Disclaimer This presentation will contain statements that constitute forward-looking statements...

DisclaimerDisclaimerThis presentation will contain statements that constitute This presentation will contain statements that constitute

forward-looking statements within the meaning of the forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not guarantees of Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, future performance and involve risks and uncertainties,

and actual results may differ materially from those in and actual results may differ materially from those in the forward-looking statements as a result of various the forward-looking statements as a result of various factors. You are referred to each company’s Annual factors. You are referred to each company’s Annual Report on Form 40-F and their other filings with the Report on Form 40-F and their other filings with the U.S. Securities and Exchange Commission and the U.S. Securities and Exchange Commission and the

Canadian securities commissions for a discussion of Canadian securities commissions for a discussion of the various factors that may affect our future the various factors that may affect our future performance and other important risk factors performance and other important risk factors

concerning their operations. concerning their operations.

In the Beginning…In the Beginning…

• February 13, 1947February 13, 1947– After drilling 133 dry holes or non-commercial wells After drilling 133 dry holes or non-commercial wells

across Western Canada, across Western Canada, Imperial OilImperial Oil finally strikes oil at finally strikes oil at LeducLeduc, a hamlet near , a hamlet near Edmonton, AlbertaEdmonton, Alberta

– Overnight Canada goes from Overnight Canada goes from oil-poor to oil-richoil-poor to oil-rich– There were also several large finds of There were also several large finds of natural gasnatural gas in in

Alberta in the Alberta in the 1940s1940s– Since than, there has been an obvious Since than, there has been an obvious expansionexpansion of the of the

oil and gas industryoil and gas industry

Canadian AdvantagesCanadian Advantages

• The Canadian oil and gas industry is now a The Canadian oil and gas industry is now a world world leaderleader in many fields including: in many fields including:

• High-tech exploration and enhanced recover production High-tech exploration and enhanced recover production methodsmethods

• Cold-climate & offshore operationsCold-climate & offshore operations• Gas processing, sulphur extraction and heavy oil upgradingGas processing, sulphur extraction and heavy oil upgrading• Construction and operations of pipelinesConstruction and operations of pipelines• Specialized controls and computer applicationsSpecialized controls and computer applications• Environmental protection technology and safety trainingEnvironmental protection technology and safety training• Innovative products and services that meet customer needsInnovative products and services that meet customer needs• Refining processes that produce quality petroleum-based Refining processes that produce quality petroleum-based

products while minimizing the impact on the environmentproducts while minimizing the impact on the environment

Industry OverviewIndustry Overview• The oil and gas industry is composed of The oil and gas industry is composed of

oil and gas oil and gas equipment manufacturersequipment manufacturers, , service providersservice providers to petroleum explorers to petroleum explorers and producers, and and producers, and businesses dealingbusinesses dealing with contract drilling.with contract drilling.

• Canada plays a Canada plays a key rolekey role as a secure and as a secure and reliable reliable suppliersupplier of oil and gas equipment, of oil and gas equipment, technology and services to the technology and services to the North North American energy marketAmerican energy market. .

Industry HighlightsIndustry Highlights• Canada ranks as the worlds Canada ranks as the worlds 66thth largest largest

exporter of oil and gas equipment and exporter of oil and gas equipment and servicesservices

• Has maintained a Has maintained a 3.5%3.5% share of the world share of the world market, since 1998market, since 1998

• Employ approximately Employ approximately 50,00050,000 people and people and have about have about 2,5002,500 manufacturing firms manufacturing firms

• Oil and gas industry accounts for Oil and gas industry accounts for 1.5%1.5% of of Canada´s GDPCanada´s GDP

DistributionDistribution• Found in western province of Alberta Found in western province of Alberta

and the Atlantic provinces of and the Atlantic provinces of Newfoundland and Nova ScotiaNewfoundland and Nova Scotia

• 80%80% of Canada´s oil and gas of Canada´s oil and gas manufacturing and services facilities manufacturing and services facilities are in Albertaare in Alberta

• Remaining Remaining 20%20% in Newfoundland and in Newfoundland and Nova ScotiaNova Scotia

IndustryIndustry Components Components• 3 main components:3 main components:

– Upstream sectorUpstream sector• Petroleum exploration and productionPetroleum exploration and production

– Midstream sectorMidstream sector• RefiningRefining

– Downstream sectorDownstream sector• Distribution and Retail salesDistribution and Retail sales

Situational AnalysisSituational Analysis• Demand is Demand is increasingincreasing!!• Global forecasts of the oil and gas industry show that Global forecasts of the oil and gas industry show that

crude oil and natural gas will continue to supply crude oil and natural gas will continue to supply 60%60% of the world´s total energy needsof the world´s total energy needs

• Oil & Gas provide the largest source of energy in Oil & Gas provide the largest source of energy in Canada at Canada at 70%70% – Oil 39%Oil 39%– Natural gas 31%Natural gas 31%– Coal 12%Coal 12%– Electricity 13%Electricity 13%

