UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

 

#### **FORM 40– F**

 

(Check One)

|   |   | Registration statement  pursuant to Section 12 of the Securities Exchange Act of 1934               |
|--------|--------|----------------------------------------------------------------------------------------------------------|
| or     |   |                                                                                                     |
| x      |   | Annual report pursuant  to Section 13(a) or 15(d) of the Securities Exchange Act of  1934 |

 

| For fiscal year ended: |   | December 31, 2008 |
|------------------------|--------|------------------------|
| Commission File No.:   |   | 1-13922                |

 

**PETRO-CANADA**

(Exact name of registrant as specified in its charter)

 

| **Canada**                                                                      | **1311, 1321, 1382, 5541**                                                        | **Not Applicable**                                       |
|---------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|----------------------------------------------------------|
| (Province or other

jurisdiction of

incorporation or organization)             | (Primary standard industrial

classification code number,

if applicable)         | (I.R.S. employer

identification number,

if applicable) |
|                                                                            |                                                                              |                                                     |
|                                                                            | 150 – 6th Avenue S.W.

Calgary, Alberta

Canada T2P 3E3

(403) 296-8000 |                                                     |
| (Address and telephone number of registrant’s  principal executive office) |

 

 

##### **CT Corporation System**

**111 Eight Avenue - CT**

**New York, New York 10011**

**(212) 894-8940**

(Name, address and telephone number of agent forservice in the United States)

 

| Securities registered  pursuant to Section 12(b) of the Act:                                 |
|--------------------------------------------------------------------------------------------------------|
|                                                                                                   |   |   |
|                                                                                                   | Title of each class: | Name of each exchange  on which registered: |
| ** **                                                                                             | **Common Shares** | **New York Stock Exchange** |
|                                                                                                   |   |   |
| Securities registered  pursuant to Section 12(g) of the Act:                                 |
|                                                                                                   | **None** |   |
|                                                                                                   |   |   |
| Securities for which  there is a reporting obligation pursuant to Section 15(d) of the  Act: |
|                                                                                                   | **5% Senior Notes due 2014** |   |
|                                                                                                   | **9 1⁄4% Debentures Due 2021** |   |
|                                                                                                   | **7 7/8% Debentures Due 2026** |   |
|                                                                                                   | **7% Debentures Due 2028** |   |
|                                                                                                   | **4% Senior Notes Due 2013** |   |
|                                                                                                   | **5.35% Senior Notes Due 2033** |   |
|                                                                                                   | **5.95% Senior Notes Due 2035** |   |
|                                                                                                   | **6.05%  Senior Notes Due 2018** |   |
|                                                                                                   | **6.80%  Senior Notes Due 2038** |   |
|                                                                                                   |   |   |
| For annual reports,  indicate by check mark the information filed with this form:                      |

 

|   |    x       Annual  Information Form |     x      Audited Financial Statements |
|--------|------------------------------------------------------------------------|-----------------------------------------------------------------------|

 

 

 

Indicate thenumber of outstanding shares of each of the issuer’s classes of capital orcommon stock as of the close of the periods covered by the annual report:

 

|   | Common Shares: | 484,597,467 |   |
|--------|----------------|-------------|--------|

 

 

Indicate by check mark whether the registrant: (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theExchange Act during the preceding 12 months (or for such shorter period thatthe registrant has been required to file such reports); and (2) has beensubject to such filing requirements in the past 90 days.

 

|   | Yes | x |   | No |   |   |
|--------|-----|---|--------|----|--------|--------|

 

 

**CAUTIONARYNOTICE REGARDING FORWARD LOOKING INFORMATION**

 

This Form 40-Fcontains forward-looking statements within the meaning of Section 27A ofthe Securities Act of 1933 and Section 21E of the Securities and ExchangeAct of 1934. Such statements are generally identifiable by the terminologyused, such as “plan”, “anticipate”, “intend”, “expect”, “estimate”, “budget” orother similar wording. Forward looking statements include but are not limitedto: references to business strategy and goals; references to future capital andother expenditures; drilling plans; construction activities; refineryturnarounds; the submission of development plans; seismic activity; refiningmargins; oil and gas production levels and the sources of growth thereof;results of exploration activities and dates by which certain areas may bedeveloped or may come on-stream; retail throughputs; pre-production andoperating costs; reserves and resources estimates; reserves life-of-fieldestimates; natural gas export capacity; and environmental matters. By theirvery nature, these forward-looking statements require Petro-Canada to makeassumptions, that may not materialize or that may not be accurate.  These forward-looking statements are subjectto known and unknown risks and uncertainties and other factors which may causeactual results, levels of activity and achievements to differ materially fromthose expressed or implied by such statements. Such factors include, but arenot limited to:  imprecision of reservesestimates of recoverable quantities of oil, natural gas and liquids fromresource plays and other sources not currently classified as reserves; generaleconomic, market and business conditions; industry capacity; competitive actionby other companies; fluctuations in oil and gas prices; refining and marketingmargins; the ability to produce and transport crude oil and natural gas tomarkets; the effects of weather and climate conditions; the results ofexploration and development drilling and related activities; fluctuation ininterest rates and foreign currency exchange rates; the ability of suppliers tomeet commitments; actions by governmental authorities including increases intaxes; decisions or approvals of administrative tribunals; changes inenvironmental and other regulations; risks attendant with oil and gasoperations; both domestic and international; international political events;expected rates of return; and other factors, many of which are beyond thecontrol of Petro-Canada. These factors are discussed in greater detailelsewhere in this Form 40-F.

 

Readers are cautionedthat the foregoing list of important factors affecting forward-lookingstatements is not exhaustive. Furthermore, the forward-looking statementscontained herein are made as of the date of this Form 40-F, andPetro-Canada does not undertake any obligation to update publicly or to reviseany of the included forward-looking statements, whether as a result of newinformation, future events or otherwise. The forward-looking statementscontained in this Form 40-F are expressly qualified by this cautionarystatement.

 

 

 

 

# **Table of Contents**

 

 
| Presentation of Information                                                                | 1      |
|--------------------------------------------------------------------------------------------|--------|
| Conversion Factors                                                                         | 1      |
| Legal Notice – Forward-Looking Information                                            | 1      |
| **Corporate Structure**                                                                    | **4**  |
| Incorporation of Petro-Canada                                                              | 4      |
| Intercorporate Relationships                                                               | 4      |
| Business of Petro-Canada                                                                   | 5      |
| **General Development of the Business**                                                    | **6**  |
| Three-Year History                                                                         | 6      |
| **Description of the Business**                                                            | **9**  |
| Business Environment                                                                       | 9      |
| Risk Management                                                                            | 10     |
| Upstream                                                                                   | 14     |
| *North American Natural Gas*                                                               | *14*   |
| *Oil Sands*                                                                                | *19*   |
| *International & Offshore*                                                        | *26*   |
| *East Coast Canada*                                                                        | *26*   |
| *International*                                                                            | *30*   |
| Upstream Production and Prices                                                             | 36     |
| Reserves                                                                                   | 46     |
| Downstream                                                                                 | 60     |
| Human Resources                                                                            | 66     |
| Social and Environmental Policies                                                          | 66     |
| Environmental Expenditures                                                                 | 68     |
| **Select Financial Data**                                                                  | **69** |
| Capital Expenditures on Property, Plant and Equipment and Exploration                      | 71     |
| Dividends                                                                                  | 72     |
| **Capital Structure**                                                                      | **73** |
| General Description of Capital Structure                                                   | 73     |
| Constraints                                                                                | 73     |
| Credit Ratings                                                                             | 74     |
| **Market for Securities**                                                                  | **75** |
| Trading Price and Volume                                                                   | 75     |
| Prior Sales                                                                                | 75     |
| **Directors and Officers**                                                                 | **76** |
| Directors                                                                                  | 76     |
| Share Ownership                                                                            | 85     |
| Audit Committee Disclosure                                                                 | 85     |
| **Interest of Management and Others in Material Transactions**                             | **86** |
| **Transfer Agents and Registrars**                                                         | **86** |
| **Interests of Experts**                                                                   | **86** |
| **Additional Information**                                                                 | **86** |
| **Schedule A: Report on Reserves Data by Senior Officer Responsible for  Reserves Data**   | **87** |
| **Schedule B: Report of Management and Directors on Reserves Data and  Other Information** | **89** |
| **Schedule C: Audit, Finance and Risk Committee**                                          | **91** |

 

Cover design: TheDesign Centre of Canada; Inside: Platinum Creative Solutions Inc.

This report wasprinted on paper that is acid-free and recyclable. Inks are based on linseedoil and contain no heavy metals. The printing process was alcohol-free.Volatile organic compounds associated with printing were reduced by 50% to 75%from the levels that would have been produced using traditional inks andprocesses.

 

## **PRESENTATIONOF INFORMATION**

## ** **

The information contained in this AnnualInformation Form (AIF) is dated as at December 31, 2008, unlessotherwise indicated. Throughout this AIF, the terms "Petro-Canada,"the "Company," "we," "us" and "our"refer to Petro-Canada and its subsidiaries or, where the context requires, theapplicable businesses within Petro-Canada (e.g. North American Natural Gas, OilSands, East Coast Canada, International and Downstream). Dollars are Canadian(Cdn), unless otherwise stated. All oil and natural gas production and reservesvolumes are stated before deduction of royalties, unless otherwise indicated.

 

 

## **CONVERSION FACTORS**

## ** **

To conform with common usage, imperial units of measurement are used inthis AIF to describe exploration and production, while metric units are usedfor refining and marketing.

 
| 1 cubic metre – m3 (liquids) |   | = | 6.29 barrels (bbls)   |
|---------------------------------------------|--------|---|----------------------------|
| 1 m3 (natural gas)           |   | = | 35.30 cubic feet |
| 1 litre                                |   | = | 0.22 imperial gallon  |
| 1 square kilometre                     |   | = | 247.10 acres          |
| 1 hectare                              |   | = | 2.47 acres            |
| 1 m3                                   |   | = | 1,000 litres          |

## ** **

 

## ** LEGAL NOTICE – FORWARD-LOOKINGINFORMATION**

 

This AIF contains forward-looking information. You can usually identifythis information by such words as "*plan*," "*anticipate*," "*forecast*,""*believe*," "*target*," "*intend*," "*expect*," "*estimate*,""*budget*" or other terms that suggestfuture outcomes or references to outlooks. Forward-looking information in thisAIF includes references to:

 
| ·   business  strategies and goals

·   future  investment decisions

·   outlook  (including operational updates and strategic milestones)

·   future  capital, exploration and other expenditures

·   future  cash flows

·   future  resource purchases and sales

·   anticipated  construction and repair activities

·   anticipated  turnarounds at refineries and other facilities

·   anticipated  refining margins

·   future  oil and natural gas production levels and the sources of their growth

·   project  development, and expansion schedules and results

·   future  exploration activities and results, and dates by which certain areas may be  developed or come on-stream |   | ·   anticipated retail throughputs 

·   anticipated pre-production and operating  costs 

·   reserves and resources estimates 

·   future royalties and taxes payable 

·   production life-of-field estimates 

·   natural gas export capacity 

·   future financing and capital activities  (including purchases of Petro-Canada common shares under the Company's normal  course issuer bid (NCIB) program) 

·   contingent liabilities (including potential  exposure to losses related to retail licensee agreements) 

·   the impact and cost of compliance with  existing and potential environmental regulations 

·   future regulatory approvals 

·   expected rates of return |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
|  | Annual Information  Form **PETRO-CANADA** | **1** |
|--|-------------------------------------------|-------|

 

Such forward-looking information is based on a number of assumptions andanalysis made by the Company. These assumptions and analysis are described ingreater detail throughout this AIF and include, without limitation, assumptionswith respect to future commodity prices, the state of the economy, requiredcapital expenditures, levels of cash flow, regulatory requirements, industrycapacity, the results of exploration and development drilling and the abilityof suppliers to meet commitments.

 

Undue reliance should not be placed on forward-looking information. Suchforward-looking information is subject to known and unknown risks anduncertainties, which may cause actual results, levels of activity and achievementsto differ materially from those expressed or implied by such information. Suchrisks and uncertainties include, but are not limited to:

 
| ·      changes in industry capacity

·      imprecise reserves estimates of  recoverable quantities of oil, natural gas and liquids from resource plays,  and other sources not currently classified as reserves

·      the effects of weather and climate  conditions

·      the results of exploration and  development drilling, and related activities

·      the ability of suppliers to meet  commitments 

·      decisions or approvals from  administrative tribunals

·      risks associated with domestic and  international oil and natural gas operations

·      changes in general economic, market and  business conditions | ·      competitive action by other companies 

·      fluctuations in oil and natural gas  prices

·      changes in refining and marketing  margins

·      the ability to produce and transport  crude oil and natural gas to markets 

·      fluctuations in interest rates and  foreign currency exchange rates 

·      actions by governmental authorities  (including changes in taxes, royalty rates and resource-use strategies)

·      changes in environmental and other  regulations

·      international political events

·      nature and scope of actions by  stakeholders and/or the general public |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Many of these and other similar factors are beyond the control ofPetro-Canada. Petro-Canada discusses these factors in greater detail in filingswith the Canadian provincial securities commissions and the United States(U.S.) Securities and Exchange Commission (SEC). See also "Risk Management– Risks Relating to Petro-Canada's Business" in this AIF for a discussionof factors that could impact Petro-Canada's operations or results.

 

Readers are cautioned that this list of important factors affectingforward-looking information is not exhaustive. Furthermore, the forward-lookinginformation in this AIF is made as of March 18, 2009 and, except asrequired by applicable law, will not be publicly updated or revised. Thiscautionary statement expressly qualifies the forward-looking information inthis AIF.

 

 

### **Petro-Canada disclosure of reserves**

### ** **

Petro-Canada's qualified reserves evaluators prepare the reservesestimates the Company uses. The Canadian provincial securities commissions donot consider Petro-Canada's reserves staff and management as independent of theCompany. Petro-Canada has obtained an exemption from certain Canadian reservesdisclosure requirements that allows Petro-Canada to make disclosure inaccordance with SEC standards where noted in this AIF. This exemption allowscomparisons with U.S. and other international issuers.

 

As a result, Petro-Canada formally discloses its proved reserves datausing U.S. requirements and practices, and these may differ from Canadiandomestic standards and practices. The use of the terms such as "*probable*," "*possible*,""*resources*" and "*life-of-field production*" in this AIF does not meet theSEC guidelines for SEC filings. To disclose reserves in SEC filings, oil andnatural gas companies must prove they are economically and legally producibleunder existing economic and operating conditions. Note that when the termbarrels of oil equivalent (boe) is used in this AIF, it may be misleading,particularly if used in isolation. A boe conversion ratio of six thousand cubicfeet (Mcf) to one barrel (bbl) is based on an energy equivalency conversionmethod. This method primarily applies at the burner tip and does not representa value equivalency at the wellhead.

 

 
| **2** | **PETRO-CANADA**Annual Information  Form |  |
|-------|------------------------------------------|--|

 

The table below describes the industrydefinitions that Petro-Canada currently uses:

 

 
| **Definitions Petro-Canada uses**                                                            | ** ** | **Reference**                                                                                                                                                                                                                                                                    |
|----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                   | ** ** | ** **                                                                                                                                                                                                                                                                       |
| ** **                                                                                   | ** ** | ** **                                                                                                                                                                                                                                                                       |
| Proved oil and natural gas reserves  (includes both proved developed and proved undeveloped) |       | SEC reserves definition (Accounting  Rules Regulation S-X 210.4-10, U.S. Financial Accounting Standards Board  (FASB) Statement No. 69) 

 

SEC Guide 7 for Oil Sands Mining                                                                                     |
|                                                                                         |       |                                                                                                                                                                                                                                                                             |
| Unproved reserves, probable and possible  reserves                                           |       | Canadian Securities Administrators:  Canadian Oil and Gas Evaluation (COGE) Handbook, Vol. 1 Section 5  prepared by the Society of Petroleum Evaluation Engineers (SPEE) and the  Canadian Institute of Mining Metallurgy and Petroleum (CIM)                               |
|                                                                                         |       |                                                                                                                                                                                                                                                                             |
| Contingent and Prospective Resources                                                         |       | Petroleum Resources Management System:  Society of Petroleum Engineers, SPEE, World Petroleum Congress and American  Association of Petroleum Geologist definitions (approved March 2007)

 

Canadian  Securities Administrators: COGE Handbook Vol. 1 Section 5 |
|                                                                                         |       |                                                                                                                                                                                                                                                                             |

 

Although the Society of Petroleum Engineers resource classification hascategories of 1C, 2C and 3C for Contingent Resources, and low, best and highestimates for Prospective Resources, Petro-Canada will only refer to theunrisked 2C for Contingent Resources and the partially risked best estimate forProspective Resources when referencing resources in this AIF. Estimates ofresources in this AIF include contingent resources that have not been adjustedfor risk based on the chance of development and partially risked prospectiveresources that have been risked for chance of discovery, but have not beenrisked for chance of development. Such estimates are not estimates of volumesthat may be recovered and actual recovery is likely to be less and may besubstantially less or zero. If a discovery is made, there is no certainty thatit will be developed or, if it is developed, there is no certainty as to thetiming of such development.

 

Canadian Oil Sands represents approximately 68% of Petro-Canada's totalfor Contingent and Prospective Resources. The balance of Petro-Canada'sresources is spread out across the business, most notably in the North Americanfrontier and International areas. Also, when Petro-Canada references resourcesfor the Company, unrisked Contingent Resources are approximately 70% of theCompany's total resources and partially risked Prospective Resources areapproximately 30% of the Company's total resources.

 

Cautionary statement: In the case of discovered resources or asubcategory of discovered resources other than reserves, there is no certaintythat it will be commercially viable to produce any portion of the resources. Inthe case of undiscovered resources or a subcategory of undiscovered resources,there is no certainty that any portion of the resources will be discovered. Ifdiscovered, there is no certainty that it will be commercially viable toproduce any portion of the resources.

 

For movement of resources to reserves categories, all projects must havean economic depletion plan and may require:

·   additionaldelineation drilling and/or new technology for unrisked Contingent Resources

·   explorationsuccess with respect to partially risked Prospective Resources

·   projectsanction and regulatory approvals

 

Reserves and resources information containedin this AIF is as at December 31, 2008.

 

 
|  | Annual Information  Form **PETRO-CANADA** | **3** |
|--|-------------------------------------------|-------|

 

 

# **Corporate Structure**

## ** **

## **INCORPORATION OFPETRO-CANADA**

## ** **

Petro-Canada is a corporation continued under the *CanadaBusiness Corporations Act*. The registered and principal executiveoffice of the Company is located at 150 – 6 Avenue S.W., Calgary,Alberta, Canada T2P 3E3. Telephone: 403-296-8000.

 

## **INTERCORPORATERELATIONSHIPS**

## ** **

Material operating subsidiaries owned 100%, directly or indirectly, by theCompany as at December 31, 2008 were as follows:

 
| **Name**                                   | ** **                                                                                                                                                 | **Jurisdiction of Incorporation** | ** ** | **Purpose**                                                                                                                                |
|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|
| 3908968 Canada Inc.              |                                                                                                                                                       | Canada                            |       | A Canadian subsidiary holding Petro-Canada's  international interests

                                                          |
| Petro-Canada  (International) Holdings BV  |                                                                                                                                                       | Netherlands                       |       | A subsidiary of Petro-Canada  Cooperative Holding UA1 holding Petro-Canada's international  interests

                          |
| Petro-Canada  Germany GmbH                 |                                                                                                                                                       | Germany                           |       | A subsidiary of Petro-Canada  (International) Holdings BV that holds the majority of Petro-Canada's  Libya interests

                |
| Petro-Canada  Oil (North Africa) GmbH      |                                                                                                                                                       | Germany                           |       | A subsidiary of Petro-Canada Germany  GmbH through which the majority of Petro-Canada's Libya operations are  conducted 

            |
| Petro-Canada  U.K. Holdings Ltd. |                                                                                                                                                       | United Kingdom  (U.K.)       |       | A subsidiary of  3908968 Canada Inc. that holds Petro-Canada's  U.K. interests

                                       |
| Petro-Canada  U.K. Ltd.               |                                                                                                                                                       | U.K.                              |       | A subsidiary of Petro-Canada  U.K. Holdings Ltd. through which Petro-Canada's operations  are conducted in the U.K.

  |
| 1                                          | Petro-Canada Cooperative Holding UA is a  cooperative between 3908968 Canada Inc. and 6872841 Canada Inc. with its  legal jurisdiction in the Netherlands. |
|                                            |                                                                                                                                                            |                                   |            |                                                                                                                                            |  |

 

Individually, the Company's remaining subsidiaries accounted for (i) lessthan 10% of the Company's consolidated assets as at December 31, 2008, and(ii) less than 10% of the Company's consolidated sales and operatingrevenues as at December 31, 2008. In the aggregate, the remainingsubsidiaries accounted for less than 20% of each of (i) and (ii) described above.

 

 
| **4** | **PETRO-CANADA**Annual Information  Form |  |
|-------|------------------------------------------|--|

 

 

## **BUSINESS OF PETRO-CANADA**

## ** **

The following business description should be read in conjunction withPetro-Canada's Management's Discussion and Analysis (MD&A) for the yearended December 31, 2008 in the Company's 2008 Annual Report. The MD&Ais incorporated by reference into and forms an integral part of this AIF.

 

Petro-Canada is an integrated oil and gas company with a portfolio ofbusinesses spanning both the upstream and downstream sectors of the industry.In the upstream businesses, the Company explores for, develops, produces andmarkets crude oil, natural gas liquids (NGL) and natural gas in Canada andinternationally. The Downstream business unit refines crude oil and otherfeedstock, and markets and distributes petroleum products and related goods andservices, primarily in Canada.

 

The table below outlines the various businesses of Petro-Canada as at December 31, 2008.

 

### **Upstream**

 
| **North American Natural Gas** | ** **                           | **Oil Sands**                               |
|--------------------------------|--------------------------------------|---------------------------------------------|
| ** **                     | ** **                           | ** **                                  |
| ** **                     | ** **                           | ** **                                  |
| ·                         | Western Canada                       |                                        | · | Syncrude (12%  Interest) |
| * *                       | ·                               | *Alberta Foothills*                         |   | · | MacKay River  (100% Interest) |
| * *                       | ·                               | *Southeast  Alberta/Southwest Saskatchewan* |   | · | Fort Hills (60%  Interest) |
| * *                       | ·                               | *West Central Alberta*                      |   | · | Other *In Situ* Oil Sands Leases |
| * *                       | ·                               | *Northeast British  Columbia (B.C.)*        | ** ** |   |
| ·                         | U.S. Rockies                         | * *                                    | * * |
| ·                         | Northwest  Territories (NWT)/Nunavut |                                        |   |
| ·                         | Alaska/Arctic  Islands               |                                        |   |

 
| ***International &  Offshore*** | *** ***                                                         | *** ***      |
|------------------------------------------|----------------------------------------------------------------------|-------------------|
| ** **                               | ** **                                                           | ** **        |
| **East Coast Canada**                    | ** **                                                           | **International** |
| ** **                               | ** **                                                           | ** **        |
| ** **                               | ** **                                                           | ** **        |
| ·                                   | Hibernia (20%  Interest)                                             |              | · | North Sea |
| ·                                   | Terra Nova (34%  Interest)                                           |              |   | · | Buzzard (29.9%  Interest) |
| ·                                   | White Rose  (27.5%1 Interest)                                   |              |   | · | Triton Area |
| ·                                   | Hebron (23.9%  Interest)                                             |              |   | · | Scott/Telford  Area |
| ·                                   | Other  Significant Discovery Licences (SDLs) and Exploration Acreage |              |   | · | De Ruyter  (54.07% Interest) |
|                                     |                                                                 |              | · | Hanze (45%  Interest) |
|                                     |                                                                 |              | · | Other  Exploration Acreage |
|                                     |                                                                 | ·            | Other International |
|                                     |                                                                 |              | · | Libya  Exploration Production Sharing Agreements (EPSAs) (50% Interest) |
|                                     |                                                                 |              | · | Syria Ebla  Natural Gas Project (100% Interest) |
|                                     |                                                                 |              | · | Trinidad and  Tobago North Coast Marine Area 1 (NCMA-1) (17.3% Interest) |
|                                     |                                                                 |              | · | Other  Exploration Acreage |

### ** **

### **Downstream**

 
| **Refining and Supply** | ** **                              | **Sales and Marketing** | ** ** | **Lubricants**        |
|-------------------------|-----------------------------------------|-------------------------|------------|-----------------------|
| ** **              | ** **                              | ** **              | ** ** | ** **            |
| ** **              | ** **                              | ** **              | ** ** | ** **            |
| ·                  | Edmonton  Refinery                      |                    | ·     | Retail  Operations    |   | · | Mississauga  Lubricants Plant |
| ·                  | Montreal  Refinery                      |                    | ·     | Wholesale  Operations |   |   |
| ·                  | ParaChem  Chemical Plant (51% Interest) |                    |       |                  |   |   |

#  

----

| **1** | **Petro-Canada's  working interest in the White Rose Extensions is 26.125% after the  Newfoundland and Labrador Energy Corporation (NALCOR) acquired its 5% working  interest effective with the signing of the final project agreements in  February 2009. There is no change to the White Rose 27.5% working  interest for the original field development as NALCOR is not a partner.** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
|  | Annual Information  Form **PETRO-CANADA** | **5** |
|--|-------------------------------------------|-------|

 

 

# **General Developmentof the Business**

## ** **

## **THREE-YEAR HISTORY**

## ** **

The following narrative is a three-yearhistory of notable Company events:

 

### **2008**

###  

Petro-Canada ended a turbulent 2008 with record net earnings and cashflow from operating activities. The Company achieved record results in EastCoast Canada, International and Oil Sands as a result of solid operationscombined with a strong business environment for most of 2008. The Companydelivered production unchanged from the prior year and at the high end of 2008guidance. The Company also completed construction on one of its major projectsand progressed the other six to deliver increased upstream production andprofitable growth in the future.

 

Specifically the Company:
| · | delivered record net earnings of $3.1  billion and record cash flow from operating activities of $6.5 billion                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | maintained a strong liquidity position with  a year-end 2008 cash balance of $1.4 billion and unutilized credit facility  capacity of $4.7 billion                                         |
| · | ended 2008 with debt levels at 23.5% of  total capital and a ratio of 0.7 times debt-to-cash flow from operating  activities, with both measures well below the Company's long-term ranges |
| · | declared a 54% increase in the quarterly  dividend to $0.20/share, commencing on October 1, 2008                                                                                      |
| · | finished 2008 with proved reserves of 1,2861 million  barrels of oil equivalent (MMboe), compared with 1,3151 MMboe  at year-end 2007                                            |
| · | signed six new EPSAs with the Libya  National Oil Company (NOC), adding reserves and extending terms by an  expected 30 years with improved commercial terms                               |
| · | completed construction of the Edmonton  refinery conversion project (RCP) and continued to ramp up the refinery                                                                            |

 

In North American Natural Gas, production was strong in 2008 due toincreased natural gas production in the U.S. Rockies and strong performance inWestern Canada, which significantly offset natural declines. Increased netearnings of $344 million in 2008 reflected higher natural gas prices, increasedU.S. Rockies production and lower exploration expenses, partially offset bydecreased Western Canada production and increased operating and depreciation,depletion and amortization (DD&A) expenses. In 2008, the Company completedthe sale of its Minehead assets in Western Canada. The sale of these assets isaligned with the business unit's strategy to continuously optimize the assetsin its portfolio. During 2008, the Company discontinued a pilot project innorthern B.C. Also in 2008, the Company completed a small acquisition of oilproduction and exploration land located in Colorado's Denver-Julesburg Basin.In 2008, the Company continued to position itself as a long-term North Americansupplier by building its northern resource base and by participating in thedrilling of three exploration wells in Alaska and the NWT.

 

The Oil Sands business delivered record net earnings of $334 million forthe year, reflecting increased production from MacKay River and higher realizedprices at both Syncrude and MacKay River. These factors were partially offsetby lower Syncrude production and increased operating costs at both Syncrude andMacKay River. In 2008, Petro-Canada and its partners in the Fort Hills projectreceived regulatory approval for an amendment to the approved mine plan, whichincorporates improvements identified through the mine plan optimizationprocess. During the year, the Fort Hills Energy Limited Partnership announcedthat the preliminary results from the front-end engineering and design (FEED)work suggested that estimated costs for the Fort Hills project had risenconsiderably and that it will defer the final investment decision (FID) on themining portion of the project until costs can be reduced and commodity pricesand financial markets strengthen. The upgrader portion of the Fort Hillsproject was put on hold and a decision on whether to proceed with the upgraderwill be made at a later date. At MacKay River, production was higher comparedwith the prior year as a result of increased reliability and capacity. TheMacKay River expansion (MRX) project was also put on hold until commodityprices and financial markets strengthen.

 

 

----

| 1 | These reserves numbers  represent the sum of oil sands mining and oil and gas activities, are  presented before royalties and stated in MMboe. Reporting reserves in this  manner does not conform to SEC standards and is for general supplemental information  only. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| **6** | **PETRO-CANADA**Annual Information  Form |  |
|-------|------------------------------------------|--|

 

 

The East Coast Canada business also delivered record net earnings of$1,368 million for the year, reflecting higher realized prices and strong reliability,partially offset by decreased production due to natural declines, increasedroyalties and higher DD&A expense. In April 2008, Petro-Canada and itspartners on the White Rose Extensions1 achievedgovernment and regulatory approval to proceed and detailed design, procurementand fabrication were underway, with necessary long-lead equipment and drillingcommitments in place. The Hibernia operator submitted the Hibernia SouthernExtension development plan amendment application in July 2008, which was stillbeing reviewed. In August 2008, the Company executed formal agreementswith the Government of Newfoundland and Labrador to allow developmentactivities for the Hebron offshore oil project to proceed. Terra Nova and WhiteRose both reached tier two royalty payout in 2008, increasing their royaltyrates. Reliability at the Petro-Canada operated Terra Nova facility remainedstrong in 2008.

 

The International business delivered record net earnings of $1,684million in 2008, which was a significant increase over the prior year. Recordnet earnings were due to the absence of expenses associated with settling theBuzzard derivative contracts in 2007 as well as higher realized prices andproduction, partially offset by higher exploration and DD&A expenses. TheBuzzard North Sea development continued to perform well, with robust operatingperformance in 2008. The Company signed six new EPSAs in 2008 with the LibyaNOC, adding reserves and extending terms by an expected 30 years with improvedcommercial terms. The construction of the Syria Ebla gas facilities progressedon plan and development drilling started with two rigs operating in the field.The Ebla gas project is on schedule to deliver first gas by August 2010.

 

The Downstream contributed net earnings of $nil in 2008, downsignificantly from 2007. Net earnings were negatively impacted by a weakerbusiness environment for gasoline cracking margins, a change in inventoryaccounting methodology and lower refinery yields. Refinery yields were lowerpredominantly at Edmonton due to planned turnaround activity to tie in and rampup the new RCP units and unplanned operational upsets. These factors werepartially offset by improved marketing margins. In the third quarter of 2008,the Company completed construction of the Edmonton RCP to process 100% oilsands-based feedstock and continued to ramp up the refinery. The Montreal cokerproject is on hold until financial and commodity markets strengthen, and theCompany is reworking project costs to take advantage of the current marketenvironment.

 

The Company returned funds to shareholders during 2008. In July 2008,the Company declared a 54% increase in the quarterly dividend to $0.20/sharecommencing on October 1, 2008. Total cash dividends paid in 2008 were $320million, compared with $255 million in 2007 and $201 million in 2006. Inaddition, Petro-Canada renewed its NCIB program. The current program, whichextends to June 21, 2009, entitles the Company to purchase up to 5% of itsoutstanding common shares, subject to certain conditions. The Company did notrepurchase any of its common shares in 2008.

 

### **2007**

### ** **

In 2007, Petro-Canada had record net earnings of $2.7 billion and strongcash flow from continuing operating activities of $3.3 billion. TheCompany achieved 21% growth in upstream production from continuing operations,compared with 2006.

 

In North American Natural Gas, the Company exited 2007 with U.S. Rockiesproduction reaching 100 million cubic feet of gas equivalent/day (MMcfe/d),achieving the goal of doubling production from 2004 acquisition levels. TheCompany also continued to position itself for long-term North American supplyby building its land position North of 60 and by participating in the drillingof three exploration wells.

 

In Oil Sands, the Company finalized the agreement to earn an additional5% working interest in the Fort Hills project, bringing Petro-Canada's totalstake in the Fort Hills project to 60%. In June 2007, Petro-Canada and itspartners completed and announced the design basis and preliminary cost estimatefor the Fort Hills project. In addition, Petro-Canada entered into anagreement, subject to the FID, with Enbridge Inc. to develop pipeline andterminalling facilities to meet the requirements of Phase 1 and subsequentphases of the project. The Company completed the MacKay River plant capacityupgrade and began steaming the fourth well pad.

 

In East Coast Canada, the Hebron partners signed a non-bindingMemorandum of Understanding (MOU) with the Government of Newfoundland and Labradorrelated to the fiscal and other terms for the future development of theHebron/Ben Nevis offshore field. In December 2007, Petro-Canada and itspartners in the North Amethyst, West White Rose and South White Rose Extension,collectively known as the White Rose Extensions1 development,signed a formal agreement with the province 

 

----

| 1 | Petro-Canada's  working interest in the White Rose Extensions is 26.125% after the NALCOR  acquired its 5% working interest effective with the signing of the final  project agreements in February 2009. There is no change to the White  Rose 27.5% working interest for the original field development as NALCOR is  not a partner. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
|  | Annual Information  Form **PETRO-CANADA** | **7** |
|--|-------------------------------------------|-------|

 

 

for the development of these oilfields. The North Amethyst portion ofthe White Rose Extensions was sanctioned by the Board of Directors in the firstquarter of 2007. Reliability at the Petro-Canada operated Terra Nova FloatingProduction, Storage and Offloading (FPSO) vessel increased significantly,leading to much higher production in 2007.

 

In International, the Company achieved first production from the Buzzardand Saxon developments in the U.K. sector of the North Sea. Late in 2007,Petro-Canada and the Libya NOC signed binding heads of agreement for a 30-yearextension of the Libya concessions. In mid-2007, the Company reached asettlement with the Venezuelan Ministry for Energy and Petroleum to dispose ofits 50% working interest in the La Ceiba Block and closed its office inVenezuela at the end of 2007. At the end of the year, the Company settled alloutstanding Buzzard derivative contracts, resulting in a reduction in cash flowof $1,145 million after-tax.

 

In the Downstream, strong reliability at the Edmonton and Montrealrefineries allowed Petro-Canada to maximize the benefits of unprecedented lightoil refining margins. At year-end 2007, Petro-Canada had completed 61% of theconstruction at the Edmonton refinery to convert the refinery to process 100%oil sands-based feedstock and all the major vessels and modules had beeninstalled. During the year, work progressed to evaluate the feasibility ofadding a coker to the Montreal refinery.

 

The Company returned funds to shareholders during the year. The Companypaid cash dividends in 2007 of $255 million and repurchased and cancelled15,998,000 shares at an average price of $52.42 per share for a total cost of$839 million.

 

### **2006**

### ** **

In 2006, Petro-Canada delivered solid net earnings of $1.7 billion andcash flow from continuing operating activities of $3.6 billion.

 

In North American Natural Gas, water treatment permits required forwells planned in 2005 and 2006 were approved, resulting in a ramp up of coalde-watering in the U.S. Rockies. The Company also continued to position itselffor long-term North American supply by assessing its exploration prospects inAlaska and Mackenzie Delta/Corridor.

 

In Oil Sands, the Syncrude Stage III expansion came on-stream, adding toupstream production for the year, and the Company added *in situ*oil sands resources with the purchase of additional leases adjacent to MacKayRiver. As part of the Fort Hills project, the partners filed a regulatoryapplication to construct and operate an upgrader in Sturgeon County, about40 kilometres northeast of Edmonton.

 

In East Coast Canada, the Company completed the extended turnaround ofthe Terra Nova FPSO and development drilling in the White Rose field showedpromise, with discoveries made in the west and southwest sections of the field.

 

In International, the Company achieved first production from the NorthSea platforms of De Ruyter and L5b-C and the Company completed the sale of itsmature producing assets in Syria for net proceeds of $640 million. Laterin the year, the Company completed an agreement to purchase a 90% interest inand operate the Ebla natural gas project in central Syria for $54 million.

 

In the Downstream, a fire occurred in early 2006 at the Mississaugalubricants plant, which reduced output to 50% of plant capacity for approximatelytwo months. Petro-Canada completed its ultra-low sulphur diesel projects at itsEdmonton and Montreal refineries, thereby providing cleaner burning fuels toconsumers. During the year, construction was started to convert the Edmontonrefinery to process 100% oil sands-based feedstock.

 

The Company returned funds to shareholders during the year. In December,the Company declared a 30% increase in its quarterly dividend to $0.13/share,commencing with the dividend payable April 1, 2007. In addition,Petro-Canada repurchased and cancelled 19,778,400 shares at an average price of$51.10 per share for a total cost of just over $1 billion.

 

 
| **8** | **PETRO-CANADA**Annual Information  Form |  |
|-------|------------------------------------------|--|

 

 

# **Description of the Business**

## ** **

## **BUSINESSENVIRONMENT**

## ** **

The major economic factors influencing Petro-Canada's upstream financialperformance include crude oil and natural gas prices and foreign exchange,particularly the Canadian dollar/U.S. dollar rates. Crude oil and naturalgas prices are affected by a number of factors, including the balance of supplyand demand, weather and political events. Economic factors influencingDownstream financial performance include the level and volatility of crude oilprices, industry refining margins, levels of crude oil price differentials,demand for refined petroleum products, the degree of market competition andforeign exchange, particularly the Canadian dollar/U.S. dollar rates.

 

 

### **Business Environment in 2008**

###  

The year 2008 was one of the most volatile on record for oil markets.The first half of the year saw significant upward momentum in oil prices asweak supply growth fell short of robust demand growth in non-Organization ofEconomic Co-operation and Development (OECD) countries. Economic momentumslowed dramatically in the second half of the year as the global financialcrisis intensified, depressing crude oil demand growth appreciably. By the endof 2008, demand was negative. The swings in oil prices through 2008 were alsoaccompanied by record inflows, followed by record outflows, of investmentdollars from commodity market funds. The price of North Sea Brent (Dated Brent)opened the year at just under $100 US/bbl, climbed to record highs of over $140US/bbl in early July, and then fell steadily to under $45 US/bbl by earlyDecember. Despite the declines in the latter half of the year, the annualaverage price of Dated Brent was the highest ever at $96.99 US/bbl,approximately one-third above the 2007 average.

