In 2007, we purchased a 100% working interest in the Kirby oil sands lease. The Kirby lease is situated in the heart of the Athabasca oil sands fairway in northeastern Alberta. We own nearly 43,000 acres on three lease areas within this region. Phase 1 of the Kirby project is located within the northernmost lease. Our lease is in a strategic area within the oil sands fairway, with rail, highway and export pipeline access situated on or near the lease itself. Kirby is surrounded by other major SAGD projects such as Devon Jackfish, EnCana Christina Lake project, Canadian Natural Kirby and many other large commercial SAGD operations.

Resource Assessment
Over the Project life, we anticipate recovering approximately 84 million barrels of bitumen. The 2007-2008 drilling season in the Kirby project area was a success for delineation of the oil sands resources. There were 58 wells drilled in the main Kirby area. This included 2 water source wells, 1 disposal water well and 55 oil sands delineation wells. This program allowed us to increase our contingent reserves from 244 to 414 million barrels.

We plan to continue resource delineation in 2008–2009 with a program that includes drilling approximately 85 delineation wells, additional 3-D seismic exploration, and further investigations around saline water source and disposal zones. We anticipate that as we further delineate the area, our contingent reserves may increase.

Phase 1

The regulatory application for the first phase of development of the Kirby lease was filed with the Energy Resources Conservation Board and Alberta Environment on September 26, 2008, slightly earlier than expected. We are continuing to execute our Kirby business plan to be in a position for a sanctioning decision by our Board of Directors once we receive regulatory approval and have completed additional engineering design by the fourth quarter of 2009.

Project Schedule*

* shows current expectations as to key milestones associated with development of the Project

We plan to use a Steam Assisted Gravity Drainage ("SAGD") process (click here to learn about SAGD) to produce 10,000 barrels per day (bbls/day) of bitumen from the first phase for approximately 25 years. As we continue the delineation of the lease, further expansion potential may exist with the total production reaching a potential 30,000 to 40,000 bbls/day of bitumen.

The proposed Project will include:

• initially 2 well pads each with 7 SAGD well pairs;
• a central plant to process the bitumen, produce steam and treat and recycle water;
• other infrastructure including fuel gas and export pipelines, saline water source, disposal wells and associated pipelines, access roads, permanent accommodation complex, temporary construction and drilling camp, and utility power.