• Hydro 11%Hydro 11%• Nuclear 2%Nuclear 2%

– Other 5%Other 5%

Situational AnalysisSituational Analysis

• Size in the market and industry is Size in the market and industry is HUGE HUGE and and EXPANDINGEXPANDING

• Excellent Excellent positionspositions in the market and in the market and industryindustry

• One of the One of the largestlargest sectors in sectors in Canadian economyCanadian economy

• US is US is reliantreliant on Canadian oil and gas on Canadian oil and gas

Crude Oil HighlightsCrude Oil Highlights11stst Canada’s rank as supplier of imported oil Canada’s rank as supplier of imported oil

products to USproducts to US22ndnd Largest petroleum deposit in world, after Saudi Largest petroleum deposit in world, after Saudi

ArabiaArabia77thth Largest oil producer in worldLargest oil producer in world15%15% Of worlds crude oil reserves Of worlds crude oil reserves175B175B Barrels of reserves in Canada’s oil sands Barrels of reserves in Canada’s oil sands1.2M1.2M Barrels produced from oil sand daily Barrels produced from oil sand daily1.5M1.5M Barrels of oil exported to US daily Barrels of oil exported to US daily2.5M2.5M Barrels of oil produced daily Barrels of oil produced daily

Canada’s Exports to USCanada’s Exports to US

Canada’s Oil Production Canada’s Oil Production and Consumptionand Consumption

Oil Production ForecastOil Production Forecast

Oil Supply ForecastOil Supply Forecast

Oil ForecastOil Forecast• Oil production is forecasted to Oil production is forecasted to 3.3M3.3M

barrels a day by barrels a day by 20152015

• This growth represents about a This growth represents about a 50%50% increase in production or increase in production or approximately approximately 1.0M1.0M barrels a day, barrels a day, over the next decadeover the next decade

Regional ComparisonRegional Comparison

Price ForecastPrice Forecast

Natural Gas HighlightsNatural Gas Highlights11stst Canada’s rank as supplier of imported gas to USCanada’s rank as supplier of imported gas to US

33rdrd largest producer of natural gas largest producer of natural gas

-next to Russia and US-next to Russia and US

3.4tcf3.4tcf of gas exported to US annually of gas exported to US annually

6.2tcf6.2tcf of gas produced in Canada annually of gas produced in Canada annually

15%15% of US market supplied by Canada of US market supplied by Canada

87%87% of US gas imports from Canada of US gas imports from Canada

167tcf167tcf of untapped gas from coal of untapped gas from coal

363tcf363tcf of reaming potential resources of reaming potential resources

Canada’s Gas Production Canada’s Gas Production and Consumptionand Consumption

Canadian Sedimentary Canadian Sedimentary BasinsBasins

Gas Production ForecastGas Production Forecast

Gas Wells DrilledGas Wells Drilled

OpportunitiesOpportunities• Demonstrates a Demonstrates a

clear-cut clear-cut cost cost advantageadvantage over over leading industrialized leading industrialized countries in North countries in North America, Europe and America, Europe and Asia-Pacific, for oil Asia-Pacific, for oil and gas equipment and gas equipment manufacturing.manufacturing.

Cost Index(U.S. =100.0)

Canada 1 95Australia 2 95.7Iceland 3 98.2

Luxembourg 4 99.6

France 5 100U.S.A. 6 100UK 7 100.5Italy 8 101.6Netherlands 9 104.9Germany 10 112.2Japan 11 119.9

Country Rank

OpportunitiesOpportunities• Canadian exports of oil and gas Canadian exports of oil and gas

equipment are expected to grow at an equipment are expected to grow at an annual rate of annual rate of 12-13%12-13%

• Global demand for energy is expected to Global demand for energy is expected to grow at grow at 9%9% annually annually

• Alberta has huge deposits of oil sands, Alberta has huge deposits of oil sands, which are being developed at an which are being developed at an unprecedented rateunprecedented rate

• Expansion into Expansion into foreign marketsforeign markets

OpportunitiesOpportunities• Expected Expected expansionexpansion of oil pipeline projects of oil pipeline projects

Chicago/Wood River, Chicago/Wood River, US mid-continent & US mid-continent &

the USGCthe USGC

Canadian West Cost-California & Asia

IssuesIssues

• High costs to enter into marketHigh costs to enter into market

• Growing environmental concernsGrowing environmental concerns

• SubstitutesSubstitutes– SolarSolar– CoalCoal– HydroHydro

IssuesIssues

• Lots of competitorsLots of competitors– Albian Sands Energy IncAlbian Sands Energy Inc– Canadian Natural Resources LimitedCanadian Natural Resources Limited– EnCana CorporationEnCana Corporation– Husky Energy Inc. Husky Energy Inc. – Imperial Oil Resources LimitedImperial Oil Resources Limited– Petro-CanadaPetro-Canada– Shell Canada LimitedShell Canada Limited– Suncor Energy Inc.Suncor Energy Inc.– Syncrude Canada Ltd. Syncrude Canada Ltd.