 

In 2008, the international light/heavy crude (Dated Brent/Mexican Maya)price differential averaged $13.15 US/bbl, somewhat wider than the$12.67 US/bbl posted in 2007. Canadian light/heavy crude (EdmontonLight/Western Canada Select (WCS)) spreads narrowed in 2008 to $19.91 Cdn/bblfrom $24.07 Cdn/bbl in 2007. Canadian heavy crudes continued to be sold at agreater discount to light crudes, compared with international heavy crudes.This is due to Canadian heavy crude oil production growing at a faster rate thanNorth American investment to convert refineries to process heavy feedstock. TheCanadian discount narrowed in 2008, however, as competing heavy oil importsfrom Mexico and Venezuela declined.

 

North American natural gas prices were very volatile in 2008. Naturalgas prices at the Henry Hub ranged from over $13.50 US/million Britishthermal units (MMBtu) in July to under $6.50 US/MMBtu in November.Overall, Henry Hub prices averaged $8.95 US/MMBtu in 2008, about 30%higher than in 2007. The increase was due to higher crude oil prices, whichraised the cost of distillate fuels that in turn competed with natural gas. In2008, the Canadian natural gas price at the AECO-C hub rose 23%, somewhat lessthan U.S. prices, as the strength of the Canadian dollar in the first half ofthe year offset some of the gains in natural gas prices.

 

The Canadian dollar was also extremely volatile in 2008, falling fromparity with the U.S. dollar in the first half of the year to under 80 cents USby December. Overall, the Canadian dollar averaged 94 cents US in 2008,compared with 93 cents US in 2007. The strength of the Canadian currency in thefirst half of the year reduced some of the impact of stronger internationalprices on Canadian crude oil and natural gas prices. Similarly, the decline inthe Canadian dollar in the second half of the year offset some of the impactfrom the declines in international crude oil and natural gas prices.

 

In the downstream sector, refined petroleum products sales in Canadaincreased by 0.5% in 2008, compared with a gain of 3.4% in 2007. Demand growthwas relatively stronger in Canada than in the U.S. in 2008, but momentum slowedsteadily through the year. The New York Harbor 3-2-1 crack spread, an indicatorof overall refining margins, averaged $9.58 US/bbl in 2008, compared with$14.15 US/bbl in 2007. Declines in gasoline cracking margins more than offsetgains in distillate cracking margins. With the exception of relatively briefhurricane-induced spikes in September, gasoline cracking margins were pressureddownward by declining U.S. consumption. Distillate margins rose markedly,averaging over $19.61 US/bbl, as strong demand for diesel fuel fromnon-OECD countries and commodity producers led to sharply higher productexports from the U.S.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **9** |
|--|-------------------------------------------|-------|

 

 

### **CompetitiveConditions**

 

It is increasingly challenging for the energy sector to find new sourcesof oil and natural gas. Petro-Canada is well positioned to successfullyincrease production of oil and natural gas and compete for new opportunitiesthat could complement existing upstream resources. The Company has an estimated14 billion boe of resources from which to develop new production, withapproximately 68% of the resources located in Alberta's oil sands. Withupstream business operations in Canada and internationally, the Company has theflexibility to pursue a wide range of opportunities. While the Company hassignificant operational scope, as measured by production levels, it remains amid-sized global company. This means Petro-Canada has the operationalcapability and balance sheet strength to invest in large projects, but smallerinvestments can also have a meaningful impact on the Company's productionlevels and financial returns.

 

Petro-Canada is well positioned to compete in the petroleum productsrefining and marketing business in Canada. Petro-Canada has the second largestdownstream business in Canada and is the "brand of choice." TheCompany conducts business in the downstream throughout Canada as an integratedbusiness unit and participates in the refining, distribution and marketing ofpetroleum products. The Company also offers a wide range of ancillarynon-petroleum goods and services, such as convenience retailing, automotiverepair and car washes.

 

The Company's strong financial position, track record of successfullyexecuting large capital projects and depth of management experience shouldenable it to continue to compete effectively in the current businessenvironment.

 

 

## **RISKMANAGEMENT**

## ** **

## **RISKS RELATING TOPETRO-CANADA'S BUSINESS**

## ** **

Petro-Canada's results are impacted by several risks and management'sstrategies for handling these risks. Management believes each major riskrequires a unique response based on Petro-Canada's business strategy andfinancial tolerance. Some risks can be effectively managed through internalcontrols, business processes, insurance and hedging. Hedging is used in limitedcircumstances, mainly to mitigate Downstream risks associated with refineryfeedstock costs. Petro-Canada's business risks include, but are not limited to,the following items. These risks could have a material adverse effect on theCompany's business, financial conditions and results of operations.

 

 

##### *A substantial or extended declinein crude oil or natural gas prices could have a material adverse effect onPetro-Canada.*

##### * *

The Company's financial condition depends substantially on the marketprices of crude oil and natural gas. Fluctuations in crude oil or natural gasprices could have a material adverse effect on Petro-Canada's financialcondition, as well as the value and amount of the Company's reserves. Pricesfor crude oil and natural gas fluctuate in response to changes in the supply ofand demand for crude oil and natural gas, market uncertainty and a variety ofother factors beyond Petro-Canada's control. These factors include, but are notlimited to, the actions of the Organization of the Petroleum ExportingCountries (OPEC), world economic conditions, government regulation, politicaldevelopments, the foreign supply of oil, the price of foreign imports, theavailability of alternate fuel sources and weather conditions. Canadian naturalgas prices are primarily affected by North American supply and demand, weatherconditions, the level of industry inventories, political events, and, to alesser extent, the price of alternate sources of energy.

 

Any substantial or extended decline in the prices of crude oil ornatural gas could result in a delay or cancellation of existing or futuredrilling, development or construction programs, curtailment in production atsome properties and unused long-term transportation commitments.

 

The margins realized for Petro-Canada's refined products are alsoaffected by factors such as crude oil price fluctuations due to the impact onrefinery feedstock costs, third-party refined product purchases and the demandfor refined petroleum products. The Company's ability to maintain productmargins in an environment of higher feedstock costs depends upon its ability topass higher costs on to customers.

 

 
| **10** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

##### *Petro-Canada's operations are subject to physicaldamage, business interruption and casualty losses.*

##### * *

Petro-Canada is subject to the operating risks associated with exploringfor, and producing, oil and natural gas, as well as operating midstream anddownstream facilities. These risks include blowouts, explosions, fires, gaseousleaks, equipment failures, migration of harmful substances, adverse weatherconditions and oil spills. These risks could cause personal injury, couldresult in damage or destruction to oil and natural gas wells, formations,production facilities, other property and equipment, and the environment, andcould interrupt operations. In addition, Petro-Canada's operations are subjectto the risks related to transporting, processing and storing of oil, naturalgas and other related products, drilling of oil and natural gas wells, and operatingand developing oil and natural gas properties.

 

 

##### *Factors that affect Petro-Canada'sability to execute projects could adversely affect business results.*

##### * *

Petro-Canada manages a variety of projects to support operations andfuture growth. Significant project cost overruns could make certain projectsuneconomic. The Company's ability to execute projects dependsupon numerous factors, which may include, but are not limited to, changes inproject scope, labour availability and productivity, staff resourcing,availability and cost of material and services, design and/or constructionerrors, delays in regulatory approvals, the ability of partners to deliver onproject commitments and access to capital funding. As a result, Petro-Canadamay not be able to execute projects on time, on budget or at all.

 

 

##### *Fluctuations in exchange ratescreate foreign currency exposure.*

##### * *

Due to the fact that energy commodity prices are primarily in U.S.dollars, Petro-Canada's revenue stream is affected by the Cdn/US dollar exchangerate. The Company's net earnings are negatively affected by a strengtheningCanadian dollar. Petro-Canada is also exposed to fluctuations in other foreigncurrencies, such as the euro and British pounds sterling.

 

 

##### *Reduced liquidity in capital marketscan limit the availability of capital and raise borrowing costs.*

##### * *

From time to time, Petro-Canada accesses the debt and/or equity marketsto raise capital. The reasons may include, among other things, the need toraise financing for new operations, mergers, acquisitions and expansions.  Reduced liquidity in the capital markets mayrestrict the Company's ability to raise the required financing and/or maysignificantly increase the associated cost of that capital.  An inability to raise capital could jeopardizethe ability of the Company to undertake a certain project and a higher cost ofcapital would reduce the profitability of that project.

 

 

##### *A failure to acquire or findadditional reserves would cause a decline in Petro-Canada's reserves andproduction levels.*

##### * *

The Company's future oil and natural gas reserves and production and,therefore, cash flows are highly dependent upon success in exploitingPetro-Canada's current reserves and resources base and acquiring or discoveringadditional reserves and resources. Without reserves additions throughexploration, acquisition or development activities, Petro-Canada's reserves andproduction will decline over time. Exploring for, developing or acquiringreserves is capital intensive. To the extent cash flows from operations areinsufficient to fund the Company's capital expenditures and external sources ofcapital become limited or unavailable, Petro-Canada's ability to make thenecessary capital investments to maintain oil and natural gas reserves will beimpaired. Costs to find and develop or acquire additional reserves also dependon success rates, which vary over time.

 

 

##### *Petro-Canada's oil and natural gas reserves data andfuture net revenue estimates are subject to variability.*

##### * *

There are many uncertainties inherentin estimating quantities of oil and natural gas reserves, including manyfactors beyond the Company's control. Estimates of economically recoverable oiland natural gas reserves are based upon a number of variables and assumptions.These include geoscientific interpretation, commodity prices, operating andcapital costs and historical production from properties. These estimates havesome degree of uncertainty and reserves classifications are best estimates. Forthese reasons, estimates of the economically recoverable oil and natural gasreserves attributed to properties

 

 
|  | Annual  Information Form **PETRO-CANADA** | **11** |
|--|-------------------------------------------|--------|

 

 

and classification of reserves based on recovery risk may varysubstantially. Petro-Canada's actual production, revenues, taxes anddevelopment and operating expenditures related to reserves may vary materiallyfrom estimates.

 

 

##### *Changes in governmental regulationaffecting the oil and natural gas industry could have a material adverse impacton Petro-Canada.*

##### * *

The petroleum industry is subject to regulation and intervention bygovernments, including the awarding of exploration and production interests,the imposition of specific drilling obligations, environmental protectioncontrols, regulation of the development and abandonment of fields (includingrestrictions on production) and, possibly, expropriation or cancellation ofcontract rights. As well, governments may regulate or intervene on prices,taxes, royalties and the exportation of oil and natural gas. Regulations may bechanged in response to economic or political conditions. New regulations orchanges to existing regulations that affect the oil and natural gas industrycould reduce demand for natural gas or crude oil and increase Petro-Canada'scosts.

 

 

##### *Petro-Canada's foreign operationsmay expose the Company to risks, which could negatively affect results ofoperations.*

##### * *

The Company has operations in a number of countries with differentpolitical, economic and social systems. As a result, Petro-Canada's operationsand related assets are subject to a number of risks, which may include, amongother things, currency restrictions and exchange rate fluctuations, loss ofrevenue, property and equipment as a result of expropriation, nationalization,war, insurrection and geopolitical and other political risks, increases intaxes and governmental royalties, renegotiation of contracts with governmentalentities and quasi-governmental agencies, changes in laws and policiesgoverning operations of foreign-based companies, economic and legal sanctions(such as restrictions against countries that the U.S. government may deem tosponsor terrorism) and other uncertainties arising from foreign governmentsovereignty over Petro-Canada's international operations. If a dispute arisesin Petro-Canada's foreign operations, the Company may be subject to theexclusive jurisdiction of foreign courts or may not be able to subject foreignpersons to the jurisdiction of a court in the U.S. or Canada.

 

The Company has operations in Libya, which is a member of OPEC.Petro-Canada may operate in other OPEC-member countries in the future.Production in those countries may be constrained by OPEC quotas.

 

 

##### *Petro-Canada's oil and natural gasproduction and refining operations impact communities and surroundingenvironments.*

##### * *

Those impacted by Petro-Canada's operations can become concerned overthe use of resources, such as land and water, the perceived or real threat tohuman health, the potential impact on biodiversity, and/or possible societalchanges to surrounding communities. The Company must secure and maintain formalregulatory approvals and licences in order to conduct operations. In addition,broader societal acceptance of Petro-Canada's activities is necessary for resourcedevelopment. An inability for the Company to secure local community support,necessary regulatory approvals and licences, and broader societal acceptancecan result in projects being delayed or stopped, resulting in higher projectcosts. Lack of local community and stakeholder support can lead to pressure tolimit or shut down operations.

##### * *

 

##### *Petro-Canada is subject toenvironmental legislation in all jurisdictions where it operates. Changes inthis legislation could negatively affect the Company's results of operations.*

##### * *

Petro-Canada is subject to environmental regulation under a variety ofCanadian, U.S. and other foreign, federal, provincial, territorial, state andmunicipal laws and regulations. This is collectively referred to below asenvironmental legislation.

 

Environmental legislation imposes, among other things, restrictions,liabilities and obligations in connection with the generation, handling, use,storage, transportation, treatment and disposal of hazardous and non-hazardoussubstances, including natural resources and waste, and in connection withspills, releases and emissions of various substances to the environment.Environmental legislation requires that wells, facility sites and otherproperties associated with Petro-Canada's operations be operated, maintained,abandoned and reclaimed to the satisfaction of the applicable regulatoryauthorities. Certain types of operations, including exploration and developmentprojects, and changes to certain existing projects, may require submitting and seekingthe approval of environmental impact assessments (EIA) or permit applications.Complying with environmental 

 

 
| **12** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

legislation can require significant expenditures, including costs forcleanup and damages due to contaminated properties. Failure to comply withenvironmental legislation may result in fines and penalties. Petro-Canada isalso exposed to civil and criminal liability for environmental matters, includingprivate parties commencing actions, new theories of liability and new heads ofdamages. Although it is not expected that the costs of complying withenvironmental legislation or dealing with environmental liabilities, as theyare known today, will have a material adverse effect on Petro-Canada'sfinancial condition or results of operations, no assurance can be made that thecosts of complying with future environmental legislation will not have amaterial effect.

 

Petro-Canada operates in jurisdictions that have regulated or haveproposed to regulate industrial greenhouse gas (GHG) emissions. Jurisdictionsthat currently regulate GHG emissions include Alberta and the European Union.Jurisdictions that have proposed to regulate GHG emissions include the U.S.,B.C., Quebec, Ontario and Canada. Those jurisdictions that have announced theintent to regulate GHG emissions support cap-and-trade systems and, in somecases, have also proposed implementing complementary measures, including lowcarbon fuel standards. To date, these jurisdictions have started or haveannounced plans to start consultations on the design of their regulations, aswell as explore opportunities to harmonize regulations across jurisdictionswithin North America. Petro-Canada participates in these consultations, eitherdirectly or through industry associations. In 2007, Petro-Canada established aninternal senior management team to steward these activities and, in 2008, thisorganization was enhanced by creating the role of Director, Climate Change.While these jurisdictions have not published details on their proposedregulations or on their compliance mechanisms, many, most notably the U.S.,have identified the importance of balancing the environment, economy and energysecurity when developing regulations. While it is premature to predict whatimpact these anticipated regulations may have on Petro-Canada and the broaderoil and gas sector, Petro-Canada will likely face increased capital andoperating costs in order to comply with these regulations and these costs couldbe material. Petro-Canada is actively following policy development to ensurethe Company is prepared to operate within a new framework.

 

 

##### *Reduced asset reliability couldadversely affect Petro-Canada's business.*

##### * *

Petro-Canada operates facilities in both the upstream and downstreamsectors of the industry. A reduction in the reliability of these facilities asa result of, but not limited to, damage to equipment, plant or material loss ofproduction capability or operational integrity, or the extension of shutdowntime could contribute to reduced profitability.

 

 

##### *Counterparties exposure.*

##### * *

Petro-Canada is exposed to credit risk, and operational risk associatedwith counterparties' abilities to fulfil their obligations to the Company.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **13** |
|--|-------------------------------------------|--------|

 

 

## **UPSTREAM**

 

**Petro-Canada's upstream operations consisted ofthree business units in 2008: North American Natural Gas, with production inWestern Canada and the U.S. Rockies; Oil Sands, with operations in northeastAlberta; and International & Offshore. International &Offshore has two segments: East Coast Canada, with three major developmentsoffshore Newfoundland and Labrador; and International, where the Company isactive in two core areas: North Sea and Other International (Libya, Syria andTrinidad and Tobago). The diverse asset base provides a balanced portfolio anda platform for long-term growth.**

 

 

### **North American Natural Gas**

 

#### **Business Summary andStrategy**

 
| North American Natural Gas explores for and  produces natural gas, crude oil and NGL in Western Canada and the U.S.  Rockies. This business also markets natural gas in North America and has  established resources in Alaska, the NWT and the Arctic Islands.

 

The North American Natural Gas strategy is to be  a significant market participant by accessing new and diverse natural gas  supply sources in North America. Key features of the strategy include:

·   optimizing core properties in Western Canada and in the U.S.  Rockies

·   targeting 50% to 60% reserves replacement

·   increasing focus on unconventional exploration in Western Canada  and the U.S. Rockies

·   building the northern resource base for long-term growth |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

 

#### **Western Canada and U.S.Rockies**

#### ** **

Annual production before royalties totalled 214 billion cubic feet(Bcf) of natural gas and 4.8 million barrels (MMbbls) of conventionalcrude oil and NGL in 2008. Exploration and development drilling activity inNorth American Natural Gas resulted in 590 gross (415 net)wells, including 431 gross (280 net) natural gas wells and 148 gross(124 net) oil wells, for an overall success rate of 98% in 2008.

 

The realized natural gas price for North American Natural Gas averaged$8.05 /Mcf in 2008, up 28% from $6.30/Mcf in 2007.

 

Western Canada natural gas production averaged 562 MMcfe/d in 2008, down5% from 590 MMcfe/d in 2007. Exploration and development drilling activityin Western Canada resulted in 292 successful wells (gross), for an overallsuccess rate of 97% in 2008. Western Canada realized natural gas price was$8.28/Mcf in 2008, compared with $6.48/Mcf in 2007. Western Canada operatingand overhead costs were $1.72/thousand cubic feet of oil equivalent (Mcfe) in2008, up from $1.50/Mcfe in the previous year. The operating and overhead costincrease in Western Canada reflected industry-wide cost pressures formaterials, fuel and labour, combined with lower production.

 

U.S. Rockies natural gas production averaged 103 MMcfe/d in 2008,up 23% from 84 MMcfe/d in 2007. The increase reflected the ramp up ofproduction from the coal bed methane (CBM) fields in the Powder River Basin andincreased drilling activity in the Denver-Julesburg Basin. Exploration anddevelopment drilling activity in the U.S. Rockies during 2008 resulted in 287 grosswells, up from the 150 wells in 2007. U.S. Rockies realized natural gas pricewas $6.63/Mcf in 2008, up 36% from $4.88/Mcf in 2007. Late in 2007, the initialexpansion of the Fort Union gas gathering system was completed, helping toreduce curtailments in the Powder River Basin. The completion of the finalphase of the Rockies Express pipeline expansion is expected to alleviateadditional U.S. Rockies pipeline constraints when it comes on-stream in 2009.U.S. Rockies operating 

 

 
| **14** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

and overhead costs were $2.26/Mcfe in 2008, up compared with $2.21/Mcfein 2007 due to industry-wide cost pressures for materials, fuel and labour.

 

In Western Canada, Petro-Canada operates 10 natural gas fieldprocessing plants, with total licensed capacity of approximately one billioncubic feet/day (Bcf/d), of which the Company's share is approximately622 million cubic feet/day (MMcf/d). As part of the Company's ongoingoptimization of its portfolio of assets, in early 2008, Petro-Canada completedthe sale of its Minehead assets, resulting in a loss on sale of$112 million after-tax. The following table shows Petro-Canada's workinginterest ownership and the capacity of operated processing plants.

 

 

##### *Petro-Canada Ownership and Capacity*

 
| Petro-Canada  Operated Plants | * *   | Working Interest  Ownership*(%)* | * *   | Gross Licensed  Capacity*(MMcf/d)* | * *   | Net Licensed  Capacity*(MMcf/d)* | * *   |
|-------------------------------|------------|----------------------------------|------------|------------------------------------|------------|----------------------------------|------------|
| Hanlan  Sweet                 |       | 41                               |       | 44                                 |       | 18                               |       |
| Hanlan Sour                   |       | 46                               |       | 380                                |       | 175                              |       |
| **Total Hanlan**              | ** ** | ** **                       | ** ** | **424**                            | ** ** | **193**                          | ** ** |
|                          |       |                             |       |                               |       |                             |       |
| Wilson  Creek Sweet           |       | 52                               |       | 12                                 |       | 7                                |       |
| Wilson  Creek Sour            |       | 52                               |       | 22                                 |       | 11                               |       |
| **Total Wilson Creek**        | ** ** | ** **                       | ** ** | **34**                             | ** ** | **18**                           | ** ** |
|                          |       |                             |       |                               |       |                             |       |
| Boundary  Lake Sweet          |       | 100                              |       | 20                                 |       | 20                               |       |
| Boundary  Lake Sour           |       | 50                               |       | 66                                 |       | 33                               |       |
| Parkland 1                    |       | 44                               |       | 18                                 |       | 8                                |       |
| Parkland 2                    |       | 35                               |       | 12                                 |       | 4                                |       |
| Wildcat  Hills                |       | 66                               |       | 124                                |       | 82                               |       |
| Bearberry                     |       | 100                              |       | 94                                 |       | 94                               |       |
| Ferrier                       |       | 99                               |       | 119                                |       | 118                              |       |
| Gilby East                    |       | 100                              |       | 52                                 |       | 52                               |       |
| **Total 2008**                | ** ** | ** **                       | ** ** | **963**                            | ** ** | **622**                          | ** ** |

 

Petro-Canada also has varying working interests in other natural gasprocessing plants and field gathering facilities operated by other oil andnatural gas companies. The Company's aggregate share from such interests is189 MMcf/d of licensed capacity.

 

In 2008, North American Natural Gas marketed 695 MMcf/d of naturalgas, of which 660 MMcf/d were direct sales. Approximately 13%(87 MMcf/d) of total sales were internal to Petro-Canada, at marketprices, and were used at refinery and lubricant facilities as fuel and hydrogenplant feedstock, and steam generation at the MacKay River *in situ*operation. In Western Canada, the Company markets natural gas produced by othercompanies, in addition to Petro-Canada's own production. From Western Canada,the Company sold 613 MMcf/d in 2008, down 3% from 631 MMcf/d in 2007,reflecting slightly lower production. U.S. Rockies sales for 2008 were82 MMcf/d, compared with 69 MMcf/d in 2007. Higher 2008 salesreflected improved natural gas performance in the CBM fields in the PowderRiver Basin and increased drilling activity in the Denver-Julesburg Basin. Toachieve better control over sales volumes, prices and transportation-relatedcosts, Petro-Canada focuses on direct sales to end-users, distributioncompanies, wholesale marketers and natural gas spot markets. Marketing effortsinclude management of the natural gas portfolio, natural gas supply contracts,pipeline commitments and customer relationships.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **15** |
|--|-------------------------------------------|--------|

 

 

The following table shows the marketdistribution of Petro-Canada's North American natural gas sales.

 

 

##### *North American Natural Gas Sales by Market*

 
|                                  | ** ** | **2008**       |       | 2007               |   |
|---------------------------------------|------------|----------------|------------|--------------------|--------|
|                                  | ** ** | ***(MMcf/d)*** | ** ** | ***(% of Total)*** |   | *(MMcf/d)* |   | *(% of Total)* |   |
| **Sales to aggregators**              |       |           |       |               |   |   |   |   |   |
| ProGas  Limited                       | ** ** | **20**         | ** ** | **3**              |   | 25 |   | 4 |   |
| Cargill  Incorporated                 | ** ** | **12**         | ** ** | **2**              |   | 16 |   | 2 |   |
| Others                                | ** ** | **3**          | ** ** | **–**         |   | 3 |   | – |   |
| **Total sales to aggregators**        | ** ** | **35**         | ** ** | **5**              |   | 44 |   | 6 |   |
| **Direct sales**                      |       |           |       |               |   |   |   |   |   |
| Alberta                               | ** ** | **194**        | ** ** | **28**             |   | 198 |   | 29 |   |
| U.S. Midwest                     | ** ** | **167**        | ** ** | **24**             |   | 162 |   | 23 |   |
| B.C. and  U.S. Pacific Northwest | ** ** | **85**         | ** ** | **12**             |   | 86 |   | 12 |   |
| U.S.  Rockies                         | ** ** | **82**         | ** ** | **11**             |   | 69 |   | 10 |   |
| California                            | ** ** | **26**         | ** ** | **4**              |   | 26 |   | 4 |   |
| Eastern  Canada                       | ** ** | **13**         | ** ** | **2**              |   | 23 |   | 3 |   |
| Saskatchewan                          | ** ** | **6**          | ** ** | **1**              |   | 7 |   | 1 |   |
| **Total before internal sales**       | ** ** | **573**        | ** ** | **82**             |   | 571 |   | 82 |   |
| Sales  within Petro-Canada            | ** ** | **87**         | ** ** | **13**             |   | 85 |   | 12 |   |
| **Total direct sales**                | ** ** | **660**        | ** ** | **95**             |   | 656 |   | 94 |   |
| **Total sales**                       | ** ** | **695**        | ** ** | **100**            |   | 700 |   | 100 |   |

 

The Company has future commitments to sell and transport natural gasassociated with normal operations. The Company has no fixed-price natural gassales commitments for 2009 and beyond.

 

 

#### **RoyaltyRegime**

#### ** **

Royalty regimes are a significant factor in the profitability of crudeoil and natural gas production. In Western Canada, royalties on conventionalcrude oil and natural gas owned by provincial governments are regulated and maybe amended from time to time. Royalty payments to provincial governments aregenerally calculated as a percentage of production and vary depending uponfactors such as well production volumes, depth of wells, selling prices, methodof recovery, location of production and date of discovery. Royalties payable onproduction of privately owned crude oil and natural gas are negotiated with themineral rights owner. In October 2007, the Alberta government published aNew Alberta Royalty Framework that became effective January 1, 2009.

 

In the U.S., production is from federal, state and freehold lands.Production from federal and state lands is subject to a fixed royalty rate plusa payment to the surface landowner. Freehold royalty rates are determined bynegotiations with the freehold mineral rights owner.

 

In 2008, Petro-Canada's average royalty rate for North American NaturalGas was approximately 21% for conventional crude oil, NGL and natural gas.

 

 

#### **NorthwestTerritories (NWT)**

#### ** **

With interests in five exploration blocks covering approximately 765,000acres gross (620,000 net acres) Petro-Canada is a significant holder ofpetroleum and natural gas rights in the NWT. Petro-Canada's explorationholdings are comprised of two concessions granted by the Inuvialuit LandCorporation and are operated by an industry partner along with three 100% ownedexploration licences. Petro-Canada's work commitments on these licences wereoriginally secured by performance bonds, totalling approximately$14 million. Based on field work conducted to December 31, 2008, itis estimated that approximately 

 

 
| **16** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

$8 million of these performance bonds will remain outstanding onceexpected approvals are received. Work program obligations in the initial termof the Inuvialuit land concessions, consisting of seismic acquisition anddrilling, have been satisfied. This included the drilling of the Tuk M-18natural gas discovery well, which was tested at restricted rates of up to30 MMcf/d. Delineation and development of this discovery is contingent ona Mackenzie Valley natural gas pipeline.

 

In addition to a substantial position in various oil and gas discoveriesretained under SDLs in the Arctic Islands and the Beaufort Sea, Petro-Canadaholds an interest in six SDLs in the mainland NWT, totalling 94,000 gross(85,000 net) acres. Included in these holdings is a 100% position in73,000 acres covering two SDLs in the Colville Hills/Tweed Lake area. TheM-47 well on the Tweed Lake SDL was re-entered and tested in 2004, withrestricted flow rates of up to 10 MMcf/d. The Company is currentlyreviewing development options and timing for this discovery.

 

 

#### **Alaska**

#### ** **

Petro-Canada's initial foray intoAlaska was in the Foothills area north of the Brooks Mountain Range. Geologicalfield studies have confirmed that the geology and prospects of this area aresimilar to the Alberta Foothills, where Petro-Canada has developed considerableexpertise and has had significant success finding and developing natural gas.In 2005, Petro-Canada and Anadarko Petroleum Corporation formed a fifty/fiftyFoothills joint venture through various transactions and, by January 2006,jointly held some 2.5 million gross acres of leased and option lands inthe Alaska Foothills. BG (Alaska) E&P Inc. became a third equalparticipant in the joint venture early in 2006, and the group acquiredadditional leases at state and federal lease sales later that year and again in2008. Petro-Canada's net land position in the Alaska Foothills is now in theorder of 1.1 million acres, including option acreage. In 2007, the groupconducted a 276 square kilometre (106 square mile) 3D seismic surveyover leaseholdings on the western edge of the Foothills near the boundary withthe National Petroleum Reserve-Alaska (NPR-A). In 2008, one well was completedas a natural gas discovery, testing at rates up to 15 MMcf/d, and one well wassuspended for re-entry in 2009 as planned. A three-well drilling program isplanned in that area in 2009 and is currently underway. The development ofdiscoveries in this area will depend on the establishment of pipelineinfrastructure, including a possible intra-Alaska line running south to servicethe Fairbanks and Anchorage areas.

 

In 2004, Petro-Canada acquired a large position of 322,610 (gross andnet) acres in the northern portion of the NPR-A, an area of significantpotential for large oil prospects. Petro-Canada and FEX L.P. (FEX) (asubsidiary of Talisman Energy Inc.) reached a pooling agreement for the jointexploration of select leases in the NPR-A in early 2006 and drilled the Aklaq-2exploration well, which encountered non-commercial hydrocarbons. In 2006, FEXand Petro-Canada acquired additional leases at the NPR-A lease sale andsubsequently pooled the majority of their NPR-A leaseholdings. Further NPR-Aacreage was acquired by Petro-Canada and FEX at the September 2008 leasesale. As a result, Petro-Canada's land position in NPR-A acreage held jointlywith FEX****is now more than 600,000 net acres. In2007, Petro-Canada and FEX jointly conducted two drilling programs in theNPR-A: one program comprising the Amaguq-2 well (40% Petro-Canada workinginterest), followed by the Aklaq-6 well (30% Petro-Canada working interest)and, the other, the deeper Aklaqyaaq-1 well (20% Petro-Canada working interest).The Amaguq-2 well was abandoned, having failed to encounter reservoir qualitysands in the primary target. The Aklaq-6 and Aklaqyaaq-1 wells encounteredseveral hydrocarbon bearing zones and were suspended for future testing.Studies and planning are currently underway aimed at developing a delineationprogram for these discoveries.

 

 

#### **ArcticIslands**

#### ** **

The Company sees long-term potential for the development of ArcticIslands natural resources discovered in the 1970s and 1980s. The two largestassets Petro-Canada holds in the region are the Drake and Hecla fields onMelville Island. In 2008, a small team progressed a feasibility study to thepoint where uncertainty regarding regulatory approval timing was identified asa significant issue. The Company will continue to work with governments andstakeholders to streamline this process but, in the meantime, the Company hasslowed Arctic Islands pre-development activities.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **17** |
|--|-------------------------------------------|--------|

 

 

#### **Liquefied Natural Gas (LNG)**

 

In July 2004,a MOU was signed with TransCanada PipeLines Limited to develop and share(fifty/fifty) ownership of a liquefied natural gas (LNG) facility atGros-Cacouna, Quebec. The parties filed an EIA with the provincial and federalgovernments in the second quarter of 2005 and conducted a joint federal andprovincial public review and consultation process in 2006. Regulatory approvalwas secured in 2007. In February 2008, Gazprom (the potential anchorsupply for the proposed project) decided not to pursue a Baltic LNG projectwith Petro-Canada. In the first quarter of 2008, the Company recorded a chargeof $24 million after-tax for the accumulated project costs relating to theproposed LNG re-gasification facility at Gros-Cacouna, Quebec, which has beenpostponed due to global LNG business conditions.

 

 

##### *Link to Petro-Canada's Corporate andStrategic Priorities*

##### * *

The North American Natural Gas business is aligned with Petro-Canada'sstrategic priorities as outlined by its progress in 2008 and goalsfor 2009.

 
| PRIORITY                                                                         | ** ** | ** ** | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ** ** | ** ** | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------------------------------------------------------------------|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Delivering Profitable   Growth with a Focus on  Operated, Long-Life   Assets** | ** ** | ** ** | **·****      **continue to selectively  optimize Western Canada core assets 

**·**       continue U.S. Rockies  CBM and tight natural gas development 

**·****      **target 50% to 60%  reserves replacement from these core assets 

**·****      **focus exploration  activity in Western Canada, with increasing emphasis on the U.S.

**·****      **advance exploration  prospects in the NWT and Alaska 

**·****      **initiate an Arctic LNG  feasibility study | ** ** | ** ** | **·****      **implemented drilling  and optimization initiatives, resulting in lower decline rates 

**·****      **drilled 287 gross wells  in the U.S. Rockies 

**·****      **continued to increase  exploration focus in the U.S. Rockies and B.C. shale gas 

**·****      **participated in three  wells in Alaska and NWT, resulting in one gas discovery, one dry and  abandoned and one suspended as planned 

**·****      **progressed Arctic LNG  feasibility study, encountering uncertainty with regard to regulatory  approval timing | ** ** | ** ** | **·****      **continue to optimize  Western Canada and U.S. core assets 

**·****      **target 50% to 60%  reserves replacement from core assets 

**·****      **focus exploration  activity in Western Canada and U.S. Rockies with an emphasis on  unconventional exploration 

**·****      **advance exploration  prospects in Alaska |
| ** **                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Driving for First Quartile  Operation of Our Assets**                          | ** ** | ** ** | **·****      **continue to focus on  safety and reliability performance 

**·****      **continue to leverage  costs through strategic alliances and preferred suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                | ** ** | ** ** | **·****      **maintained reliability  of 99% at Western Canada natural gas processing facilities 

**·****      **delivered value to the organization through preferred supplier  relationships, while continuing to ensure competitive supply costs through  selective bidding                                                                                                                                                                                                                                                                                                                                                                                | ** ** | ** ** | **·****      **continue to focus on  safety and reliability performance

**·****      **continue to leverage  costs through strategic alliances and preferred suppliers 

**·****      **renegotiate contracts  to reflect economic environment                                                                                                                                 |
| ** **                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Continuing to Work at   Being a Responsible   Company**                        | ** ** | ** ** | **·****      **continue to focus on  total recordable injury frequency (TRIF) and maintain low regulatory  exceedances 

**·****      **conduct internal  stakeholder engagement training for project managers and other key business  roles 

**·****      **strengthen approach to  investigating and learning from events                                                                                                                                                                                                                                                         | ** ** | ** ** | **·****      **TRIF decreased to 1.31,  compared with 1.54 in 2007 

**·****      **experienced eight  environmental regulatory exceedances in 2008, compared with three in 2007 

**·****      **conducted training for  stakeholder practitioners, project managers and key contractors 

**·****      **set up a formal process  to identify and communicate key learnings from significant events                                                                                                                                                                                     | ** ** | ** ** | **·****      **pursue initiatives  aimed at developing front-line supervisory capability in safety management 

**·****      **develop a water  management plan for operations in areas of water scarcity and develop  measures related to usage and capacity of the source 

**·****      **continue to improve  community emergency response programs                         |
| ** **                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

 

 
| **18** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

 

### **Oil Sands**

###  

#### **Business Summary andStrategy**

#### ** **

| Petro-Canada estimates that it has 1.21 billion bbls of total Oil Sands proved plus  probable reserves and 9.52 billion bbls of total Oil Sands Contingent  and Prospective Resources. The Company's major Oil Sands interests include a  12% ownership in the Syncrude joint venture (an oil sands mining operation  and upgrading facility), 100% ownership of the MacKay River *in situ* bitumen development (a steam-assisted gravity  drainage (SAGD) operation), a 60% ownership in and operatorship of the  proposed Fort Hills oil sands mining project, and extensive oil sands acreage  considered prospective for *in situ*  development of bitumen resources.

 

The Oil Sands strategy for profitable growth includes:

**·**   integrated development of  resources to maximize leverage of infrastructure and to promote long-term  stability of financial returns

**·**   being positioned to capture  the value opportunities inherent in long-life projects

**·**   applying a phased and disciplined approach  to development of capital-intensive projects to allow rigorous cost  management and to create opportunities to benefit from evolving technology

  |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|

 

TheCompany has chosen to participate in the full oil sands value chain due to itsresource potential and strong position with bitumen upgrading capacity.Petro-Canada has processing capacity through Syncrude and Suncor Energy Inc. In2008, the Company converted the conventional crude oil train at its Edmontonrefinery to refine oil sands-based feedstock from northern Alberta. Thisconversion, along with the existing synthetic crude supply, resulted in therefinery being able to run on an exclusive diet of oil sands-based feedstock.This connection between resource and upgrading capacity should provide moreeconomic certainty in a business where volatile light/heavy differentialsaffect bitumen pricing.

 

 

#### **Oil Sands Mining –Syncrude**

#### ** **

Petro-Canadahas a 12% interest in Syncrude, the world's largest oil sands miningoperation, located approximately 40 kilometres north ofFort McMurray, Alberta. Syncrude is a joint venture formed to mine shallowdeposits of oil sands from the McMurray formation in the Athabasca Oil Sandsand to extract and upgrade bitumen to produce synthetic crude oil.

 
|  | Syncrude holds eight oil sands leases (numbered T10, T12, T17, T22,  T29, T30, T31 and T34) issued by the Province of Alberta, covering a total of  approximately 255,000 acres. The operating licence associated with these  leases expires in 2035. The licence permits Syncrude to mine oil sands and  produce synthetic crude oil from approved development areas on the oil sands leases.  The leases are automatically renewable as long as oil sands operations are  ongoing or the leases are part of an approved development plan. All eight  leases are included in a development plan approved by the Alberta Energy and  Utilities Board (now the Energy Resources Conservation Board (ERCB)).

 

1  These reserves numbers represent the sum of  oil sands mining and oil and gas activities, including probable reserves, and  are presented before royalties. Reporting reserves in this manner does not  conform to SEC standards and is for general supplemental information only.

2  25% of total Oil Sands resources are risked  Prospective Resources and 75% are Contingent Resources. See "Legal  Notice – Petro-Canada disclosure of reserves" for additional risks to  develop resources.

  |
|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
|  | Annual  Information Form **PETRO-CANADA** | **19** |
|--|-------------------------------------------|--------|

 

 

Commercial operations commenced at Syncrudein 1978. Capacity additions have been added over several stages, beginning in1988 to present, and have included mine expansions, opening of the Aurora mine,upgrader additions and de-bottlenecking projects. The most recent $8.2 billiongross ($1 billion net) Stage III project involved the opening of a secondAurora mine and an upgrading expansion. Syncrude's Stage III expansionincreased Petro-Canada's share of production capacity to approximately42,000 barrels/day (b/d). Production is expected to reach this level in2010.

