strengthening of the Canadian dollar relative to the U.S. dollar. Foreign exchange rates averaged $0.88 US/Cdn in 2006 compared to $0.83 US/Cdn in 2005. Our SSB price differential to Canadian dollar WTI in 2006 averaged a discount of $2.57 per barrel, compared to a premium of $1.05 per barrel in the prior year. The shift in differentials primarily reflects the additional supply of synthetic crude oil in the market in 2006 compared to 2005. We are anticipating our annual SSB price differential to average a discount to Canadian dollar WTI of $4.00 per barrel in 2007 as a result of the additional supply of synthetic crude oil from the various oil sands producers, including Syncrude.