1. Natural Gas Exchange Inc PRMIA – May 31, 2006

2. 2 SECTION ONE: NGX BACKGROUND

3. 3 Introduction to NGX Business Concept:  Electronic trading and clearing services to North American energy market participants  NGX is a service provider and therefore does not trade or take positions Headquartered in Calgary, Alberta, Canada Incorporated in 1993, began trading operations in Feb 1994 Ownership History  Initial Ownership by Westcoast Energy Inc.  Acquired by OM on Jan 1, 2001  Acquired by TSX Group March 1, 2004 Services provided  Electronic Marketplace  Pipeline balancing instruments  Market advocacy (facilitating transactions)  Market agency (facilitating order entry)  Real-Time Price Index Generation  Clearing House  Assured performance  Trade and counterparty netting  Centralized collateral management  Centralized risk management

4. 4 Current NGX Product Locales NGX Products & Services Financial Products Physical Products Upcoming Products NGX INTRA-ALBERTA EMPRESS EMERSON/GREAT LAKES FUTURES SWAPS HENRY SWING SWAPS LDS FOR GDD PARKWAY IROQUOIS NIAGARA FALLS CHIPPAWA DAWN NBPL VENTURA CHICAGO SWAPS NICOR-NGPL MICHCON SWAPS ALBERTA POWER SWAPS MALIN SWAPS ROCKY MTN SWAPS ATCO NORTH STATION #2 TEP PG&E CITYGATE PG&E CITYGATE SWAPS SOCAL GAS SOCAL GAS SWAPS MALIN ST. CLAIR SUMAS SWAPS ALBERTA SWAPS HUNTINGDON

5. 5 Operational Statistics 138 NGX Contracting Parties –“Member” firms eligible to transact through the Exchange List 102 physical and derivative products Average in Excess of 400 Traders Online Daily Approximately 100 View-Only Users Online Daily 2005 Trading Statistics: –Volume = 8.8 Tcf –Transactions = 185,878 Average Daily Deliveries in Excess of 12.0 Bcf

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8. 8 SECTION TWO : CLEARING STRUCTURE

9. 9 How is Counterparty Risk Mitigated? Standard Rules Collateral Provisions Liquidation Rights Backstopping Settlement Bank Emergency Fund

10. 10 Clearing Structure Physical Backstopping (storage) Settlement Banking Credit Facility Defaulting Party Collateral (100% Coverage Under NGX Exposure Model) NGX Cash Reserves NGX Emergency Fund ($30MM CIBC Mellon Trust) Deposit Agreement Deposit Agreement $ $ or Natural Gas Payer Payee $ $ or Natural Gas

11. 11 Clearing Statistics Cleared Transactions –180,000+ transactions cleared annually –Notional value of transactions consummated is in excess of CAD60 Billion annually Margin –Over 130 corporate margin accounts held –Margin accounts averaging CAD2.0 Billion, peaking at one point, in excess of CAD4.0 Billion in cash and LCs Settlement –Settlement in both USD and CAD cash streams –Monthly settlement values averaging over CAD1.2 Billion (peak, CAD2 Billion) processed

12. 12 Collateral on deposit in excess of CAD $1.88 Billion Approx. CAD $1.6 Billion LC’s, CAD $0.28 Billion Cash Collateral Makeup

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14. 14 SECTION THREE: RISK MANAGEMENT

15. 15 Performance Risks Failure to Make/Take Delivery Failure to Pay Failure to Provide Collateral

16. 16 Margin Requirements Risk Measurement –Performance risks are quantified through NGX’s margining methodology, which attempts to estimate probable worst-case portfolio value Collateral –Accepted in the form of cash and irrevocable letter of credit from an A or higher rated bank –Collateral is held to support the Contracting Party’s traded positions and can only be used to remedy a performance failure by the Contracting Party itself Margin Triggers –If margin requirements reach 80% of collateral deposited, NGX will request additional collateral –At 90%, NGX may restrict the Contracting Parties trading capabilities –At 95%, NGX is entitled to invoke the liquidation procedure

17. 17 Risk Measurement NGX uses Web Reports to monitor trading activity and counterparty positions. Reports can be accessed from the NGX website www.ngx.com, or from the NGX Trading System.www.ngx.com NGX measures risk in real-time and calculates margin requirements to quantify the risk measurement. Margin Requirements consists of –Accounts Receivable/Payable (netted) –Variation Margin (Mark-to-Market, also netted) –Initial Margin  A calculation of the probability of a movement in market prices during a two-day holding period  Initial margin coverage protects against a prolonged liquidation

18. 18 Initial Margin Methodology NGX utilizes a Value-at-Risk methodology NGX’s VaR calculation measures the worst expected price change in a date range for a product over a given time interval under normal market conditions at a given confidence level VaR, while imperfect and subject to several limitations, provides a measurement tool that has historically been an accurate measure to evaluate potential exposure in a portfolio Calculated based on statistical analysis of historical prices. Calculations: Delta = ln (settlement price/previous day settlement price) Daily Volatility = √[{(delta1)² + (delta2)²…(deltan)²}/n] VAR = standard deviation x √(hold period/# of days) x daily volatility x last price Standard Deviation = 2.7 Hold Period = 2 or 5 days (Depending on market liquidity) Number of days = 2 years NGX uses a half life decay rate to give higher weighting to the recent periods.

19. 19 Reports For a number of reasons (scalability, efficiency, ease of use, etc) NGX has made all the information required by the front, middle and back offices available through the Web Reports readily accessible include daily trade reports, confirmations, invoices, details of settlements, deliveries, fees, user permissions etc. Risk reports are also made available for CounterParties to check their own Margin Requirements at NGX

20. 20 Questions and Contact Information Dan Zastawny – Vice President, Clearing & Compliance 403.974.4335 dan.zastawny@ngx.com Kenny Foo – Clearing Manager 403.974.1737 kenny.foo@ngx.com Natural Gas Exchange Inc. Suite 2330, 140 4th Avenue SW Calgary, Alberta Canada T2P 3N3 Phone403.974.1700 Fax403.974.1719