 

Syncrudehas an estimated remaining proved and probable reserves life in excess of50 years. Proved reserves of light (32 degree) synthetic crude oilfrom Syncrude are based on high geological certainty and the application ofproven technology. Drill-hole spacing is less than 500 metres andappropriate regulatory approvals are in place. For probable reserves,drill-hole spacing is less than 1,000 metres and reserves are included inthe 50-year long-range lease development plan. In 2008, approximately196.2 million gross tons of oil sands were processed, yielding122.4 MMbbls of gross bitumen that were upgraded into marketable syntheticcrude oil. Gross shipments of marketable synthetic crude oil were105.8 MMbbls.

 

 

##### *Proved Reserves – Synthetic Crude Oil*

 
| **Petro-Canada's Working Interest Before and After  Royalties** |       |              |       |        |       |       |       |      |       |
|-----------------------------------------------------------------|------------|-------------------|------------|-------------|------------|------------|------------|-----------|------------|
|                                                            |       | **Base Mine and** |       |        |       |       |       |      |       |   |   |
|                                                            |       | **North Mine**1   |       | **Aurora**2 |       | **Total**  |       |
| *(MMbbls)*                                                      | ** ** | **Before**        | ** ** | **After**   | ** ** | **Before** | ** ** | **After** | ** ** | **Before** | ** ** | **After** | ** ** |
| **Beginning  of year 2007**                                     | ** ** | **100**           | ** ** | **83**      | ** ** | **245**    | ** ** | **206**   | ** ** | **345** | ** ** | **289** | ** ** |
| Revision  of previous estimates                                 |       | (3                | )          | (2          | )          | 21         |       | 13        |       | 18 |   | 11 |   |
| Extensions  and discoveries                                     |       | –            |       | –      |       | –     |       | –    |       | – |   | – |   |
| Production  net                                                 |       | (6                | )          | (5          | )          | (7         | )          | (6        | )          | (13 | ) | (11 | ) |
| **End  of year 2007**                                           | ** ** | **91**            | ** ** | **76**      | ** ** | **259**    | ** ** | **213**   | ** ** | **350** | ** ** | **289** | ** ** |
| Revision  of previous estimates                                 |       | 2                 |       | 8           |       | –     |       | 24        |       | 2 |   | 32 |   |
| Extensions  and discoveries                                     |       | 18                |       | 17          |       | 9          |       | 9         |       | 27 |   | 26 |   |
| Production  net                                                 |       | (6                | )          | (5          | )          | (7         | )          | (6        | )          | (13 | ) | (11 | ) |
| **End of  year 2008**                                           | ** ** | **105**           | ** ** | **96**      | ** ** | **261**    | ** ** | **240**   | ** ** | **366** | ** ** | **336** | ** ** |

 

1     LeasesT17 and T22.

2     Leases T10, T12, T31 and T34.

 

Twomines, the North mine and the Aurora mine, are currently in operation atSyncrude. Base mine operations were discontinued in 2007. Mine operationsare carried out using truck, shovel and hydro-transport systems. An extractionprocess recovers about 90% of the crude bitumen contained in the minedsands. Refining processes upgrade the bitumen into high quality, light(32 degree) sweet synthetic crude oil, with a process yield ofapproximately 86%. Petro-Canada's share of synthetic crude oil productionis processed primarily at the Petro-Canada refinery in Edmonton, with thebalance periodically processed in Eastern Canada and in the U.S.

 

Twoelectricity generating plants located on site and owned by the Syncrude jointventure provide power for Syncrude. One plant produces a maximum of270 megawatts (MW) and the other plant produces 80 MW.

 

Syncrude'sproduction averaged 289,000 b/d gross (34,700 b/d net) in 2008,compared with 305,000 b/d gross (36,600 b/d net) in 2007. Syncrudeproduction was negatively impacted by turnarounds at Cokers 8-1 and 8-2 in2008. Average unit operating and overhead costs in 2008 increased compared with2007. Higher unit operating costs were mainly due to lower production, highercosts associated with moving additional overburden to increase exposed minableore inventory, higher maintenance costs and higher natural gas costs. Syncruderealized price for synthetic crude oil averaged $106.63/bbl in 2008, up from$79.20/bbl in 2007.

 

 
| **20** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

##### *Syncrude Mining Statistics*

 

 
| ** **                                              |       | **2008**   |       | 2007       |       | 2006       |       |
|---------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Total gross mined volume**1                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Millions of  tons                                       | ** ** | **492.8**  |       | 436.0      |       | 398.0      |       |
| Mined  volume of oil sands ratio                        | ** ** | **2.5**    |       | 2.2        |       | 2.3        |       |
| **Gross oil sands processed**                           |       |       |       |       |       |       |       |
| Millions of  tons                                       | ** ** | **196.2**  |       | 200.5      |       | 175.0      |       |
| Average  bitumen grade *(weight %)*                     | ** ** | **11.1**   |       | 11.6       |       | 11.3       |       |
| **Gross bitumen in mined oil sands**                    |       |       |       |       |       |       |       |
| Millions of  tons                                       | ** ** | **21.8**   |       | 23.2       |       | 19.6       |       |
| Average  extraction recovery*(%)*                       | ** ** | **90.3**   |       | 91.8       |       | 90.3       |       |
| **Gross bitumen production**2                           |       |       |       |       |       |       |       |
| MMbbls                                                  | ** ** | **122.4**  |       | 132.5      |       | 111.5      |       |
| Average  upgrading yield*(%)*                           | ** ** | **85.9**   |       | 84.3       |       | 84.9       |       |
| **Gross synthetic crude oil shipped**3                  |       |       |       |       |       |       |       |
| MMbbls                                                  | ** ** | **105.8**  |       | 111.3      |       | 94.3       |       |
| **Petro-Canada's share of shipped synthetic crude oil** |       |       |       |       |       |       |       |
| MMbbls  before royalties                                | ** ** | **12.7**   |       | 13.4       |       | 11.3       |       |
| MMbbls  after royalties                                 | ** ** | **10.9**   |       | 11.4       |       | 10.2       |       |

 

1  Includes pre-stripping of mine areas andreclamation volumes.

2  Bitumen production in bbls is determined bymultiplying the mined bitumen volume in tons by the average extraction recoveryand then applying the appropriate conversion factor.

3  Shipped volumes vary from synthetic crude oilderived from bitumen production due to internal use and inventory management.

 

 

#### **Fort Hills Project**

 
| In 2005, Petro-Canada strengthened its position in oil sands mining by  securing the majority interest and operatorship of the Fort Hills project  from UTS Energy Corporation (UTS). Later in 2005, a mining partner, Teck  Cominco Ltd. (Teck), joined the consortium. In 2006, the Fort Hills partners  acquired two additional leases adjacent to the existing Fort Hills leases to  afford greater mine planning flexibility. In November 2007, Petro-Canada  and its partners finalized an agreement for the Company to earn an additional  5% working interest in the project in return for funding $375 million of  partnership expenditures. Petro-Canada is project operator with a 60% interest,  and UTS and Teck each hold a 20% interest. Petro-Canada plans to  initially market |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 100% of the production from Fort Hills. The Fort Hills mining project  has estimated Contingent Resources of approximately 4 billion bbls of bitumen  or 3.6 billion bbls of synthetic crude oil after accounting for upgrading  yields (approximately 2.4 billion bbls of bitumen or 2.2 billion bbls of  synthetic crude oil based on Petro-Canada's working interest before  royalties), which is expected to be recovered over approximately 40 years.  The project has regulatory approval to produce up to 190,000 b/d gross  (104,500 b/d net) of bitumen from the mine. An amended regulatory  approval of the mine plan received in October 2008 provided for  optimizations in recovery and to the tailings area.

 

In June 2007, Petro-Canada and its partners completed and  announced the design basis and approved the detailed FEED for Phase 1, which  consists of the proposed Fort Hills mine and upgrader. At the completion of  the FEED phase in September 2008, the estimated costs to complete the  project increased by approximately 50%. The FID on the mining portion of the  project is 

  |

 

 
|  | Annual  Information Form **PETRO-CANADA** | ** **

** **

**21** |
|--|-------------------------------------------|--------------------------------|

 

 

beingdeferred until the extension of the Fort Hills mine lease is resolved, costscan be reduced and commodity prices and financial markets strengthen. The FortHills upgrader portion of the project was put on hold and a decision on whetherto proceed with the upgrader will be made at a later date. Bitumen productionfrom the first phase of the mine is expected to be about 160,000 b/d gross(96,000 b/d net). The Fort Hills Energy Limited Partnership has entered into anagreement, subject to the FID, with Enbridge Pipelines (Athabasca) Inc. todevelop pipeline and terminalling facilities to meet the requirements of theFort Hills mine Phase 1 and subsequent phases of the project.

 

Thepartners selected Sturgeon County, 40 kilometres northeast of Edmonton, as thelocation for a proposed upgrading facility to process bitumen from the FortHills mine. The upgrader will use delayed coking technology to convert FortHills bitumen into light synthetic crude oil. Late in 2006, Petro-Canada filedthe regulatory application for the Fort Hills upgrader. Conditional ERCB regulatoryapproval was received in January 2009. In 2007, the Fort Hillspartnership, Sturgeon County and the Alberta Capital Region WastewaterCommission (ACRWC) entered into definitive agreements, finalizing arrangementsto provide treated waste water to the upgrader as its process water source.

 

Itis anticipated that the re-scoping and revision of the FEED cost estimates forthe mining portion will be completed sometime in the third quarter of 2009.Once this work is complete, the Fort Hills partnership will decide on a goforward strategy. While new orders for equipment and services were put on hold,some long-lead equipment remains on order, with plans to take delivery and putequipment into storage. Some existing equipment supply and service agreements wereterminated or suspended. In the fourth quarter of 2008, costs incurred due tothe deferral of the FID on the mining and upgrading portions of the Fort Hillsproject were $156 million after-tax. These costs reflected terminating certaingoods and services agreements and DD&A charges on certain property, plantand equipment.

 

Intwo of the Oil Sands leases granted to the Fort Hills Energy Corporation by theAlberta government, there are several conditions, including a productionmilestone requiring that a mine be completed and producing 100,000 b/d gross(60,000 b/d net) of bitumen by mid-2011. Discussions are in progress with theGovernment of Alberta to amend the two Oil Sands leases. In the event that anamendment is not achieved and the Fort Hills partnership is unable to meet theexisting conditions associated with the two leases, the Alberta government mayimpose a performance deposit or cancel the two leases if the performancedeposit is not provided within the applicable time period.

 

#### **Oil Sands *In Situ* –Bitumen**

#### ** **

In September 2002,Petro-Canada successfully completed construction of its 100% owned *in situ* bitumen production facility at MacKay River.Following the introduction of steam to the reservoir, Petro-Canada commencedbitumen production in November 2002. The extraction process at MacKayRiver uses SAGD, a technology that Petro-Canada participated in developingthrough its involvement in the underground test facility. SAGD combineshorizontal drilling with thermal steam injection. Steam is injected into thereservoir through the top well of a horizontal well pair to mobilize thebitumen, which flows to the lower producing well. This technology is expectedto economically recover more than 60% of the bitumen in place within thedevelopment area. The initial development at MacKay River included two wellpads of 12 and 13 horizontal well pairs, respectively. Original wellpairs are about 700 metres to 750 metres in length and produce800 b/d to 1,200 b/d of bitumen. On average, wells are expected tohave a six- to eight-year life. More than 90% of the water used togenerate steam at MacKay River is recycled, a key feature of the environmentalefficiency of the facility. Work to tie in a third well pad, which included14 horizontal well pairs, was completed in January 2006. Productionfrom the third well pad commenced in the second quarter of 2006 and continuedto ramp up during 2007. In 2007, work to de-bottleneck water handling capacityand add production from a fourth well pad was completed. Tie-in of the fourthwell pad, which includes seven horizontal well pairs, was completed in late August 2007and steaming began in September 2007. Steam to this pad was disrupted inmid-October when a steam header line was damaged. Steaming recommenced inmid-November and first production started in January 2008. MacKayRiver bitumen is currently being shipped under a processing agreement toSuncor, where it is processed into a sour synthetic crude and transported tothe Edmonton refinery.

 

MacKayRiver's production and unit operating costs increased considerably in 2008.Production averaged 25,200 b/d in 2008, up 24% compared with 20,300 b/d in2007. Higher production reflected increased reliability and capacity. MacKayRiver reliability averaged 97% in 2008, up from 87% in 2007, when operationalupsets occurred. Unit operating and overhead costs increased by 18% in 2008,averaging $24.65/bbl, compared with $20.97/bbl in 2007. Higher unit operatingcosts were due to 

 

 
| **22** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

increasedmaintenance and repair costs, higher natural gas costs and a major turnaround,partially offset by increased production. MacKay River realized price forbitumen averaged $60.26/bbl in 2008, compared with $28.23/bbl in 2007.

 

In2005, Petro-Canada filed an application for a potential MacKay River *in situ* expansion project with first production by the endof the decade and peak production of an additional 40,000 b/d to follow.In the first quarter of 2008, Petro-Canada received regulatory approval for theproposed MacKay River *in situ*expansion project. In December 2007, the Company announced a one-yearextension for the completion of FEED for the proposed MRX project due to costpressures, including increased royalties. Petro-Canada is pursuing cost-savingopportunities associated with using international engineering, procurement andconstruction (EPC) contractors on a lump-sum basis. A FID is being deferreduntil costs can be reduced and commodity prices and financial marketsstrengthen.

 

 

#### **Royalty Regime**

#### ** **

CurrentlyPetro-Canada has two oil sands projects, Syncrude and MacKay River, which payoil sands royalties to the Province of Alberta.

 

TheSyncrude project, in 2001, completed the transition from payingproject-specific contractual royalty to paying royalty under the 1997 Oil SandsRoyalty Regulation. One of the key features of the transition agreement, whichwould expire at the end of 2015, is that Syncrude has a one-time option toconvert from paying royalty based on revenues derived from the sales ofsynthetic crude oil to paying royalty based on revenues from the sales ofbitumen.

 

Effectivein January 2002, the royalty payable by Syncrude to the Province ofAlberta was set at the greater of 1% of gross synthetic crude oil revenue, or25% of net synthetic crude oil revenue. The net synthetic crude oil revenue isdetermined by subtracting allowable operating and capital costs from grosssynthetic crude oil revenue. The total royalty paid in 2008 equated to a rateof 14% of the gross synthetic crude oil revenues.

 

In October 2007,the Alberta government published a New Alberta Royalty Framework that becameeffective January 1, 2009. When the government announced the New AlbertaRoyalty Framework, it indicated its intention to have Syncrude move to the NewAlberta Royalty Framework in advance of the expiry of Syncrude's existingroyalty agreement, which is the end of 2015.

 

In November 2008,the Alberta government and the Syncrude joint venture owners reached anagreement for the implementation of the New Alberta Royalty Framework for theSyncrude project. Under the new royalty terms, the project would continuepaying the greater of 1% gross revenue, or 25% of net revenue until the end of2015. On January 1, 2016, the royalty rates under the New Alberta RoyaltyFramework will apply to the Syncrude project. As part of this new agreement,Syncrude exercised its option to pay royalty based on bitumen revenues ratherthan on synthetic crude oil revenues. Due to this conversion to a bitumen-basedroyalty, the upgrader facility at the Syncrude project will no longer beconsidered as part of the oil sands project. The Syncrude owners have agreed topay a total of $1.25 billion in royalties over the next 25 years, with interestto account for deductions of allowed costs related to the upgrader facility,which were previously received. The owners also agreed to pay an additionalroyalty of $975 million over a six-year period starting in 2010, contingent onachieving certain production levels.

 

TheMacKay River project, which produces bitumen, has been paying royalty to theProvince of Alberta under the 1997 Oil Sands Royalty Regulation. Prior toroyalty payout, which includes a specified return allowance, the royalty iscalculated as 1% of gross revenue. After royalty payout, the royalty is basedon the greater of 1% of gross revenue or 25% of net revenue. The net revenue isdetermined by subtracting allowable operating and capital costs from grossrevenue. The total royalty paid in 2008 equated to a rate of 1% of the grossbitumen revenues.

 

In2009, MacKay River will start paying royalty under the New Alberta RoyaltyFramework. One of the key features of the New Alberta Royalty Framework is thelinking of pre- and post-royalty payout royalty rates to the price of WestTexas Intermediate (WTI) crude oil. The pre-payout royalty rate will start at1% and increase for every dollar WTI is priced above $55 Cdn/bbl, to a maximumof 9% when WTI is $120 Cdn/bbl or higher. Royalty payout occurs when theproject developer has recovered all of the investment capital in the projectplus a return on the investment at a rate based on Government of Canadalong-term bonds. The post-payout royalty is the greater of the pre-payoutroyalty or a percentage of net revenue. The percentage of net revenue starts at25% and increases for every dollar WTI is priced above $55 Cdn/bbl, to amaximum of 40% when WTI is $120 Cdn/bbl or higher. The net revenue isdetermined by subtracting allowable operating and capital costs fromgross revenue.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **23** |
|--|-------------------------------------------|--------|

 

 

**Integrated OilSands Development**

#### ** **

Atthe Edmonton refinery, Petro-Canada invested to convert the facility to run oilsands-based feedstock exclusively and to produce low-sulphur products.

 

TheRCP enables Petro-Canada to directly upgrade 26,000 b/d of bitumen andprocess 48,000 b/d of sour synthetic crude oil, replacing the conventionallight crude feedstock. The RCP supports the Company’s long-term strategy andbuilds on a $1.4 billion investment in gasoline and dieseldesulphurization.

 

 

##### *Link to Petro-Canada’s Corporate and StrategicPriorities*

##### * *

TheOil Sands business is aligned with Petro-Canada’s strategic priorities asoutlined by its progress in 2008 and goals for 2009.

 
| PRIORITY                                                                        | ** ** | ** ** | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | ** ** | ** ** | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------------------------------------------------------------------------------|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                      | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Delivering Profitable   Growth with a Focus  on Operated, Long-Life  Assets** | ** ** | ** ** | **·****      **complete Fort Hills FEED and make FID in the third quarter of 2008

**·****      **order long-lead items for Fort Hills project

**·****      **continue to ramp up Syncrude Stage III expansion

**·****      **receive regulatory  decision on MRX project

**·****      **continue to advance MRX project in preparation for the FID in the first  quarter of 2009

**·****      **receive regulatory decision on the Fort Hills upgrader | ** ** | ** ** | **·****      **completed Fort Hills  Phase 1 FEED

**·****      **deferred making the FID  for Fort Hills mine due to a more than 50% increase from initial project cost  estimates and market conditions

**·****      **delayed the investment  decision on the Fort Hills upgrader

**·****      **revisiting Fort Hills  FEED and ordering of long-lead items for the Fort Hills upgrader

**·****      **received regulatory  approval of the Fort Hills amended mine processes and tailings locations

**·****      **Syncrude production  decreased due to two planned turnarounds at two cokers, and operational  upsets

**·****      **received regulatory  approval on MRX project in the first quarter of 2008

**·****      **received fixed bids  from three international engineering firms for the MRX project

**·****      **deferred making the FID  for MRX due to market conditions

**·****      **received regulatory  approval of Fort Hills upgrader in January 2009

**·****      **reached a Syncrude  royalty agreement, along with its partners, with the Province of Alberta | ** ** | ** ** | **·****      **complete a new estimate for the Fort Hills mine costs by taking  advantage of the current market softness

**·****      **take delivery of some long-lead equipment for the Fort Hills upgrader  and secure the asset for future re-activation

**·****      **maintain spending discipline for 2009 capital commitments

**·****      **position MRX for  sanction once commodity and financial markets improve

**·****      **continue to ramp up Syncrude Stage III expansion toward its design  capacity

  |
| ** **                                                                      | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Driving for First Quartile  Operation of Our Assets**                         | ** ** | ** ** | **·****      **ramp up MacKay River  production to hit 30,000 b/d and increase reliability to greater than 90%

**·****      **commence shipping  MacKay River bitumen to the Edmonton refinery after it has been upgraded into  synthetic crude oil at Suncor

**·****      **decrease Syncrude  non-fuel unit operating costs by 10%, compared with 2007                                                                                                                                                                                                           | ** ** | ** ** | **·****      **achieved 97% reliability at MacKay River

**·****      **achieved daily  throughput average of 30,000 b/d for 30 days at MacKay River

**·****      **achieved record average  production of 25,200 b/d at MacKay River

**·****      **commenced shipping of  MacKay River bitumen to Suncor for processing and subsequent shipping to the  Edmonton refinery, effective January 1, 2009

**·****      **experienced higher  Syncrude non-fuel unit operating costs due to lower production and higher  maintenance costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** | **·****      **maintain MacKay River  production at 27,000 b/d and reliability above 95%

**·****      **optimize the  integration of MacKay River bitumen and Suncor processing through to the  Edmonton refinery

**·****      **work through the  Syncrude joint venture owners to improve reliability and lower operating and  sustaining capital costs                                                                                                                                                                                                                                                |

 

 
| **24** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

 

##### *Link to Petro-Canada’s Corporate andStrategic Priorities (continued)*

 
| PRIORITY                                                  | ** ** | ** ** | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------------------------|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Continuing to Work at   Being a Responsible   Company** | ** ** | ** ** | **·****      **drive for continuous improvement in safety

**·****      **continue relevant and transparent engagement with key stakeholders to  obtain approval for the Fort Hills upgrader and mine expansion

**·****      **develop capability in managing the social issues of a temporary foreign  workforce

**·****      **pursue research on practical solutions for tailings management

  | ** ** | ** ** | **·****      **TRIF decreased in 2008 to 0.67, compared with 0.75 in 2007

**·****      **experienced 20 environmental regulatory exceedances in 2008, compared  with six in 2007

**·****      **received regulatory approval for the Fort Hills mine amendment without  a hearing

**·****      **received regulatory approval for the Fort Hills upgrader in  January 2009

**·****      **implemented a risk assessment to understand and mitigate the social  risks related to bringing temporary foreign workers into oil sands project  camps

**·****      **pursuing research and industry solutions to tailings management  continues to be a priority | ** ** | ** ** | **·****      **incorporate zero liquid discharge into MRX facility design

**·****      **implement performance measures aimed at lowering environmental  regulatory exceedances

**·****      **better understand how to manage the language and cultural aspects of  the safety of foreign contract workers on Petro-Canada sites

  |

 

 
|  | Annual  Information Form **PETRO-CANADA** | **25** |
|--|-------------------------------------------|--------|

 

###  

### ***International &Offshore***

###  

### **East Coast Canada**

###  

#### **Business Summary andStrategy**

#### ** **

| Petro-Canada has a strong position in every major producing oil  development off Canada’s east coast. The Company holds a 20% interest in  Hibernia, a 27.5%1 interest in White Rose and a 22.7% interest  in Hebron, and is the operator of Terra Nova with a 34% interest.

 

The East Coast Canada strategy is to  deliver reliable and profitable production well into the next decade,  leveraging the existing infrastructure while pursuing profitable development  opportunities. Key features of the strategy include:

 

**·**   delivering top quartile operating  performance

 

**·**   sustaining profitable production through  reservoir extensions and add-ons

 

**·**   pursuing high potential, near field  development and exploration projects

 

In 2008, realized crude oil prices remained  strong, partially offset by decreased production. East Coast Canada realized  crude prices averaged $99.13/bbl in 2008, up from $75.87/bbl in 2007. East  Coast Canada production averaged 90,500 b/d in 2008, down from  98,700 b/d in 2007. Decreased production reflected natural declines in  all East Coast Canada assets. Additionally, pack ice at the White Rose field  in the second quarter of 2008 caused production deferments  and drilling  delays. East Coast Canada operating and overhead costs averaged $5.92/bbl in  2008, compared with $4.86/bbl in 2007. In 2008, unit operating costs for East  Coast Canada increased as a result of decreased production and slightly  higher operating costs. |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|

 

 

#### **Hibernia**

#### ** **

TheHibernia oilfield is approximately 315 kilometres southeast ofSt. John’s, Newfoundland and Labrador, and was the first field to bedeveloped in the Jeanne d’Arc Basin offshore on the Grand Banks ofNewfoundland. The production system is a fixed Gravity BaseStructure (GBS), which sits on the sea floor. The GBS has a productioncapacity of 230,000 b/d gross and storage capacity of 1.3 MMbblsgross. Actual production levels are lower, however, reflecting currentreservoir capability and natural decline. Hibernia commenced production in November 1997.The Hibernia oilfield, encompassing the Hibernia and Ben Nevis Avalonreservoirs, is estimated to have a remaining production life of 23 to27 years. The development potential of the Ben Nevis Avalon and SouthernExtension of the Hibernia reservoir remains under assessment. In 2006, theoperator submitted a development plan to the regulator for the HiberniaSouthern Extension. In early 2007, the Government of Newfoundland and Labradorrejected the decision report of the Canada-Newfoundland and Labrador OffshorePetroleum Board (C-NLOPB) to approve the development of the Hibernia SouthernExtension and asked the applicants for additional information. In July 2008,the operator submitted the Hibernia Southern Extension development planamendment application. The C-NLOPB is currently reviewing this updatedapplication.

 

At December 31,2008, there were 32 producing oil wells, 17 water injection wells andsix gas injection wells in operation. Field production is transported byshuttle tanker either from the platform to a transshipment terminal on theAvalon Peninsula or, if tanker schedules permit, directly to market. Crude oildelivered to the transshipment facility is transferred to storage tanks and loadedonto tankers for transport to markets in Eastern Canada and theU.S. Petro-Canada has a 14% ownership interest in the transshipmentfacility.

 

 

----

| 1 | Petro-Canada’s  working interest in the White Rose Extensions is 26.125% after the NALCOR  acquired its 5% working interest effective with the signing of the final  project agreements in February 2009. There is no change to the White  Rose 27.5% working interest for the original field development as NALCOR is  not a partner. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| **26** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

Hiberniaproduction averaged 139,000 b/d gross (27,800 b/d net) in 2008, up from 134,500b/d gross (26,900 b/d net) in 2007. Higher production in 2008 was due to thepositive impact of recent well workovers, strong reliability and the additionof two new production wells, partially offset by natural declines. Hibernia hada 30-day maintenance turnaround in 2007, but no major turnaround in 2008.

 

 

#### **Terra Nova**

#### ** **

TheTerra Nova oilfield, which is approximately 350 kilometres southeast ofSt. John’s, Newfoundland and Labrador, was discovered by Petro-Canada in1984. Located about 35 kilometres southeast of Hibernia, it is the secondoilfield to be developed offshore Newfoundland and Labrador. The productionsystem uses a FPSO vessel, which is a ship moored on location. Terra Nova wasthe first harsh environment development in North America to use a FPSO vessel.It has a production capacity of 180,000 b/d gross and a storage capacityof 960,000 bbls gross, however, actual production levels reflect currentreservoir capability. Production from the Terra Nova oilfield began in January 2002.The field is estimated to have a remaining production life of approximately13 to 20 years.

 

In December 2006,the Terra Nova FPSO encountered a mechanical issue in a swivel connection onthe turret system that supports water injection to the reservoir. A repair wascompleted in late December 2006 and Terra Nova has been producing atnormal rates in excess of 100,000 b/d gross (34,000 b/d net) since. Performanceof the water injection swivel was satisfactory throughout 2008. Contingencyplans have been developed and parts have been sourced for the modification orreplacement of the swivel in the event performance deteriorates.

 

Atyear-end 2008, 15 producing oil wells, nine water injection wells andthree gas injection wells were in operation. Terra Nova uses the same system ofshuttle tankers and transshipment terminal that are used for Hibernia, and alsotransports its crude oil to markets in Eastern Canada and the U.S.

 

AtTerra Nova, production averaged 102,700 b/d gross (34,900 b/d net) in 2008,down from 116,200 b/d gross (39,500 b/d net) in 2007, due to natural reservoirdecline. Terra Nova had a strong year, with facility reliability averaging 90%for 2008.

 

 

#### **White Rose**

#### ** **

WhiteRose, the third development offshore Newfoundland and Labrador, is about350 kilometres southeast of St. John’s and approximately50 kilometres northeast of Hibernia and Terra Nova. It uses a FPSO vesselsimilar to Terra Nova. The vessel had an initial design production capacity of100,000 b/d gross and a storage capacity of 940,000 bbls gross.Production is offloaded to chartered tankers that go directly to markets inEastern Canada and the U.S. Production from the White Rose oilfield began in November 2005.The field is estimated to have a remaining production life of approximately15 to 18 years.

 

Atyear-end 2008, eight producing oil wells and 10 water injection wells were inoperation. Effective June 1, 2007, White Rose was granted regulatoryapproval to increase the daily oil production rate on the SeaRose FPSO to140,000 b/d gross (38,500 b/d net) and to increase the annual oilproduction rate to 50 MMbbls. White Rose production averaged 101,100 b/dgross (27,800 b/d net) in 2008, compared with 117,500 b/d gross (32,300b/d net) in 2007. Decreased White Rose production in 2008 was due to the impactof pack ice in the field in the second quarter of 2008 that shut in productionand delayed development drilling.

 

In September 2007,the Government of Newfoundland and Labrador approved the C-NLOPB recommendationto permit development of the South White Rose Extension. Subsequently, theWhite Rose partners reached an agreement in principle with the province onfiscal and other terms for the White Rose Extensions development, incorporatingthe South White Rose Extension, North Amethyst and West White Rose satellitefields. In December 2007, Petro-Canada and its partners signed a formalagreement with the Province of Newfoundland and Labrador for the development ofthese oilfields. North Amethyst will be developed initially, with first oiltargeted for late 2009. The development of the West White Rose satellite isexpected to follow. FEED for the North Amethyst portion of the project iscomplete and detailed design, procurement and fabrication are underway, withnecessary long-lead equipment and drilling commitments in place. The partnersachieved regulatory and government approval in April 2008.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **27** |
|--|-------------------------------------------|--------|

 

#### ** **

#### **Offshore Oil RoyaltyRegime**

#### ** **

Theroyalty regime for the Hibernia project has three tiers: gross royalty, netroyalty and supplementary royalty. Gross royalty increased to 5% of gross fieldrevenue on July 1, 2003. The gross royalty rate will remain at 5% untilnet royalty payout is reached. The gross royalty is indexed to crude oil pricesunder certain conditions. Upon achieving payout, including a specified returnallowance, the net royalty payable becomes the greater of 30% of net revenue,or 5% of gross revenue. After a further level of payout is reached, whichincludes an additional return allowance, a supplementary royalty of 12.5% ofnet revenue also becomes payable. At this time, Hibernia continues to besubject to basic royalties of 5% of gross revenue. However, provincialgovernment royalty rates are expected to increase from 5% of gross revenue to30% of net revenue in the near future. In addition, Hibernia production will besubject to a federal government net profits interest of up to 10% of netrevenue commencing in the first quarter of 2009.

 

TheTerra Nova royalty regime has three tiers. The royalty consists of asliding-scale basic royalty payable throughout the project’s life, with twoadditional tiers of incremental net royalties, which are payable upon theachievement of specified levels of profitability. The basic royalty is payableas a percentage of gross field revenue, with an initial rate of 1%, which risesto 10% depending on cumulative production levels and the occurrence of simplepayout. After tier one payout has been reached, including a specified returnallowance, tier one net royalty will become the greater of the basic royalty,or 30% of net revenue. An additional tier two net royalty equal to 12.5% of netrevenue will be payable once a further level of payout, including an additionalreturn allowance, is attained. In the second quarter of 2008, Terra Novareached tier two royalty payout and the royalty rate shifted to 42.5% of netrevenue from 30% of net revenue. Terra Nova average royalty payments areexpected to be between 30% and 35% of gross revenues in 2009, depending oncrude oil prices.

 

In July 2003,the Government of Newfoundland and Labrador published regulations for theroyalty regime that will apply to the development of petroleum resources inoffshore areas other than at Hibernia and Terra Nova. The generic offshoreroyalty regime consists of a sliding-scale basic royalty payable throughout aproject’s life, and a two-tier incremental net royalty payable upon theachievement of specified levels of profitability. The basic royalty iscalculated as a percentage of gross field revenue, commencing at 1% and risingto 7.5%, depending on cumulative production levels and the achievement ofsimple payout. Upon reaching tier one payout, including a return allowance, thetier one net royalty is calculated as the greater of the basic royalty, or 20%of net revenue. An additional 10% tier two net royalty rate is payable once ahigher level of return on investment is attained. In the first quarter of 2008,White Rose reached tier two royalty payout and the royalty rate shifted to 30%of net revenue from 20% of net revenue. The total royalty payable in 2009 isexpected to equate to a rate of between 20% and 25% of gross revenue, dependingon crude oil prices.

 

 

#### **OtherOffshore Exploration and Development**

#### ** **

Inaddition to existing East Coast Canada developments, Petro-Canada holdsinterests in a number of discoveries, including a 22.7% interest in theHebron/Ben Nevis oilfield discoveries. In 2005, Chevron Canada Resources(as operator), Petro-Canada and the other joint venture participants signeda unitization and joint operating agreement to advance the joint evaluation ofthe Hebron/Ben Nevis and West Ben Nevis oilfields offshore Newfoundland andLabrador. In August 2007, the Hebron partners signed a non-binding MOUwith the Government of Newfoundland and Labrador related to the fiscal andother terms for the future development of the Hebron/Ben Nevis offshoreoilfield. In August 2008, the Hebron partners reached a formal agreementwith the Government of Newfoundland and Labrador on commercial terms that willallow development activities to proceed for Hebron. The partners also agreed totransfer operatorship from Chevron Canada Ltd. to ExxonMobil. First productionfrom Hebron is expected in 2016 or 2017.

 

In2008, Petro-Canada, in conjunction with partners, secured two highprospectivity licences in the Jeanne d’Arc Basin. In 2009, Petro-Canada isplanning to drill an operated exploration well on the Ballicatters prospect,which is located adjacent to one of these licences immediately northeast of theHibernia field.

 

 
| **28** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

##### *Link to Petro-Canada’s Corporate andStrategic Priorities*

 

The East Coast Canada business isaligned with Petro-Canada’s strategic priorities as outlined by its progress in2008 and goals for 2009.

 
| PRIORITY                                                                     |       |       | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       |       | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|------------------------------------------------------------------------------|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                   | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Delivering Profitable Growth  with a Focus on Operated, Long-Life Assets** | ** ** | ** ** | **·****      **advance White Rose  Extensions development toward regulatory approval and FID in 2008, with first  oil targeted for late 2009

**·**       commence development  drilling for the White Rose Extensions project

**·****      **achieve binding formal  agreements and re-establish the Hebron project team, with the goal of  submitting the project for regulatory approval in the 2010 time frame

**·****      **advance the Hibernia  Southern Extension growth project                               | ** ** | ** ** | **·****      **achieved internal and  regulatory approval for North Amethyst portion of the White Rose Extensions  in 2008; on track for first oil in late 2009

**·****      **drilled a pilot well in  North Amethyst for the White Rose Extensions project 

**·****      **signed binding formal  agreements for Hebron

**·****      **filed a development  plan amendment application for the Hibernia Southern Extension project                                                                                                                                                                                                                                                                                                                                                                                     | ** ** | ** ** | **·****      **drill two development  wells in the main Terra Nova field

**·****      **drill exploration well  in Ballicatters prospect

**·****      **achieve formal  agreement for Hibernia Southern Extension development

**·****      **advance the target  Hebron first oil date

**·****      **achieve first oil at  North Amethyst and finalize development concept for West White Rose                                                                                                                                                                 |
| ** **                                                                   | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Driving for First Quartile  Operation of Our Assets**                      | ** ** | ** ** | **·****      **achieve and maintain  greater than 90% reliability at Terra Nova

**·****      **finalize Terra Nova  swivel repair plans

**·****      **complete 16-day  turnarounds at Terra Nova and partner-operated White Rose                                                                                                                                                                                                                                                                                                                     | ** ** | ** ** | **·****      **achieved 90%  reliability at Terra Nova

**·****      **put in place all swivel  contingency plans and materials if repair/ replacement is required

**·****      **completed Terra Nova  and White Rose turnarounds on time                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** | **·****      **maintain greater than  90% reliability at Terra Nova and close process safety gaps

**·****      **complete 28-day  turnarounds at Terra Nova and White Rose, and 21-day turnaround at Hibernia

**·****      **identify and implement  opportunities to reduce administrative and operating costs across the  business                                                                                                                                                                                                                                                                                                    |
| ** **                                                                   | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Continuing to Work at Being a  Responsible Company**                       | ** ** | ** ** | **·****      **continue to reduce  injuries and illnesses through implementation of Exposure Based Safety  program and first aid reduction initiatives

**·**       enhance focus on  process safety management

**·****      **continue to implement  loss containment improvement plan

**·****      **continue to enhance  produced water management

**·****      **integrate stakeholder  management process and tools and streamline with regulatory processes and  requirements | ** ** | ** ** | **·****      **TRIF increased to 2.5,  compared with 0.5 in 2007

**·****      **achieved lower combined first aids,  medical aids and restricted work cases in 2008, compared with 2007

**·****      **scored 93% on Total  Loss Management (TLM) process safety audit

**·****      **recorded one environmental  regulatory exceedance, compared with zero in 2007

**·****      **improved produced water quality

**·**       trained more than 60  employees on stakeholder information management system

**·****      **successfully  completed an on-water oil spill countermeasure exercise

**·**       successfully  completed Terra Nova operations authorization | ** ** | ** ** | **·****      **develop action plan to address injury frequency

**·****      **develop gap closure plan  and stewardship to address process safety and TLM self-assessment gap

**·****      **implement  continuous improvement initiatives relating to oil spill response

**·****      **develop and implement  GHG emissions reduction strategy and continue initiatives to improve flare  management and produced water quality

**·****      **support  research and development initiatives that have personal safety, environmental  and community benefits |

 

 
|  | Annual  Information Form **PETRO-CANADA** | **29** |
|--|-------------------------------------------|--------|

 

 

### **International**

 

For reporting purposes, Petro-Canadaconsolidated its International activities into two core areas: the North Sea(the U.K., the Netherlands and Norway sectors) and Other International areas(Libya, Syria and offshore Trinidad and Tobago).

 

 

**Business Summary and Strategy**

 
| International is concentrating  on countries and regions where material positions may be built, with a  particular focus on increasing the proportion of long-life assets in the  portfolio. These regions include the North Sea, Libya, Syria and Trinidad and  Tobago.                                                                                                                                             |   |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|
|                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Petro-Canada’s International  strategy capitalizes on the strengths of a mid-sized exploration and  production company, which is big enough to execute large scale projects and  agile enough to develop smaller projects that can still create significant  value, such as the Company’s concentric developments around the Triton hub in  the North Sea. Key features of the International strategy are: |   |
| **·**   expanding and exploiting the existing portfolio

 

**·**   targeting new growth opportunities

 

**·**   executing a substantial and balanced  exploration program                                                                                                                                                                                  |   |

 

International production averaged 157,200 barrels of oilequivalent/day (boe/d) net in 2008, compared with 150,500 boe/d net in2007. The increase was primarily due to additional North Sea production.International crude oil and NGL realized prices averaged $98.25/bbl and naturalgas realized prices averaged $10.15/Mcf in 2008, compared with $75.90/bbl and$6.46/Mcf, respectively, in 2007. Operating and overhead costs averaged$7.33/boe in 2008, down 20% compared with $9.12/boe in 2007, due to loweroperating expenses related to new EPSAs in Libya.

