Risk Management

Foreign Currency Risk

Our results are affected by fluctuations in the U.S./Canadian currency exchange rates as we generate revenue from oil sales based on a U.S. dollar WTI benchmark price. There have been considerable changes in the value of the Canadian dollar relative to the U.S. dollar, ranging from a high of $0.91 US/Cdn in June 2006 to a low of $0.79 US/Cdn in May 2005. Our revenue exposure is partially offset by U.S. dollar obligations, such as interest costs on the U.S.-denominated debt and our share of Syncrude’s U.S. dollar vendor payments. When our U.S. Senior Notes mature, we will have exposure to U.S. exchange rates on the repayment of the notes. This repayment of U.S. dollar debt acts as a partial hedge against our U.S. denominated revenue payments we receive from our customers. We have reduced our currency exchange risk by denominating most of our debt in U.S. dollars and in the past, have entered into contracts that fix exchange rates on future U.S. dollar revenue receipts. At the present time, we do not intend to increase our currency hedge positions. However, the Trust may hedge foreign exchange rates in the future, depending on the business environment and growth opportunities. At February 22, 2007, we had US$20 million hedged at an average U.S. dollar exchange rate of $0.69 US/Cdn.