PricesPrices• Price volatilityPrice volatility

•Gas prices, which are driven by North American events in Gas prices, which are driven by North American events in the short run, also follow oil pricesthe short run, also follow oil prices

General BackgroundGeneral Background

Founded in Founded in 1880, when 16 refiners in 1880, when 16 refiners in southwestern Ontario created The Imperial Oil southwestern Ontario created The Imperial Oil Company, LimitedCompany, Limited

landmark discovery at Leduc, AB landmark discovery at Leduc, AB

Canada first gas station: Leduc #1Canada first gas station: Leduc #1

Headquartered in TorontoHeadquartered in Toronto


Three segments: Three segments: Natural resources: Oil Sands, Natural GasNatural resources: Oil Sands, Natural Gas

PetroleumPetroleum

ChemicalChemical

69.9% hold by69.9% hold by

Symbol: IMO-T, IMO-ASymbol: IMO-T, IMO-A

Traded in ASEX, TSETraded in ASEX, TSE

ManagementManagement

T.J. (Tim) Hearn - CEOT.J. (Tim) Hearn - CEO

StrategyStrategy

Continually improves base operations Continually improves base operations (increase exploration, production)(increase exploration, production)

Invest in future opportunitiesInvest in future opportunities

Increase shareholder’s valueIncrease shareholder’s value

In 2030…In 2030…

One Year Stock PriceOne Year Stock Price

Ten Year Stock PriceTen Year Stock Price

AdvantageAdvantage

Business Magazine Top 1000 Business Magazine Top 1000 Ranking:Ranking:

Profit: 9Profit: 9

Revenue: 9Revenue: 9

Assets: 39Assets: 39

Only Only AAAAAA by S&P by S&P

EPS: EPS: 5.72 (2004)5.72 (2004)

4.69 (2003) 4.69 (2003) Increased 21.96%Increased 21.96%

Financial PerformanceFinancial Performance

P/E: 15.5P/E: 15.5

Market Capitalization:Market Capitalization:$31.135 billion$31.135 billion

ROA: 22.93ROA: 22.93

ROE: 34.58ROE: 34.58

Debt/Equity: 0.23Debt/Equity: 0.23

Int Cov: 73.73Int Cov: 73.73

3 year growth:3 year growth:Revenue: 9.59%Revenue: 9.59%

Net Income: 18.31%Net Income: 18.31%


Factors affecting EarningsFactors affecting Earnings

Earning SensitivityEarning Sensitivity

$3 (US) a barrel change in crude oil prices +/- 140.00$ Sixty cents a thousand cubic feet change in natual gas prices +/- 40.00$ One cent a litre change in sales margins for total petroleum products +/- 180.00$ one cent (U.S.) a pound change in sales margins for polyethylene +/- 8.00$ One-quarter percent decrease(increase) in short term interest rates +/- 2.00$ Eight cents decrease (increase in value of the Canadian dollar versus the U.S. dollar +/- 340.00$

Millions of dollars after taxMillions of dollars after tax

Market RiskMarket Risk

Financial RiskFinancial Risk

Operating RiskOperating Risk

No big impactNo big impact

No derivative usedNo derivative used

Investment in indexInvestment in index

RisksRisks

Financial SummaryFinancial Summary

(in millions) 2003 2002 2001 2000 1999Revenue 19,208 17,042 17,253 18,051 12,963

Net Earning by Segment Natural Resources 1,139 1,056 957 1,177 567 Petroleum Products 407 127 353 313 15 Chemicals 37 52 23 59 43 Corporate and Other 99 -11 -78 -139 3Net Earnings 1,682 1,224 1,255 1,410 628

Total Assets 12,631 11,894 10,781 11,244 10,828

Long-term debt 859 1,466 1,029 1,037 1,352Other Long-Term obligations 972 1,207 1,098 1,104 1,172

Per-share infomration (dollar) 4.52 3.23 3.19 3.38 1.46 Earnings per share- basic and diluted 0.87 0.84 0.83 0.78 0.75 Dividends

Financial SummaryFinancial Summary

(in millions) 2004 2003Revenue 22,460 19,208

Expenses Exploration 59 55 Purchase of crude oil and products 13,094 10,823 Others 6,280 5,940Total Expenses 19,433 16,818

Net income 2,052 1,705

Net income per common share (Basic) 5.75 4.58

Net income per common share (diluted) 5.74 4.58

Financial SummaryFinancial Summary(in millions) 2003 2002 2001Opearting Net Earnings 1,682 1,224 1,255 Others 672 557 761Cash flow from earnings 2,354 1,781 2,016 Account Receiveable 33 -356 504Inventories 31 51 -11Others -224 -200 -505Cash from operating activities 2,194 1,276 2,004

