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Annual Report 2007
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Canadian Oil Sands Trust
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management's discussion and analysis

contractual obligations and commitments

The following table outlines the significant financial obligations and commitments that we have assumed in the normal course of our operations and are known as of February 28, 2008. These obligations and commitments represent future cash payments that the Trust is required to make under existing contractual agreements that it has entered into either directly, or as a 36.74 percent owner in the Syncrude Joint Venture:

  Payments Due By Period
($ millions) Total < 1 year 1 – 3 years 4 – 5 years > 5 years
Long-term debt1 1,229 166 447 296 320
Capital expenditure commitments2 250 84 166 – –
Pension plan solvency deficiency payments3 122 14 42 17 49
Management services agreement4 153 17 51 34 51
Pipeline commitments5 575 25 59 40 451
Asset retirement obligations6 743 13 34 30 666
Other obligations7 288 166 81 9 32
  3,360 485 880 426 1,569
1 Actual payments exclude interest payments and differ from the carrying value, which is stated at amortized cost. While there is approximately $150 million of debt maturing in 2008, Canadian Oil Sands' intention is to refinance such debt.
2 Capital expenditure commitments are primarily comprised of our 36.74 percent share of the SER project.
3 We are responsible for funding our 36.74 percent share of Syncrude Canada's registered pension plan solvency deficiency, which was confirmed in the December 31, 2006 valuation that was completed in 2007.
4 Reflects our 36.74 percent share of Syncrude Canada's annual fixed service fees under the Management Services Agreement.
5 Reflects our 36.74 percent share of the AOSPL pipeline commitment as a Syncrude Joint Venture owner, and various other of Canadian Oil Sands' pipeline commitments for transportation access beyond Edmonton.
6 Reflects our 36.74 percent share of the undiscounted estimated cash flows required to settle Syncrude's environmental obligations upon the ultimate reclamation of the Syncrude Joint Venture properties. Canadian Oil Sands maintains a reclamation trust, of which the trust amount will be used to fund a portion of our ultimate reclamation obligation.
7 These obligations primarily include our 36.74 percent share of the minimum payments required under Syncrude's commitments for natural gas purchases and employee retention program. Other items include, but are not limited to, annual disposal fees for the flue gas desulphurization unit and capital and operating lease obligations.

In total, the Trust's financial obligations have decreased by $919 million relative to the prior year-end. The four most significant net changes are: (1) a reduction in long-term debt of $415 million, as discussed in the "Liquidity and Capital Resources" section of this MD&A; (2) a $475 million payment, comprised of cash and Units, to Talisman on January 2, 2007 for the additional 1.25 percent Syncrude working interest acquisition; (3) a $60 million decrease in natural gas purchase commitments, mainly reflecting timing of natural gas contract renewals; and (4) a $127 million increase in the Trust's estimated undiscounted reclamation cost obligation, as previously discussed in the Review of Financial Results of this MD&A. The Trust is committed to paying this obligation as the Syncrude Joint Venture properties are reclaimed and has recorded its obligation on a discounted basis in its Consolidated Balance Sheet under "Asset retirement obligation", which totalled $226 million at December 31, 2007. Syncrude Canada's pension plan actuarial valuation for December 31, 2006 was completed in the second quarter of 2007 and confirmed an increase to our share of Syncrude Canada's pension funding of approximately $5 million per year for the next five years. There have been no other significant changes to the Trust's contractual obligations and commitments in 2007 from our 2006 year-end disclosure, other than reductions to the capital expenditure and various payment obligation commitments as a result of expenditures incurred in the year.

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