 

In 2005, Petro-Canada reached an agreement to sell the Company’s matureproducing assets in Syria. The sale was closed on January 31, 2006. Theseassets and associated results are reported as discontinued operations andexcluded from continuing operations. Sale proceeds were used to buy back sharesunder the NCIB program.

 

 

#### **North Sea**

 

In the North Sea, the Company is growing its business around coreproduction areas in the U.K. and the Netherlands sectors, with explorationactivities extending into Norway.

 

Petro-Canada’s North Sea production averaged 97,700 boe/d net in2008, compared with 91,100 boe/d net in 2007. Additional production fromBuzzard and Saxon and a full year of production from De Ruyter and L5b-C werepartially offset by natural declines and problems with two producing wells inthe Triton area. North Sea crude oil and NGL realized prices averaged$97.76/bbl and natural gas averaged $12.15/Mcf in 2008, compared with$75.12/bbl and $7.94/Mcf, respectively, in 2007.

 

The Company’s U.K. position is built around three core production hubs:Triton, Buzzard and Scott/Telford. The Triton development area exemplifiesPetro-Canada’s approach to concentric development in the North Sea, where theCompany has gained world class operating capability in subsea development.Triton comprises the Guillemot West and Northwest fields, the Bittern field,the Pict field, the Clapham field and the Saxon field. Although this group offields is relatively modest in size, it contributes significantly to cash flowand net earnings. The crude oil gathered at Triton is shipped via tanker, whilenatural gas is delivered through the SEGAL system to the U.K. Petro-Canadais a 33.1% owner of the Triton FPSO.

 

The second core hub in the U.K. North Sea is the Buzzard oilfield,located in the Outer Moray Firth. Buzzard achieved first oil in January 2007and the Company has a 29.9% interest in the field. The field ramped up to peakproduction in the middle of 2007. Buzzard is supported by three bridge-linkedplatforms supporting wellhead facilities, production facilities, livingquarters and utilities. Crude oil is transported via the Forties pipelinesystem to shore and natural gas is transported to the St. Fergus 

 

 
| **30** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

gas terminal in Scotland via the Frigg pipeline in the U.K. Petro-Canadaand its partners in the Buzzard field evaluated solutions to address themoderate, but higher than expected levels of hydrogen sulphide (H2S) in some ofthe producing wells. A decision on the appropriate solution was made in 2008and a new H2Sstripping facilities platform is being constructed to manage the export qualityof the oil production.

 

In keeping withPetro-Canada’s concentric development approach, the Company’s acquisition ofits interest in the Buzzard field in June 2004 included a number of nearbyblocks with exploration potential. This included Block 20/1 North, where thenon-operated Golden Eagle discovery was drilled in late 2006. The well wasdrilled to a depth of approximately 2,286 metres and encountered 37 metres ofnet oil pay. The well tested at more than 4,000 b/d of light crude oil. Thewell was sidetracked to appraise the accumulation. Exploration successcontinued in 2008 with the non-operated Pink discovery, also located in Block20/1 North. Together with its joint venture partners, the Company is evaluatingmore exploration opportunities in the immediate area, with a view to optimizingthe development plan for the discovered resources. Petro-Canada holds a 25%working interest in the Golden Eagle discovery and a 33% interest in the Pinkdiscovery.

 

Following the 2005 discovery on the Petro-Canada operated 13/27a Block(90% working interest), the Company farmed into adjacent Blocks 13/26a and13/26b in September 2006, obtaining a 27.5% non-operated working interest.An appraisal well was drilled during 2007 on Block 13/26a, which encounteredhydrocarbons but did not confirm the commerciality of the original discovery.Plans are to dilute Petro-Canada’s 92.5% working interest by farming out tofurther appraise the accumulation.

 

In November 2008, Petro-Canada, as operator, bid for Blocks 13/27e,14/25b and 15/21 (split), and 30/11c in the U.K. 25th licensing round. It isanticipated these blocks will be awarded in 2009.

 

The Company’s third core production hub in the U.K. North Sea,Scott/Telford, is also located in the Outer Moray Firth and consists of a 20.6%working interest in the Scott oilfield and production platform, and a 9.4%working interest in the Telford oilfield, with a subsea tie-back to the Scottplatform. High quality crude oil from Scott/Telford is transported to shore viathe Forties pipeline system. Associated natural gas is transported via theScottish Area Gas Evacuation pipeline system.

 

In the Netherlands sector of the North Sea, oil production comes fromthe Petro-Canada operated Hanze and De Ruyter platforms. The Company has a 45%working interest in Hanze and a 54.07% working interest in De Ruyter. De Ruytercame on-stream in late September 2006. Oil from the Hanze and De Ruyterplatforms is exported by a dedicated tanker, with the cargoes marketed on aspot basis into Northwest Europe. Natural gas production from Hanze is exportedto shore via the Northern Offshore Gas Transport (NOGAT) pipeline, and naturalgas from De Ruyter is exported via the Noord Gas Transport (NGT) pipelinesystem.

 

In 2007, the Company drilled two successful exploration wells, van Nesand van Brakel, in which Petro-Canada is operator with a 50% and 60% workinginterest, respectively. In 2008, the Company, as operator with a 50% workinginterest, drilled the successful exploration van Ghent well. All three wellsare in the vicinity of the De Ruyter development. Van Nes was drilled to adepth of 2,048 metres and encountered 38 metres of net gas pay, while the vanBrakel well was drilled to a depth of 1,598 metres and encountered 24metres of net gas pay. The van Ghent well was drilled to a depth of 1,852 metresand encountered 49 metres of net gas and 12 metres of net oil pay. Both van Nesand van Brakel have been suspended as natural gas discoveries and van Ghent hasbeen suspended as an oil and gas discovery. The Company is assessing itsdevelopment options.

 

The major source of natural gas production in the Netherlands is fromthe L5b-L8b non-operated natural gas area, where Petro-Canada has a workinginterest of approximately 30%. L5b-C, a non-operated asset in this area,achieved first natural gas in November 2006. The Company has a 30% workinginterest in L5b-C. The produced natural gas is transported to shore by pipelineand sold to NV Nederlandse Gasunie under long-term delivery and off-takecontracts. Petro-Canada also holds a 12% interest in the onshore Bergen gasstorage facility operated by TAQA.

 

In 2006, Petro-Canada opened an office in Stavanger, Norway, followingthe award of five production licences in the Norwegian sector of the North Seain the 2005 Awards in Predefined Areas (APA). In 2007, the Company was awardednine additional production licences in the 2006 APA round. In 2008, the Companywas awarded four additional production licences. At the end of 2008,Petro-Canada held 17 production licences, including relinquishment, of whichfive are operated.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **31** |
|--|-------------------------------------------|--------|

** **

 

In the third quarter of 2008, the Company completed a sales and purchaseagreement with Bayerngas Norge AS for the sale of all the Company’s interestsin Denmark for net proceeds of $140 million, resulting in an $82 millionafter-tax gain on the sale of these assets. The sale of all of Petro-Canada’sinterests in Denmark is consistent with the International & Offshorebusiness unit strategy to optimize the portfolio by reducing participation incountries where the Company cannot foresee developing a material position.

 

 

#### **Other International**

 

Crude oil production comesfrom interests principally in Libya, with natural gas production from assetsoffshore Trinidad and Tobago. A natural gas development is also underway inSyria.

 

##### *Libya*

 

In June 2008, Petro-Canada signed six new EPSAs with the Libya NOCto replace existing concession agreements and one EPSA. The new EPSAs wereratified as of the signing, with an effective date of January 1, 2008.Following ratification of the new agreements, a payment of $500 million US,representing 50% of the signature bonus, was made to the Libya NOC in July 2008,with the remaining $500 million to be paid between 2009 and 2013. The commercialterms of the new agreements, including the signing bonus, match those announcedwhen the heads of agreement were completed in December 2007. The new EPSAswill run for 30 years and enable the Company and the NOC to jointly design andimplement the redevelopment of the existing fields in the Sirte Basin.Petro-Canada and the NOC will each pay one-half of development expendituresthat are expected to total up to $7 billion US gross over the term of thelicences and to double existing production to 100,000 boe/d net. Under the newagreements, the Company is the exploration operator and has committed to fullyfund an exploration program at an estimated cost of $460 million US over afive-year period. Petro-Canada has started to acquire 3D seismic over the newEPSA acreage and expects to start exploration drilling in 2009.

 

In2008, Petro-Canada’s production in Libya averaged 48,800 boe/d net, up 2%from 47,700 boe/d net in 2007. Libyan crude oil and NGL realized pricesaveraged $101.97/bbl in 2008, compared with $77.26/bbl in 2007. Petro-Canada’sproduction is currently sold on contract to the NOC. In early January 2009,the NOC advised the Company that production from Petro-Canada’s Libya EPSAswill be limited to 85,000 b/d gross (42,500 b/d net) due to the quota agreed toby OPEC producers in December 2008.

 

In 2008, 12 development wells were completed in the producing fields inLibya, consisting of 11 production wells and one injection well. A further fivedevelopment wells were drilling at year end. Additionally, one appraisal wellwas drilled.

 

Petro-Canada is the operator, with a 50% working interest, of Block 137in the Sirte Basin. In 2008, the Company completed 2D and 3D seismicacquisition and is evaluating the data in preparation for drilling anexploration well, possibly in 2009.

 

##### *Syria*

##### * *

Early in 2006, the Companycompleted the sale of its mature producing assets in Syria. In November 2006,Petro-Canada acquired operatorship and a 90% interest in a Production SharingContract (PSC) in the Ebla gas project for $54 million. Under the agreement,Petro-Canada expects to spend approximately $1 billion to develop and producean estimated 80 MMcf/d of natural gas from the Ash Shaer and Cherrifenatural gas fields, with first gas anticipated in 2010. The developmentincludes take or pay contracts for the gas, the price of which is tied toMediterranean heavy fuel oil prices. In December 2007, the Companyexercised its option to purchase the remaining 10% interest in the Ebla gasPSC. In 2008, the Company completed FEED and awarded the EPC contract for theproduction facilities and commenced construction. A 2D and 3D appraisal anddevelopment seismic program was started in August 2008 and two drillingrigs were mobilized to commence development drilling. Overall, the Ebla gasproject was 50% complete at year end and is on schedule to meet the contractualcommitment of first gas by mid-2010. On Block II, the Company completed theevaluation of the Al Dahramat well and moved into the second exploration periodfor the licence.

 

 
| **32** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

##### *Trinidad and Tobago*

 

The Company holds a 17.3%working interest in the NCMA-1 offshore natural gas development projectoperated by BG Group p.l.c. In 2006, subsea tie-backs to the Hibiscusplatform for Phases 3a and 3b were completed and first natural gas was achievedin late 2006. Phase 3c was approved and will involve development of thePoinsettia field, with a platform and pipeline tie-back to the Hibiscusplatform. Production is expected to come on-stream by early 2009. Petro-Canadaparticipated in a well to appraise the Poinsettia discovery, which was spuddedlate in 2007. Natural gas production is delivered by pipeline to the LNGfacility operated by Atlantic LNG at Point Fortin for liquefaction andsubsequent sale into U.S. markets.

 

In 2008, Petro-Canada’sshare of Trinidad and Tobago offshore production averaged 64 MMcf/d net, downfrom 71 MMcf/d net in 2007. Decreased production reflected additionalmaintenance at the Atlantic LNG plant, rebalancing of mutual aid productionamong producers to the Atlantic LNG plant and several brief shutdowns of NCMAto prepare for the start up of the new Poinsettia field. Trinidad and Tobagorealized prices for natural gas averaged $7.15/Mcf in 2008, compared with$4.34/Mcf in 2007.

 

Petro-Canada signed PSCswith the Trinidad and Tobago Ministry of Energy and Energy Industries foroffshore exploration Blocks 1a, 1b and 22 in 2005. These blocks covera total of 4,258 square kilometres. In 2006, the 3D seismic program onBlocks 1a, 1b and 22 offshore Trinidad and Tobago were completed. In 2007,Petro-Canada completed and received approval of its EIAs for the drillingprograms on Blocks 1a, 1b and 22 in advance of the arrival of the contracteddrilling rigs. In the third quarter of 2007, the Company drilled and completedthe successful Zandolie West exploration well on Block 1a. The Anole well onBlock 1b was abandoned as a dry hole. Two further wells were drilled on Block1a in 2008. Zandolie East was completed as a gas discovery, while Tegu was adry hole. On Block 22 offshore Trinidad and Tobago, Petro-Canada, as operatorwith a 90% working interest in the block, drilled the Cassra-1 well in 2007 in430 metres of water and reached a depth of 1,712 metres below sea level. Thewell encountered the reservoir objective and established a gas water contact.The well was completed as a discovery and was followed in 2008 by thesuccessful appraisal well Cassra-2. Two further wells were drilled on Block 22during 2008; Bene was a dry hole and Sancoche was a gas discovery. The Companyis now considering development options for all of its discoveries in Trinidadand Tobago.

 

 

##### *Other*

##### * *

In Tunisia during 2006,the Company closed its Tunis office and relinquished its 72.5% interest in theMelitta Block after completing its work commitment. In 2007, the Companyfocused on exploration of the offshore, non-operated Cap Serrat and Bechateurpermits (33% working interest).

 

In July 2008,Petro-Canada converted its existing reconnaissance licence in southern Moroccoto an exploration permit. Petro-Canada’s partners in the exploration licenceinclude German company RWE and the Moroccan National Officeof Hydrocarbons.

 

 

#### **Business Development Opportunities**

 

In 2007, the Companycontinued its discussions to import natural gas from Russia to North Americathrough a joint LNG project with Gazprom. An agreement was signed with Gazpromin March 2006 to proceed with the initial engineering design of theliquefaction plant. In February 2008, Petro-Canada was informed thatGazprom had decided not to pursue this project and instead wanted to focus onother projects.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **33** |
|--|-------------------------------------------|--------|

 

 

##### *Link to Petro-Canada’s Corporate and StrategicPriorities*

 

The International businessis aligned with Petro-Canada’s strategic priorities as outlined by its progressin 2008 and goals for 2009.

 
| PRIORITY                                                                     | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Delivering Profitable Growth  with a Focus on Operated, Long-Life Assets** | **·****   **evaluate 2007  exploration results and deliver 2008 exploration program

**·****     **develop a transition  plan for the Libya Concession Development project

**·****     **develop a detailed  exploration program in Libya

**·****     **award EPC contract for  Syria Ebla gas project and finalize commercial agreements

**·****     **spud first well for the  Syria Ebla gas project

**·****     **evaluate opportunities  to commercialize Trinidad and Tobago gas discoveries, subject to exploration  results | **·****     **drilled 13 exploration  wells, with nine wells suspended as discoveries, four wells abandoned as  dry holes and one well still drilling at year end

**·****     **signed six new EPSAs  with the Libya NOC, adding reserves and extending terms by an expected 30  years with improved commercial terms

**·****     **commenced 3D seismic  program in Libya

**·****     **completed 50% of Syria  Ebla gas project

**·****     **commenced seismic and  development drilling on the Syria Ebla gas project

**·****     **participated in four  gas discoveries in Trinidad and Tobago and began study of commercialization  options | **·****     **continue appraisal and  development planning for the U.K. and the Netherlands exploration discoveries

**·****     **drill up to three  exploration wells in the U.K. and Norway depending on rig availability

**·****     **continue Libya  exploration 3D seismic program and start exploration drilling program

**·****     **prepare and submit  redevelopment plans for the Libya Amal field and pursue early production  gains across the new contract areas

**·****     **complete the Syria Ebla  seismic program and continue development drilling and construction of the  Syria Ebla gas plant with a first gas target of mid-2010

**·****     **develop appraisal and  commercialization strategies for the Trinidad and Tobago discoveries |
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Driving for First Quartile  Operation of Our Assets**                      | **·****     **maintain excellent  production efficiency at the Petro-Canada operated De Ruyter and Hanze  platforms

**·****     **deliver plateau level  production at Buzzard while the enhancement program is implemented                                                                                                                                                                                                                                                                                                                                                                                                                          | **·****     **delivered 97%  reliability at both the  De Ruyter  and Hanze facilities

**·****     **Buzzard achieved  average production of 205,000 boe/d gross (61,300 boe/d net), in line with  plateau production expectations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **·****     **maintain greater than  90% reliability at Hanze and De Ruyter and drill a Hanze Pliocene development  well

**·****     **develop and  implement Triton de-bottlenecking and reliability improvement plans

**·****     **identify and implement opportunities  to reduce administrative and operating costs across the business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Continuing to Work at Being a  Responsible Company**                       | **·****     **continue to work with  contractors to reduce injuries and illnesses

**·****     **continue to improve TLM  systems and processes in Libya

**·****     **complete the EIA for  the Ebla gas project in Syria

**·****     **continue to develop  stakeholder management processes to maintain positive outcomes with key  stakeholders                                                                                                                                                                                                                                     | **·****     **TRIF was 0.62, a  decrease of 56% compared with 1.42 in 2007

**·****     **held Zero-Harm  conference for major contractors in the Netherlands and Syria

**·****     **experienced one  environmental regulatory exceedance, compared with zero in 2007

**·****     **established fully  capable Environment Safety and Social Responsibility (ES&SR)  organizations in Libya and Syria

**·****     **completed the EIA for  the Syria Ebla gas project

**·****     **addressed local  stakeholder concerns in Trinidad and Tobago (impact on fishing activities)  and in Syria (feeding grounds of Northern Bald Ibis)               | **·****     **focus on contractor  management to improve safety performance, with particular emphasis in Syria  and Libya on land transport safety

**·****     **monitor water  consumption required to support Syria and Libya activities and identify  opportunities to reduce water use

**·****     **continue stakeholder  engagement training in Syria and Libya and support implementation of  processes and tools                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

 
| **34** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

#### **Discontinued Operations**

 

On January 31, 2006,Petro-Canada completed the sale of the Company’s producing assets in Syria to ajoint venture of companies owned by India’s Oil and Natural Gas CorporationLimited and the China National Petroleum Corporation for net proceeds of $640million. The sale resulted in a gain on disposal of $134 million recorded inthe first quarter of 2006. This sale aligned with Petro-Canada’s strategy toincrease the proportion of long-life and operated assets within its portfolio.Petro-Canada’s activities in Syria remain part of the Other Internationalproducing region, with an active exploration program in Block II and theaddition of the Ebla gas project in Syria during 2006. Additional informationconcerning Petro-Canada’s discontinued operations can be found in Note 5 to theConsolidated Financial Statements.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **35** |
|--|-------------------------------------------|--------|

 

 

## **UPSTREAM PRODUCTION AND PRICES**

 

The following table shows Petro-Canada’s average daily production ofconventional crude oil, NGL, bitumen, synthetic crude oil (from miningoperations) and natural gas, before and after deduction of royalties for theyears indicated.

 

 

##### *Average Daily Production of Crude Oil, NGL, Bitumen,Synthetic Crude Oil and Natural Gas*

 

*Reserves information in this table does not conform to SEC standardsand is supplemental general information.**1*

 
|                                                                                                                   | Years Ended December 31, |
|------------------------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                                                   | ** **                    | **2008** |   | 2007 |   | 2006 |
|                                                                                                                   | **Before  Royalties**         | **After  Royalties** | Before  Royalties | After  Royalties | Before  Royalties | After  Royalties |
| **Crude oil and equivalents***(thousands of barrels/day – Mbbls/d)*                                               | ** **                    | ** ** |   |   |   |   |
| North American Natural Gas                                                                                             | **13.1**                      | **9.9** | 12.5 | 9.5 | 14.2 | 10.8 |
| Oil Sands2                                                                                                             | **59.9**                      | **54.7** | 56.9 | 51.2 | 52.2 | 48.8 |
| *International & Offshore*                                                                                    | *** ***                  | *** *** | * * | * * | * * | * * |
| East Coast Canada                                                                                                      | **90.5**                      | **68.6** | 98.7 | 84.4 | 72.7 | 68.5 |
| International                                                                                                          | ** **                    | ** ** |   |   |   |   |
| North Sea                                                                                                              | **88.4**                      | **88.4** | 81.3 | 81.3 | 33.2 | 33.2 |
| Other International                                                                                                    | **48.8**                      | **31.0** | 47.7 | 43.4 | 49.4 | 44.7 |
| **Total crude oil and equivalents**                                                                                    | **300.7**                     | **252.6** | 297.1 | 269.8 | 221.7 | 206.0 |
| **Natural gas***(MMcf/d)*                                                                                              | ** **                    | ** ** |   |   |   |   |
| North American Natural Gas                                                                                             | **586**                       | **466** | 599 | 471 | 616 | 489 |
| International                                                                                                          | ** **                    | ** ** |   |   |   |   |
| North Sea                                                                                                              | **56**                        | **56** | 58 | 58 | 63 | 63 |
| Other International                                                                                                    | **64**                        | **63** | 71 | 65 | 63 | 32 |
| **Total natural gas**                                                                                                  | **706**                       | **585** | 728 | 594 | 742 | 584 |
| **Total production from continuing operations**3** ***(thousands of barrels of oil equivalent/day – Mboe/d)* | **418**                       | **350** | 418 | 369 | 345 | 303 |
| **Discontinued operations**4                                                                                           | ** **                    | ** ** |   |   |   |   |
| Crude oil and NGL *(Mbbls/d)*                                                                                          | **–**                    | **–** | – | – | 5.2 | 1.4 |
| Natural gas *(MMcf/d)*                                                                                                 | **–**                    | **–** | – | – | 2 | – |
| **Total production from discontinued operations**3,4 *(Mboe/d)*                                                   | **–**                    | **–** | – | – | 6 | 1 |
| **Total production**3** ***(Mboe/d)*                                                                              | **418**                       | **350** | 418 | 369 | 351 | 304 |
| Proved oil and NGL reserves1,4 *(MMbbls)*                                                                         | **1,037**                     | **888** | 1,022 | 886 | 950 | 841 |
| Proved natural gas reserves*(trillions of cubic feet – tcf)*4                                                | **1.5**                       | **1.2** | 1.8 | 1.4 | 1.9 | 1.5 |

 

1  Reporting working interest reserves before royalties and combining oiland gas with oil sands mining activities does not conform to SEC standards andis for general supplemental information only.

2  Includesproduction of synthetic crude oil from Syncrude mining operation.

3  Naturalgas is converted to oil equivalent using six Mcf of gas to one boe.

4  TheCompany closed the sale of its Syrian producing assets on January 31,2006.

 
| **36** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

The following table shows Petro-Canada’s average daily production ofconventional crude oil, NGL, bitumen, synthetic crude oil and natural gas,before deduction of royalties by quarter for the years indicated.

 

 

##### *Average Daily Production of Crude Oil, NGL, Bitumen,Synthetic Crude Oil and Natural Gas Before Royalties by Quarter*

 
| ** **                                | **2008  Three Months Ended** |             | 2007

Three Months Ended |
|-------------------------------------------|------------------------------|------------------|--------------------------|
| ** **                                | **Mar. 31**             | **June 30** | **Sept. 30**             | **Dec. 31** |   | Mar. 31 | June 30 | Sept. 30 | Dec. 31 |
| **Crude oil and equivalents***(Mbbls/d)*  | ** **                   | ** **       | ** **               | ** ** |   |   |   |   |   |
| North American Natural Gas                | **13.1**                     | **13.0**         | **13.0**                 | **13.7** |   | 12.4 | 12.6 | 12.6 | 12.5 |
| Oil Sands1                                | **55.5**                     | **53.9**         | **66.9**                 | **63.1** |   | 59.7 | 52.4 | 63.8 | 51.7 |
| *International & Offshore*       | ** **                   | ** **       | ** **               | ** ** |   |   |   |   |   |
| East Coast Canada                         | **92.1**                     | **90.4**         | **90.6**                 | **88.7** |   | 97.3 | 108.4 | 102.1 | 87.4 |
| International                             | ** **                   | ** **       | ** **               | ** ** |   |   |   |   |   |
| North Sea                                 | **97.4**                     | **89.4**         | **85.7**                 | **81.2** |   | 64.5 | 84.7 | 87.5 | 88.4 |
| Other International                       | **49.8**                     | **49.6**         | **49.6**                 | **45.4** |   | 46.5 | 46.2 | 49.1 | 49.0 |
| **Total crude oil and equivalents**       | **307.9**                    | **296.3**        | **305.8**                | **292.1** |   | 280.4 | 304.3 | 315.1 | 289.0 |
| **Natural gas***(MMcf/d)*                 | ** **                   | ** **       | ** **               | ** ** |   |   |   |   |   |
| North American Natural Gas                | **586**                      | **582**          | **596**                  | **579** |   | 605 | 599 | 599 | 594 |
| International                             | ** **                   | ** **       | ** **               | ** ** |   |   |   |   |   |
| North Sea                                 | **58**                       | **60**           | **54**                   | **54** |   | 68 | 49 | 59 | 59 |
| Other International                       | **68**                       | **63**           | **59**                   | **66** |   | 75 | 73 | 65 | 72 |
| **Total natural gas**                     | **712**                      | **705**          | **709**                  | **699** |   | 748 | 721 | 723 | 725 |
| **Total production**2** ***(Mboe/d)* | **427**                      | **414**          | **424**                  | **409** |   | 405 | 425 | 436 | 410 |

 

1   Includesproduction of synthetic crude oil from Syncrude mining operation.

2   Naturalgas is converted to oil equivalent using six Mcf of gas to one boe.

 
|  | Annual  Information Form **PETRO-CANADA** | **37** |
|--|-------------------------------------------|--------|

 

 

The following table shows Petro-Canada’s average daily production ofconventional crude oil, NGL, bitumen, synthetic crude oil and natural gas,after deduction of royalties by quarter for the years indicated.

 

 

##### *Average Daily Production of Crude Oil, NGL, Bitumen,Synthetic Crude Oil and Natural Gas After Royalties by Quarter*

 
| ** **                                | **2008**

**Three Months Ended** |             | 2007

Three Months Ended |
|-------------------------------------------|----------------------------------|------------------|--------------------------|
| ** **                                | **Mar. 31**                 | **June 30** | **Sept. 30**        | **Dec. 31** |   | Mar. 31 | June 30 | Sept. 30 | Dec. 31 |
| **Crude oil and equivalents***(Mbbls/d)*  | ** **                       | ** **       | ** **               | ** ** |   |   |   |   |   |
| North American Natural Gas                | **10.0**                         | **10.0**         | **10.0**                 | **9.9** |   | 9.5 | 10.0 | 10.1 | 9.5 |
| Oil Sands1                                | **50.6**                         | **49.1**         | **60.2**                 | **59.9** |   | 55.2 | 47.6 | 57.1 | 45.3 |
| *International & Offshore*       | ** **                       | ** **       | ** **               | ** ** |   |   |   |   |   |
| East Coast Canada                         | **72.1**                         | **66.5**         | **67.7**                 | **69.4** |   | 87.2 | 95.1 | 83.7 | 72.8 |
| International                             | ** **                       | ** **       | ** **               | ** ** |   |   |   |   |   |
| North Sea                                 | **97.4**                         | **89.4**         | **85.7**                 | **81.2** |   | 64.5 | 84.7 | 87.5 | 88.4 |
| Other International                       | **45.8**                         | **24.6**         | **28.3**                 | **30.6** |   | 41.3 | 41.8 | 44.9 | 45.2 |
| **Total crude oil and equivalents**       | **275.9**                        | **239.6**        | **251.9**                | **251.0** |   | 257.7 | 279.2 | 283.3 | 261.2 |
| **Natural gas***(MMcf/d)*                 | ** **                       | ** **       | ** **               | ** ** |   |   |   |   |   |
| North American Natural Gas                | **466**                          | **456**          | **466**                  | **479** |   | 477 | 470 | 476 | 462 |
| International                             | ** **                       | ** **       | ** **               | ** ** |   |   |   |   |   |
| North Sea                                 | **58**                           | **60**           | **54**                   | **54** |   | 68 | 49 | 59 | 59 |
| Other International                       | **68**                           | **63**           | **59**                   | **54** |   | 75 | 53 | 43 | 56 |
| **Total natural gas**                     | **592**                          | **579**          | **579**                  | **587** |   | 620 | 572 | 578 | 577 |
| **Total production**2** ***(Mboe/d)* | **375**                          | **336**          | **348**                  | **349** |   | 361 | 375 | 380 | 357 |

 

1  Includes production of synthetic crude oil fromSyncrude mining operation.

2  Natural gas is converted to oil equivalentusing six Mcf of gas to one boe.

 
| **38** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

#### **ProductionOutlook**

 

In 2008, production of crude oil, NGL and natural gas averaged 418,000boe/d net, which was at the high end of the 2008 guidance range of 400,000boe/d to 420,000 boe/d. Upstream production is expected to decrease in 2009 dueto large facility turnarounds in East Coast Canada and International, naturaldeclines in East Coast Canada and Western Canada, cutbacks to 2009 plannedcapital expenditures that affect near-term production and OPEC quota restraintsin Libya. Offsetting these decreases is the expectation of higher Oil Sandsproduction. Production is expected to average in the range of345,000 boe/d to 385,000 boe/d in 2009. The production guidance rangewas expanded to reflect market uncertainty in the current environment and thepotential impact on near-term production if low commodity prices persist or worsenand further reductions to capital expenditures are needed.

 

Factors that may impact production during 2009 include reservoirperformance, drilling results, facility reliability, changes in OPEC productionquotas and the successful execution of planned turnarounds.1

 

The following table shows Petro-Canada’s 2009 production outlook forconventional crude oil, NGL, bitumen, synthetic crude oil and natural gas incrude oil equivalents before deduction of royalties.

 

 

##### *Consolidated Production Net*

##### *(Mboe/d)*

 
| ** **                              | **2008 Actual** | **2009 Outlook (+/–)**

As at January 29,  2009 |
|-----------------------------------------|-----------------|-----------------------------------------------------------|
| **North American Natural Gas**          | ** **      |                                                      |
| – Natural gas                      | **98**          | **81**                                                    |
| – Liquids                          | **13**          | **14**                                                    |
| **Oil Sands**                           | ** **      | ** **                                                |
| – Syncrude                         | **35**          | **38**                                                    |
| – MacKay River                     | **25**          | **27**                                                    |
| ***International & Offshore*** | ** **      | ** **                                                |
| **East Coast Canada**                   | **90**          | **68**                                                    |
| **International**                       | ** **      | ** **                                                |
| – North Sea                        | **98**          | **85**                                                    |
| – Other International              | **59**          | **52**                                                    |
|                                    | **418**         | **345 – 385**                                        |

 

 

----

1  See the Legal Notice on page 1 for a morecomplete discussion of the factors that may impact production during 2009.

 
|  | Annual  Information Form **PETRO-CANADA** | **39** |
|--|-------------------------------------------|--------|

 

 

The following table shows the average sale price for Petro-Canada’sconventional crude oil, NGL, bitumen, synthetic crude oil and natural gasproduced, by country and/or region, for the years indicated.

 

 

##### *Average Prices for Crude Oil, NGL,Bitumen, Synthetic Crude Oil and Natural Gas*

 
|                                                                                      | Years Ended December 31, |
|-------------------------------------------------------------------------------------------|-------------------------------|
| Average  annual price received                                                            | ** **                    | **2008** |   | 2007 |   | 2006 |
| **Crude oil and equivalents***($/barrel - $/bbl)*                                         | ** **                    | ** ** |   |   |   |   |
| North American Natural Gas                                                                | **$**                         | **90.37** | $ | 67.37 | $ | 64.87 |
| Oil Sands                                                                                 | ** **                    | **87.10** |   | 61.02 |   | 54.60 |
| *International & Offshore*                                                       | ** **                    | ** ** |   |   |   |   |
| East Coast Canada                                                                         | ** **                    | **99.13** |   | 75.87 |   | 71.12 |
| International                                                                             | ** **                    | ** ** |   |   |   |   |
| North Sea                                                                                 | ** **                    | **97.76** |   | 75.12 |   | 72.67 |
| Other International1                                                                      | ** **                    | **101.97** |   | 77.26 |   | 72.70 |
| **Total crude oil and equivalents from continuing  operations**                           | ** **                    | **95.63** |   | 72.66 |   | 67.38 |
| Discontinued operations                                                                   | ** **                    | **–** |   | – |   | 71.84 |
| **Total crude oil and equivalents**                                                       | **$**                         | **95.63** | $ | 72.66 | $ | 67.48 |
| **North America***($/bbl)*                                                                | ** **                    | ** ** |   |   |   |   |
| Average crude oil and NGL sale price                                                      | **$**                         | **98.02** | $ | 74.91 | $ | 70.10 |
| Average bitumen sale price                                                                | ** **                    | **60.26** |   | 28.23 |   | 28.93 |
| Average synthetic crude oil sale price                                                    | ** **                    | **106.63** |   | 79.20 |   | 72.13 |
| **North America average crude oil and NGL, bitumen  and synthetic crude oil price**       | **$**                         | **94.03** | $ | 70.22 | $ | 64.28 |
| **International***($/bbl)*                                                                | ** **                    | ** ** |   |   |   |   |
| North Sea – average crude oil and NGL sale price                                     | **$**                         | **97.76** | $ | 75.12 | $ | 72.67 |
| Other International – average crude oil and NGL sale price1                          | ** **                    | **101.97** |   | 77.26 |   | 72.70 |
| **International – average crude oil and NGL sale  price from continuing operations** | **$**                         | **98.25** | $ | 75.90 | $ | 72.69 |
| **Natural gas***($/thousand cubic feet - $/Mcf)*                                          | ** **                    | ** ** |   |   |   |   |
| North American Natural Gas                                                                | **$**                         | **8.05** | $ | 6.30 | $ | 6.85 |
| International                                                                             | ** **                    | ** ** |   |   |   |   |
| North Sea                                                                                 | ** **                    | **12.15** |   | 7.94 |   | 8.91 |
| Other International                                                                       | ** **                    | **7.15** |   | 4.34 |   | 5.13 |
| **Total natural gas from continuing operations**                                          | ** **                    | **8.34** |   | 6.32 |   | 6.96 |
| Discontinued operations                                                                   | ** **                    | **–** |   | – |   | 7.94 |
| **Total natural gas**                                                                     | **$**                         | **8.34** | $ | 6.32 | $ | 6.96 |

 

1  Other International excludes prices realized onproduction related to the mature Syrian producing assets sold in January 2006,which are shown as discontinued operations.

 
| **40** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

Thefollowing tables on pages 41 to 45 show Petro-Canada’s averageproduct prices, netbacks, net earnings and production before royalties forNorth American Natural Gas (natural gas equivalent), Oil Sands (synthetic crudeoil and bitumen), East Coast Canada (conventional crude oil), and Internationalregions (crude oil equivalents) for the years indicated. Footnotes for thefollowing tables on pages 41 to 45 can be found on page 45.

 

Petro-Canadamonitors production costs and charges to earnings by business segment orregion, rather than on a product basis. As a result, unit netbacks and netearnings for a business segment or region producing a mix of crude oil, naturalgas and NGL are calculated on an oil- or gas-equivalent basis. In the NorthAmerican Natural Gas business segment, most crude oil and NGL production isancillary to the production of natural gas. In the North Sea, crude oil and NGLproduction represent about 91% of total North Sea production on anoil-equivalent basis. In the Other International region, crude oil and NGLproduction represent about 82% of total Other International production on anoil-equivalent basis.

