1. Crown Share Adjustment Payments (CSAP) October 2007

2. Crown Share Adjustment Payments: Highlights  Founded in our 1986 Offshore Accord  Separate from our 2005 Offshore Accord  Statutory right to transfer payments from Ottawa based on offshore oil and gas project cash flows  Projected value in the $100s of millions based on currently producing offshore fields

3. Why does NS have the right to CSAP?  1980 NEP (Federal Crown Share)  1982 NS agrees to set aside claim of offshore ownership in exchange for compensation and signs Offshore Agreement (NS Crown Share)  1985 NEP dismantled (Crown Share repealed)  1986 Offshore Accord (CSAP introduced)  1988 Canada Act (CSAP statutory right)

4. What was a Crown Share?  Keystone of the National Energy Program  Reserved to Canada a 25% share in an interest in respect of Canada lands (Canada Oil and Gas Act)  Nova Scotia had an option to acquire a portion of the federal Crown Share ( 1982 Offshore Agreement) - up to 25% of Canada’s 25% in an oil field (6.25%) - up to 50% of Canada’s 25% in a gas field (12.5%)

5. What are CS Adjustment Payments?  1986 Offshore Accord Objective 1.02 (g):  “financial benefits equivalent to those [Nova Scotia] would have achieved had it exercised its Crown Share option”  1988 Canada Act (Part VIII):  Canada shall pay to Nova Scotia an amount equal to at least 75% of the deemed profit in respect of a project

6. How are CSAPs to be determined? Canada has:  the obligation to draft the Regulations; and  the duty to consult with Nova Scotia on the proposed Regulations  NS has the right to approve the proposed Regulations  A three-member panel will determine CSAP  One panel member selected by each government; panel members choose chair

7. Crown Share Adjustment Payments October 2007