Advisory

In the interest of providing Unitholders and potential investors of Canadian Oil Sands Trust (the "Trust" or "Canadian Oil Sands") with information regarding the Trust, including management's assessment of the Trust's future production and cost estimates, plans and Syncrude operations, certain statements throughout this annual report contain "forward looking statements" under applicable securities law. Forward-looking statements in this annual report include, but are not limited to, statements with respect to: the expectation to grow production to 350,000 barrels per day ("bpd") and eventually to 500,000 bpd; the belief that higher TV/BIP ratios will extend Syncrude's resource life and potentially increasing future expansion plans beyond 500,000 bpd; the expectation of achieving the production design rates from Coker 8-3 and Stage 3; expectations that crude oil will be in high demand for a very long time; the plan to reach a net debt target of $1.6 billion by the end of 2010; the plans and expectations with regard to future distributions; the expectation that Canadian Oil Sands will convert to a corporate structure; the actual recoverable amounts from any reserves or resources; the belief that demand for our synthetic crude oil product will grow and that it will benefit both our revenues and cost structure; the belief that the arctic natural gas assets offer tremendous upside potential; the expected investments and costs relating to environmental legislation and regulations; the proposed reduction in sulphur dioxide emissions; the expected amount of Crown royalties payable in 2008; the expectation that Syncrude will continue to develop better and more sustainable practices; the short term and long term goals for operations, growth, distributions and the business environment; the expected improvement in energy efficiency; the productive capacity that can be achieved in the future; the expected timing to fix the design issues around the hydrogen plant; the expected growth opportunities that the Trust has through its expansion of the current interest in Syncrude or through external opportunities; the extent and value of Syncrude's reserves and resources; the quality of Syncrude's leases; the ability to improve the base operations at Syncrude, including without limitation the expected benefits to be realized from the Management Services Agreement between Syncrude Canada Ltd. and Imperial Oil Resources; future increases if any in distributions; the ability to mitigate and prevent operational risks such as dyke failures, explosions in upgrading units or other similar events; the anticipated impact of changes in federal tax legislation on income trusts; the impact of material and labour constraints on the Trust; the need for future hedging; the expected price for crude oil and natural gas in 2008; the actual taxes paid in the future by Canadian Oil Sands;–the expected timing and associated production impact of coker and other unit turnarounds; the expected revenues, operating costs and cash from operating activities for 2008; the anticipated impact that certain factors such as natural gas and oil prices, foreign exchange, operating costs and Crown royalties have on the Trust's cash from operating activities and net income; and the expected capital expenditures in 2008 and beyond. 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 that could cause results to differ materially from those expressed in the forward-looking statements contained in this annual report include, but are not limited to: labour shortages and the productivity achieved from labour in the Fort McMurray area; the impact of technology on operations and processes and how new complex technology may not perform as expected; risks inherent to the operation of any large, complex refinery units, especially the integration between mining operations and an upgrader facility; regulatory changes which may impact the penalties on greenhouse gas emitters, or the amount of Crown royalty or taxes paid to the government; currency and interest rate fluctuations; the availability of pipeline capacity; changes in business strategy; the availability and price of–energy commodities; regulatory decisions; the effects of competition and pricing pressures; shifts in market demands; changes in laws and regulations including environmental and regulatory laws; potential increases in costs; timing of completion of capital or maintenance projects; the availability of adequate levels of insurance; various events which could disrupt operations including severe weather conditions; technological changes and management retention and development; the supply and demand metrics for oil and natural gas; general economic, business and market conditions; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust, including those outlined in the management's discussion and analysis in this annual report and the assumptions outlined in the guidance for 2008 actually occurring. You are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this annual report are made as of the date of this annual report and unless required by law, the Trust does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this annual report are expressly qualified by this cautionary statement. In any reference to resources in this annual report, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Unless otherwise specified, all dollar amounts are expressed in Canadian dollars, all references to "dollars" or "$" are to Canadian dollars and all references to "US$" are to United States dollars.

Non-GAAP Financial Measures

In prior years, we referred to free cash flow as an indicator of the Trust's ability to repay debt and pay distributions to its Unitholders. It was a measure that did not have any standardized meaning under GAAP. During 2007, we discontinued our discussions of free cash flow, and now refer to the GAAP measure of cash from operating activities, which is derived from our Consolidated Statements of Cash Flows. We also refer to the Trust's cash from operating activities on a per Trust Unit basis, which does not have any standardized meaning under Canadian GAAP. Cash from operating activities per Trust Unit is calculated as cash from operating activities reported on the Trust's Consolidated Statement of Cash Flows divided by the weighted average number of Units outstanding in the period, as used in the Trust's net income per Trust Unit calculations. This measure is an indicator of the Trust's capacity to fund capital expenditures, distributions, and other investing activities without incremental financing, allocated to our outstanding Units. In addition, the Trust refers to various per barrel figures, such as net realized selling prices, operating costs and Crown royalties, which are also considered non-GAAP measures, but provide meaningful information on the operational performance of the Trust. We derive per barrel figures by dividing the relevant revenue or cost figure by our sales net of purchased crude oil volumes in a period. Cash from operating activities per Trust Unit and per barrel figures may not be directly comparable to similar measures presented by other companies or trusts.