 

 

##### *North American Natural Gas*1

##### *($/thousand cubic feet equivalent – $/Mcfe, unlessotherwise indicated)*

 
| ** **                                                         | ** ** | **2008 Three Months Ended** | ** ** | ** **       | **Total**  |              | ** ** | 2007 Three Months Ended |       |       | Total           |       | Total      | ** **      |
|--------------------------------------------------------------------|------------|--------------------------------------------|------------|------------------|------------|-------------------|------------|----------------------------------------|------------|------------|-----------------|------------|------------|-----------------|
| ** **                                                         | ** ** | **Mar. 31**                           | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**        |       | ** ** | Mar. 31    |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received                                            | ** ** | **$ 8.53**                            | ** ** | **$ 11.50** | ** ** | **$ 9.90**   | ** ** | **$ 7.07**                        | ** ** | ** ** | **$ 9.24** | ** ** |       | $ 7.64     |   | $ 7.30 |   | $ 5.95 |   | $ 6.64 |   |   | $ 6.88 |   | $ 7.34 |   |
| Royalties                                                          | ** ** | **(1.79**                                  | **)**      | **(2.46**        | **)**      | **(2.25**         | **)**      | **(1.28**                              | **)**      | ** ** | **(1.95**       | **)**      |       | (1.68           | ) | (1.62 | ) | (1.26 | ) | (1.48 | ) |   | (1.51 | ) | (1.55 | ) |
| Operating  expenses                                                | ** ** | **(1.39**                                  | **)**      | **(1.45**        | **)**      | **(1.43**         | **)**      | **(1.68**                              | **)**      | ** ** | **(1.49**       | **)**      |       | (1.32           | ) | (1.18 | ) | (1.34 | ) | (1.32 | ) |   | (1.29 | ) | (1.14 | ) |
| Netback                                                            | ** ** | **5.35**                                   | ** ** | **7.59**         | ** ** | **6.22**          | ** ** | **4.11**                               | ** ** | ** ** | **5.80**        | ** ** |       | 4.64            |   | 4.50 |   | 3.35 |   | 3.84 |   |   | 4.08 |   | 4.65 |   |
| Overhead  expenses (general and administrative – G&A)2    | ** ** | **(0.30**                                  | **)**      | **(0.29**        | **)**      | **(0.28**         | **)**      | **(0.37**                              | **)**      | ** ** | **(0.31**       | **)**      |       | (0.30           | ) | (0.32 | ) | (0.25 | ) | (0.29 | ) |   | (0.29 | ) | (0.25 | ) |
| Netback  after overhead expenses                                   | ** ** | **5.05**                                   | ** ** | **7.30**         | ** ** | **5.94**          | ** ** | **3.74**                               | ** ** | ** ** | **5.49**        | ** ** |       | 4.34            |   | 4.18 |   | 3.10 |   | 3.55 |   |   | 3.79 |   | 4.40 |   |
| Processing  and other income                                       | ** ** | **0.06**                                   | ** ** | **0.07**         | ** ** | **0.09**          | ** ** | **0.12**                               | ** ** | ** ** | **0.08**        | ** ** |       | 0.04            |   | 0.08 |   | 0.06 |   | 0.02 |   |   | 0.05 |   | 0.06 |   |
| Exploration  expenses                                              | ** ** | **(0.37**                                  | **)**      | **(0.21**        | **)**      | **(0.51**         | **)**      | **(0.86**                              | **)**      | ** ** | **(0.49**       | **)**      |       | (0.54           | ) | (0.26 | ) | (0.31 | ) | (1.01 | ) |   | (0.53 | ) | (0.37 | ) |
| DD&A3                                                          | ** ** | **(2.50**                                  | **)**      | **(1.93**        | **)**      | **(1.98**         | **)**      | **(2.89**                              | **)**      | ** ** | **(2.32**       | **)**      |       | (1.76           | ) | (1.74 | ) | (1.72 | ) | (4.22 | ) |   | (2.36 | ) | (1.55 | ) |
| Income and  other taxes4                                           | ** ** | **(0.72**                                  | **)**      | **(0.97**        | **)**      | **(1.13**         | **)**      | **(0.03**                              | **)**      | ** ** | **(0.71**       | **)**      |       | (0.67           | ) | (0.67 | ) | (0.40 | ) | 0.82 |   |   | (0.23 | ) | (0.83 | ) |
| **Net earnings**                                                   | ** ** | **$ 1.52**                            | ** ** | **$ 4.26**  | ** ** | **$ 2.41**   | ** ** | **$ 0.08**                        | ** ** | ** ** | **$ 2.05** | ** ** | ** ** | **$ 1.41** | ** ** | **$ 1.59** | ** ** | **$ 0.73** | ** ** | **$ (0.84** | **)** | ** ** | **$ 0.72** | ** ** | **$ 1.71** | ** ** |
| Production,  net*(billion cubic feet equivalent – Bcfe)* | ** ** | **60.5**                                   | ** ** | **60.1**         | ** ** | **62.0**          | ** ** | **60.9**                               | ** ** | ** ** | **243.5**       | ** ** |       | 61.1            |   | 61.5 |   | 62.0 |   | 61.5 |   |   | 246.1 |   | 255.9 |   |

 

 
|  | Annual  Information Form**PETRO-CANADA** | **41** |
|--|------------------------------------------|--------|

 

 

##### *Oil Sands – Syncrude*

##### *($/bbl, unless otherwise indicated)*

 
| ** **                   | ** ** | **2008 Three Months Ended** | ** ** | ** **        | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total             |       | Total      | ** **       |
|------------------------------|------------|--------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------------------|------------|------------|-------------------|------------|------------|------------------|
| ** **                   | ** ** | **Mar. 31**                           | ** ** | **June 30**  | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**          | ** ** | ** ** | Mar. 31     |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received      | ** ** | **$ 101.27**                          | ** ** | **$ 131.37** | ** ** | **$ 127.24** | ** ** | **$ 69.07**                       | ** ** | ** ** | **$ 106.63** |       |       | $ 68.79     |   | $ 76.71 |   | $ 81.77 |   | $ 88.01 |   |   | $ 79.20 |   | $ 72.13 |   |
| Royalties                    | ** ** | **(14.74**                                 | **)**      | **(20.04**        | **)**      | **(21.59**        | **)**      | **(5.74**                              | **)**      | ** ** | **(15.41**        | **)**      |       | (8.26            | ) | (11.15 | ) | (12.65 | ) | (14.87 | ) |   | (11.86 | ) | (6.98 | ) |
| Operating  expenses          | ** ** | **(39.03**                                 | **)**      | **(42.30**        | **)**      | **(34.40**        | **)**      | **(36.38**                             | **)**      | ** ** | **(37.79**        | **)**      |       | (26.68           | ) | (33.44 | ) | (20.92 | ) | (28.49 | ) |   | (26.94 | ) | (30.00 | ) |
| Netback                      | ** ** | **47.50**                                  | ** ** | **69.03**         | ** ** | **71.25**         | ** ** | **26.95**                              | ** ** | ** ** | **53.43**         | ** ** |       | 33.85            |   | 32.12 |   | 48.20 |   | 44.65 |   |   | 40.40 |   | 35.15 |   |
| Processing  and other income | ** ** | **–**                                 | ** ** | **–**        | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–**        | ** ** |       | –           |   | – |   | – |   | – |   |   | – |   | 1.65 |   |
| DD&A                     | ** ** | **(4.95**                                  | **)**      | **(4.95**         | **)**      | **(4.95**         | **)**      | **(4.95**                              | **)**      | ** ** | **(4.95**         | **)**      |       | (5.11            | ) | (5.13 | ) | (5.12 | ) | (5.12 | ) |   | (5.12 | ) | (3.74 | ) |
| Income and  other taxes4     | ** ** | **(12.41**                                 | **)**      | **(18.71**        | **)**      | **(20.80**        | **)**      | **(6.85**                              | **)**      | ** ** | **(14.66**        | **)**      |       | (9.33            | ) | (6.23 | ) | (13.83 | ) | 5.91 |   |   | (6.02 | ) | (7.75 | ) |
| **Net earnings**             | ** ** | **$ 30.14**                           | ** ** | **$ 45.37**  | ** ** | **$ 45.50**  | ** ** | **$ 15.15**                       | ** ** | ** ** | **$ 33.82**  | ** ** | ** ** | **$ 19.41** | ** ** | **$ 20.76** | ** ** | **$ 29.25** | ** ** | **$ 45.44** | ** ** | ** ** | **$ 29.26** | ** ** | **$ 25.31** | ** ** |
| Production,  net*(MMbbls)*   | ** ** | **2.9**                                    | ** ** | **2.9**           | ** ** | **3.5**           | ** ** | **3.4**                                | ** ** | ** ** | **12.7**          |       |       | 3.2              |   | 2.9 |   | 3.8 |   | 3.5 |   |   | 13.4 |   | 11.3 |   |

 

 

##### *Oil Sands – MacKay River*

##### *($/bbl, unless otherwise indicated)*

 
| ** **                       | ** ** | **2008 Three Months Ended** | ** ** | ** **       | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total            |       | Total      | ** **      |
|----------------------------------|------------|--------------------------------------------|------------|------------------|------------|-------------------|------------|----------------------------------------|------------|------------|------------------|------------|------------|-----------------|
| ** **                       | ** ** | **Mar. 31**                           | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**         | ** ** | ** ** | Mar. 31    |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received          | ** ** | **$ 52.43**                           | ** ** | **$ 75.85** | ** ** | **$ 83.51**  | ** ** | **$ 28.41**                       | ** ** | ** ** | **$ 60.26** |       |       | $ 29.08    |   | $ 25.58 |   | $ 32.48 |   | $ 24.13 |   |   | $ 28.23 |   | $ 28.93 |   |
| Royalties                        | ** ** | **(0.50**                                  | **)**      | **(0.01**        | **)**      | **(0.85**         | **)**      | **(0.26**                              | **)**      | ** ** | **(0.43**        | **)**      |       | (0.27           | ) | (0.23 | ) | (0.28 | ) | (0.15 | ) |   | (0.24 | ) | (0.49 | ) |
| Operating  expenses              | ** ** | **(23.01**                                 | **)**      | **(29.71**       | **)**      | **(22.16**        | **)**      | **(20.82**                             | **)**      | ** ** | **(23.66**       | **)**      |       | (15.08          | ) | (21.56 | ) | (17.28 | ) | (28.49 | ) |   | (19.71 | ) | (16.93 | ) |
| Netback                          | ** ** | **28.92**                                  | ** ** | **46.13**        | ** ** | **60.50**         | ** ** | **7.33**                               | ** ** | ** ** | **36.17**        | ** ** |       | 13.73           |   | 3.79 |   | 14.92 |   | (4.51 | ) |   | 8.28 |   | 11.51 |   |
| Overhead  expenses   (G&A)2  | ** ** | **(1.01**                                  | **)**      | **(1.16**        | **)**      | **(0.88**         | **)**      | **(0.97**                              | **)**      | ** ** | **(0.99**        | **)**      |       | (1.06           | ) | (1.36 | ) | (1.26 | ) | (1.45 | ) |   | (1.26 | ) | (0.90 | ) |
| Netback  after overhead expenses | ** ** | **27.91**                                  | ** ** | **44.97**        | ** ** | **59.62**         | ** ** | **6.36**                               | ** ** | ** ** | **35.18**        | ** ** |       | 12.67           |   | 2.43 |   | 13.66 |   | (5.96 | ) |   | 7.02 |   | 10.61 |   |
| Processing  and other income     | ** ** | **(0.17**                                  | **)**      | **0.83**         | ** ** | **0.43**          | ** ** | **2.48**                               | ** ** | ** ** | **0.91**         | ** ** |       | –          |   | 0.11 |   | (0.83 | ) | (0.54 | ) |   | (0.29 | ) | (0.05 | ) |
| Exploration  expenses            | ** ** | **(1.54**                                  | **)**      | **(0.04**        | **)**      | **(0.13**         | **)**      | **(0.08**                              | **)**      | ** ** | **(0.42**        | **)**      |       | (1.38           | ) | (0.20 | ) | 0.02 |   | (0.32 | ) |   | (0.51 | ) | (0.04 | ) |
| DD&A                         | ** ** | **(3.44**                                  | **)**      | **(3.23**        | **)**      | **(3.09**         | **)**      | **(3.42**                              | **)**      | ** ** | **(3.29**        | **)**      |       | (4.30           | ) | (4.51 | ) | (4.82 | ) | (3.73 | ) |   | (4.39 | ) | (4.63 | ) |
| Income and  other taxes4         | ** ** | **(6.63**                                  | **)**      | **(13.15**       | **)**      | **(17.47**        | **)**      | **(0.52**                              | **)**      | ** ** | **(9.59**        | **)**      |       | (2.51           | ) | 0.17 |   | (2.93 | ) | (0.21 | ) |   | (1.53 | ) | (1.43 | ) |
| **Net earnings (loss)**          | ** ** | **$ 16.13**                           | ** ** | **$ 29.38** | ** ** | **$ 39.36**  | ** ** | **$ 4.82**                        | ** ** | ** ** | **$ 22.79** | ** ** | ** ** | **$ 4.48** | ** ** | **$ (2.00** | **)** | **$ 5.10** | ** ** | **$ (10.76** | **)** | ** ** | **$ 0.30** | ** ** | **$ 4.46** | ** ** |
| Production,  net*(MMbbls)*       | ** ** | **2.1**                                    | ** ** | **2.0**          | ** ** | **2.7**           | ** ** | **2.4**                                | ** ** | ** ** | **9.2**          |       |       | 2.2             |   | 1.9 |   | 2.0 |   | 1.3 |   |   | 7.4 |   | 7.7 |   |

 

 
| **42** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

 

#### ***International & Offshore***

 

 

##### *East Coast Canada*

##### *($/bbl, unless otherwise indicated)*

 
| ** **                       | ** ** | **2008 Three Months Ended** | ** ** | ** **        | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total            |       | Total      | ** **       |
|----------------------------------|------------|--------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------------------|------------|------------|------------------|------------|------------|------------------|
| ** **                       | ** ** | **Mar. 31**                           | ** ** | **June 30**  | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**         | ** ** | ** ** | Mar. 31     |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received          | ** ** | **$ 97.70**                           | ** ** | **$ 126.35** | ** ** | **$ 114.76** | ** ** | **$ 57.19**                       | ** ** | ** ** | **$ 99.13** | ** ** |       | $ 65.76     |   | $ 75.29 |   | $ 76.83 |   | $ 86.45 |   |   | $ 75.87 |   | $ 71.12 |   |
| Royalties                        | ** ** | **(20.88**                                 | **)**      | **(32.65**        | **)**      | **(29.04**        | **)**      | **(12.50**                             | **)**      | ** ** | **(23.79**       | **)**      |       | (6.75            | ) | (9.28 | ) | (13.78 | ) | (14.34 | ) |   | (10.97 | ) | (4.54 | ) |
| Operating  expenses              | ** ** | **(4.76**                                  | **)**      | **(5.46**         | **)**      | **(5.44**         | **)**      | **(6.30**                              | **)**      | ** ** | **(5.49**        | **)**      |       | (5.14            | ) | (4.67 | ) | (5.40 | ) | (3.27 | ) |   | (4.66 | ) | (7.27 | ) |
| Netback                          | ** ** | **72.06**                                  | ** ** | **88.24**         | ** ** | **80.28**         | ** ** | **38.39**                              | ** ** | ** ** | **69.85**        | ** ** |       | 53.87            |   | 61.34 |   | 57.65 |   | 68.84 |   |   | 60.24 |   | 59.31 |   |
| Overhead  expenses   (G&A)2  | ** ** | **(0.32**                                  | **)**      | **(0.47**         | **)**      | **(0.37**         | **)**      | **(0.58**                              | **)**      | ** ** | **(0.43**        | **)**      |       | (0.13            | ) | (0.21 | ) | (0.20 | ) | (0.27 | ) |   | (0.20 | ) | (0.44 | ) |
| Netback  after overhead expenses | ** ** | **71.74**                                  | ** ** | **87.77**         | ** ** | **79.91**         | ** ** | **37.81**                              | ** ** | ** ** | **69.42**        | ** ** |       | 53.74            |   | 61.13 |   | 57.45 |   | 68.57 |   |   | 60.04 |   | 58.87 |   |
| Processing  and other income     | ** ** | **4.98**                                   | ** ** | **0.05**          | ** ** | **0.03**          | ** ** | **0.07**                               | ** ** | ** ** | **1.30**         | ** ** |       | 0.03             |   | 0.99 |   | (0.03 | ) | 3.80 |   |   | 1.12 |   | 1.20 |   |
| Exploration  expenses            | ** ** | **0.01**                                   | ** ** | **–**        | ** ** | **0.03**          | ** ** | **–**                             | ** ** | ** ** | **0.01**         | ** ** |       | (0.38            | ) | – |   | – |   | 0.01 |   |   | (0.09 | ) | – |   |
| DD&A                         | ** ** | **(11.31**                                 | **)**      | **(11.96**        | **)**      | **(11.68**        | **)**      | **(11.88**                             | **)**      | ** ** | **(11.70**       | **)**      |       | (11.49           | ) | (11.07 | ) | (11.51 | ) | (11.31 | ) |   | (11.34 | ) | (8.82 | ) |
| Income and  other taxes4         | ** ** | **(20.43**                                 | **)**      | **(23.74**        | **)**      | **(21.60**        | **)**      | **(8.33**                              | **)**      | ** ** | **(18.57**       | **)**      |       | (14.20           | ) | (16.63 | ) | (15.51 | ) | (14.83 | ) |   | (15.35 | ) | (15.87 | ) |
| **Net earnings**                 | ** ** | **$ 44.99**                           | ** ** | **$ 52.12**  | ** ** | **$ 46.69**  | ** ** | **$ 17.67**                       | ** ** | ** ** | **$ 40.46** | ** ** | ** ** | **$ 27.70** | ** ** | **$ 34.42** | ** ** | **$ 30.40** | ** ** | **$ 46.24** | ** ** | ** ** | **$ 34.38** | ** ** | **$ 35.38** | ** ** |
| Production,  net*(MMbbls)*       | ** ** | **8.4**                                    | ** ** | **8.2**           | ** ** | **8.3**           | ** ** | **8.2**                                | ** ** | ** ** | **33.1**         |       |       | 8.7              |   | 9.9 |   | 9.4 |   | 8.1 |   |   | 36.1 |   | 26.5 |   |

 

 

##### *North Sea*5, 6

##### *($/barrel of oil equivalent – $/boe, unless otherwise indicated)*

 
| ** **                                                | ** ** | **2008 Three Months Ended** | ** ** | ** **        | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total            |       | Total      | ** **       |
|-----------------------------------------------------------|------------|--------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------------------|------------|------------|------------------|------------|------------|------------------|
| ** **                                                | ** ** | **Mar. 31**                           | ** ** | **June 30**  | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**         | ** ** | ** ** | Mar. 31     |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received7                                  | ** ** | **$ 91.65**                           | ** ** | **$ 108.79** | ** ** | **$ 113.57** | ** ** | **$ 66.01**                       | ** ** | ** ** | **$ 95.38** |       |       | $ 64.34     |   | $ 68.12 |   | $ 73.56 |   | $ 80.54 |   |   | $ 72.18 |   | $ 67.16 |   |
| Operating  expenses                                       | ** ** | **(7.01**                                  | **)**      | **(8.79**         | **)**      | **(8.55**         | **)**      | **(10.92**                             | **)**      | ** ** | **(8.74**        | **)**      |       | (14.92           | ) | (7.48 | ) | (7.41 | ) | (7.64 | ) |   | (9.03 | ) | (9.56 | ) |
| Netback                                                   | ** ** | **84.64**                                  | ** ** | **100.00**        | ** ** | **105.02**        | ** ** | **55.09**                              | ** ** | ** ** | **86.64**        | ** ** |       | 49.42            |   | 60.64 |   | 66.15 |   | 72.90 |   |   | 63.15 |   | 57.60 |   |
| Overhead  expenses   (G&A)2                           | ** ** | **(1.13**                                  | **)**      | **(1.30**         | **)**      | **(0.63**         | **)**      | **(2.07**                              | **)**      | ** ** | **(1.27**        | **)**      |       | (2.77            | ) | (1.22 | ) | (1.60 | ) | (0.80 | ) |   | (1.53 | ) | (1.55 | ) |
| Netback  after overhead expenses                          | ** ** | **83.51**                                  | ** ** | **98.70**         | ** ** | **104.39**        | ** ** | **53.02**                              | ** ** | ** ** | **85.37**        | ** ** |       | 46.65            |   | 59.42 |   | 64.55 |   | 72.10 |   |   | 61.62 |   | 56.05 |   |
| Processing  and other income                              | ** ** | **0.71**                                   | ** ** | **(0.21**         | **)**      | **3.70**          | ** ** | **7.64**                               | ** ** | ** ** | **2.81**         | ** ** |       | 2.70             |   | (0.32 | ) | (0.16 | ) | 0.80 |   |   | 0.65 |   | 0.70 |   |
| Exploration  expenses                                     | ** ** | **(1.99**                                  | **)**      | **(2.72**         | **)**      | **0.51**          | ** ** | **(0.01**                              | **)**      | ** ** | **(1.11**        | **)**      |       | (0.77            | ) | (3.38 | ) | 0.32 |   | (2.75 | ) |   | (1.68 | ) | (1.33 | ) |
| Derivative  contracts associated with Buzzard acquisition | ** ** | **–**                                 | ** ** | **–**        | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–**       | ** ** |       | –           |   | – |   | (14.71 | ) | (17.67 | ) |   | (8.75 | ) | – |   |
| DD&A                                                  | ** ** | **(15.51**                                 | **)**      | **(15.50**        | **)**      | **(16.50**        | **)**      | **(14.91**                             | **)**      | ** ** | **(15.61**       | **)**      |       | (20.66           | ) | (18.86 | ) | (18.71 | ) | (17.17 | ) |   | (18.73 | ) | (18.22 | ) |
| Income and  other taxes8                                  | ** ** | **(32.75**                                 | **)**      | **(39.53**        | **)**      | **(46.42**        | **)**      | **(24.41**                             | **)**      | ** ** | **(35.86**       | **)**      |       | (13.75           | ) | (18.39 | ) | (18.26 | ) | (19.99 | ) |   | (17.84 | ) | (34.68 | ) |
| **Net earnings**                                          | ** ** | **$ 33.97**                           | ** ** | **$ 40.74**  | ** ** | **$ 45.68**  | ** ** | **$ 21.33**                       | ** ** | ** ** | **$ 35.60** | ** ** | ** ** | **$ 14.17** | ** ** | **$ 18.47** | ** ** | **$ 13.03** | ** ** | **$ 15.32** | ** ** | ** ** | **$ 15.27** | ** ** | **$ 2.52** | ** ** |
| Production,  net*(MMboe)*                                 | ** ** | **9.7**                                    | ** ** | **9.1**           | ** ** | **8.7**           | ** ** | **8.3**                                | ** ** | ** ** | **35.8**         |       |       | 6.8              |   | 8.4 |   | 8.9 |   | 9.0 |   |   | 33.1 |   | 15.9 |   |

 

 
|  | Annual  Information Form**PETRO-CANADA** | **43** |
|--|------------------------------------------|--------|

 

##### *North Africa/Near East*5, 9, 11

##### *($/boe, unless otherwise indicated)*

 
| ** **                      | ** ** | **2008 Three Months Ended** | ** ** | ** **        | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total             |       | Total      | ** **      |
|---------------------------------|------------|--------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------------------|------------|------------|-------------------|------------|------------|-----------------|
| ** **                      | ** ** | **Mar. 31**                           | ** ** | **June 30**  | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**          | ** ** | ** ** | Mar. 31    |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received7        | ** ** | **$ 99.13**                           | ** ** | **$ 121.06** | ** ** | **$ 126.47** | ** ** | **$ 63.73**                       | ** ** | ** ** | **$ 102.00** | ** ** |       | $ 66.68    |   | $ 75.31 |   | $ 77.59 |   | $ 88.53 |   |   | $ 77.26 |   | $ 72.70 |   |
| Royalties                       | ** ** | **(7.94**                                  | **)**      | **(69.56**        | **)**      | **(54.26**        | **)**      | **(20.53**                             | **)**      | ** ** | **(37.33**        | **)**      |       | (7.55           | ) | (7.22 | ) | (6.71 | ) | (6.92 | ) |   | (7.05 | ) | (7.01 | ) |
| Operating  expenses12           | ** ** | **(9.20**                                  | **)**      | **4.36**          | ** ** | **(2.46**         | **)**      | **(1.69**                              | **)**      | ** ** | **(2.26**         | **)**      |       | (9.19           | ) | (6.50 | ) | (7.27 | ) | (7.08 | ) |   | (7.50 | ) | (4.91 | ) |
| Netback                         | ** ** | **81.99**                                  | ** ** | **55.86**         | ** ** | **69.75**         | ** ** | **41.51**                              | ** ** | ** ** | **62.41**         | ** ** |       | 49.94           |   | 61.59 |   | 63.61 |   | 74.53 |   |   | 62.71 |   | 60.78 |   |
| Overhead  expenses   (G&A)2 | ** ** | **(1.56**                                  | **)**      | **(1.88**         | **)**      | **(3.07**         | **)**      | **3.06**                               | ** ** | ** ** | **(0.94**         | **)**      |       | (0.51           | ) | (0.68 | ) | (0.64 | ) | (1.27 | ) |   | (0.78 | ) | (0.80 | ) |
| Netback  after overhead         | ** ** | **80.43**                                  | ** ** | **53.98**         | ** ** | **66.68**         | ** ** | **44.57**                              | ** ** | ** ** | **61.47**         | ** ** |       | 49.43           |   | 60.91 |   | 62.97 |   | 73.26 |   |   | 61.93 |   | 59.98 |   |
| Processing  and other income    | ** ** | **(1.67**                                  | **)**      | **(8.71**         | **)**      | **(10.45**        | **)**      | **(5.49**                              | **)**      | ** ** | **(3.44**         | **)**      |       | 0.57            |   | 0.36 |   | (1.26 | ) | (0.06 | ) |   | (0.12 | ) | (0.30 | ) |
| Exploration  expenses           | ** ** | **(1.87**                                  | **)**      | **(10.70**        | **)**      | **0.52**          | ** ** | **(7.52**                              | **)**      | ** ** | **(4.80**         | **)**      |       | (4.56           | ) | (0.53 | ) | 0.42 |   | (1.44 | ) |   | (1.49 | ) | (0.47 | ) |
| DD&A                        | ** ** | **(2.94**                                  | **)**      | **(3.33**         | **)**      | **(6.00**         | **)**      | **(7.32**                              | **)**      | ** ** | **(5.33**         | **)**      |       | (2.47           | ) | (2.27 | ) | (2.15 | ) | (2.12 | ) |   | (2.25 | ) | (1.51 | ) |
| Income and  other taxes         | ** ** | **(69.89**                                 | **)**      | **(7.95**         | **)**      | **(44.82**        | **)**      | **(28.03**                             | **)**      | ** ** | **(37.51**        | **)**      |       | (38.89          | ) | (52.37 | ) | (55.34 | ) | (64.84 | ) |   | (53.13 | ) | (53.89 | ) |
| **Net earnings (loss)**         | ** ** | **$ 4.06**                            | ** ** | **$ 23.29**  | ** ** | **$ 5.93**   | ** ** | **$ (3.79**                       | **)**      | ** ** | **$ 10.39**  | ** ** | ** ** | **$ 4.08** | ** ** | **$ 6.10** | ** ** | **$ 4.64** | ** ** | **$ 4.80** | ** ** | ** ** | **$ 4.94** | ** ** | **$ 3.81** | ** ** |
| Production,  net*(MMboe)*       | ** ** | **4.5**                                    | ** ** | **4.5**           | ** ** | **4.6**           | ** ** | **4.2**                                | ** ** | ** ** | **17.9**          | ** ** |       | 4.2             |   | 4.2 |   | 4.5 |   | 4.5 |   |   | 17.4 |   | 18.1 |   |

 

 

##### *Northern Latin America*5, 10

##### *($/Mcf, unless otherwise indicated)*

 
| ** **                       | ** ** | **2008 Three Months Ended** | ** ** | ** **       | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total           |       | Total      | ** **      |
|----------------------------------|------------|--------------------------------------------|------------|------------------|------------|-------------------|------------|----------------------------------------|------------|------------|-----------------|------------|------------|-----------------|
| ** **                       | ** ** | **Mar. 31**                           | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**        | ** ** | ** ** | Mar. 31    |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received          | ** ** | **$ 4.95**                            | ** ** | **$ 5.73**  | ** ** | **$ 7.85**   | ** ** | **$ 11.95**                       | ** ** | ** ** | **$ 7.15** | ** ** |       | $ 4.89     |   | $ 4.59 |   | $ 4.19 |   | $ 3.65 |   |   | $ 4.34 |   | $ 5.13 |   |
| Royalties                        | ** ** | **–**                                 | ** ** | **–**       | ** ** | **(2.20**         | **)**      | **(2.37**                              | **)**      | ** ** | **(0.20**       | **)**      |       | –          |   | (1.39 | ) | (1.38 | ) | (0.82 | ) |   | (0.38 | ) | (1.26 | ) |
| Operating  expenses              | ** ** | **(0.17**                                  | **)**      | **(0.22**        | **)**      | **(0.25**         | **)**      | **(0.23**                              | **)**      | ** ** | **(0.22**       | **)**      |       | (0.05           | ) | (0.17 | ) | (0.15 | ) | (0.12 | ) |   | (0.12 | ) | (0.18 | ) |
| Netback                          | ** ** | **4.78**                                   | ** ** | **5.51**         | ** ** | **5.40**          | ** ** | **9.35**                               | ** ** | ** ** | **6.73**        | ** ** |       | 4.84            |   | 3.03 |   | 2.66 |   | 2.71 |   |   | 3.84 |   | 3.69 |   |
| Overhead  expenses   (G&A)2  | ** ** | **(0.06**                                  | **)**      | **(0.10**        | **)**      | **(0.07**         | **)**      | **(0.09**                              | **)**      | ** ** | **(0.08**       | **)**      |       | (0.07           | ) | (0.11 | ) | (0.12 | ) | (0.19 | ) |   | (0.13 | ) | (0.15 | ) |
| Netback  after overhead expenses | ** ** | **4.72**                                   | ** ** | **5.41**         | ** ** | **5.33**          | ** ** | **9.26**                               | ** ** | ** ** | **6.65**        | ** ** |       | 4.77            |   | 2.92 |   | 2.54 |   | 2.52 |   |   | 3.71 |   | 3.54 |   |
| Processing  and other income     | ** ** | **0.26**                                   | ** ** | **(0.30**        | **)**      | **(0.34**         | **)**      | **(0.24**                              | **)**      | ** ** | **(0.14**       | **)**      |       | (0.16           | ) | 0.02 |   | (0.03 | ) | 0.17 |   |   | – |   | (0.03 | ) |
| Exploration  expenses            | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **(0.81**                              | **)**      | ** ** | **(0.21**       | **)**      |       | (0.01           | ) | (0.01 | ) | – |   | (0.01 | ) |   | (0.01 | ) | (0.01 | ) |
| DD&A                         | ** ** | **(1.24**                                  | **)**      | **(1.24**        | **)**      | **(1.24**         | **)**      | **(1.24**                              | **)**      | ** ** | **(1.24**       | **)**      |       | (0.88           | ) | (0.88 | ) | (0.88 | ) | (0.88 | ) |   | (0.88 | ) | (0.73 | ) |
| Income and  other taxes          | ** ** | **(1.13**                                  | **)**      | **(2.24**        | **)**      | **(2.05**         | **)**      | **(3.97**                              | **)**      | ** ** | **(2.80**       | **)**      |       | (1.49           | ) | (1.30 | ) | (0.66 | ) | (0.59 | ) |   | (1.53 | ) | (1.29 | ) |
| **Net earnings**                 | ** ** | **$ 2.61**                            | ** ** | **$ 1.63**  | ** ** | **$ 1.70**   | ** ** | **$ 3.00**                        | ** ** | ** ** | **$ 2.26** | ** ** | ** ** | **$ 2.23** | ** ** | **$ 0.75** | ** ** | **$ 0.97** | ** ** | **$ 1.21** | ** ** | ** ** | **$ 1.29** | ** ** | **$ 1.48** | ** ** |
| Production,  net (Bcf)           | ** ** | **6.2**                                    | ** ** | **5.8**          | ** ** | **5.5**           | ** ** | **6.1**                                | ** ** | ** ** | **23.6**        | ** ** |       | 6.8             |   | 6.6 |   | 6.0 |   | 6.7 |   |   | 26.1 |   | 22.9 |   |

 

 
| **44** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

 

##### *Discontinued Operations*11

##### *($/boe, unless otherwise indicated)*

 
| ** **                     | ** ** | **2008 Three Months Ended** | ** ** | ** **       | **Total**  | ** **        | ** ** | 2007 Three Months Ended |       |       | Total      |       | Total      | ** **   |
|--------------------------------|------------|--------------------------------------------|------------|------------------|------------|-------------------|------------|----------------------------------------|------------|------------|------------|------------|------------|--------------|
| ** **                     | ** ** | **Mar. 31**                           | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31**                       | ** ** | ** ** | **2008**   | ** ** | ** ** | Mar. 31 |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |   | 2007 |   | 2006 | ** ** |
| Average  price received7       | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | $ 70.36 |   |
| Royalties                      | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | (52.10 | ) |
| Operating  expenses            | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | (2.65 | ) |
| Netback                        | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | 15.61 |   |
| Overhead  expenses  (G&A)2 | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | (0.23 | ) |
| Netback  after overhead        | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | 15.38 |   |
| Processing  and other income   | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | (1.06 | ) |
| DD&A                       | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | – |   |
| Income and  other taxes        | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | (5.11 | ) |
| **Net earnings**               | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** | ** ** | ** ** | **–**   | ** ** | **–** | ** ** | **–** | ** ** | **–** | ** ** | ** ** | **–** | ** ** | **$ 9.21** | ** ** |
| Production,  net *(MMboe)*     | ** ** | **–**                                 | ** ** | **–**       | ** ** | **–**        | ** ** | **–**                             | ** ** | ** ** | **–** |       |       | –       |   | – |   | – |   | – |   |   | – |   | 2.0 |   |

 
| 1  | North  American Natural Gas includes conventional crude oil, NGL and natural gas in  natural gas equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2  | Portion  of head office expenses allocated to production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3  | In  the fourth quarter of 2007, the North American Natural Gas business unit  recorded a charge of $97 million after-tax for the impairment of CBM assets  in the U.S. Rockies due to probable reserves reductions combined with lower  prices.                                                                                                                                                                                                                                                                                                                                                                |
| 4  | Income  and other taxes in the fourth quarter of 2007 included a tax rate adjustment  reflecting the reduction in Canadian federal income tax rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 5  | North  Sea and North Africa/Near East include conventional crude oil, NGL and  natural gas in crude oil equivalents. Northern Latin America includes only  natural gas.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 6  | Production  in the North Sea is subject to a conventional royalty and tax regime. No  royalty is payable on production in the U.K. sector.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 7  | Average  price for North Sea and North Africa/Near East includes conventional crude  oil, NGL and natural gas in crude oil equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 8  | In  2007, the Company recorded a $36 million recovery (2006 – $242 million  charge) for the U.K. supplemental corporate tax rate adjustment.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 9  | On  June 19, 2008, the Company signed six new EPSAs with the Libya NOC to  replace existing concession agreements and one EPSA. The new EPSAs were  ratified as of the signing with an effective date of January 1, 2008.  Net earnings for the three months ended June 30, 2008 included a $47  million after-tax adjustment to recognize incremental earnings on the EPSAs  relating to the period from January 1 to March 31, 2008, which  could not be ratified until June 19, 2008. The government share is split  between royalty and tax for Canadian reporting purposes. |
| 10 | Natural  gas production offshore Trinidad and Tobago is held pursuant to a PSC with  the government of that country. The government share is split between royalty  and tax for Canadian reporting purposes.                                                                                                                                                                                                                                                                                                                                                                                                   |
| 11 | North  Africa/Near East excludes production related to the mature Syrian producing  assets sold in 2006, which are shown as discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 12 | The  Company is not obligated to pay operating expenses for the Libya NOC’s share  of production under the EPSAs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

 
|  | Annual  Information Form**PETRO-CANADA** | **45** |
|--|------------------------------------------|--------|

 

## **RESERVES**

 

Inorder to harmonize its oil and gas disclosure in both Canada and the U.S.,Petro-Canada applied for, and received, certain exemptions to reservesdisclosure requirements as set out in National Instrument 51-101 Standardsof Disclosure for Oil and Gas Activities (NI 51-101). These exemptionspermit Petro-Canada to use its own staff of qualified reserves evaluators toprepare the Company’s reserves estimates and to use SEC and FASB standards whenreporting oil and gas reserves. In addition, the reserves for the Syncrudemining operation were prepared in accordance with SEC Industry Guide 7.

 

Petro-Canadastrongly believes that the use of its own staff of qualified reservesevaluators, who are familiar with the Company’s oil and natural gas assets as aresult of working with them on a day-to-day basis, combined with independentthird-party assessment of both its reserves processes and its reservesestimates, provides a level of confidence in its reserves data that is at leastas valid as that which would be provided if the work was done solely by a thirdparty.

 

Petro-Canada’sstaff of qualified reserves evaluators determines the Company’s reserves dataand quantities based on corporate-wide policies, procedures and practices. TheCompany believes these reserves policies, procedures and practices conform tothe requirements of applicable Canadian and SEC regulations, and of theAssociation of Professional Engineers, Geologists and Geophysicists of Alberta’sStandard of Practice for the Evaluation of Oil and Gas Reserves forPublic Disclosure.

 

Toconfirm the quality of the reserves policies, procedures and practices and theinternally generated reserves estimates, Petro-Canada employs the services ofindependent qualified engineering evaluators and auditors. For 2008,independent petroleum reservoir engineering consultants, Sproule AssociatesLimited (Sproule) and RPS Energy (RPS), conducted assessments of Petro-Canada’shydrocarbon reserves. RPS completed an independent audit of 60% of the Company’sproved crude oil, natural gas and NGL reserves outside of North America.Similarly, Sproule audited 49% of Petro-Canada’s North American proved oil andnatural gas reserves, not including Oil Sands. Also in 2008, 100% of Oil Sandsbitumen proved reserves were audited and 100% of Oil Sands mining provedreserves were reviewed by independent reserves evaluators. The independentauditors’ and evaluators’ reports concluded that the Company’s year-end 2008proved reserves estimates are reasonable.

 

Sprouleand RPS also audited Petro-Canada’s reserves policies, procedures andpractices. They concluded that Petro-Canada’s reserves booking standards meetapplicable disclosure regulations, that management is complying with thosestandards and that the reserves process is carried out in a manner and standardconsistent with the auditors’ practices. In addition,PricewaterhouseCoopers LLP, as contract internal auditor, has testedaspects of the non-engineering management control processes used inestablishing reserves.

 

Detailedinformation about Petro-Canada’s proved reserves of crude oil, NGL, naturalgas, bitumen and synthetic crude oil, before and after royalties, follows thissection.

 

 

#### **Petro-Canada’s Reserves Processes**

 

Petro-Canadahas a well-established reserves management process. The key components of theprocess are:

 

*Reserves Steering Committee*: Chaired by the senior vice-president, NorthAmerican Natural Gas, the Reserves Steering Committee meets regularly toaddress issues regarding the reserves evaluation and reporting processes.Senior managers representing each upstream business unit, finance and legalservices make up this Committee.

 

*Reservoir Engineering Organization:* One ormore reservoir engineering supervisors are responsible for the functionalguidance of reservoir engineering within each upstream business unit. Thesupervisors ensure that the appropriate standards, processes and qualityassurance checks are applied to reservoir engineering activities, includingreserves evaluation. The supervisors, as responsible qualified reservesevaluators, sign the annual reserves evaluations for their respective areas.

 

 
| **46** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

*Reserves Definitions, Policies, Procedures and Practices:*Petro-Canada has developed corporate-wide internal policies, procedures andpractices to assist reserves evaluation personnel. These policies are designedto meet internal and external reporting requirements, are updated annually, arereviewed with the reservoir engineering staff and are maintained for referenceon the reservoir engineering section of Petro-Canada’s internal website.

 

*Major Property Reviews:* Eachyear, prior to business plan development, a series of reviews are conductedwith interdisciplinary management on Petro-Canada’s major properties. Thesereviews are intended to ensure that there is a current, accurate andappropriately communicated understanding of these assets and their associatedopportunities.

 

*Reserves Software Tools:*Petro-Canada employs a high quality, technical tool kit for reservoirengineering. This software supports the analysis of technical and economicparameters required for reserves evaluation. Ongoing training and competencyassessment support the effective use of the tool kit.

 

*Independent Evaluation/Audit/Review:*Independent qualified reserves evaluators are engaged to audit and/or evaluatethe Company’s internal evaluation processes and to perform such tests as theydeem appropriate to ensure Petro-Canada’s reserves are appropriately evaluated.Each year’s annual independent evaluator assessment plan is reviewed andapproved by the Audit, Finance and Risk Committee of the Board of Directors(Board). The independent evaluators’ observations and recommendations arereviewed with senior management and are used to guide process improvementactivities.

 

*Reserves Review and Disclosure Process:* In December ofeach year, the management in each business unit reviews the reserves dataprepared by the reservoir engineering staff. The officer responsible for eachbusiness unit signs an assertion regarding the quality of the reservesestimates and the processes applied. Also in December, Petro-Canada’s year-endreserves and preliminary reports from the independent evaluators are reviewedby the Reserves Steering Committee and a copy of the preliminary reservesreport is supplied to the external financial auditor. In January, the finalreserves report is reviewed with the Audit, Finance and Risk Committee of theBoard.

 

 
|  | Annual  Information Form**PETRO-CANADA** | **47** |
|--|------------------------------------------|--------|

 

Thefollowing tables show the Company’s estimates of Petro-Canada’s total provedcrude oil, natural gas, bitumen and synthetic crude oil reserves as at December 31,2008 and average 2008 daily production by major fields. These reserves numbersrepresent the sum of oil sands mining and oil and gas activities and arepresented before royalties. Reserves shown in this format do not conform to SECstandards and are for general supplemental information only.

