While the company senses recovery, it also expects the early part of 2009 will be challenging. The company has already experienced difficult conditions during the first few months of 2009, although it is currently experiencing improved market conditions. Nevertheless, in response to these circumstances, the company has curtailed Connacher's anticipated capital spending for 2009 to approximately $123-million, down from previous levels approximating $373-million. Most of these expenditures will occur in the first quarter 2009, primarily related to Algar.

The company anticipate a much improved full year contribution from Connacher's refining operations, primarily due to healthy asphalt markets. Newly announced U.S. government infrastructure projects are anticipated to result in an unprecedented demand for asphalt. This product is currently in short supply in the United States. This improvement should start to be apparent in the second quarter of 2009. The company also anticipate positive net operating income from Connacher's upstream operations. With Connacher's significant cash balances and Connacher's operating cash flow, the company anticipates being able to finance all of Connacher's capital spending activities and meet all financial obligations throughout 2009, even if crude oil prices stay at WTI $45.00 (U.S.)/bbl for the balance of this year, without having to raise any additional capital.

The company continues to believe preserving its liquidity and protecting assets are the priority responsibilities for 2009. The company has ample identified reserves and resources to remain confident of its long-term growth prospects, and the company believes energy prices will improve as the year unfolds. To stabilize Connacher's outlook in a volatile period and protect against the possibility of renewed crude oil price weakness, the company has arranged WTI hedges at prices of $46.00 (U.S.)/bbl and $49.50 (U.S.)/bbl, on approximately one-half of Connacher's anticipated bitumen production for much of 2009. The company has a built-in physical hedge with its own natural gas production at Marten Creek, Randall, Latornell, Seal and other areas. The company believes that this minimizes the impact of volatility in natural gas prices on its overall operations.