Review of Alberta Oil Sands Royalty

Controls Environment

Management is responsible for establishing and maintaining adequate internal control over financial reporting. We have established disclosure controls and procedures, internal control over financial reporting, and corporate-wide policies to provide that Canadian Oil Sands’ consolidated financial position, results of operations and cash flows are presented fairly. Our disclosure controls and procedures are designed to provide reasonable assurance of the timely disclosure and communication of all material information.

We periodically review and update our internal control systems to reflect changes in our business environment. In the last quarter of 2006, the following significant changes were made to our internal control systems:

• Designed, implemented and tested controls related to crude oil marketing, which transitioned from an external service provider to an internal marketing department at Canadian Oil Sands;
• Designed, implemented and tested controls related to information systems management and support, which transitioned to an external service provider from being managed by Canadian Oil Sands during the year; and
• Established an Internal Audit department and commenced reviews in accordance with the Internal Audit plan.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, these systems provide reasonable, but not absolute, assurance that financial information is accurate and complete.

Canadian Oil Sands, under the supervision and participation of management, including the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures and the design of our internal control over financial reporting pursuant to Multilateral Instrument 52-109 “Certification of Disclosure in Issuers’ Annual and Interim Filings” as of December 31, 2006. In addition, management has evaluated the effectiveness of internal control over financial reporting as of December 31, 2006 using criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on these evaluations, Canadian Oil Sands’ management concluded that:

• Our disclosure controls and procedures were effective as of December 31, 2006 to provide reasonable assurance that material information is recorded, processed, summarized and reported within the time periods specified by the applicable Canadian securities regulators. Furthermore, our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed under applicable Canadian securities regulation is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure; and
• Our internal control over financial reporting as of December 31, 2006 was designed and operating effectively to provide reasonable assurance regarding the reliability of financial reporting.

PricewaterhouseCoopers LLP, our independent auditors, have expressed an unqualified opinion on management’s assessment and on the effectiveness of Canadian Oil Sands’ internal control over financial reporting as of December 31, 2006, as stated in their report which appears herein.