 

 

##### *Major Reserves and Production Locations, BeforeDeduction of Royalties*

 
| **Crude Oil field/Facility**1 | ** ** | **Location**                       | ** ** | **Proved Reserves**2,3** ****at  December 31, 2008***(MMbbls)* | ** ** | **Average 2008  Daily Production**2*****(Mbbls/d)* | ** ** |
|------------------------------------|------------|------------------------------------|------------|------------------------------------------------------------------------------------|------------|--------------------------------------------------------------|------------|
| Syncrude3                          |       | Alberta                            | ** ** | **366**                                                                            | ** ** | **35**                                                       | ** ** |
| MacKay  River                      |       | Alberta                            | ** ** | **258**                                                                            | ** ** | **25**                                                       | ** ** |
| Buzzard                            |       | Offshore U.K.                      | ** ** | **132**                                                                            | ** ** | **59**                                                       | ** ** |
| Amal                               |       | Libya                              | ** ** | **42**                                                                             | ** ** | **15**                                                       | ** ** |
| Hibernia                           |       | Offshore Newfoundland and Labrador | ** ** | **41**                                                                             | ** ** | **28**                                                       | ** ** |
| Terra Nova                         |       | Offshore Newfoundland and Labrador | ** ** | **23**                                                                             | ** ** | **35**                                                       | ** ** |
| Ghani  Gir/Facha                   |       | Libya                              | ** ** | **23**                                                                             | ** ** | **9**                                                        | ** ** |
| White Rose                         |       | Offshore Newfoundland and Labrador | ** ** | **17**                                                                             | ** ** | **27**                                                       | ** ** |
| Ghani/Zenad  Farrud                |       | Libya                              | ** ** | **17**                                                                             | ** ** | **9**                                                        | ** ** |
| Denver-Julesburg  area             |       | U.S.                               | ** ** | **14**                                                                             | ** ** | **3**                                                        | ** ** |
| Other                              | ** ** | ** **                         | ** ** | **90**                                                                             | ** ** | **48**                                                       | ** ** |
| **Total**                          | ** ** | ** **                         | ** ** | **1,023**                                                                          | ** ** | **293**                                                      | ** ** |

 

 
| **Natural Gas Field/Facility**1 | ** ** | **Location**                 | ** ** | **Proved Reserves at  December 31, 2008***(Bcf)* | ** ** | **Average 2008  Daily Production***(MMcf/d)* | ** ** |
|-------------------------------------------|------------|------------------------------|------------|----------------------------------------------------------------------|------------|--------------------------------------------------------|------------|
| Wildcat  Hills area                       |       | Alberta                      | ** ** | **204**                                                              | ** ** | **87**                                                 | ** ** |
| Hanlan area                               |       | Alberta                      | ** ** | **185**                                                              | ** ** | **80**                                                 | ** ** |
| NCMA-1                                    |       | Offshore Trinidad and Tobago | ** ** | **157**                                                              | ** ** | **64**                                                 | ** ** |
| Medicine  Hat                             |       | Alberta                      | ** ** | **135**                                                              | ** ** | **44**                                                 | ** ** |
| Denver-Julesburg  area                    |       | U.S.                         | ** ** | **84**                                                               | ** ** | **24**                                                 | ** ** |
| Jedney/Bubbles  area                      |       | British Columbia             | ** ** | **79**                                                               | ** ** | **26**                                                 | ** ** |
| Alderson                                  |       | Alberta                      | ** ** | **76**                                                               | ** ** | **26**                                                 | ** ** |
| Laprise  area                             |       | British Columbia             | ** ** | **62**                                                               | ** ** | **23**                                                 | ** ** |
| Powder  River area                        |       | U.S.                         | ** ** | **59**                                                               | ** ** | **55**                                                 | ** ** |
| Coleman                                   |       | Alberta                      | ** ** | **47**                                                               | ** ** | **17**                                                 | ** ** |
| Other                                     | ** ** | ** **                   | ** ** | **406**                                                              | ** ** | **260**                                                | ** ** |
| **Total**                                 | ** ** | ** **                   | ** ** | **1,494**                                                            | ** ** | **706**                                                | ** ** |

 
| 1 | Fields  are onshore unless otherwise indicated.                                                                                                                                                         |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | The  reserves and production figures shown in this table do not include NGL. Total  Company proved reserves (including oil sands mining) of crude oil and NGL at  year-end 2008 were 1,037 MMbbls. |
| 3 | Syncrude  reserves are synthetic crude oil reserves from oil sands mining. See Legal  Notice on page 1 regarding oil sands mining.                                                                 |

 

Petro-Canadabelieves that the crude oil, NGL, natural gas, bitumen and synthetic crude oilreserves quantities are reasonable estimates consistent with current knowledgeof the characteristics and extent of the productive formations. Estimates aresubject to upward or downward revisions as additional information regardingproducing fields becomes available, as technology improves and as economicconditions change. Additional proved reserves are expected to be booked duringthe normal course of continuing development.

 

 
| **48** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

 

The table below shows, for the years indicated, Petro-Canada’s estimatesof proved reserves, before royalties, for Oil and Gas activities. The reportingof working interest reserves before royalties does not conform to SEC standardsand is for general supplemental information.

 

 

##### *Proved Developed and Undeveloped Reserves Before Royalties*

##### *(Crude oil and equivalents in MMbbls; Natural gas in Bcf)*

 
| ** **                                     | ** ** |                                               |       |       |                                 |              |                     |                         |       |       |         |       |       |                   |                                          |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |   |   |    |   |   |                                     |   |   |         | ** ** | ** ** | ** **                               | ** ** | ** ** | ** **       | ** ** |
|------------------------------------------------|------------|----------------------------------------------------|------------|------------|--------------------------------------|-------------------|--------------------------|------------------------------|------------|------------|--------------|------------|------------|------------------------|-----------------------------------------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|--------|--------|---------|--------|--------|------------------------------------------|--------|--------|--------------|------------|------------|------------------------------------------|------------|------------|------------------|------------|
| ** **                                     | ** ** | **Oil and Gas Activities**1,2,3,4,5 | ** ** |
| ** **                                     | ** ** | ** **                                         | ** ** | ** ** | ** **                           | **International** | ** **               | ** **                   | ** ** | ** ** | ** **   | ** ** | ** ** | **North America** | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** |
| ** **                                     | ** ** |                                               |       |       |                                 |              | Other International |                         |       |       |         |       |       |                   | **North American Natural Gas** |       |                       |       |       |         |       |       |                       |       |       |         |       | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** |
| ** **                                     | ** ** | North Sea6                                    |       |       | North Africa/Near  East7,8,9,10 |              |                     | Northern  Latin  America7,11 |       |       | Subtotal     |       |       | Western Canada    |                                          |       | U.S. Rockies          |       |       | East  Coast  |       |       | Oil  Sands                 |       |       | Subtotal     | ** ** | ** ** | **Total**                  | ** ** |
| ** **                                     | ** ** | Crude  oil &  NGL                         |       |       | Natural  gas                         |              |                     | Crude  oil &  NGL   |       |       | Natural  gas |       |       | Natural  gas           |                                          |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |   |   | Bitumen |   |   | Crude oil,  NGL &  bitumen |   |   | Natural  gas | ** ** | ** ** | **Crude  oil,  NGL &  bitumen** | ** ** | ** ** | **Natural  gas** | ** ** |
| **Beginning of year 2007**                     | ** ** | **144**                                            | ** ** | **84**     | ** **                           | **134**           | ** **               | **1**                        | ** ** | **215**    | ** **   | **278**    | ** ** | **300**                | ** **                                    | **39**     | ** **                 | **1,500**  | ** ** | **8**        | ** ** | **145**    | ** **                 | **123**    | ** ** | **157**      | ** ** | **327**    | ** **                 | **1,645**  | ** ** | **605**      | ** ** | **1,945**  | ** **                 |
| Revisions  of previous estimates13             |       | 7                                                  |       | 16         |                                 | (9)               |                     | (1)                          |       | –     |         | (2)        |       | 15                     |                                          | (1)        |                       | (90)       |       | 1            |       | 10         |                       | 7          |       | 72           |       | 79         |                       | (80)       |       | 77           |       | (65)       |                       |
| Sale of  reserves in place                     |       | –                                             |       | –     |                                 | –            |                     | –                       |       | –     |         | –     |       | –                 |                                          | (1)        |                       | (11)       |       | –       |       | –     |                       | –     |       | –       |       | (1)        |                       | (11)       |       | (1)          |       | (11)       |                       |
| Purchase of  reserves in place                 |       | –                                             |       | –     |                                 | –            |                     | –                       |       | –     |         | –     |       | –                 |                                          | –     |                       | 1          |       | –       |       | –     |                       | –     |       | –       |       | –     |                       | 1          |       | –       |       | 1          |                       |
| Discoveries,  extensions and improved recovery |       | 19                                                 |       | 12         |                                 | 3                 |                     | –                       |       | –     |         | 22         |       | 12                     |                                          | 1          |                       | 102        |       | 3            |       | 41         |                       | 6          |       | 55           |       | 65         |                       | 143        |       | 87           |       | 155        |                       |
| Production  net                                |       | (30)                                               |       | (21)       |                                 | (17)              |                     | –                       |       | (26)       |         | (47)       |       | (47)                   |                                          | (4)        |                       | (194)      |       | (1)          |       | (25)       |                       | (36)       |       | (8)          |       | (49)       |                       | (219)      |       | (96)         |       | (266)      |                       |
| **End of year 2007**                           | ** ** | **140**                                            | ** ** | **91**     | ** **                           | **111**           | ** **               | **–**                   | ** ** | **189**    | ** **   | **251**    | ** ** | **280**                | ** **                                    | **34**     | ** **                 | **1,308**  | ** ** | **11**       | ** ** | **171**    | ** **                 | **100**    | ** ** | **276**      | ** ** | **421**    | ** **                 | **1,479**  | ** ** | **672**      | ** ** | **1,759**  | ** **                 |
| Revisions  of previous estimates13             |       | (4)                                                |       | (30)       |                                 | (31)              |                     | –                       |       | (8)        |         | (35)       |       | (38)                   |                                          | (3)        |                       | (39)       |       | (4)          |       | (28)       |                       | 14         |       | (9)          |       | (2)        |                       | (67)       |       | (37)         |       | (105)      |                       |
| Sale of  reserves in place                     |       | –                                             |       | –     |                                 | –            |                     | –                       |       | –     |         | –     |       | –                 |                                          | –     |                       | (1)        |       | –       |       | –     |                       | –     |       | –       |       | –     |                       | (1)        |       | –       |       | (1)        |                       |
|                                           |       |                                               |       |       |                                 |              |                     |                         |       |       |         |       |       |                   |                                          |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |
| Purchase of  reserves in place                 |       | –                                             |       | –     |                                 | 65                |                     | –                       |       | –     |         | 65         |       | –                 |                                          | –     |                       | –     |       | 5            |       | 9          |                       | –     |       | –       |       | 5          |                       | 9          |       | 70           |       | 9          |                       |
| Discoveries,  extensions and improved recovery |       | 59                                                 |       | 10         |                                 | –            |                     | –                       |       | 12         |         | 59         |       | 22                     |                                          | 1          |                       | 42         |       | 3            |       | 26         |                       | –     |       | –       |       | 4          |                       | 68         |       | 63           |       | 90         |                       |
| Production  net                                |       | (32)                                               |       | (20)       |                                 | (18)              |                     | –                       |       | (24)       |         | (50)       |       | (44)                   |                                          | (4)        |                       | (184)      |       | (1)          |       | (30)       |                       | (33)       |       | (9)          |       | (47)       |                       | (214)      |       | (97)         |       | (258)      |                       |
| **End of year 2008**                           | ** ** | **163**                                            | ** ** | **51**     | ** **                           | **127**           | ** **               | **–**                   | ** ** | **169**    | ** **   | **290**    | ** ** | **220**                | ** **                                    | **28**     | ** **                 | **1,126**  | ** ** | **14**       | ** ** | **148**    | ** **                 | **81**     | ** ** | **258**      | ** ** | **381**    | ** **                 | **1,274**  | ** ** | **671**      | ** ** | **1,494**  | ** **                 |
| **Proved undeveloped reserves**                | ** ** | ** **                                         | ** ** | ** ** | ** **                           | ** **        | ** **               | ** **                   | ** ** | ** ** | ** **   | ** ** | ** ** | ** **             | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 |
| ** **                                     | ** ** | ** **                                         | ** ** | ** ** | ** **                           | ** **        | ** **               | ** **                   | ** ** | ** ** | ** **   | ** ** | ** ** | ** **             | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 |
| **Beginning of year 2007**                     | ** ** | **42**                                             | ** ** | **3**      | ** **                           | **3**             | ** **               | **–**                   | ** ** | **138**    | ** **   | **45**     | ** ** | **141**                | ** **                                    | **–** | ** **                 | **56**     | ** ** | **4**        | ** ** | **36**     | ** **                 | **33**     | ** ** | **129**      | ** ** | **166**    | ** **                 | **92**     | ** ** | **211**      | ** ** | **233**    | ** **                 |
| **End of year 2007**                           | ** ** | **20**                                             | ** ** | **2**      | ** **                           | **2**             | ** **               | **–**                   | ** ** | **138**    | ** **   | **22**     | ** ** | **140**                | ** **                                    | **1**      | ** **                 | **69**     | ** ** | **6**        | ** ** | **46**     | ** **                 | **29**     | ** ** | **230**      | ** ** | **266**    | ** **                 | **115**    | ** ** | **288**      | ** ** | **255**    | ** **                 |
| **End of year 2008**                           | ** ** | **68**                                             | ** ** | **9**      | ** **                           | **1**             | ** **               | **–**                   | ** ** | **131**    | ** **   | **69**     | ** ** | **140**                | ** **                                    | **–** | ** **                 | **45**     | ** ** | **7**        | ** ** | **39**     | ** **                 | **26**     | ** ** | **207**      | ** ** | **240**    | ** **                 | **84**     | ** ** | **309**      | ** ** | **224**    | ** **                 |

 

See footnotes on page 53.

 

 
|  | Annual Information  Form **PETRO-CANADA****   ****49** |
|--|-----------------------------------------------------------------------|

 

 

The table below shows, for the years indicated, Petro-Canada’s estimatesof proved reserves, after royalties for Oil and Gas activities in accordancewith SEC standards for oil and gas activities.

 

 

##### *Proved Developed and Undeveloped Reserves After Royalties*

##### *(Crude oil and equivalents in MMbbls; Natural gas in Bcf)*

 
| ** **                                     | ** ** | ** **                                         | ** ** | ** **   | ** **                           | ** **         | ** **               | ** **                   | ** ** | ** **           | ** **   | ** **       | ** ** | ** **          | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                               | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                               | ** ** | ** ** | ** **       | ** ** |
|------------------------------------------------|------------|----------------------------------------------------|------------|--------------|--------------------------------------|--------------------|--------------------------|------------------------------|------------|----------------------|--------------|------------------|------------|---------------------|-----------------------------------------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|------------|------------|--------------|------------|------------|----------------------------|------------|------------|------------|------------|------------|------------------------------------------|------------|------------|--------------|------------|------------|------------------------------------------|------------|------------|------------------|------------|
| ** **                                     | ** ** | **Oil and Gas Activities**1,2,3,4,5 | ** ** |
| ** **                                     | ** ** | ** **                                         | ** ** | ** **   | ** **                           | **International**  | ** **               | ** **                   | ** ** | ** **           | ** **   | ** **       | ** ** | ** **          | **North America**                        | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 |
| ** **                                     | ** ** |                                               |       |         |                                 |               | Other International |                         |       |                 |         |             |       |                | **North American Natural Gas** |       |                       |       |       |         |       |       |                       |       |       |         |       | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** |
| ** **                                     | ** ** | North Sea6                                    |       |         | North Africa/Near  East7,8,9,10 |               |                     | Northern  Latin  America7,11 |       |                 | Subtotal     |             |       | Western Canada |                                          |       | U.S. Rockies               |       |       | East  Coast  |       |       | Oil  Sands                 |       |       | Subtotal     | ** ** | ** ** | **Total**                  | ** ** |
| ** **                                     | ** ** | Crude  oil &  NGL                         |       |         | Natural  gas                         |               |                     | Crude  oil &  NGL   |       |                 | Natural  gas |             |       | Natural  gas        |                                          |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |       |       | Natural  gas |       |       | Crude  oil &  NGL |       |       | Bitumen    |       |       | Crude oil,  NGL &  bitumen |       |       | Natural  gas | ** ** | ** ** | **Crude  oil, NGL  &  bitumen** | ** ** | ** ** | **Natural  gas** | ** ** |
| **Beginning of year 2007**                     | ** ** | **143**                                            | ** ** | **84**       | ** **                           | **122**            | ** **               | **–**                   | ** ** | **189**              | ** **   | ** 265**    | ** ** | **273**             | ** **                                    | **32**     | ** **                 | **1,151**  | ** ** | **6**        | ** ** | **122**    | ** **                 | **98**     | ** ** | **151**      | ** ** | **287**    | ** **                 | **1,273**  | ** ** | **552**      | ** ** | **1,546**  | ** **                 |
| Revisions  of previous estimates13             |       | 7                                                  |       | 16           |                                 |   (7)    |                     | –                       |       |    –  |         | –           |       | 16                  |                                          | (1)        |                       | (70)       |       | 1            |       | 8          |                       | 2          |       | 55           |       | 57         |                       | (62)       |       | 57           |       | (46)       |                       |
| Sale of  reserves in place                     |       | –                                             |       |  – |                                 |   – |                     | –                       |       |    –  |         | –           |       | –              |                                          | (1)        |                       | (8)        |       | –       |       | –     |                       | –     |       | –       |       | (1)        |                       | (8)        |       | (1)          |       | (8)        |                       |
|                                           |       |                                               |       |         |                                 |               |                     |                         |       |                 |         |             |       |                |                                          |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |
| Purchase of  reserves in place                 |       | –                                             |       |  – |                                 |   – |                     | –                       |       |    –  |         | –           |       | –              |                                          | –     |                       | 1          |       | –       |       | –     |                       | –     |       | –       |       | –     |                       | 1          |       | –       |       | 1          |                       |
| Discoveries,  extensions and improved recovery |       | 20                                                 |       | 12           |                                 |   2      |                     | –                       |       |    –  |         | 22               |       | 12                  |                                          | –     |                       | 77         |       | 3            |       | 34         |                       | 4          |       | 48           |       | 55         |                       | 111        |       | 77           |       | 123        |                       |
| Production  net                                |       | (30)                                               |       | (21)         |                                 |   (16)   |                     | –                       |       |   (24)     |         |   (46) |       | (45)                |                                          | (3)        |                       | (151)      |       | (1)          |       | (21)       |                       | (31)       |       | (7)          |       | (42)       |                       | (172)      |       | (88)         |       | (217)      |                       |
| **End of year 2007**                           | ** ** | **140**                                            | ** ** | **91**       | ** **                           | **101**            | ** **               | **–**                   | ** ** | **165**              | ** **   | ** 241**    | ** ** | **256**             | ** **                                    | **27**     | ** **                 | **1,000**  | ** ** | **9**        | ** ** | **143**    | ** **                 | **73**     | ** ** | **247**      | ** ** | **356**    | ** **                 | **1,143**  | ** ** | **597**      | ** ** | **1,399**  | ** **                 |
| Revisions  of previous estimates13             |       | (4)                                                |       | (30)         |                                 |   (74)   |                     | –                       |       |     3 |         |   (78)      |       | (27)                |                                          | (1)        |                       | (2)        |       | (2)          |       | (22)       |                       | 17         |       | 18           |       | 32         |                       | (24)       |       | (46)         |       | (51)       |                       |
| Sale of  reserves in place                     |       | –                                             |       |  – |                                 |   – |                     | –                       |       |    –  |         | –           |       | –              |                                          | –     |                       | (1)        |       | –       |       | –     |                       | –     |       | –       |       | –     |                       | (1)        |       | –       |       | (1)        |                       |
|                                           |       |                                               |       |         |                                 |               |                     |                         |       |                 |         |             |       |                |                                          |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |       |       |         |       |       |                       |
| Purchase of  reserves in place                 |       | –                                             |       |  – |                                 |   17     |                     | –                       |       |    –  |         | 17               |       | –              |                                          | –     |                       | –     |       | 4            |       | 8          |                       | –     |       | –       |       | 4          |                       | 8          |       | 21           |       | 8          |                       |
| Discoveries,  extensions and improved recovery |       | 59                                                 |       | 10           |                                 |   – |                     | –                       |       |  11             |         | 59               |       | 21                  |                                          | –     |                       | 33         |       | 2            |       | 20         |                       | –     |       | –       |       | 2          |                       | 53         |       | 61           |       | 74         |                       |
| Production  net                                |       | (32)                                               |       | (20)         |                                 |   (11)   |                     | –                       |       |   (23)     |         |   (43) |       | (43)                |                                          | (3)        |                       | (146)      |       | (1)          |       | (25)       |                       | (25)       |       | (9)          |       | (38)       |                       | (171)      |       | (81)         |       | (214)      |                       |
| **End of year 2008**                           | ** ** | **163**                                            | ** ** | **51**       | ** **                           | ** 33**       | ** **               | **–**                   | ** ** | **156**              | ** **   | **196**          | ** ** | **207**             | ** **                                    | **23**     | ** **                 | **884**    | ** ** | **12**       | ** ** | **124**    | ** **                 | **65**     | ** ** | **256**      | ** ** | **356**    | ** **                 | **1,008**  | ** ** | **552**      | ** ** | **1,215**  | ** **                 |
| **Proved undeveloped reserves**                | ** ** | ** **                                         | ** ** | ** **   | ** **                           | ** **         | ** **               | ** **                   | ** ** | ** **           | ** **   | ** **       | ** ** | ** **          | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 |
| ** **                                     | ** ** | ** **                                         | ** ** | ** **   | ** **                           | ** **         | ** **               | ** **                   | ** ** | ** **           | ** **   | ** **       | ** ** | ** **          | ** **                                    | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 | ** ** | ** ** | ** **   | ** ** | ** ** | ** **                 |
| **Beginning of year 2007**                     | ** ** | **42**                                             | ** ** | **4**        | ** **                           | **  2**  | ** **               | **–**                   | ** ** | **121**              | ** **   | ** 44**     | ** ** | **125**             | ** **                                    | **–** | ** **                 | **42**     | ** ** | **4**        | ** ** | **30**     | ** **                 | **24**     | ** ** | **124**      | ** ** | **152**    | ** **                 | **72**     | ** ** | **196**      | ** ** | **197**    | ** **                 |
| **End of year 2007**                           | ** ** | **20**                                             | ** ** | **2**        | ** **                           | **  2**  | ** **               | **–**                   | ** ** | **121**              | ** **   | ** 22**     | ** ** | **123**             | ** **                                    | **–** | ** **                 | **52**     | ** ** | **5**        | ** ** | **38**     | ** **                 | **20**     | ** ** | **201**      | ** ** | **226**    | ** **                 | **90**     | ** ** | **248**      | ** ** | **213**    | ** **                 |
| **End of year 2008**                           | ** ** | **68**                                             | ** ** | **9**        | ** **                           | **–**         | ** **               | **–**                   | ** ** | **120**              | ** **   | ** 68**     | ** ** | **129**             | ** **                                    | **–** | ** **                 | **34**     | ** ** | **6**        | ** ** | **32**     | ** **                 | **22**     | ** ** | **204**      | ** ** | **232**    | ** **                 | **66**     | ** ** | **300**      | ** ** | **195**    | ** **                 |

 

See footnotes on page 53.

 

 
| **50**   **PETRO-CANADA**Annual Information Form |  |
|-----------------------------------------------------------------|--|

 

 

Thetable below shows, for the years indicated, Petro-Canada’s estimates of provedreserves for Oil Sands mining activities in accordance with SEC Industry Guide7.

 

 

##### *Proved Developed and Undeveloped Reserves*

##### *(Synthetic crude oil in MMbbls)*

 
| ** **                                    | ** ** | **Syncrude Mining Operation**1,2,3,4,5,12,15 | ** ** |
|-----------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                    | ** ** | Before Royalties                                  |       | After Royalties |   |
| **Beginning of year 2007**                    | ** ** | **345**                                                | ** ** | **289** | ** ** |
| Revisions of previous estimates13             |       | 18                                                     |       | 11 |   |
| Sale of reserves in place                     |       | –                                                 |       | – |   |
| Purchase of reserves in place                 |       | –                                                 |       | – |   |
| Discoveries, extensions and improved recovery |       | –                                                 |       | – |   |
| Production net                                |       | (13                                                    | )          | (11 | ) |
| **End of year 2007**                          | ** ** | **350**                                                | ** ** | **289** | ** ** |
| Revisions of previous estimates13             |       | 2                                                      |       | 32 |   |
| Sale of reserves in place                     |       | –                                                 |       | – |   |
| Purchase of reserves in place                 |       | –                                                 |       | – |   |
| Discoveries, extensions and improved recovery |       | 27                                                     |       | 26 |   |
| Production net                                |       | (13                                                    | )          | (11 | ) |
| **End of year 2008**                          | ** ** | **366**                                                | ** ** | **336** | ** ** |
| **Proved undeveloped reserves**               | ** ** | ** **                                             | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | ** **                                             | ** ** | ** ** | ** ** |
| **Beginning of year 2007**                    | ** ** | **219**                                                | ** ** | **182** | ** ** |
| **End of year 2007**                          | ** ** | **238**                                                | ** ** | **197** | ** ** |
| **End of year 2008**                          | ** ** | **251**                                                | ** ** | **231** | ** ** |

 

Seefootnotes on page 53.

 

 
|  | Annual Information Form **PETRO-CANADA **     **51** |
|--|------------------------------------------------------------------------------------|

 

 

 

Thetable below shows, for the years indicated, Petro-Canada’s estimates of provedreserves for Oil and Gas activities and Oil Sands mining activities. Thereporting of working interest reserves before royalties, MMboe and combiningoil and gas and oil sands mining activities together does not conform to SECstandards and is for general supplemental information.

 

 

##### *Proved Developed and Undeveloped Reserves*

 
| ** **                                     | ** **   | **Oil and Gas Activities and Oil Sands Mining** | ** ** |
|------------------------------------------------|--------------|-------------------------------------------------|------------|
| *** ***                                   | *** *** | **Natural Gas***(Bcf)*                          | * *   | **Crude Oil & NGLs***(MMbbls)* | * * | **Crude Oil, Natural Gas  & NGLs*****(MMboe)* | * * |
|                                           |         | Before  Royalties                               |       | After  Royalties |   | Before  Royalties |   | After  Royalties |   | Before  Royalties |   | After  Royalties | ** ** |
| **Beginning of year 2007**                     | ** **   | **1,945**                                       | ** ** | **1,546** | ** ** | **950** | ** ** | **841** | ** ** | **1,274** | ** ** | **1,099** | ** ** |
| Revisions  of previous estimates13             |         | (65                                             | )          | (46 | ) | 95 |   | 68 |   | 84 |   | 60 |   |
| Sale of  reserves in place                     |         | (11                                             | )          | (8 | ) | (1 | ) | (1 | ) | (3 | ) | (2 | ) |
| Purchase of  reserves in place                 |         | 1                                               |       | 1 |   | – |   | – |   | – |   | – |   |
| Discoveries,  extensions and improved recovery |         | 155                                             |       | 123 |   | 87 |   | 77 |   | 113 |   | 97 |   |
| Production  net                                |         | (266                                            | )          | (217 | ) | (109 | ) | (99 | ) | (153 | ) | (135 | ) |
| **End of year 2007**                           | ** **   | **1,759**                                       | ** ** | **1,399** | ** ** | **1,022** | ** ** | **886** | ** ** | **1,315** | ** ** | **1,119** | ** ** |
| Revisions  of previous estimates13             |         | (105                                            | )          | (51 | ) | (35 | ) | (14 | ) | (53 | ) | (22 | ) |
| Sale of reserves  in place                     |         | (1                                              | )          | (1 | ) | – |   | – |   | – |   | – |   |
| Purchase of  reserves in place                 |         | 9                                               |       | 8 |   | 70 |   | 21 |   | 72 |   | 22 |   |
| Discoveries,  extensions and improved recovery |         | 90                                              |       | 74 |   | 90 |   | 87 |   | 105 |   | 99 |   |
| Production  net                                |         | (258                                            | )          | (214 | ) | (110 | ) | (92 | ) | (153 | ) | (128 | ) |
| **End of year 2008**                           | ** **   | **1,494**                                       | ** ** | **1,215** | ** ** | **1,037** | ** ** | **888** | ** ** | **1,286** | ** ** | **1,090** | ** ** |
| **Proved undeveloped reserves**14              | ** **   | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                     | ** **   | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Beginning of year 2007**                     | ** **   | **233**                                         | ** ** | **197** | ** ** | **430** | ** ** | **378** | ** ** | **469** | ** ** | **411** | ** ** |
| **End of year 2007**                           | ** **   | **255**                                         | ** ** | **213** | ** ** | **526** | ** ** | **445** | ** ** | **569** | ** ** | **481** | ** ** |
| **End of year 2008**                           | ** **   | **224**                                         | ** ** | **195** | ** ** | **560** | ** ** | **531** | ** ** | **597** | ** ** | **564** | ** ** |

 

Seefootnotes on page 53.

 
| **52**     **PETRO-CANADA** Annual Information Form |  |
|------------------------------------------------------------------------------|--|

 

 

 

1            In orderto harmonize its oil and gas disclosure in both Canada and the U.S.,Petro-Canada applied for, and received, certain exemptions to reservesdisclosure requirements as set out in NI 51-101. These exemptions permitPetro-Canada to use its own staff of qualified reserves evaluators to preparethe Company’s reserves estimates and to use SEC and FASB standards whenpreparing and reporting reserves. Such reserves information may differ fromreserves information prepared in accordance with Canadian disclosure standardsunder NI 51-101. These differences relate to the SEC requirement for disclosureonly of proved reserves calculated at constant year-end prices and costs, whileNI 51-101 requires disclosure of proved plus probable reserves at forecastprices and costs. Also, the definition of proved reserves differs between SECand NI 51-101 requirements. However, this difference should not be material.The COGE Handbook (the source document for reserves definitions under NI51-101) supports this view.

2            Petro-Canadaemploys the services of independent third-party evaluators/auditors to assessits reserves policies, procedures and practices and its reserves estimates.

3            Provedreserves before royalties are Petro-Canada’s working interest reserves beforethe deduction of Crown or other royalties. Such royalties are subject to changeby legislation or regulation and can also vary depending on production rates,selling prices and timing of initial production. Reserves quantities afterroyalty also reflect net overriding royalty interests paid and received.

4            Provedreserves are the estimated quantities of crude oil, natural gas and NGL, whichgeological and engineering data demonstrate with reasonable certainty to berecoverable in future years from known reservoirs under existing economic andoperating conditions. Proved developed reserves are those proved reserves thatare expected to be recovered from existing wells or facilities. Provedundeveloped reserves are proved reserves, which are not recoverable fromexisting wells or facilities, but which are expected to be recovered throughadditional development drilling or through the upgrading of existing oradditional new facilities.

5            Unprovedreserves are based on geological and/or engineering data similar to that usedin estimates of proved reserves, but technical, contractual, economic orregulatory uncertainties preclude such reserves being classified as proved.Unproved reserves may be further classified as probable reserves and possiblereserves.

6            Reservesin the North Sea are subject to a conventional royalty and tax regime. Noroyalty is payable on reserves in the U.K. sector. Royalty is payable ononshore reserves in the Netherlands.

7            Provedreserves include quantities of crude oil and natural gas, which will beproduced under arrangements, which involve the Company or its subsidiaries inupstream risks and rewards, but which do not transfer title of the product tothose companies.

8            InPetro-Canada’s production sharing contracts (PSCs), after royalty provedreserves have been determined using the economic interest method and includethe Company’s share of future cost recovery and Profit Oil after foreigngovernments’ royalty interests, and include reserves relating to income taxpayable. Under this method, reported reserves will increase as oil pricesdecrease (and vice versa), since the bbls necessary to achieve cost recoverychange with the prevailing oil prices. Twelve per cent of Petro-Canada’s totalproved reserves before royalty and 5% after royalty are held under PSCs.

9            Reservesin North Africa/Near East are calculated as per footnote 8.

10       Thevolume of proved oil and gas reserves before royalties reported above heldunder PSCs in the North Africa/Near East region at the end of 2008 was 127MMbbls of crude oil and NGL and zero Bcf of natural gas. At year-end 2007, thevolume held under PSCs was 8 MMbbls of crude oil and NGL and zero Bcf ofnatural gas. The after royalty reserves volume at year-end 2008 held under PSCswas 33 MMbbls of crude oil and NGL and zero Bcf of natural gas, compared withyear-end 2007, which was 7 MMbbls of crude oil and NGL and zero Bcf of naturalgas.

11       Naturalgas reserves offshore Trinidad and Tobago are held under a PSC with theapplicable government and are calculated as per footnote 8. The volume ofproved natural gas reserves before royalties reported above held under PSCsoffshore Trinidad and Tobago at the end of 2008 was 169 Bcf. At year-end2007, the volume was 189 Bcf. The after royalty reserves volume at year-end2008 was 156 Bcf and at year-end 2007 was 165 Bcf.

12       SECregulations do not define proved reserves of synthetic crude oil from oil sandsmining operations as an oil and gas activity. These reserves are classified asa mining activity and are estimated in accordance with SEC Industry Guide 7.Petro-Canada views these reserves as an integral part of the Company’sbusiness. Proved reserves of synthetic crude oil are based on high geologicalcertainty and application of proven or piloted technology. Syncrude proved oilsands mining reserves have been determined using SEC year-end prices in theeconomics.

13       Revisionsinclude changes in previous estimates, either upward or downward, resultingfrom new information (except an increase in acreage) normally obtained fromdrilling or production history or resulting from a change in economic factors.

14       Provedundeveloped crude oil and NGL reserves represent approximately 54% ofPetro-Canada’s total crude oil and NGL proved reserves. The vast majority ofthese oil and NGL reserves are associated with large development projectscurrently producing or under active development, including Buzzard, MacKayRiver, Syncrude, Terra Nova and Hibernia. Proved undeveloped gas reservesrepresent approximately 15% of total proved natural gas reserves. Thesereserves typically will be developed through tie-in of existing wells, drillingof additional wells or addition of compression facilities. Fifty-eight per centof the proved undeveloped gas reserves are associated with the currentlyproducing NCMA-1 development offshore Trinidad and Tobago. Generally, theCompany plans to develop proved undeveloped natural gas reserves in the nextfew years.

15       Forinternal management purposes, Petro-Canada views the oil sands mining reservesas part of the Company’s total exploration and production operations.

 
|  | Annual Information Form**PETRO-CANADA**     **53** |
|--|-----------------------------------------------------------------------------|

 

 

#### **Standardized Measure ofDiscounted Future Net Cash Flows and Changes Therein Relating to Proved Oil andGas Reserves**

#### ** **

Thefollowing disclosures on Standardized Measure of discounted cash flows andchanges therein relating to proved oil and natural gas reserves are determinedin accordance with the U.S. FASB Statement 69, *DisclosuresAbout Oil and Gas Producing Activities*. The future cash flows arecalculated by applying year-end prices, or prices provided by contractualarrangements, net of royalties, to year-end quantities of proved oil andnatural gas reserves. Future production, development and asset retirement costsare based on year-end costs and estimated future income taxes are based onlegislated future income tax rates. The resulting future net cash flows arediscounted at 10% per annum. The calculation does not represent a fair marketvalue of the Company’s oil and natural gas reserves or of the future net cashflows. No consideration is given to the value of exploration properties orprobable reserves. No consideration is given to the value of the Company’sshare of the Syncrude oil sands mining operation, as it is considered a miningoperation under SEC disclosure. The following benchmark commodity prices as at December 31,2008 were used in deriving the Standardized Measure: WTI at Cushing$44.60/bbl US, Dated Brent at Sullom Voe $36.55/bbl US, New YorkMercantile Exchange (NYMEX) gas price at the Henry Hub $5.62/MMBtu US andAlberta price of natural gas at the AECO-C Hub Cdn $6.04/gigajoule (GJ). Thefollowing currency exchange rates were also used: Cdn$/US$ 1.2246, Cdn$/euro1.6998, Cdn$/British pound 1.78.