Cash from investing activities -1,393 -1,491 -1,024

Financing Activities S-T Debt 0 -388 385 L-T Debt 818 500 - Repayment of L-T Debt -818 71- 379- Issuance of common shares Under stock option plan 2 - - Common shares purchased -799 13- 812- Dividend paid -322 319- 322- Cash from financing activities -1,119 -291 -1,128

Cash at end of year 448 766 872

Common shares outstanding (000) 372154 378876 393121Cash per share 1.20$ 2.02$ 2.22$

Business SegmentsBusiness Segments

Natural ResourcesNatural Resources

Holds Holds 20 per cent20 per cent of the country's of the country's net proved reserves of oil and gasnet proved reserves of oil and gas

Pioneered development of northern Pioneered development of northern Alberta's oil sands, through Alberta's oil sands, through Syncrude and development of Syncrude and development of large-scale bitumen recovery at large-scale bitumen recovery at Cold LakeCold Lake

Oil Sand OperationsOil Sand Operations

Cold LakeCold Lake is the largest thermal is the largest thermal heavy-oil in western Hemisphere, heavy-oil in western Hemisphere, the second largest in the worldthe second largest in the world

Holds Holds 1.7 trillion1.7 trillion barrels of heavy barrels of heavy oil called bitumen in Albertaoil called bitumen in Alberta


100% owned and operated 100% owned and operated Cold Cold LakeLake Development Development

New 170-mega watt cogeneration New 170-mega watt cogeneration plant will improve the efficiency for plant will improve the efficiency for the entire Cold Lake operationthe entire Cold Lake operation

Further expansions would increase Further expansions would increase total production to about total production to about 180,000 180,000 barrelsbarrels a day in later the decade a day in later the decade

Map of Cold LakeMap of Cold Lake


Further expansions:Further expansions:Additional Additional 30,00030,000 barrels a day of barrels a day of bitumen in new three phases of bitumen in new three phases of production in production in NabiyeNabiye, this will add , this will add 250 250 million barrelsmillion barrels of recoverable at Cold of recoverable at Cold LakeLake

Extension phase at new area known Extension phase at new area known as Mahikan North, will as Mahikan North, will add additional add additional 125 million barrels of recoverable 125 million barrels of recoverable reservesreserves over the next 10-20 years, as over the next 10-20 years, as much as much as 200 million barrels over the 200 million barrels over the project lifeproject life

Map of ExpansionMap of Expansion

Oil Sands lease boundaries

Approved Development Area

Proposed Development Area

Plants

Proposed Plant Location


Imperial oil own 25% of Imperial oil own 25% of SyncrudeSyncrude CanadaCanada

Mining and upgrading (crude oil) Mining and upgrading (crude oil) operation in the operation in the AthabascaAthabasca oil- oil-sands region near Fort McMurraysands region near Fort McMurray


AA major expansion underway at major expansion underway at Syncrude is expected to Syncrude is expected to increaseincrease Imperial's share of Syncrude Imperial's share of Syncrude production to production to 90,000 barrels a day90,000 barrels a day by mid decade, and by mid decade, and further further expansionexpansion planned for 2010 and planned for 2010 and beyond could increase Imperial's beyond could increase Imperial's share of production from Syncrude share of production from Syncrude to as much as to as much as 140,000 barrels a 140,000 barrels a dayday

Ownership of SyncrudeOwnership of Syncrude

Map of Fort McMurrayMap of Fort McMurray


Kearl Oil Sand Project Kearl Oil Sand Project in in AthabascaAthabasca

Joint-venture with Joint-venture with

believe that the resource potential believe that the resource potential exists here to support a jointly exists here to support a jointly owned mining and upgrading owned mining and upgrading project in the range of project in the range of 200,000 200,000 barrelsbarrels a day. a day.

Map of Kearl ProjectMap of Kearl Project


Mackenzie Delta ProjectMackenzie Delta Project

Joint venture withJoint venture with


Imperial wholly holds and operates Imperial wholly holds and operates the Taglu natural gas field. Imperial the Taglu natural gas field. Imperial is also the operator for the is also the operator for the gathering system and the gathering system and the Mackenzie Valley pipelineMackenzie Valley pipeline

Taglu discovery represents nearly Taglu discovery represents nearly half of the total natural half of the total natural gas gas reservesreserves of of 5.8 trillion5.8 trillion cubic feet cubic feet in in the regionthe region

Map of Mackenzie DeltaMap of Mackenzie Delta

Offshore ExplorationOffshore Exploration

East-Coast Sable Offshore Energy East-Coast Sable Offshore Energy ProjectProject

produces an average of produces an average of 550 million 550 million cubic feetcubic feet of natural gas and of natural gas and 20,000 barrels20,000 barrels of natural gasof natural gas liquids every dayliquids every day

Joint-Venture:Joint-Venture:

Offshore ExplorationOffshore Exploration

Imperial has 9% interest in the Imperial has 9% interest in the Sable Offshore Energy ProjectSable Offshore Energy Project

Also some other offshore Also some other offshore explorations in Nova Scotia, explorations in Nova Scotia, Newfoundland, and LabradorNewfoundland, and Labrador

PetroleumPetroleum

PetroleumPetroleum

Distribute through its Distribute through its ESSOESSO stations (787)stations (787)

650 convenience stores (650 convenience stores (ON THE ON THE RUNRUN))

Sale rose 6% in 2003, above industrial Sale rose 6% in 2003, above industrial averageaverage

Tim HortonsTim Hortons

Mobile productsMobile products

ChemicalsChemicals

ChemicalsChemicals

Largest market share in North Largest market share in North America for polyethylene used in America for polyethylene used in rotational and injection moldingrotational and injection molding

Largest shares of the Canadian Largest shares of the Canadian market for solventsmarket for solvents

Sarnia Polyethylene manufacturing Sarnia Polyethylene manufacturing facility representing facility representing 70% of North 70% of North America demand for polyethyleneAmerica demand for polyethylene

ConclusionConclusionSustain growth and increase Sustain growth and increase production in futureproduction in futureLarge amount of reserves as Large amount of reserves as advantageadvantageLow risk, best with conservative Low risk, best with conservative investorsinvestors

BUY For LT investmentBUY For LT investment

Calgary, AlbertaCalgary, Alberta

PKZ (TSE, NYSE, LSE)PKZ (TSE, NYSE, LSE)

CA_PKZ (KASE)CA_PKZ (KASE)

• Calgary based,Calgary based,• Publicly traded,Publicly traded,

– TSE, NYSE, LSE, TSE, NYSE, LSE, Frankfurt, KASEFrankfurt, KASE

• Vertically integrated oil Vertically integrated oil and gas company.and gas company.– All processes handled All processes handled

within the organization, within the organization, from exploration to from exploration to retailing.retailing.

• Bernard IsautierBernard Isautier

• Degrees in:Degrees in:– MathematicsMathematics– PhysicsPhysics

• Advanced Degrees in:Advanced Degrees in:– EngineeringEngineering– Business AdministrationBusiness Administration

PetroKazakhstan PetroKazakhstan OperationsOperations


2004 2003 2002 2001 2000 1999 1998

Gross Revenue 1642.4 1117 825 603 523 155 175.9Expenses 839.3 560.1 508 324 224 137 153.9Net income 500.7 317.5 163 169 155 8.5 -229 Per share (basic) 6.4 4.06 2.01 2.12 2.19 0.19 -5.18 Per share (diluted) 6.28 3.91 1.93 2.02Cash flow 560.5 399.9 217 200 179 17 0.6 Per share 7.16 5.12 2.68 2.51 2.54 0.38 0.01Net Debt -48.7 135.2 223 269 47.8 168 78.1

Production (mbopd) 151.1 151.3 136 101 84.1 64.3 53.1

Full YearEnded Dec 31


2004 2003 2004 2003

Gross Revenue 1642.4 1117.3 405.1 310.6Net income 500.67 316.94 114.9 88.8 Per share (basic) 6.4 4.06 1.51 1.14 Per share (diluted) 6.28 3.9 1.49 1.09Cash flow 560.5 400 118.8 110.3 Per share 7.16 5.12 1.56 1.42 Per share (diluted) 7.03 4.92 1.55 1.36

Cash 199,105 184,660ST Debt 15,541 73,225LT Debt 134,862 246,655Net Debt -48,702 135,220

Production (mbopd) 151.1 151.3 152.51 154.7

YearEnded Dec 31

Three MonthsEnded Dec 13

Financial PerformanceFinancial Performance• Free Cash Flow:Free Cash Flow:

– $372.4 million in 2004$372.4 million in 2004– $142.9 million in 2003$142.9 million in 2003

• Raised dividend payouts by 33% for 2005 Raised dividend payouts by 33% for 2005 to $.20 per share (~2% yield) – ROCE: to $.20 per share (~2% yield) – ROCE: 68.5% and ROA: 71.62%!!68.5% and ROA: 71.62%!!

• QTR earnings lower by $32M due to QTR earnings lower by $32M due to inventory buildupinventory buildup

OpportunityOpportunity

• The best buy in the oil and gas sector!The best buy in the oil and gas sector!

– P/E of 6.6 (!),P/E of 6.6 (!),– High earnings,High earnings,

– Shrinking costs,Shrinking costs,– Production expansions,Production expansions,– Bold exploration plan,Bold exploration plan,

Export OpportunitiesExport Opportunities

• Growth markets in China and Iran,Growth markets in China and Iran,

• 51% of oil production exported in 200351% of oil production exported in 2003

• Growth markets in China and IranGrowth markets in China and Iran– 20% of export production went to China20% of export production went to China

• A $2 - $2.50 reduction in export cost A $2 - $2.50 reduction in export cost through the CPCthrough the CPC

DifferentialsDifferentials

• Largest single expenditureLargest single expenditure

• Export netback differential to Brent:Export netback differential to Brent:– $14.11 in 2003,$14.11 in 2003,– $12.62 in 2004,$12.62 in 2004,– Expect $12.00 range for 2005.Expect $12.00 range for 2005.

