GLOBAL CHINESE FINANCIAL FORUM SHANGHAI CONFERENCE 2009

1. GLOBAL CHINESE FINANCIAL FORUMSHANGHAI CONFERENCE 2009 Canadian Natural Resources M&A Environment Trends and Outlook Brian Imrie Partner, KPMG Corporate Finance, Canada

2. Canadian Natural Resources M&A Environment • M&A Activity Overview • Global M&A has fallen dramatically from the 2007 peak and activity has continued to decline in 2009 • M&A activity has rebounded modestly in Canada in 2009 • Canadian portion of global total is significant and has risen in recent years Source: Bloomberg

3. Canadian Natural Resources M&A Environment • Importance of Natural Resources in Canada • Natural Resources are the leading components of Canadian equity markets and M&A Source: Standard and Poor’s (as at November 23, 2009)

4. Canadian Natural Resources M&A Environment • Natural Resources M&A 2004 - 2009 • Mining M&A activity has declined since 2007 with fewer mega deals • Energy M&A activity has declined less Source: MergerMarket

5. Canadian Natural Resources M&A Environment • Premiums Paid Analysis • The average premium paid in public natural resources takeovers in this period has been 24.7% • The premium paid in the energy industry has been lower because of the greater number of “mergers of equals” with little or no premium, i.e. “at the market” transactions Source: MergerMarket

6. Canadian Natural Resources M&A Environment • Cross-Border Transactions • Cross-border transactions continue to represent a majority of Canadian M&A by Value • Significantly higher than US Market Source: MergerMarket

7. Canadian Natural Resources M&A Environment • Importance of Foreign Acquirors of Natural Resources Companies • Non-Canadian acquirors play an important role in takeovers of Canadian natural resources companies • Proportion is higher for mining companies, given the more global nature of the assets and the high degree of consolidation activity in Western Canadian conventional oil and gas Source: MergerMarket

8. Canadian Natural Resources M&A Environment • Consideration Used in Acquisitions • Cash is used to acquire natural resource companies in the majority of transactions • However, acquirors regularly offer equity to target shareholders, or a combination of cash and equity Source: MergerMarket

9. Canadian Natural Resources M&A Environment • Notable Deals - Mining • Decline in Canadian mining M&A values in 2009 has been driven by a reduced number of mega deals • Decline of commodity prices • Lower equity market values for acquirors • Reduced access to capital Source: MergerMarket

10. Canadian Natural Resources M&A Environment • Chinese Mining Acquisitions • In the last several years, Chinese acquirors have been very active in Canada • Targets have been multiple minerals: nickel, coal, gold, zinc, copper • Exploration, development and production • 100% ownership/minority control/portfolio investment Source: MergerMarket

11. Canadian Natural Resources M&A Environment • Notable Deals – Energy 2009 • Energy has been the most active sector in Canadian M&A in 2009 • Top 2 transactions and 5 of the top 10 • Foreign companies have been active buyers • Ongoing domestic consolidation also • Top Energy Deals • Suncor Energy/Petro-Canada - $20 B • Sinopec/Addax Petroleum - $10 B • Korean National Oil/Harvest Energy Trust - $5 B • Petrobakken Energy/Tristar Oil & Gas - $3 B • Abu Dhabi Investment Authority/Nova Chemicals - $2 B Source: MergerMarket

12. Canadian Natural Resources M&A Environment • Chinese Energy Acquisitions • Chinese acquirors have also been active in the mining sector • Greater focus historically on companies with large international reserves Source: MergerMarket

13. Canadian Natural Resources M&A Environment • Unsolicited or “Hostile” Bids in Canada • Most public company takeovers in Canada are friendly, negotiated transactions • Exclusive negotiations with single buyer or a controlled auction of company • However, Canadian takeover regulations and practices make Canada one of the easiest jurisdictions globally to successfully launch an unsolicited or hostile takeover bid • Regulators in Canada want shareholders to decide on merits of a takeover bid • Majority of Canadian hostile transactions result in a change of control • Different from US “Just Say No” defence • Average ultimate takeover premium for hostile bids is 54%, well above average premium for negotiated deals • First Chinese hostile bid for Canadian company was successful in 2009 • Jilin Jien Nickel Industry’s acquisition of Canadian Royalties

14. Canadian Natural Resources M&A Environment • Canadian Hostile Transactions since 2005

15. Canadian Natural Resources M&A Environment • Foreign Acquisitions in Canada – Investment Canada Act • Investment Canada Act applies to every acquisition of control of a Canadian business by a non-Canadian • Only 1 transaction has been blocked in 25 years, excluding cultural industries • Proposed $1.3 B acquisition of MDA’s space division by US-based Alliant Techsystems • Changes to the ICA in 2009 significantly increased the threshold size under which reviews are not required • Deals will not be reviewed under $600 MM enterprise value • Increasing to $800 MM in 2011 and $1 B in 2013 • No longer any special review for uranium • However, new power to review transactions based on national security interests creates some uncertainty • Not expected to be used often

16. Canadian Natural Resources M&A Environment Source: Bloomberg

17. Canadian Natural Resources M&A Environment • M&A Outlook – 2010 and Beyond • Most markets have improved significantly in 2009 • Prospect for global economy has improved • Commodity prices have strengthened • Equity markets have improved and reduction of volatility • Improved CEO and Board confidence • Improved Liquidity • Access to equity capital, particularly for senior and intermediate producers • Improved investment grade credit • Canadian Natural Resources M&A • Mining M&A activity will increase substantially in 2010; energy M&A will remain high • Increased competition for mega deals as seniors return to the game • Junior and intermediates, especially miners with development projects, will actively seek strategic partners and creative solutions • M&A • Minority investments • JV’s/project level investments • Offtakes

18. Questions/Discussion