TEXT-S&P reports on Canadian oil and gas companies

(The following statement was released by the rating agency)

April 21 - Record crude oil prices effectively offset the adverse impact of
falling natural gas prices in the first half of 2007 and rising oil sands
development costs throughout the year, according to a commentary published
today by Standard & Poor's Ratings Services. "Industry Report Card: Canadian
Oil And Gas Companies Spending It As Fast As They Earn It" notes that several
companies have already announced reduced spending for natural gas development
in 2008, largely in response to the relatively weak natural gas fundamentals
experienced earlier in the year.

Conventional oil and gas development in the Western Canadian Sedimentary
Basin is maintaining a steady-to-slowing pace, while unconventional oil and
gas development should continue to expand. Based on the pace of regulatory
applications and approvals, development activity in the Athabasca oil sands
region will likely continue at the current, fast pace.

"As the demand for oil sands construction supplies and labor continues to
put pressure on project development costs, companies with existing operations
(especially those highly leveraged to crude oil) can offset the adverse
effects of rising capital spending with stronger operating cash flow
generation," said Standard & Poor's credit analyst Michelle Dathorne.

Despite the announced spending decreases, Canada's senior producers
should achieve stated reserves and production growth targets by reallocating
capital to either higher-margin liquids production or into other regions.
Furthermore, the decreased demand for drilling services among the senior
producers has increase rig and related service availability for the small to
mid size producers who had been resource constrained until 2007.

"As larger Canadian companies leverage portfolio diversification and the
more regionally focused smaller natural gas producers gain greater access to
drilling rigs and services, we expect credit quality among the Canadian
upstream producers to remain fairly stable despite the continuing volatility
of North American natural gas prices," Ms Dathorne said.

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(New York Ratings Team)