• Higher utilization of cheaper export routes will Higher utilization of cheaper export routes will improve this differential, which has huge improve this differential, which has huge impact on profits. ($1 decrease in differential impact on profits. ($1 decrease in differential increases cash-flow/net-income before tax by increases cash-flow/net-income before tax by $26.6 million)$26.6 million)

ThreatsThreats

• Is a P/E of 6.6 deserved?Is a P/E of 6.6 deserved?

– Local political/ethnic instability,Local political/ethnic instability,– Nationalization,Nationalization,– Arbitrary and adverse regulations,Arbitrary and adverse regulations,– Terror threats to CPC.Terror threats to CPC.

Upstream OperationsUpstream Operations

Field AssetsField Assets

ReservesReserves

0

100

200

300

400

500

600

1997 1998 1999 2000 2001 2002 2003 2004

549,800,000 barrels of proven and probable reserves

ReservesReserves

Over $3,000,000,000 in proved and probable oil reserves! That’s over $38 per

share!

Proved Producing $1,816,701 $1,611,516 $1,454,169 $1,329,811Proved Undeveloped $1,431,931 $1,053,369 $816,652 $658,757 Total Proved $3,248,632 $2,664,885 $2,270,821 $1,988,568Probable $1,545,370 $1,076,751 $794,011 $612,211

Total Present Value $4,794,002 $3,741,636 $3,064,832 $2,600,779

0% 5% 10% 15%

ProductionProduction

0

20

40

60

80

100

120

140

160

180

1997 1999 2001 2003 2005

Production expected to reach 170,000 barrels of oil per day in 2005

Field Asset HighlightsField Asset Highlights

• In 3Q04, 68% of the production came In 3Q04, 68% of the production came from 44% of the reserve base,from 44% of the reserve base,

• 2004 saw a 197% reserve replacement of 2004 saw a 197% reserve replacement of production,production,– Five-year average figure of over 140%Five-year average figure of over 140%

• 50+ million barrel expansion in reserve 50+ million barrel expansion in reserve base from previous year due to base from previous year due to explorations in new Aryskum and explorations in new Aryskum and Kyzylkiya (KAM) areas.Kyzylkiya (KAM) areas.

Field Asset HighlightsField Asset Highlights

• Acquired new exploration contracts (4x),Acquired new exploration contracts (4x),

• Reserve potential of 930 million barrels,Reserve potential of 930 million barrels,

• Extremely low finding and development Extremely low finding and development costs of $1.08/bbl (1-yr average) costs of $1.08/bbl (1-yr average) compared to $1.53/bbl (5-yr average)compared to $1.53/bbl (5-yr average)

DistributionDistribution

Distribution HighlightsDistribution Highlights

• Significant growth potential to ChinaSignificant growth potential to China

• Enormous transportation cost savings Enormous transportation cost savings with KAM pipelinewith KAM pipeline

• Now owns over 4,000 rail cars – to reduce Now owns over 4,000 rail cars – to reduce transportation coststransportation costs

Downstream OperationsDownstream Operations

Shymkent RefineryShymkent Refinery

• The most advanced of three refineries in The most advanced of three refineries in KazakhstanKazakhstan

• Supplies 50% national consumption Supplies 50% national consumption demand and still below its capacitydemand and still below its capacity– 78,000 bopd of crude processed 3Q04,78,000 bopd of crude processed 3Q04,– 56% of capacity,56% of capacity,– Fall refining costs, from $2.15/bbl in 2000 to Fall refining costs, from $2.15/bbl in 2000 to

$1.37/bbl in 3Q04, expected to fall further $1.37/bbl in 3Q04, expected to fall further with “minor capital expenditures”with “minor capital expenditures”

Shymkent RefineryShymkent Refinery

• Competitors: Competitors: – KazMunaiGas’ Pavlodar PetrochemicalsKazMunaiGas’ Pavlodar Petrochemicals– Mangistaumunaigas’ Atrau Oil RefineryMangistaumunaigas’ Atrau Oil Refinery

• Price Fixing and diesel export ban during Price Fixing and diesel export ban during harvest seasonharvest season– $140.70 for PetroKazakhstan Oil Products,$140.70 for PetroKazakhstan Oil Products,– $139 for Atyrau Oil Refinery,$139 for Atyrau Oil Refinery,– $179 for Pavlodar Petrochemicals$179 for Pavlodar Petrochemicals

Retail/Service StationsRetail/Service Stations• Near monopoly in Near monopoly in

south/south-eastern south/south-eastern KazakhstanKazakhstan– Faced $6.3 million dollar Faced $6.3 million dollar

fine (subsequently fine (subsequently reduced to $1 million) in reduced to $1 million) in late 2003 for alleged late 2003 for alleged breach of monopoly breach of monopoly regulationsregulations

• Otherwise, a very Otherwise, a very efficient and popular efficient and popular distributor of everyday distributor of everyday petroleum productspetroleum products

Potential Threats?Potential Threats?