 

##### *Present Value of Estimated Future Net Cash Flows*

##### *(millions of Canadian dollars)*

 
| ** **                                                 | ** ** | **Western Canada**1,2 | ** ** | **U.S. Rockies**           | ** ** | **East Coast Canada**3     | ** ** |
|------------------------------------------------------------|------------|-----------------------|------------|----------------------------|------------|----------------------------|------------|
| ** **                                                 |       | **2008**              |       | 2007                       |       | 2006                       | ** ** | **2008** |   | 2007 |   | 2006 | ** ** | **2008** |   | 2007 |   | 2006 |   |
| Future cash  flows                                         | ** ** | **$**                 | **13,413** |                       | $          | 20,422                     |       | $ | 12,513 | ** ** | **$** | **992** |   | $ | 1,899 |   | $ | 1,130 | ** ** | **$** | **3,115** |   | $ | 7,387 |   | $ | 7,164 |   |
| Future  production, development and asset retirement costs | ** ** | **(9,769**            | **)**      | (9,205                     | )          | (5,593                     | )          | **(426** | **)** | (486 | ) | (525 | ) | **(1,686** | **)** | (1,685 | ) | (1,499 | ) |
| Future  income taxes                                       | ** ** | **(605**              | **)**      | (2,682                     | )          | (1,764                     | )          | **(68** | **)** | (382 | ) | (187 | ) | **(245** | **)** | (1,457 | ) | (1,553 | ) |
| Future net  cash flows                                     | ** ** | **3,039**             |       | 8,535                      |       | 5,156                      | ** ** | **498** |   | 1,031 |   | 418 |   | **1,184** | ** ** | 4,245 |   | 4,112 |   |
| Discount of  10% for estimated timing of cash flows        | ** ** | **(1,102**            | **)**      | (4,159                     | )          | (1,927                     | )          | **(169** | **)** | (446 | ) | (154 | ) | **(152** | **)** | (1,003 | ) | (879 | ) |
| Discounted  future net cash flows                          | ** ** | **$**                 | **1,937**  |                       | $          | 4,376                      |       | $ | 3,229 | ** ** | **$** | **329** |   | $ | 585 |   | $ | 264 |   | **$** | **1,032** | ** ** | $ | 3,242 |   | $ | 3,233 |   |
|                                                       | ** ** | ** **            |       |                       |       |                       | ** ** | ** ** |   |   |   |   |   | ** ** | ** ** |   |   |   |   |
| ** **                                                 | ** ** | **North Sea**         | ** ** | **North Africa/Near East** | ** ** | **Northern Latin America** | ** ** |
| ** **                                                 |       | **2008**              |       | 2007                       |       | 2006                       | ** ** | **2008** |   | 2007 |   | 2006 | ** ** | **2008** |   | 2007 |   | 2006 |   |
| Future cash  flows                                         | ** ** | **$**                 | **7,468**  |                       | $          | 13,220                     |       | $ | 8,506 | ** ** | **$** | **1,585** |   | $ | 9,491 |   | $ | 8,011 | ** ** | **$** | **661** |   | $ | 819 |   | $ | 838 |   |
| Future  production, development and asset retirement costs | ** ** | **(2,720**            | **)**      | (3,172                     | )          | (2,918                     | )          | **(941** | **)** | (1,015 | ) | (1,024 | ) | **(239** | **)** | (205 | ) | (282 | ) |
| Future  income taxes                                       | ** ** | **(2,658**            | **)**      | (5,303                     | )          | (2,966                     | )          | **(412** | **)** | (7,457 | ) | (6,088 | ) | **(190** | **)** | (321 | ) | (289 | ) |
| Future net  cash flows                                     | ** ** | **2,090**             | ** ** | 4,745                      |       | 2,622                      |       | **232** | ** ** | 1,019 |   | 899 |   | **232** | ** ** | 293 |   | 267 |   |
| Discount of  10% for estimated timing of cash flows        | ** ** | **(548**              | **)**      | (963                       | )          | (532                       | )          | **(80** | **)** | (322 | ) | (309 | ) | **(69** | **)** | (111 | ) | (119 | ) |
| Discounted  future net cash flows                          | ** ** | **$**                 | **1,542**  | ** **                 | $          | 3,782                      |       | $ | 2,090 |   | **$** | **152** | ** ** | $ | 697 |   | $ | 590 |   | **$** | **163** | ** ** | $ | 182 |   | $ | 148 |   |
|                                                       | ** ** | ** **            | ** ** |                       |       |                       |       | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
|                                                       | ** ** | ** **            | ** ** | **Total**                  |       |                       |       | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
|                                                       | ** ** | **2008**              |       | 2007                       |       | 2006                       |       | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Future cash  flows                                         | ** ** | **$**                 | **27,234** |                       | $          | 53,238                     |       | $ | 38,162 |   | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Future  production, development and asset retirement costs | ** ** | **(15,781**           | **)**      | (15,768                    | )          | (11,841                    | )          | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Future  income taxes                                       | ** ** | **(4,178**            | **)**      | (17,602                    | )          | (12,847                    | )          | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Future net  cash flows                                     | ** ** | **7,275**             | ** ** | 19,868                     |       | 13,474                     |       | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Discount of  10% for estimated timing of cash flows        | ** ** | **(2,120**            | **)**      | (7,004                     | )          | (3,920                     | )          | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
| Discounted  future net cash flows                          | ** ** | **$**                 | **5,155**  | ** **                 | $          | 12,864                     |       | $ | 9,554 |   | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |
|                                                       | ** ** | ** **            | ** ** | ** **                 |       |                       |       |   |   |   | ** ** | ** ** | ** ** |   |   |   |   |   |   | ** ** | ** ** | ** ** |   |   |   |   |   |   |
|                                                            |            |                       |            |                            |            |                            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

1  WesternCanada includes the cash flows of MacKay River in 2006, 2007 and 2008.

2  Cash flowfor Western Canada has been restated for 2007.

3  AdditionalEast Coast Canada reserves quantities will be booked as proved reserves asdevelopment proceeds.

 
| **54**     **PETRO-CANADA** Annual Information Form |  |
|------------------------------------------------------------------------------|--|

 

 

##### *Summary of Changes in Present Value of EstimatedFuture Cash Flows*

##### *(millions of Canadian dollars)*

 
| ** **                                                            |       | **2008**    | ** ** | 20071      |   | 2006   |   |
|-----------------------------------------------------------------------|------------|-------------|------------|------------|--------|--------|--------|
| **Balance at beginning of year**                                      | ** ** | **$**       | **12,864** | ** ** | $      | 9,554  |   | $ | 12,188 |   |
| **Changes result from:**                                              |       |        | ** ** |       |   |   |   |
| Sales and  transfers of oil and gas produced, net of production costs | ** ** | **(10,360** | **)**      | (7,147     | )      | (5,480 | )      |
| Net changes  in prices, operating costs and royalties                 | ** ** | **(7,441**  | **)**      | 9,406      |   | (2,859 | )      |
| Extensions,  discoveries, additions and improved recoveries           | ** ** | **1,657**   | ** ** | 2,376      |   | 59     |   |
| Changes in  estimated future development costs                        | ** ** | **(1,108**  | **)**      | (1,198     | )      | (597   | )      |
| Development  costs incurred during the year                           | ** ** | **764**     | ** ** | 698        |   | 900    |   |
| Revisions  of previous quantity estimates                             | ** ** | **(58**     | **)**      | 1,157      |   | 2,081  |   |
| Accretion  of discount                                                | ** ** | **2,480**   | ** ** | 2,042      |   | 2,295  |   |
| Net change  in income tax                                             | ** ** | **8,881**   | ** ** | (2,868     | )      | 2,572  |   |
| Purchase  and sale of reserves in place                               | ** ** | **88**      | ** ** | 642        |   | (367   | )      |
| Changes in  timing and other                                          | ** ** | **(2,612**  | **)**      | (1,798     | )      | (1,238 | )      |
| Net change                                                            | ** ** | **(7,709**  | **)**      | 3,310      |   | (2,634 | )      |
| **Balance at end of year**                                            | ** ** | **$**       | **5,155**  | ** ** | $      | 12,864 |   | $ | 9,554 |   |

 

1 Cash flow for Western Canada has been restatedfor 2007.

 

 

#### **Abandonmentand Reclamation Costs**

#### ** **

TheCompany’s upstream future asset retirement costs are estimated based on currentcosts and technology and in accordance with existing legislation and industrypractice. As of December 31, 2008, the total of these future costs wasestimated to be $5,336 million undiscounted, or $911 milliondiscounted at 10%. The Company’s upstream operations expect to spendapproximately $33 million, $31 million and $38 million in thenext three years, respectively, for future asset retirement costs. Thefollowing table summarizes Petro-Canada’s wells that are capable of production.

 

 

##### *Productive Wells*1 at December 31,2008

 
| ** **                                                           | ** ** | **Crude Oil Wells** | ** ** | **Natural Gas Wells** | ** ** | **Total Wells** | ** ** |
|----------------------------------------------------------------------|------------|---------------------|------------|-----------------------|------------|-----------------|------------|
| ** **                                                           | ** ** | **Gross**2          | ** ** | **Net**3              | ** ** | **Gross**2      | ** ** | **Net**3 | ** ** | **Gross**2 | ** ** | **Net**3 | ** ** |
| **North America**                                                    |       |                |       |                  |       |            |       |   |   |   |   |   |   |
| North  American Natural Gas – conventional oil and natural gas  |       | 1,341               |       | 1,113                 |       | 5,993           |       | 4,166 |   | 7,334 |   | 5,279 |   |
| Oil Sands* – in situ*bitumen recovery                      |       | 49                  |       | 49                    |       | –          |       | – |   | 49 |   | 49 |   |
| East Coast  Canada – conventional oil                      |       | 100                 |       | 25                    |       | –          |       | – |   | 100 |   | 25 |   |
| Total North  America                                                 |       | 1,490               |       | 1,187                 |       | 5,993           |       | 4,166 |   | 7,483 |   | 5,353 |   |
| **International**                                                    |       |                |       |                  |       |            |       |   |   |   |   |   |   |
| North  Sea – conventional oil and natural gas              |       | 58                  |       | 24                    |       | 32              |       | 5 |   | 90 |   | 29 |   |
| Other  International                                                 |       |                |       |                  |       |            |       |   |   |   |   |   |   |
| North  Africa/Near East – conventional oil and natural gas |       | 233                 |       | 111                   |       | –          |       | – |   | 233 |   | 111 |   |
| Northern  Latin America – natural gas                      |       | –              |       | –                |       | 11              |       | 2 |   | 11 |   | 2 |   |
| Total  International                                                 |       | 291                 |       | 135                   |       | 43              |       | 7 |   | 334 |   | 142 |   |
| **Total productive wells**                                           |       | 1,781               |       | 1,322                 |       | 6,036           |       | 4,173 |   | 7,817 |   | 5,495 |   |

 

1     Wells with multiplecompletions are counted as one well.

2     Gross wells includethe interests of others.

3     Net wells excludethe interests of others.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **55** |
|--|-------------------------------------------|--------|

 

#### **Oil and Natural Gas Rights**

#### ** **

Petro-Canada’soil and natural gas rights are summarized in the following table. Landholdingsare subject to government regulation.

 

 

##### *Oil and Natural Gas Rights at December 31, 2008*

 
| ** **                  | ** ** | **Developed Lands**1 | ** ** | **Undeveloped Lands**1 | ** ** | **Total** | ** ** |
|-----------------------------|------------|----------------------|------------|------------------------|------------|-----------|------------|
| ** **                  |       | **2008**             |       | 2007                   |       | **2008**  |       | 2007 |   | **2008** |   | 2007 |   |
| *(millions of acres)*       | ** ** | **Gross**2           | ** ** | **Net**3               |       | Gross2    |       | Net3 | ** ** | **Gross**2 | ** ** | **Net**3 |   | Gross2 |   | Net3 | ** ** | **Gross**2 | ** ** | **Net**3 |   | Gross2 |   | Net3 |   |
| **Canada**                  |       |                 |       |                   |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mainland  Canada            | ** ** | **2.3**              | ** ** | **1.2**                |       | 2.2       |       | 1.2 | ** ** | **2.1** | ** ** | **1.8** |   | 2.6 |   | 2.2 | ** ** | **4.4** | ** ** | **3.0** |   | 4.8 |   | 3.4 |   |
| Oil Sands                   | ** ** | **0.4**              | ** ** | **0.2**                |       | 0.4       |       | 0.2 | ** ** | **0.4** | ** ** | **0.3** |   | 0.4 |   | 0.3 | ** ** | **0.8** | ** ** | **0.5** |   | 0.8 |   | 0.5 |   |
| East Coast  Canada offshore | ** ** | **0.1**              | ** ** | **–**             |       | 0.1       |       | – | ** ** | **1.3** | ** ** | **0.5** |   | 1.1 |   | 0.3 | ** ** | **1.4** | ** ** | **0.5** |   | 1.2 |   | 0.3 |   |
| Other  frontier4            | ** ** | **–**           | ** ** | **–**             |       | –    |       | – | ** ** | **8.5** | ** ** | **7.0** |   | 8.6 |   | 7.0 | ** ** | **8.5** | ** ** | **7.0** |   | 8.6 |   | 7.0 |   |
| **Total Canada**            | ** ** | **2.8**              | ** ** | **1.4**                |       | 2.7       |       | 1.4 | ** ** | **12.3** | ** ** | **9.6** |   | 12.7 |   | 9.8 | ** ** | **15.1** | ** ** | **11.0** |   | 15.4 |   | 11.2 |   |
| **U.S.**5                   | ** ** | **0.1**              | ** ** | **0.1**                |       | 0.1       |       | 0.1 | ** ** | **4.5** | ** ** | **1.8** |   | 0.4 |   | 0.3 | ** ** | **4.6** | ** ** | **1.9** |   | 0.5 |   | 0.4 |   |
| **International**           |       |                 |       |                   |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North Sea                   | ** ** | **0.1**              | ** ** | **0.1**                |       | 0.1       |       | – | ** ** | **2.9** | ** ** | **1.0** |   | 3.0 |   | 1.0 | ** ** | **3.0** | ** ** | **1.1** |   | 3.1 |   | 1.0 |   |
| Other  International        |       |                 |       |                   |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North  Africa/Near East     | ** ** | **0.4**              | ** ** | **0.2**                |       | 0.4       |       | 0.2 | ** ** | **13.8** | ** ** | **7.5** |   | 27.7 |   | 21.4 | ** ** | **14.2** | ** ** | **7.7** |   | 28.1 |   | 21.6 |   |
| Northern  Latin America     | ** ** | **0.1**              | ** ** | **–**             |       | 0.1       |       | – | ** ** | **0.9** | ** ** | **0.8** |   | 1.0 |   | 0.9 | ** ** | **1.0** | ** ** | **0.8** |   | 1.1 |   | 0.9 |   |
| **Total International**     | ** ** | **0.6**              | ** ** | **0.3**                |       | 0.6       |       | 0.2 | ** ** | **17.6** | ** ** | **9.3** |   | 31.7 |   | 23.3 | ** ** | **18.2** | ** ** | **9.6** |   | 32.3 |   | 23.5 |   |
| **Total**                   | ** ** | **3.5**              | ** ** | **1.8**                |       | 3.4       |       | 1.7 | ** ** | **34.4** | ** ** | **20.7** |   | 44.8 |   | 33.4 | ** ** | **37.9** | ** ** | **22.5** |   | 48.2 |   | 35.1 |   |

 

1     Developed lands areareas capable of production, while undeveloped lands are areas with rights toexplore.

2     Gross acres includethe interests of others.

3     Net acres excludethe interests of others.

4     Includes landslocated off the west coast of Canada where exploration is currently subject toa moratorium (approximately 5.8 million acres of land gross and net).

5     U.S. figures do notinclude option acreage in the Alaska Foothills.

 

 
| **56** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

#### **Work Commitments**

#### ** **

Thepractice of governments requiring companies to pledge to carry out workcommitments in exchange for the right to carry out exploration for anddevelopment of hydrocarbons is common, particularly in unexplored or lightlyexplored regions of the world. Petro-Canada has made the following commitmentsin regard to the lands it holds.

 

 

##### *Work Commitments as at December 31, 2008*

##### *(millions of Canadian dollars)*

 

| ** **                               | ** ** | **Petro-Canada Share of Total  Work Commitments** | ** ** | **Petro-Canada Share of  Total  Work Commitments to be  Incurred in 2009**1 | ** ** |
|------------------------------------------|------------|---------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| **Mainland Canada**                      |       |                                              |       |                                                                        |       |
| NWT region                               |       | $                                                 | 14.2       |                                                                        | 8.0        |   |
| ***International &  Offshore*** |       |                                              |       |                                                                        |       |
| **East Coast Canada**                    |       | 18.0                                              |       | –                                                                      |       |
| North Sea                                |       | 43.3                                              |       | 43.3                                                                        |       |
| Other  International                     |       |                                              |       |                                                                        |       |
| North  Africa/Near East                  |       | 692.4                                             |       | 322.7                                                                       |       |
| Northern  Latin America                  |       | –                                            |       | –                                                                      |       |
| **Total work commitments**               |       | $                                                 | 767.9      |                                                                        | 374.0      |   |

 

1     Capital expenditureplan for 2009 includes provisions for these work commitments.

 

 

#### **Land Expiries**

#### ** **

Thefollowing table summarizes the land area by region for which Petro-Canada’srights to explore for or develop hydrocarbons will expire in 2009.

 

 

##### *Land Expiries in 2009*

##### *(millions of acres)*

 
| ** **                               | ** ** | **Gross**1 | ** ** | **Net**2 | ** ** |
|------------------------------------------|------------|------------|------------|----------|------------|
| **North American Natural Gas**           |       | 0.5        |       | 0.4      |       |
| **Oil Sands**                            |       | 0.2        |       | 0.1      |       |
| ***International &  Offshore*** | * *   | * *   | * *   | * * | * *   |
| **East Coast Canada**                    |       | –     |       | –   |       |
| **International**                        |       | –     |       | –   |       |
| **Total expiries in 2009**               |       | 0.7        |       | 0.5      |       |

 

1     Gross acres includethe interests of others.

2     Net acres excludethe interests of others.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **57** |
|--|-------------------------------------------|--------|

 

#### **Drilling Activity**

 

Thefollowing table shows Petro-Canada’s drilling activity during the yearsindicated.

 

 

##### *Exploration and Development Wells Drilled*

 
| ** **                               |       | **2008**   |       | 2007       |   | 2006   |   |
|------------------------------------------|------------|------------|------------|------------|--------|--------|--------|
| ** **                               | ** ** | **Gross**1 | ** ** | **Net**2   |   | Gross1 |   | Net2 |   | Gross1 |   | Net2 |   |
| **NORTH AMERICAN NATURAL GAS**           |       |       |       |       |   |   |   |   |   |   |   |   |   |
| **Western Canada and U.S. Rockies** |       |       |       |       |   |   |   |   |   |   |   |   |   |
| Exploration  wells3                      |       |       |       |       |   |   |   |   |   |   |   |   |   |
| Oil                                      | ** ** | **–** | ** ** | **–** |   | 2      |   | 1 |   | 3 |   | 3 |   |
| Natural gas                              | ** ** | **6**      | ** ** | **5**      |   | 5      |   | 4 |   | 18 |   | 14 |   |
| Dry4                                     | ** ** | **4**      | ** ** | **4**      |   | 17     |   | 11 |   | 20 |   | 19 |   |
| Subtotal                                 | ** ** | **10**     | ** ** | **9**      |   | 24     |   | 16 |   | 41 |   | 36 |   |
| Development  wells5                      |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Oil                                      | ** ** | **148**    | ** ** | **124**    |   | 131    |   | 117 |   | 75 |   | 68 |   |
| Natural gas                              | ** ** | **425**    | ** ** | **275**    |   | 405    |   | 293 |   | 551 |   | 413 |   |
| Dry                                      | ** ** | **7**      | ** ** | **7**      |   | 20     |   | 16 |   | 9 |   | 6 |   |
| Subtotal                                 | ** ** | **580**    | ** ** | **406**    |   | 556    |   | 426 |   | 635 |   | 487 |   |
| **Total North American Natural Gas**     | ** ** | **590**    | ** ** | **415**    |   | 580    |   | 442 |   | 676 |   | 523 |   |
| **OIL SANDS**                            |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Development  wells5                      |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Bitumen                                  | ** ** | **31**     | ** ** | **31**     |   | 19     |   | 19 |   | – |   | – |   |
| **Total Oil Sands**                      | ** ** | **31**     | ** ** | **31**     |   | 19     |   | 19 |   | – |   | – |   |
| ***International &  Offshore*** |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| **EAST COAST CANADA**                    |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Exploration  wells3                      |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Oil                                      | ** ** | **3**      | ** ** | **1**      |   | 2      |   | 1 |   | 3 |   | 1 |   |
| Dry4                                     | ** ** | **–** | ** ** | **–** |   | – |   | – |   | – |   | – |   |
| Subtotal                                 | ** ** | **3**      | ** ** | **1**      |   | 2      |   | 1 |   | 3 |   | 1 |   |
| Development  wells5                      |       | ** ** |       | ** ** |   |   |   |   |   |   |   |   |   |
| Oil                                      | ** ** | **5**      | ** ** | **1**      |   | 7      |   | 1 |   | 10 |   | 3 |   |
| Dry                                      | ** ** | **–** | ** ** | **–** |   | – |   | – |   | – |   | – |   |
| Subtotal                                 | ** ** | **5**      | ** ** | **1**      |   | 7      |   | 1 |   | 10 |   | 3 |   |
| **Total East Coast Canada**              | ** ** | **8**      | ** ** | **2**      |   | 9      |   | 2 |   | 13 |   | 4 |   |

 

Seefootnotes on page 59.

 

 
| **58** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

##### *Exploration and Development Wells Drilled*

 
| ** **                                                 |       | **2008**   |       | 2007       |       | 2006   |   |
|------------------------------------------------------------|------------|------------|------------|------------|------------|--------|--------|
| ** **                                                 | ** ** | **Gross**1 | ** ** | **Net**2   |       | Gross1 |   | Net2 |   | Gross1 |   | Net2 |   |
| ***International &  Offshore –(continued)*** |       |       |       |       |       |   |   |   |   |   |   |   |   |
| **INTERNATIONAL – Continuing Operations**        |       |       |       |       |       |   |   |   |   |   |   |   |   |
| Exploration  wells3                                        |       |       |       |       |       |   |   |   |   |   |   |   |   |
| Oil                                                        |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **3**      | ** ** | **1**      | ** ** | 3      |   | 1 |   | – |   | – |   |
| North  Africa/Near East                                    | ** ** | **1**      | ** ** | **1**      | ** ** | 2      |   | 1 |   | 1 |   | 1 |   |
| Natural gas                                                |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **2**      | ** ** | **1**      | ** ** | 2      |   | 1 |   | 1 |   | – |   |
| Northern  Latin America                                    | ** ** | **4**      | ** ** | **3**      | ** ** | 1      |   | 1 |   | – |   | – |   |
| Dry4                                                       |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **2**      | ** ** | **1**      | ** ** | 1      |   | 1 |   | 2 |   | – |   |
| North  Africa/Near East                                    | ** ** | **–** | ** ** | **–** | ** ** | 1      |   | 1 |   | 1 |   | 1 |   |
| Northern  Latin America                                    | ** ** | **2**      | ** ** | **1**      | ** ** | 1      |   | 1 |   | – |   | – |   |
| Subtotal                                                   | ** ** | **14**     | ** ** | **8**      | ** ** | 11     |   | 7 |   | 5 |   | 2 |   |
| Development  wells5                                        |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| Oil                                                        |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **3**      | ** ** | **1**      | ** ** | 11     |   | 5 |   | 18 |   | 6 |   |
| North  Africa/Near East                                    | ** ** | **11**     | ** ** | **6**      | ** ** | 4      |   | 2 |   | 5 |   | 2 |   |
| Natural gas                                                |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **1**      | ** ** | **–** | ** ** | – |   | – |   | – |   | – |   |
| North  Africa/Near East                                    | ** ** | **3**      | ** ** | **3**      | ** ** | – |   | – |   | – |   | – |   |
| Northern  Latin America                                    | ** ** | **1**      | ** ** | **–** | ** ** | – |   | – |   | 8 |   | 1 |   |
| Dry                                                        |       | ** ** |       | ** ** | ** ** |   |   |   |   |   |   |   |   |
| North Sea                                                  | ** ** | **–** | ** ** | **–** | ** ** | – |   | – |   | 1 |   | – |   |
| Subtotal                                                   | ** ** | **19**     | ** ** | **10**     | ** ** | 15     |   | 7 |   | 32 |   | 9 |   |
| **Total International**                                    | ** ** | **33**     | ** ** | **18**     | ** ** | 26     |   | 14 |   | 37 |   | 11 |   |
| **Total wells drilled**                                    | ** ** | **662**    | ** ** | **466**    | ** ** | 634    |   | 477 |   | 726 |   | 538 |   |

 

1     Gross wells(excluding all service wells) include the interests of others. This includesgross overriding royalty (GOR) wells.

2     Net wells excludethe interests of others. Net wells exclude GOR wells.

3     Exploration wellsare wells drilled to find and produce oil or natural gas in an unproved area,to find a new reservoir or to extend the known boundaries of a previouslydiscovered reservoir.

4     A dry hole is anexploration or development well found to be incapable of producing either oilor natural gas in sufficient quantities to justify completion as an oil ornatural gas well.

5     Development wellsare wells drilled in an oil or natural gas reservoir to the depth of astratigraphic horizon known to be productive.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **59** |
|--|-------------------------------------------|--------|

 

 

## **DOWNSTREAM**

 

 

#### **Business Summary and Strategy**

#### ** **

| Petro-Canada has the second largest downstream business and is the "brand  of choice" in Canada. In 2008, Petro-Canada accounted for approximately  13% of the total refining capacity in Canada and about 15% of total petroleum  products sold in Canada.                                                                                                                                                                |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Downstream operations include two refineries - one  in Edmonton and one in Montreal - with a total  daily rated capacity of 40,500 cubic metre/day (m3/d) (255,000  b/d), a lubricants plant that is the largest producer of lubricant base  stocks in Canada, a network of 1,323 retail service stations, Canada's  largest national commercial road transport network of 233 locations and  a robust bulk fuel sales channel. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| The strategy in the Downstream business is to increase the  profitability of the base business through effective capital investment and  disciplined management of controllable factors. The Downstream business goal  is to deliver superior returns and growth, including a 12% return on capital  employed (ROCE) based on a mid-cycle business environment. Key features of  the strategy include:                               |

·         achieving and maintaining first quartileoperating performance in all areas

 

·         managing and reducing costs, with a specificfocus on reducing feedstock costs

 

·       growing revenue

 

 

#### **Refining and Supply**

#### ** **

Petro-Canadaowns and operates two refineries, with a total daily rated capacity ofapproximately 40,500 m3/d at the end of 2008. This representedapproximately 13% of the Canadian refining industry's total refining capacityin 2008. Petro-Canada's refineries produce a full range of refined petroleumproducts, including gasoline, diesel oils, heating oils, aviation fuels, heavyfuel oil, asphalts, petrochemicals and feedstock for lubricants.

 

Thefollowing table shows the daily rated capacity of Petro-Canada's refineries asat December 31, 2008 and the approximate average daily volumes of crudeoil processed, including volumes processed by Petro-Canada for other companiesfor the years indicated. The overall crude utilization rate at the tworefineries averaged 89% in 2008, down 10% from 2007, due largely to the plannedshutdowns in 2008 needed to bring the Edmonton RCP on-stream and subsequentramp up and, in part, due to unplanned outages at the Edmonton refinery in thethird quarter.

 

 
| **60** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

##### *Rated Capacity of Refineries and Average Daily Crude Oil Processed*

##### *(thousands of m*3/d)

 
| ** **            | ** ** | Average Volumes of   Crude Oil Processed/Calendar Day |   | Daily Rated Capacity1 |   |
|-----------------------|------------|-------------------------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **            | ** ** | Years Ended December 31,                                             |   |                            |   |
| **Refinery Location** | ** ** | **2008**                                                                            |   | 2007                            |   | 2006 | ** ** | **As at December 31,  2008** | ** ** |
| Edmonton,  Alberta    | ** ** | **16.3**                                                                            |   | 20.4                            |   | 18.9 |   | 19.9 |   |
| Montreal,  Quebec     | ** ** | **19.7**                                                                            |   | 19.7                            |   | 18.9 |   | 20.6 |   |
| **Total**             | ** ** | **36.0**                                                                            |   | 40.1                            |   | 37.8 |   | 40.5 |   |

 
| 1 | Daily rated capacity is based on calendar days and defined  specifications as to types of crude oil, the products to be obtained and the  refinery processes required. Variations in these factors may result in actual  capacity being higher or lower than rated capacities. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

In 2008, construction of the Edmonton RCP to process 100% oilsands-based feedstock was completed and operations utilizing the new feedstocksbegan ramping up. At the Montreal refinery, engineering and evaluation of apotential 4,000 m3/d (25,000 b/d) coker was progressed.

 

Petro-Canada is well positioned with the supply capability to optimizeprofitability within a range of future business scenarios.

 

 

#### **Edmonton Refinery**

#### ** **

The Edmonton refinery is Petro-Canada's most efficient refinery,producing a high yield of light oils. Following completion of the RCP in thirdquarter 2008, the refinery now runs entirely on oil sands-based feedstocks. Theconventional crude unit at Edmonton was replaced with new crude and vacuumunits, and expanded coker capacity and sulphur removal capability to upgradeand refine oil sands-based feedstock. The new configuration allows the refineryto directly upgrade an Athabasca blend feed of 5,500 m3/d (comprised of 4,100 m3/d of bitumen and 1,400 m3/d of diluent) and process7,600 m3/d of sour synthetic crude oil,replacing the more expensive conventional light crude feedstock previouslyrefined. The refinery continues to process sweet synthetic crude through itssynthetic train. Refer to the Oil Sands content in the Upstream section of thisAIF for bitumen and sour crude oil feedstock supply arrangements.

 

 

#### **Montreal Refinery**

#### ** **

The Montreal refinery, supplied with imported crude oil primarilythrough the Portland-Montreal pipeline, has a flexible configuration thatallows processing of a variety of crude oils, including heavy grades andintermediate feedstock. The refinery produces gasoline, distillates, asphalts,heavy fuel oil, petrochemicals, solvents and feedstock for lubricants.

 

Petro-Canada continues its assessment of the potential addition of a4,000 m3/d(25,000 b/d) coker unit, which would allow the Montreal refinery to leveragelower cost heavier crude feedstock and shift production of lower value asphaltand heavy fuel oil to higher value diesel and gasoline fuel. However, theproject is on hold until commodity prices and financial markets strengthen, andthe Company is reworking the project costs to take advantage of the currentmarket environment.

 

 

#### **ParaChem Chemicals Plant**

#### ** **

Petro-Canada holds a 51% working interest in ParaChem Chemicals L.P.(ParaChem), which owns and operates a petrochemicals plant located adjacent tothe Montreal refinery. The plant primarily produces up to 350,000 metrictons/year of paraxylene (PX), which is used to manufacture polyester textilesand plastic bottles. ParaChem also produces benzene, hydrogen and heavyaromatics. The 75-hectare plant site is located in Montreal's industrialdistrict, with access to pipelines, shipping lanes and rail shippingfacilities. Its hydrocarbon storage capacity exceeds 300 million litres.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **61** |
|--|-------------------------------------------|--------|

 

Petro-Canada currently supplies mixed xylenes and toluene to ParaChem.The integration of the ParaChem plant with the Montreal refinery provides severalsynergies, including the ability to capture more of the petrochemicals valuechain through vertical integration.

 

 

#### **Supply and Distribution**

#### ** **

Petro-Canada purchases crude oil and other refinery feedstock fromCanadian and international sources under a number of different contractualarrangements. The Downstream business is responsible for arranging domestic andforeign crude supply for the Company's refineries, as well as marketingPetro-Canada's upstream crude oil production. Upstream crude oil production isgenerally marketed through short-term, renewable contracts. There is awell-developed infrastructure for third-party supply of both domestic andimported crudes to markets in North America. Purchases are generally throughshort-term, renewable contracts. Petro-Canada is not dependent on any singlesource of supply for conventional crude oil and does not anticipate anydifficulty in obtaining an adequate supply in the foreseeable future.

 

Efficiencies are achieved through refined product exchange, purchase,sale and short-term storage arrangements with other petroleum companies. Thesearrangements reduce capital and transportation costs, assist in the maintenanceof supply to customers and enable Petro-Canada to participate in geographicalareas without the need to invest capital in distribution facilities. Applicableagreements contain appropriate provisions for consistent product quality to bemaintained for the Company's customers.

 

Petro-Canada operates an extensive distribution network, using pipeline,road, rail and marine transportation to deliver refined products to retailoutlets and commercial and industrial customers. The Company holds interests intwo refined product pipelines, one crude pipeline and a joint venture interestin one major refined products terminal. Petro-Canada also owns and operates11 major refined products terminals across Canada.

 

 

#### **Sales and Marketing**

#### ** **

In2008, Petro-Canada was the second largest marketer of petroleum products inCanada. Petro-Canada's petroleum products sales represented approximately 15%of total petroleum products sold in Canada during 2008. Petro-Canada markets afull range of petroleum products, including gasoline, diesel oils, heatingoils, aviation fuels, heavy fuel oil, asphalts, lubricants, petrochemicalfeedstock and liquefied petroleum gases. Petro-Canada also generatesnon-petroleum revenue from convenience stores, car washes and automotive repairand maintenance services. During 2008, the Company continued to focus onprofitable growth through initiatives directed at the retail and PETRO-PASStruck stop networks.

 

 
| **62** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

##### *Average Daily Sales of Petroleum Products*

##### *(thousands of m*3/d)

 
|                 |       | Years Ended December 31, |   |
|----------------------|------------|-------------------------------|--------|
| ** **           |       | **2008**                      |   | 2007 |   | 2006 |   |
| Gasoline1            |       |                          |   |   |   |   |   |
| Eastern  Canada      | ** ** | **13.4**                      |   | 13.8 |   | 13.5 |   |
| Western  Canada      | ** ** | **10.0**                      |   | 10.3 |   | 10.7 |   |
| Subtotal             | ** ** | **23.4**                      |   | 24.1 |   | 24.2 |   |
| Middle  distillates2 |       |                          |   |   |   |   |   |
| Eastern  Canada      | ** ** | **8.9**                       |   | 8.8 |   | 8.7 |   |
| Western  Canada      | ** ** | **10.0**                      |   | 11.1 |   | 10.9 |   |
| Subtotal             | ** ** | **18.9**                      |   | 19.9 |   | 19.6 |   |
| Other3               | ** ** | **10.1**                      |   | 9.3 |   | 8.7 |   |
| **Total**            | ** ** | **52.4**                      |   | 53.3 |   | 52.5 |   |

 
| 1      | Includes motor and aviation gasoline.                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                |
| 2      | Includes diesel oils, heating oils and aviation  jet fuels.                                                                                         |
|   |                                                                                                                                                |
| 3      | Includes heavy fuel oil, asphalts, lubricants,  liquefied petroleum gases, petrochemical feedstock and other petroleum and  non-petroleum products. |

 

Thefollowing table shows the annual revenues derived from refining and marketingactivities during the years indicated.

 

##### *Refining and Marketing Revenues*

##### *(millions of Canadian dollars)*

 
|                 |       | Years Ended December 31, |       |
|----------------------|------------|-------------------------------|------------|
| ** **           |       | **2008**                      |       | 2007 |   | 2006 |   |
| Gasoline1            | ** ** | **$**                         | **6,786**  |   | $ | 5,883 |   | $ | 5,481 |   |
| Middle  distillates2 | ** ** | **6,117**                     |       | 4,864 |   | 4,537 |   |
| Other3               | ** ** | **3,392**                     |       | 2,606 |   | 2,363 |   |
| **Total**            | ** ** | **$**                         | **16,295** |   | $ | 13,353 |   | $ | 12,381 |   |

 
| 1      | Includes motor and aviation gasoline.                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                |
| 2      | Includes diesel oils, heating oils and aviation  jet fuels.                                                                                         |
|   |                                                                                                                                                |
| 3      | Includes heavy fuel oil, asphalts, lubricants,  liquefied petroleum gases, petrochemical feedstock and other petroleum and  non-petroleum products. |

 

 

#### **Retail**

#### ** **

At December 31,2008, Petro-Canada's network of retail sites consisted of 1,323 outletsacross Canada, of which 808 outlets were Company-controlled and thebalance of the outlets were controlled by third parties. Independent dealersand agents operate all the outlets.

 

TheCompany continued to advance Petro-Canada's standing as the "brand ofchoice" through focusing on selective representation and site development,generating high site throughputs and achieving a 16% share of the nationalretail market. In 2008, Petro-Canada led the industry in key urban marketmetrics and continued to improve the fundamentals of the business. Within theCompany's network, annual sales averaged 6.1 million litres per site. TheCompany also added locations nationally to its independent retail network in2008. In addition, the Company advanced the development of its new integratedhighway facilities, which is a combined retail and PETRO-PASS offering.

 

Petro-Canadacontinued to expand its non-petroleum revenue base. This included advancingpreviously launched product offerings and implementing new products, such asthe Fuel Savings Reward Card and car wash Seasons Passes. The businesscontinued to expand the Neighbours fresh food offering and industry-leadingGlide Autowash offering. Based on the 

 

 
|  | Annual  Information Form **PETRO-CANADA** | **63** |
|--|-------------------------------------------|--------|

 

successof these developments, the Company plans to broaden the availability of theseofferings over the coming years. Despite a challenging business environment in2008, year-over-year convenience store sales grew by 1%, and same-store salesdeclined by 1% compared with 2007.

 

 

#### **Wholesale**

#### ** **

Petro-Canadasells petroleum products into farm, home heating, paving, small industrial,commercial and truck markets. This category accounted for approximately 61% oftotal Downstream sales volumes in 2008, down slightly from 62% in 2007.Petro-Canada is the leading national marketer to the commercial road transportsegment in Canada with 233 PETRO-PASS sites. The Company also sells largevolumes of petroleum products directly to large industrial and commercialcustomers and independent marketers.

 

TheCompany's focus has been on improving its sales mix in the high value channelsof commercial road transport and bulk fuels channels. In 2008, Petro-Canadacontinued to expand and upgrade the network in key growth markets.

#### ** **

#### ** **

#### **Lubricants**

#### ** **

Thelubricants plant in Mississauga, Ontario produces specialty lubricants andwaxes that are marketed in Canada and internationally. Petro-Canada'slubricants plant is the largest producer of lubricant base stocks in Canada,the sixth largest in North America and the twelfth largest in the world, withannual base oil production capacity in excess of 900 million litres. In June 2006,the lubricants plant was expanded by 25% to support the growth of its highvalue, specialty lubricants business.

 

Thelubricants plant uses a two-stage hydro-treating process, which is unique inCanada. This process enables Petro-Canada to refine gas oils produced from awide range of crude feedstock into lubricating oil-based stocks that are amongthe highest level of purity of any base stocks in the world. Advancinglubricant technology and growing environmental concerns continue to increasethe demand for high purity, hydro-treated base stocks for many lubricantapplications. Petro-Canada is well positioned to meet this growing demand. In2008, Lubricants advanced product development and commercialization of its neweco-friendly lawn care product lines, receiving U.S. National EnvironmentalProtection Agency approval for sales into the U.S. market. Product launch plansare currently underway. Also in 2008, Lubricants obtained a business licence toparticipate in direct sales into the China market.

 

TheCompany's product-driven strategy is to improve plant safety and reliabilityand grow volume in high value segments. In 2008, Petro-Canada continued tofocus on optimizing operations and maintenance procedures based on industrybest practices. Lubricants sales in 2008 totalled 850 million litres, anincrease of approximately 9%, compared with sales volumes of 778 millionlitres in 2007. The increase in sales volumes was due to higher process fluid,white oil, base oil, and commercial and industrial product sales, partiallyoffset by a decline in wax and automotive product sales. Sales in high  value product segments represented 75% oftotal sales by year-end 2008.

 

 

#### **Pipelines**

#### ** **

Petro-Canadacomplements its production, extraction and refining operations with ownership incrude oil and refined product pipelines. The principal pipelines in which theCompany has an interest are Alberta Products Pipe Line Inc.,Trans-Northern Pipelines Inc. and Montreal Pipe Line Limited.