Potential ThreatsPotential Threats

• Nationalization?Nationalization?– On the contrary, KazMurnaiGas auctioned its On the contrary, KazMurnaiGas auctioned its

stakes in three of its major oil subsidiaries.stakes in three of its major oil subsidiaries.

• Regulations?Regulations?– High taxes and disturbing oil regulations High taxes and disturbing oil regulations

(sounds like Canada in the 1970s)(sounds like Canada in the 1970s)


• Terrorist attacks to Caspian Sea Terrorist attacks to Caspian Sea Pipeline?Pipeline?– Protected by a 5-nation military forceProtected by a 5-nation military force– It isn’t a PetroKazakhstan assetIt isn’t a PetroKazakhstan asset– Expanding its customer base in China and Expanding its customer base in China and

Central AsiaCentral Asia


• Political/Ethnic Turmoil?Political/Ethnic Turmoil?– Instability concentrated in northern regions,Instability concentrated in northern regions,– Good relations with neighboring states,Good relations with neighboring states,– Economic growth (as usual) tempers public Economic growth (as usual) tempers public

anger and political conflictsanger and political conflicts

• S&P rates Kazakhstan’s sovereign debt S&P rates Kazakhstan’s sovereign debt at BB- (the first FSR state to achieve at BB- (the first FSR state to achieve investment grade),investment grade),

Summary:Summary:

With potential risks overstated, With potential risks overstated, PetroKazakhstan is a company PetroKazakhstan is a company

poised for huge growth.poised for huge growth.

STRONG BUY!!STRONG BUY!!

ECA (TSE, NYSE)ECA (TSE, NYSE)

ECA (TSE, NYSE)ECA (TSE, NYSE)

• ““Energy, Canada, Alberta”Energy, Canada, Alberta”

• Largest independent natural gas Largest independent natural gas producer and gas storage operator in producer and gas storage operator in North AmericaNorth America

• Enterprise value of US$38.7 BillionEnterprise value of US$38.7 Billion

• In 2002, merger agreement was In 2002, merger agreement was established between established between

•Albert Energy Company Ltd. (AEC) Albert Energy Company Ltd. (AEC)

–1975•PanCanadian Energy Corp. PanCanadian Energy Corp.

–1971

• Headquartered in CalgaryHeadquartered in Calgary


• Gwyn Morgan - President & CEOGwyn Morgan - President & CEO• Randy Eresman - Executive VP & COORandy Eresman - Executive VP & COO• Brian Ferguson - Executive VP & Corporate Brian Ferguson - Executive VP & Corporate

DevelopmentDevelopment• Bill Oliver - Executive VP & President, Midstream & Bill Oliver - Executive VP & President, Midstream &

MarketingMarketing• Gerry Protti - Executive VP & Corporate RelationsGerry Protti - Executive VP & Corporate Relations• Drude Rimell - Executive VP & Corporate ServicesDrude Rimell - Executive VP & Corporate Services• John Watson - Executive VP & CFOJohn Watson - Executive VP & CFO• Roger Biemans - Executive VP & President, EnCana Roger Biemans - Executive VP & President, EnCana

Oil & Gas (USA) Inc.Oil & Gas (USA) Inc.• John Brannan - Managing Director, Int’l New John Brannan - Managing Director, Int’l New

Ventures ExplorationVentures Exploration

Leadership TeamLeadership Team

One Year Stock PriceOne Year Stock Price

Three Year Stock PriceThree Year Stock Price

• Business Magazine Top 1000 Ranking: Business Magazine Top 1000 Ranking: – Profit: 1Profit: 1– Revenue: 18Revenue: 18– Assets: 18Assets: 18


VolatilityVolatility

• Financial (commodity price, foreign Financial (commodity price, foreign exchange, interest rate & credit risks)exchange, interest rate & credit risks)

• OperationalOperational• Environmental, health, safety and Environmental, health, safety and

securitysecurity• ReputationalReputational

Risk ManagementRisk Management

• Lock in near term ROILock in near term ROI

• Downside protection for Cash flowDownside protection for Cash flow

• Combination of fixed price swaps & put Combination of fixed price swaps & put optionsoptions

Commodity Price RiskCommodity Price Risk

• Upstream: Acquire, explore and Upstream: Acquire, explore and develop natural gas, crude oil & NGLsdevelop natural gas, crude oil & NGLs

• Midstream: NG storage operations, Midstream: NG storage operations, NGLs processing & power generation NGLs processing & power generation operationsoperations

• Market optimizationMarket optimization

Business SegmentsBusiness Segments

• Upstream capital investmentUpstream capital investment

•Greater Sierra & Cutbank Ridge in Greater Sierra & Cutbank Ridge in BCBC

•Southern AlbertaSouthern Alberta•Jonah & Mamm Creek in US RockiesJonah & Mamm Creek in US Rockies

• Oil developmentOil development

•Foster Creek, Pelican Lake & SuffieldFoster Creek, Pelican Lake & Suffield• Midstream opportunitiesMidstream opportunities

Business StrategiesBusiness Strategies

Analysis of F/SAnalysis of F/S

($US millions) 2004 2003 2002

Price to BVNet MV of assetsCF per share 10.82 9.41 5.79 ROA 11.25 9.79 4.08 ROE 24.55 20.93 9.31 D/E 0.55

# Common shares OS 450.3 460.6 478.9

UpstreamUpstream

• Unconventional natural gas resource Unconventional natural gas resource playsplays

• 75% of North America production75% of North America production

• Focus in 4 regions: Focus in 4 regions: • Canadian PlainsCanadian Plains

• Canadian Foothills & FrontiersCanadian Foothills & Frontiers

• USAUSA

• EcuadorEcuador

• Int’l new ventures explorationInt’l new ventures exploration

UpstreamUpstream

International New VenturesInternational New Ventures

• Invested ~2% of its capital inInvested ~2% of its capital in– AfricaAfrica– BrazilBrazil– GreenlandGreenland– Middle East Middle East

International New VenturesInternational New Ventures

Land BaseLand Base

UpstreamUpstream

Resource PlaysResource Plays

• Highly concentrated accumulations of Highly concentrated accumulations of hydrocarbons (land/rock) hydrocarbons (land/rock)

• Low geological & commercial Low geological & commercial development riskdevelopment risk

• Predictable in timing, costs, production Predictable in timing, costs, production rates & reserve additionsrates & reserve additions

• Provide steady long-term reserves & Provide steady long-term reserves & production growthproduction growth

Resource PlaysResource Plays

UpstreamUpstream

Midstream & MarketingMidstream & Marketing

• Provides value added services byProvides value added services by– Gas storageGas storage– NGLs (ethane, propane, butance, pentanes-NGLs (ethane, propane, butance, pentanes-

plus)plus)– Gas marketingGas marketing– Crude oil marketingCrude oil marketing

Midstream & MarketingMidstream & Marketing

• Initiated Canada’s first commercial Initiated Canada’s first commercial coalbed methane (CBM) development coalbed methane (CBM) development

• CBM is natural gas contained in coal, CBM is natural gas contained in coal, and commonly is referred to as an and commonly is referred to as an "unconventional" form of natural gas"unconventional" form of natural gas

Strengthening the UnconventionalStrengthening the Unconventional

• Partners up with Pearson College on Partners up with Pearson College on Canada’s free-stream tidal power Canada’s free-stream tidal power project in B.C.project in B.C.

• Environmental Innovation FundEnvironmental Innovation Fund• Tangibly encourage innovative energy Tangibly encourage innovative energy

solutionssolutions

Strengthening the UnconventionalStrengthening the Unconventional

• U.K. central North SeaU.K. central North Sea•Gain on sale of ~1.4 billionGain on sale of ~1.4 billion

• EcuadorEcuador•Taxation on revenue earnedTaxation on revenue earned

Discontinued OperationsDiscontinued Operations

• In 2004, acquired full control of Tom In 2004, acquired full control of Tom Brown Inc. of Denver, ColoradoBrown Inc. of Denver, Colorado

• Expected to add 325 million cubic feet Expected to add 325 million cubic feet equivalent per day of current gas equivalent per day of current gas production, about 1.2 trillion cubic feet production, about 1.2 trillion cubic feet of proved gas reserves and about 2 of proved gas reserves and about 2 million net undeveloped acresmillion net undeveloped acres

AcquisitionAcquisition

• High-growth potential of undeveloped High-growth potential of undeveloped resources located in key resources located in key unconventional onshore US gas basinsunconventional onshore US gas basins

• Further advance North America Further advance North America resource play strategyresource play strategy

Acquisition (cont.)Acquisition (cont.)

• Vast land positionVast land position•17 million net undeveloped acres onshore 17 million net undeveloped acres onshore

North AmericaNorth America•79 million net undeveloped acres offshore 79 million net undeveloped acres offshore

& int’l& int’l

• Resource Plays Management Resource Plays Management

Future GrowthFuture Growth

• Strong operating & financial strengthStrong operating & financial strength• Future growth in proved reserves Future growth in proved reserves • Technological innovationsTechnological innovations• Industry Leader Industry Leader

•BUY & HOLD!BUY & HOLD!

ConclusionConclusion

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