 

 
| **64** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

##### *Link to Petro-Canada’s Corporate and StrategicPriorities*

##### * *

The Downstream business is aligned with Petro-Canada’s strategicpriorities as outlined by its progress in 2008 and goals for 2009.

 
| PRIORITY                                                                               |       |       | 2008 GOALS                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |       | 2008 RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | ** ** | **2009 GOALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                   |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                   |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** ****Delivering  Profitable Growth with a Focus on Operated, Long-Life Assets** |       |       | ·     advance Montreal coker,  with FID expected in the second quarter of 2008

 

·**    **complete Edmonton RCP for startup in the fourth  quarter of 2008

 

·**    **continue to invest in smaller scale refinery yield  and reliability improvement projects 

 

·**    **selectively invest in retail and wholesale assets | ** ** | ** ** | ·**    **completed FEED for proposed 25,000 b/d  Montreal coker; FID for project was delayed due to market conditions 

 

·     completed construction  of the Edmonton RCP and started up in the fourth quarter 

 

·     invested $41 million in  smaller scale refinery yield and reliability improvement projects

 

·     made selective  investments in retail and wholesale assets                                                               | ** ** | ** ** | ·     review costs for  Montreal coker project and position it for sanction when commodity and  financial markets improve 

 

·     realize value of the  Edmonton RCP investment

 

·     prudently manage  refinery capital expenditure spending consistent with economic conditions

 

·     selectively invest in  retail and wholesale assets                                                                                                                                                                             |
| ** **                                                                             |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                                                                             |       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Driving for First Quartile  Operation of Our Assets**                                | ** ** | ** ** | ·     continue to focus on  safety and refinery reliability, with increased focus on process safety

 

·     reduce feedstock costs

 

·     increase retail  non-petroleum revenue 

 

·     grow high value  lubricants sales volumes                                                                                         | ** ** | ** ** | ·     achieved a combined  reliability index of 84 at the Company's two refineries

 

·     began processing lower  cost oil sands-based feedstock at completed Edmonton RCP

 

·     grew convenience store  sales by 1%, while same-store sales declined by 1% compared with 2007

 

·     increased high value  lubricants sales volumes by 13%                                                                                                           | ** ** | ** ** | ·     continue to focus on  personal and process safety, refinery reliability and environmental  responsibility

 

·     reduce feedstock costs

 

·     increase retail non-petroleum  revenue 

 

·     grow high value  lubricants sales volumes                                                                                                                                                                                                                                                                            |
| ** **                                                                             | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                                                                             | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Continuing to Work at Being a  Responsible Company**                                 | ** ** | ** ** | ·     maintain focus on TRIF  and regulatory compliance exceedances

 

·     assess highest risk  retail sites for safety and security enhancements

 

·     assess water use at  retail and wholesale facilities and  review current management activities in high risk areas                                                                                 | ** ** | ** ** | ·     TRIF decreased to 0.60,  compared with 0.64 in 2007

 

·     recorded 13  environmental regulatory exceedances, compared with 12 in 2007 

 

·     completed safety and  security assessments at retail sites and implemented upgrades based on  priority profile

 

·     assessed water quality  risks and identified highest risk retail and wholesale facilities and  developed water quality management plans based on corporate water principles | ** ** | ** ** | ·     execute drinking water  management plans for high risk wholesale and retail facilities and develop  criteria to audit success 

 

·     employ Life-Cycle Value  Assessment (LCVA) to help inform decisions regarding waste management and  minimization at refineries

 

·     maintain focus on energy efficiency and GHG  mitigation opportunities and establish a baseline for new Edmonton refinery  configuration

 

·     maintain focus on TRIF  and integrate new measures related to process safety activities |
| ** **                                                                             | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                                                             | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

 
|  | Annual  Information Form **PETRO-CANADA** | **65** |
|--|-------------------------------------------|--------|

 

## **HUMAN RESOURCES**

## ** **

Asat December 31, 2008, Petro-Canada and its wholly owned subsidiaries had6,088 employees, compared with 5,603 employees as at December 31,2007. Of the year-end 2008 employees, 896 employees were employed in theNorth American Natural Gas business unit, 661 employees were employed in theOil Sands business unit, 519 employees were employed in the International &Offshore business unit and 2,522 employees were employed in Downstream.The remaining 1,490 employees were corporate support staff. Seven hundredand twelve employees were employed outside of Canada, of which 274 werecorporate support staff employees and 35 were Downstream employees.

 

Approximately20% of Petro-Canada's employees were covered by collective bargainingagreements in 2008. Approximately 90% of the Company's unionized employees weremembers of the Communications Energy and Paperworkers Union (CEP) in 2008,which represents refinery, marketing, gas plant and offshore productionworkers. Three-year collective bargaining agreements with most CEP locals willexpire on January 31, 2010. A collective agreement at our Montrealrefinery was reached in December 2008, following a 13-monthCompany-initiated work stoppage. Negotiations between the Company and the unionrepresenting employees on the Terra Nova FPSO commenced well in advance of thecontract expiry and a tentative agreement was reached in early 2009.

 

 

## **SOCIAL ANDENVIRONMENTAL POLICIES**

## ** **

Petro-Canadais determined to earn the support received from stakeholders, not just throughexcellence in meeting customers' energy needs, but by also playing an activeand important role in the communities where the Company lives and operates.Petro-Canada conducts business in a highly principled manner, as guided by aCode of Business Conduct (a copy of which is available under the Company'sSEDAR profile at www.sedar.com), corporate values and standards, and the valuesand standards of the societies that host Petro-Canada operations. Wherever theCompany operates around the world, Petro-Canada aims to invest and conductoperations in a manner that is economically rewarding to all parties, isrecognized as being ethically, socially and environmentally responsible, iswelcomed by the communities in which Petro-Canada operates, and helpsfacilitate economic, human and community development within a stable operatingenvironment. Petro-Canada subscribes to the International Code of Ethics forCanadian Business, the United Nations Global Compact and the UniversalDeclaration of Human Rights.

 

Petro-Canadaexecutives are accountable for the effective execution of TLM policy1 andstandards. Petro-Canada periodically reviews each business unit or SharedServices unit based on risk to assess the implementation of the policy andstandards. The Executive Leadership Team reviews environment, health and safetyperformance monthly. As well, the Environment, Health and Safety Committee ofthe Board reviews environment, health and safety performance throughout theyear.

 

AtPetro-Canada, investing in communities is an integral part of the way theCompany does business. Petro-Canada works with communities in the Company's keybusiness locations to ensure its presence generates value and makes adifference for its neighbours. The Company invests in large scale initiativesthat provide significant benefits at a national level, as well as in grassrootsprograms and services at the local level. Following a detailed strategic reviewof its community partnerships program, a new strategy was launched in 2007 witha focus on education, the environment and local community support.

 

 

----

1   Petro-Canada'sTLM framework is a systematic approach to identify, assess and controloperational risk.

 

 
| **66** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

## ** **

## **CASH AND IN-KINDCONTRIBUTIONS OF NEARLY $14 MILLION IN 2008**

## ** **

#### **Highlights**

#### ** **

In2008, Petro-Canada invested nearly $8 million to strengthen key communitieswhere the Company has operations, and where employees live and work. In supportof the Company's largest partnership – the Olympics and Paralympics –Petro-Canada invested nearly $6 million to support Canadian athletes andcoaches at the grassroots level.

 

Educationis a key area of investment to develop skills and competencies Petro-Canadauses today and will need in the future. Since its creation in 2006, thePetro-Canada Emerging Leaders Awards program has been established at sixpost-secondary institutes for a total long-term commitment of more than $4million.

 

Toensure the strength of its community partnerships, the Company is activelyinvolved in the London Benchmarking Group, which provides a framework and toolsto measure the input and impact of community investment.

 

Petro-Canadaemployees are consistently involved in providing leadership and assistancewithin their communities. Employees and the Company donated nearly$3.5 million to United Way campaigns across North America in 2008. Inaddition, the Petro-Cares program provided 814 grants totalling $305,901to non-profit organizations supported by employees and retirees who give theirtime to the community. These volunteer grants, created in 1992, have nowsurpassed $2.4 million globally. In Canada, through the Company's year-roundPetro-Cares days, employees and retirees contributed more than 3,300 hours ofvolunteer time to 104 projects for non-profit organizations.

 

In2008, Petro-Canada reaffirmed its commitment to the pursuit of the Olympicideals by presenting the Petro-Canada sports leadership conference in Halifax,by providing Canadian Olympians and Paralympians the opportunity to take theirinspirational messages to schools, and by developing the populariwilldreambig.ca website to profile developing Canadian athletes.

 

Tolearn more about Petro-Canada's community involvement, please access the annualReport to the Community available on the Company's website(www.petro-canada.ca). The 2008 report will be published mid-2009.

 
|                             |       | Years ended December 31, |     |
|----------------------------------|------------|-------------------------------|----------|
| *(millions of Canadian dollars)* | ** ** | **2008**                      |     | 2007 |   | 2006 |   |
| Local  community support1        | ** ** | **$**                         | **3.2**  |   | $ | 5.0 |   | $ | 6.2 |   |
| Olympic/Paralympic               | ** ** | **5.9**                       |     | 5.0 |   | 10.7 |   |
| Education                        | ** ** | **2.5**                       |     | 2.4 |   | 1.5 |   |
| United Way2                      | ** ** | **1.5**                       |     | 1.3 |   | 1.2 |   |
| Environment                      | ** ** | **0.6**                       |     | 1.2 |   | 0.6 |   |
| **Total**                        | ** ** | **$**                         | **13.7** |   | $ | 14.9 |   | $ | 20.2 |   |

 

1  Cashcontributions to communities from Petro-Canada's community partnerships program(including the Petro-Cares program), business operating units plus in-kinddonations.

2  Company cash contributions and campaign costsonly (excludes employee donations).

 

 
|  | Annual  Information Form **PETRO-CANADA** | 67 |
|--|-------------------------------------------|----|

## ** **

## **ENVIRONMENTALEXPENDITURES**

## ** **

In 2008, Petro-Canada's environmental capital and operating expenditurestotalled $412 million, compared with $280 million in 2007 and$501 million in 2006. The increase in 2008 expenditures mainly reflectedthe completion of Downstream projects to meet federal regulations for sulphurlimits in diesel.

 

Environmental expenditures included purchase, installation, operationand maintenance of pollution abatement equipment and facilities, replacement ofunderground tanks, waste management, environmental studies and research,reclamation activities and the workforce costs of environmental staff andconsultants.

 

The following table shows Petro-Canada's expenditures for environmentalmatters during 2008.

 

 

##### *Environmental Costs – Year Ended December 31, 2008*

##### *(millions of Canadian dollars)*

 
|                          |   | Capital |   | Operating  Expense |   | Total  |   |
|-------------------------------|--------|---------|--------|--------------------|--------|--------|--------|
| Upstream                      |   | $       | 67     |               | 143    |   | 210    |   |
| Downstream                    |   | 150     |   | 52                 |   | 202    |   |
| **Total environmental costs** |   | $       | 217    |               | 195    |   | 412    |   |

 

Moredetailed information on the Company's policies and performance relative to theenvironment will be included in the annual Report to the Community,which will be published on the Company's website (www.petro-canada.ca)mid-2009.

 

Petro-Canadawill likely face increased capital and operating costs in the future in orderto comply with proposed environmental regulations. See "Risk Management –Risks Relating to Petro-Canada's Business."

 

 
| **68** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

# **Select Financial Data**

##### * *

##### *Consolidated Financial Information*

 
|                                                       |                | Years Ended December 31, |       |
|------------------------------------------------------------|---------------------|-------------------------------|------------|
| *(millions of Canadian dollars, except per share amounts)* | * *            | ** **                    | **2008**   |   | 2007 |   | 2006 |   |
| **Statement of earnings data**                             |                |                          |       |   |   |   |   |
| Revenue                                                    |                |                          |       |   |   |   |   |
| Operating                                                  | ** **          | **$**                         | **27,585** |   | $ | 21,710 |   | $ | 18,911 |   |
| Investment  and other income (expense)                     | ** **          | **200**                       |       | (460 | ) | (242 | ) |
| Total  revenue                                             | ** **          | **27,785**                    |       | 21,250 |   | 18,669 |   |
| Earnings  from continuing operations before income taxes   | ** **          | **5,753**                     |       | 4,907 |   | 3,972 |   |
| Provision  for income taxes                                | ** **          | **2,619**                     |       | 2,174 |   | 2,384 |   |
| Net  earnings from continuing operations                   | ** **          | **3,134**                     |       | 2,733 |   | 1,588 |   |
| Net  earnings from discontinued operations                 | ** **          | **–**                    |       | – |   | 152 |   |
| Net  earnings                                              | ** **          | **$**                         | **3,134**  |   | $ | 2,733 |   | $ | 1,740 |   |
| **Net earnings**                                           |                |                          |       |   |   |   |   |
| Upstream                                                   |                |                          |       |   |   |   |   |
| North  American Natural Gas                                | ** **          | **$**                         | **344**    |   | $ | 191 |   | $ | 405 |   |
| Oil Sands                                                  | ** **          | **334**                       |       | 316 |   | 245 |   |
| *International & Offshore*                        |                |                          |       |   |   |   |   |
| East Coast  Canada                                         | ** **          | **1,368**                     |       | 1,229 |   | 934 |   |
| International                                              | ** **          | **1,684**                     |       | 374 |   | (206 | ) |
| Downstream                                                 | ** **          | **–**                    |       | 629 |   | 473 |   |
| Shared  Services and Eliminations                          | ** **          | **(596**                      | )          | (6 | ) | (263 | ) |
| Discontinued  operations                                   | ** **          | **–**                    |       | – |   | 152 |   |
| Net  earnings                                              | ** **          | **$**                         | **3,134**  |   | $ | 2,733 |   | $ | 1,740 |   |
| Earnings per share from continuing operations              | – basic   | ** **                    | **$**      | **6.47** |   | $ | 5.59 |   | $ | 3.15 |   |
|                                                       | – diluted | ** **                    | **6.43**   |   | 5.53 |   | 3.11 |   |
| Earnings  per share                                        | – basic   | ** **                    | **6.47**   |   | 5.59 |   | 3.45 |   |
|                                                       | – diluted | ** **                    | **6.43**   |   | 5.53 |   | 3.41 |   |
| Dividends  per share                                       | ** **          | **0.66**                      |       | 0.52 |   | 0.40 |   |
| Cash flow  from continuing operating activities            | ** **          | **6,522**                     |       | 3,339 |   | 3,608 |   |
| **Balance sheet data (at end of year)**               |                |                          |       |   |   |   |   |
| Total  assets                                              | ** **          | **30,377**                    |       | 23,852 |   | 22,646 |   |
| Debt                                                       | ** **          | **4,749**                     |       | 3,450 |   | 2,894 |   |
| Cash and  cash equivalents1                                | ** **          | **1,445**                     |       | 231 |   | 499 |   |
| Shareholders'  equity                                      | ** **          | **15,475**                    |       | 11,870 |   | 10,441 |   |
| Average  capital employed1                                 | ** **          | **$**                         | **17,772** |   | $ | 14,328 |   | $ | 12,868 |   |
|                                                            |                     |                               |            |  |  |  |  |  |  |  |  |  |

 

1     Includesdiscontinued operations associated with the mature Syrian assets sold in 2006.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **69** |
|--|-------------------------------------------|--------|

 

 

##### *Quarterly Information*

##### *(millions of Canadian dollars, except per shareamounts)*

 
| ** **                          |       | **2008  Three Months Ended** |       | 2007  Three Months Ended |       |
|-------------------------------------|------------|------------------------------|------------|--------------------------|------------|
| ** **                          | ** ** | **Mar. 31**             | ** ** | **June 30**         | ** ** | **Sept. 30** |   | **Dec. 31** |   | Mar. 31 |   | June 30 |   | Sept. 30 |   | Dec. 31 |   |
| **Total revenue**                   | ** ** | **$**                        | **6,586**  | ** **               | **$**      | **7,646** | ** ** | **$** | **8,286** | ** ** | **$** | **5,267** |   | $ | 4,841 |   | $ | 5,478 |   | $ | 5,497 |   | $ | 5,434 |   |
| **Net earnings**                    |       |                         |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Upstream                            |       |                         |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North  American Natural Gas         | ** ** | **$**                        | **74**     | ** **               | **$**      | **100** | ** ** | **$** | **165** | ** ** | **$** | **5** |   | $ | 112 |   | $ | 81 |   | $ | 55 |   | $ | (57 | ) |
| Oil Sands                           | ** ** | **112**                      | ** ** | **177**                  | ** ** | **209** | ** ** | **(164** | **)** | 43 |   | 34 |   | 110 |   | 129 |   |
| *International & Offshore* |       |                         |       |                     |       |   |   |   | ** ** |   |   |   |   |   |   |   |   |
| East Coast  Canada                  | ** ** | **375**                      | ** ** | **385**                  | ** ** | **397** | ** ** | **211** | ** ** | 256 |   | 334 |   | 293 |   | 346 |   |
| International                       | ** ** | **336**                      | ** ** | **672**                  | ** ** | **483** | ** ** | **193** | ** ** | 9 |   | 195 |   | 200 |   | (30 | ) |
| Downstream                          | ** ** | **184**                      | ** ** | **300**                  | ** ** | **(27** | **)** | **(457** | **)** | 184 |   | 259 |   | 105 |   | 81 |   |
| Shared  Services and Eliminations   | ** ** | **(5**                       | **)**      | **(136**                 | **)**      | **24** | ** ** | **(479** | **)** | (14 | ) | (58 | ) | 13 |   | 53 |   |
| **Net earnings**                    | ** ** | **$**                        | **1,076**  | ** **               | **$**      | **1,498** | ** ** | **$** | **1,251** | ** ** | **$** | **(691** | **)** | $ | 590 |   | $ | 845 |   | $ | 776 |   | $ | 522 |   |
| **Earnings per share**              |       |                         |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                               | ** ** | **$**                        | **2.22**   | ** **               | **$**      | **3.10** | ** ** | **$** | **2.58** | ** ** | **$** | **(1.43** | **)** | $ | 1.19 |   | $ | 1.71 |   | $ | 1.59 |   | $ | 1.08 |   |
| Diluted                             | ** ** | **$**                        | **2.20**   | ** **               | **$**      | **3.07** | ** ** | **$** | **2.56** | ** ** | **$** | **(1.43** | **)** | $ | 1.18 |   | $ | 1.70 |   | $ | 1.58 |   | $ | 1.07 |   |

 

 
| **70** | **PETRO-CANADA** Annual  Information Form |  |
|--------|-------------------------------------------|--|

 

## **CAPITAL EXPENDITURESON PROPERTY, PLANT AND EQUIPMENT AND EXPLORATION**

## ** **

The following table shows Petro-Canada's capital expenditures onproperty, plant and equipment and exploration for the years indicated.

 

 

##### *Capital Expenditures on Property, Plant and Equipment and Exploration*

##### *(millions of Canadian dollars)*

 
| ** **                                                                                                  |       | **2008**   |      | 2007   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------|------------|------------|-----------|--------|--------|--------|--------|
| **Exploration**                                                                                             |       |       |      |   |   |   |   |
| North  American Natural Gas                                                                                 | ** ** | **$**      | **232**   |   | $      | 144    |   | $ | 160 |   |
| Oil Sands                                                                                                   | ** ** | **–** |      | 20     |   | 6      |   |
| *International & Offshore*                                                                         |       |       |      |   |   |   |   |
| East Coast  Canada                                                                                          | ** ** | **7**      |      | (2     | )      | 3      |   |
| International                                                                                               |       |       |      |   |   |   |   |
| North Sea                                                                                                   | ** ** | **60**     |      | 71     |   | 37     |   |
| Other  International                                                                                        | ** ** | **279**    |      | 220    |   | 40     |   |
| **Total exploration**                                                                                       | ** ** | **578**    |      | 453    |   | 246    |   |
| **Development**                                                                                             |       |       |      |   |   |   |   |
| North  American Natural Gas                                                                                 | ** ** | **445**    |      | 514    |   | 523    |   |
| Oil Sands                                                                                                   | ** ** | **1,060**  |      | 408    |   | 269    |   |
| *International & Offshore*                                                                         |       |       |      |   |   |   |   |
| East Coast  Canada                                                                                          | ** ** | **269**    |      | 161    |   | 253    |   |
| International                                                                                               |       |       |      |   |   |   |   |
| North Sea                                                                                                   | ** ** | **221**    |      | 324    |   | 551    |   |
| Other  International                                                                                        | ** ** | **599**    |      | 147    |   | 132    |   |
| **Total development**                                                                                       | ** ** | **2,594**  |      | 1,554  |   | 1,728  |   |
| **Property acquisitions**                                                                                   |       |       |      |   |   |   |   |
| North  American Natural Gas                                                                                 | ** ** | **346**    |      | 208    |   | 105    |   |
| Oil Sands                                                                                                   | ** ** | **3**      |      | 351    |   | 102    |   |
| International                                                                                               |       |       |      |   |   |   |   |
| Other  International                                                                                        | ** ** | **956**    |      | – |   | – |   |
| **Total property acquisitions**                                                                             | ** ** | **1,305**  |      | 559    |   | 207    |   |
| **Downstream**                                                                                              |       |       |      |   |   |   |   |
| Refining  and supply                                                                                        | ** ** | **1,651**  |      | 1,214  |   | 1,038  |   |
| Sales,  marketing and other                                                                                 | ** ** | **156**    |      | 155    |   | 142    |   |
| Lubricants                                                                                                  | ** ** | **27**     |      | 27     |   | 49     |   |
| **Total Downstream**                                                                                        | ** ** | **1,834**  |      | 1,396  |   | 1,229  |   |
| **Shared Services**                                                                                         | ** ** | **33**     |      | 26     |   | 24     |   |
| **Total capital expenditures on property, plant and equipment and  exploration from continuing operations** | ** ** | **6,344**  |      | 3,988  |   | 3,434  |   |
| **Discontinued operations**                                                                                 | ** ** | **–** |      | – |   | 1      |   |
| **Total capital expenditures on property, plant and equipment and  exploration**                            | ** ** | **$**      | **6,344** |   | $      | 3,988  |   | $ | 3,435 |   |

 

 
|  | Annual  Information Form **PETRO-CANADA** | **71** |
|--|-------------------------------------------|--------|

 

For2009, the Company expects to cover its capital program with cash flow, cashand, if necessary, from available credit facilities. On December 11, 2008,the Company released an outlook for 2009 planned capital expenditures totalling$3,960 million. Subsequent to the release of this guidance, as a result ofpersistently low commodity prices, the Company plans to further reduce 2009planned capital expenditures to more properly balance the levels being investedon capital expenditures and the draws on the liquidity resources comprised ofcash flow, cash and available credit facilities. In 2009, spending on newgrowth projects is expected to decrease, while spending on replacing reservesin core areas is expected to increase. Approximately 54% of planned capitalexpenditures support delivering profitable new growth and funding explorationand new ventures. This is down by $2.5 billion, compared with the samecategories in 2008. Approximately 34% of planned capital expenditures will bedirected toward replacing reserves in core areas, an increase of $170 millioncompared with 2008. The remaining 12% of 2009 planned capital expenditures isdirected toward enhancing existing assets, improving base businessprofitability and complying with new regulations.

 
| **2009 Capital Outlook**                                | * * | *(millions of Canadian  dollars)* | * * |
|---------------------------------------------------------|----------|-----------------------------------|----------|
| Comply with  new regulations                            |     | $                                 | 130      |   |
| Enhance  existing assets                                |     | 300                               |     |
| Improve  base business profitability                    |     | 60                                |     |
| Replace  reserves in core areas                         |     | 1,340                             |     |
| Advance new  growth projects                            |     | 1,935                             |     |
| Fund  exploration and new ventures for long-term growth |     | 195                               |     |
| **Total**                                               |     | $                                 | 3,960    |   |

 

 
| **Capital Investment by Business – 2009 Outlook** | * * | *(millions of Canadian  dollars)* | * * |
|--------------------------------------------------------|----------|-----------------------------------|----------|
| **Upstream**                                           |     |                              |     |
| North  American Natural Gas                            |     | $                                 | 580      |   |
| Oil Sands                                              |     | 985                               |     |
| *International & Offshore*                    |     |                              |     |
| East Coast  Canada                                     |     | 530                               |     |
| International                                          |     | 1,270                             |     |
| Subtotal                                               |     | 3,365                             |     |
| **Downstream**                                         |     |                              |     |
| Refining  and Supply                                   |     | 460                               |     |
| Sales and  Marketing                                   |     | 70                                |     |
| Lubricants                                             |     | 30                                |     |
| Subtotal                                               |     | 560                               |     |
| **Shared Services**                                    |     | 35                                |     |
| **Total**                                              |     | $                                 | 3,960    |   |

## ** **

 

## **DIVIDENDS**

## ** **

Petro-Canada'spriority uses of cash are to fund the capital program and profitable growthopportunities, and to return cash to shareholders through dividends and a sharebuyback program.

 

Petro-Canadaregularly reviews its dividend strategy to ensure the alignment of dividendpolicy with shareholder expectations, and financial and growth objectives. Consistentwith this objective, on July 23, 2008, the Company declared a 54% increasein its quarterly dividend to $0.20/share, commencing with the dividend payableon October 1, 2008. Total dividends paid in 2008 were $320 million($0.66/share), compared with $255 million ($0.52/share) in 2007 and $201million ($0.40/share) in 2006.

 

 
| **72** | **PETRO-CANADA**Annual  Information Form |  |
|--------|------------------------------------------|--|

 

 

**Capital Structure**

 

## **GENERAL DESCRIPTION OF CAPITAL STRUCTURE**

## ** **

TheCompany's authorized share capital is comprised of an unlimited number ofcommon shares, an unlimited number of preferred shares issuable in seriesdesignated as senior preferred shares and an unlimited number of preferredshares issuable in series designated as junior preferred shares. As at December 31,2008, there were 484,597,467 common shares issued and outstanding. To theknowledge of the Board and executive officers of Petro-Canada, no personbeneficially owns or exercises control or direction over securities carrying10% or more of the voting rights attached to any class of voting securities ofthe Company. The investment firm of Alliance Bernstein L.P. exercises controlor direction over 51,029,472 common shares of the Company as at November 10,2008, representing approximately 10.5% of the total issued and outstandingcommon shares of the Company as at December 31, 2008. The holders ofcommon shares are entitled to attend all meetings of shareholders and vote atany such meeting on the basis of one vote for each common share held. As nosenior preferred shares or junior preferred shares are issued and outstanding,common shareholders are entitled to receive any dividend declared by the Boardon the common shares and to participate in a distribution of the Company'sassets among its shareholders for the purpose of winding up its affairs. Theholders of the common shares shall be entitled to share equally, share forshare, in all distributions of such assets.

 

 

## **CONSTRAINTS**

## ** **

### **Ownership,Voting and Other Restrictions**

###  

The*Petro-Canada Public Participation Act*requires that the Articles of Petro-Canada include certain restrictions on theownership and voting of voting shares of the Company. The common shares ofPetro-Canada are voting shares.

 

Noperson, together with associates of that person, may subscribe for, havetransferred to that person, hold, beneficially own or control otherwise than byway of security only, or vote in the aggregate, voting shares of Petro-Canadato which are attached more than 20% of the votes attached to all outstandingvoting shares of Petro-Canada. Additional restrictions include provisions forsuspension of voting rights, forfeiture of dividends, prohibitions againstshare transfer, compulsory sale of shares, and redemption and suspension ofother shareholder rights. The Board may at any time require holders of, orsubscribers for, voting shares, and certain other persons, to furnish statutorydeclarations as to ownership of voting shares and certain other mattersrelevant to the enforcement of the restrictions. Petro-Canada is prohibitedfrom accepting any subscription for, and issuing or registering a transfer of,any voting shares if a contravention of the individual ownership restrictionsresults.

 

Petro-Canada'sArticles, as required by the *Petro-Canada PublicParticipation Act*, also include provisions requiring Petro-Canada tomaintain its head office in Calgary, Alberta; prohibiting Petro-Canada fromselling, transferring or otherwise disposing of all or substantially all of itsassets in one transaction, or several related transactions, to any one personor group of associated persons, or to non-residents, other than by way ofsecurity only in connection with the financing of Petro-Canada; and requiringPetro-Canada to ensure (and to adopt, from time to time, policiesdescribing the manner in which Petro-Canada will fulfil the requirement toensure) that any member of the public can, in either official language ofCanada (English and French), communicate with and obtain available servicesfrom Petro-Canada's head office and any other facilities where Petro-Canadadetermines there is significant demand for communication with, and servicesfrom, that facility in that language.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **73** |
|--|-------------------------------------------|--------|

 

## **CREDIT RATINGS**

## ** **

The following table shows the ratings issued by the rating agenciesnoted therein as of December 31, 2008. A security rating is not arecommendation to buy, sell or hold securities and may be subject to revisionsor withdrawal at any time by the rating agency.

 

 

##### *Petro-Canada's Credit Ratings*

 
|              |   | Moody's Investors  Service (Moody's) |   | Standard & Poor's  (S&P) |   | Dominion Bond  Rating Service  (DBRS) |   |
|-------------------|--------|------------------------------------------------|--------|--------------------------------------------|--------|-------------------------------------------------|--------|
| Outlook           |   | Stable                                         |   | Stable                                     |   | Negative                                        |   |
| Senior  unsecured |   | Baa2                                           |   | BBB                                        |   | A (low)                                         |   |
| Short term        |   | –                                         |   | –                                     |   | R-1 (low)                                       |   |

 

Moody'scredit ratings are on a long-term debt rating scale that ranges from Aaa to C,which represents the range from highest to lowest quality of such securitiesrated. According to Moody's rating system, obligations rated "Baa"are subject to moderate credit risk. They are considered medium-grade and, assuch, may possess certain speculative characteristics.

 

Moody'sapplies numerical modifiers 1, 2 and 3 in each generic ratingclassification from Aa through Caa in its corporate bond rating system. Themodifier 1 indicates that the issue ranks in the higher end of its genericrating category; the modifier 2 indicates a mid-range ranking and themodifier 3 indicates that the issue ranks in the lower end of its genericrating category.

 

S&P'scredit ratings are on a long-term debt rating scale that ranges from AAA to D,which represents the range from highest to lowest quality of such securitiesrated. According to the S&P rating system, an obligor rated BBB hasadequate capacity to meet its financial commitments. However, adverse economicconditions or changing circumstances are more likely to lead to a weakenedcapacity of the obligor to meet its financial commitments on the obligation.The ratings from AA to CCC may be modified by the addition of a plus (+) orminus (–) sign to show relative standing within the major rating categories.

 

DBRS'credit ratings are on a long-term debt rating scale that ranges from AAA to D,which represents the range from highest to lowest quality of such securitiesrated. According to the DBRS rating system, bonds and long-term debt rated Aare of satisfactory credit quality. Protection of interest and principal isstill substantial, but the degree of strength is less than with AA ratedentities. While a respectable rating, entities in the A category are consideredto be more susceptible to adverse economic conditions and have greater cyclicaltendencies than higher rated companies. The ratings from AA to C may bemodified by the addition of a "high" or "low" grade toindicate the relative standing of a credit within a particular rating category.

 

DBRS'short-term credit ratings are on a short-term debt rating scale that rangesfrom R-1 to D, which represents the range from highest to lowest quality ofsuch securities rated. The ratings from R-1 to R-2 may be modified by theaddition of a "high," "mid" or "low" grade toindicate the relative standing of a credit within a particular rating category.According to the DBRS rating system, short-term debt rated R-1 (low) is ofsatisfactory credit quality. The overall strength and outlook for keyliquidity, debt and profitability ratios is not normally as favourable as withhigher rating categories, but these considerations are still respectable. Anyqualifying negative factors that exist are considered manageable, and theentity is normally of sufficient size to have some influence in its industry.

 

DBRSuses "rating trends" for its ratings in the corporate sector. Ratingtrends provide guidance in respect of DBRS's opinion regarding the outlook forthe rating in question, with rating trends falling into one of threecategories: "Positive," "Stable" or "Negative."The rating trend indicates the direction in which DBRS considers the rating isheaded should present tendencies continue or, in some cases, unless challengesare addressed. In general, the DBRS view is based primarily on an evaluation ofthe issuing entity or guarantor itself, but may also include consideration ofthe outlook for the industry or industries in which the issuing entityoperates. A Positive or Negative Trend is not an indication that a ratingchange is imminent. Rather, a Positive or Negative Trend represents anindication that there is a greater likelihood that the rating could change inthe future than would be the case if a Stable Trend was assigned to thesecurity.

 

 
| **74** | **PETRO-CANADA******Annual Information Form |  |
|--------|---------------------------------------------|--|

 

**Market for Securities**

 

## **TRADING PRICE AND VOLUME**

## ** **

TheCompany's outstanding share capital is comprised of common shares, and eachcommon share carries one vote. The Company's common shares trade on the TorontoStock Exchange (TSX) under the symbol PCA and on the New York StockExchange (NYSE) under the symbol PCZ.

 

Thegreatest volume of trading in the Company's shares takes place on the TSX. Thefollowing table sets out the trading range and volume traded on the TSX and theNYSE in 2008 on a monthly basis.

 

 

##### *Petro-Canada Share Trading Activity on the TSX and theNYSE in 2008*

 
| ** ** | ** ** | **Toronto Stock Exchange**                                                  | ** ** | **New York Stock Exchange** | ** ** |
|------------|------------|---------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
|       |       | Share Price Trading Range*(Canadian dollars per share)* |       | Share  Volume                              |       | Share Price Trading Range*(U.S. dollars per share)* |   | Share  Volume |   |
|       |       | High                                                                                  |       | Low                                        |       | Close |   | *(millions)* |   | High |   | Low |   | Close |   | *(millions)* |   |
| **2008**   |       |                                                                                  |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| January    |       | $                                                                                     | 55.35      |                                       | 45.63      |   | 45.63 |   | 52.7 |   | $ |   | 55.99 |   | 45.52 |   | 45.60 |   | 25.2 |   |
| February   |       |                                                                                  | 49.41      |                                       | 43.12      |   | 47.11 |   | 50.6 |   |   | 50.27 |   | 42.77 |   | 48.04 |   | 28.8 |   |
| March      |       |                                                                                  | 47.11      |                                       | 42.77      |   | 44.72 |   | 52.6 |   |   | 47.79 |   | 41.95 |   | 43.41 |   | 32.0 |   |
| April      |       |                                                                                  | 52.00      |                                       | 44.69      |   | 50.46 |   | 45.2 |   |   | 51.77 |   | 43.70 |   | 50.12 |   | 24.6 |   |
| May        |       |                                                                                  | 60.00      |                                       | 50.27      |   | 57.33 |   | 52.9 |   |   | 61.03 |   | 49.43 |   | 57.72 |   | 32.4 |   |
| June       |       |                                                                                  | 59.05      |                                       | 54.15      |   | 57.11 |   | 48.7 |   |   | 58.24 |   | 53.40 |   | 55.75 |   | 31.9 |   |
| July       |       |                                                                                  | 55.75      |                                       | 46.04      |   | 47.26 |   | 47.2 |   |   | 56.90 |   | 45.44 |   | 46.23 |   | 37.9 |   |
| August     |       |                                                                                  | 48.42      |                                       | 45.13      |   | 46.95 |   | 43.9 |   |   | 47.10 |   | 42.53 |   | 44.14 |   | 36.1 |   |
| September  |       |                                                                                  | 43.92      |                                       | 33.70      |   | 35.40 |   | 75.4 |   |   | 41.25 |   | 32.35 |   | 33.35 |   | 61.4 |   |
| October    |       |                                                                                  | 35.23      |                                       | 23.70      |   | 30.14 |   | 77.8 |   |   | 33.18 |   | 19.08 |   | 24.96 |   | 92.6 |   |
| November   |       |                                                                                  | 33.73      |                                       | 20.83      |   | 33.73 |   | 54.7 |   |   | 25.30 |   | 16.43 |   | 25.05 |   | 56.2 |   |
| December   |       | $                                                                                     | 29.25      |                                       | 25.28      |   | 26.72 |   | 47.1 |   | $ |   | 24.46 |   | 19.92 |   | 21.89 |   | 52.3 |   |

## ** **

 

## **PRIORSALES**

## ** **

On May 15,2008, the Company issued $600 million US of 10-year notes, bearing interest atthe rate of 6.05% per year, and $900 million US of 30-year notes, bearinginterest at the rate of 6.80% per year, under its previously filed base shelfprospectus. The base shelf prospectus provides for the offering of up to $4billion US of debt securities in Canada or the U.S. over the course of a25-month period from March 31, 2008.

 

 
|  | Annual  Information Form **PETRO-CANADA** | **75** |
|--|-------------------------------------------|--------|

 

 

**Directors and Officers**

 

## **DIRECTORS**

## ** **

Thefollowing describes the Directors of the Company. Details on compensation andshare ownership guidelines for the Directors can be found in the Company’sManagement Proxy Circular dated March 5, 2009.

 

 
|  

**HANS BRENNINKMEYER**9

 

Independent1

Age: 63

Toronto, Ontario, Canada

 

Director since July 2008 |                                                                                                                                 | Hans Brenninkmeyer has been the  Chairman of Porticus N.A. (a charitable foundation) since 2005. Prior to that  he was Chairman and President of American Retail Group and the former Chief  Executive Officer of Comark Canada. Mr. Brenninkmeyer sits on the Board  of Governors of The New School University in New York City. He holds a Master  of Business Administration from New York University. |
|---------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                            |                                                                                                                                 |
|                                                                                                                            |                                                                                                                                 |
|                                                                                                                            | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                            | Board of Directors                                                                                                                   | 4 of 4                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                            | Audit, Finance and Risk  Committee                                                                                                   | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                            | Pension Committee                                                                                                                    | 1 of 1                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                            |                                                                                                                                 |
|                                                                                                                            |                                                                                                                                 |
|                                                                                                                            | **Securities Held**                                                                                                                  |
|                                                                                                                            | ** **                                                                                                                           |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           | Deferred |   |   |   |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           | Share |   |   |   |
|                                                                                                                            |                                                                                                                                 | Common                                                                                                                                                                                                                                                                                                                                                                                                         | Units | Total of  Common | Total  Market Value of | Minimum |
|                                                                                                                            | Year                                                                                                                                 | Shares2                                                                                                                                                                                                                                                                                                                                                                                                        | (DSUs)3 | Shares and  DSUs | Common  Shares and DSUs4 | Required5 |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                            | 2008                                                                                                                                 | –                                                                                                                                                                                                                                                                                                                                                                                                         | 2,033 | 2,033 | $61,250 | $420,000 |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |
|                                                                                                                            | **Options  Held:  **None. Non-employee  Directors are not eligible to participate in the Company’s stock option plan. |
|                                                                                                                            |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |
|                                                                                                                            | **Other  Public Board Directorships:  **None                                                                               |
|                                                                                                                                 |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |  |  |  |  |

 

 
|  

**GAIL COOK-BENNETT, C.M.**

 

Independent1,6  Age: 68  Toronto, Ontario, Canada

 

Director since 1991 |                                                                                                                                 | Gail Cook-Bennett was appointed  Chair of the Board of Manulife Financial during 2008. Prior to that she had  been the Chairperson of the Canada Pension Plan Investment Board (public  pension plan investment) since 1998. Ms. Cook-Bennett has earned a PhD  in Economics from the University of Michigan and holds a Doctor of Laws  (honoris causa) from Carleton University. She is a Fellow of the Institute of  Corporate Directors. |
|-----------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                        |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                        | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                        | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                            | 100% |
|                                                                                                                        | Audit, Finance and Risk  Committee                                                                                                   | 6 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                            | 86% |
|                                                                                                                        | Pension Committee (Chair)                                                                                                            | 2 of 2                                                                                                                                                                                                                                                                                                                                                                                                                                            | 100% |
|                                                                                                                        |                                                                                                                                 |
|                                                                                                                        | **Securities Held**                                                                                                                  |
|                                                                                                                        | ** **                                                                                                                           |
|                                                                                                                        | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                   | DSUs3 | Total of  Common  Shares and DSUs | Total  Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                        |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                        | 2008                                                                                                                                 | 4,098                                                                                                                                                                                                                                                                                                                                                                                                                                             | 20,575 | 24,673 | $   712,020 | $420,000 |
|                                                                                                                        |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|                                                                                                                        | 2007                                                                                                                                 | 4,098                                                                                                                                                                                                                                                                                                                                                                                                                                             | 20,361 | 24,459 | $1,284,524 |
|                                                                                                                        | ** **                                                                                                                           |
|                                                                                                                        | ** **                                                                                                                           |
|                                                                                                                        | **Options  Held:  **None. Non-employee  Directors are not eligible to participate in the Company’s stock option plan. |
|                                                                                                                        |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
|                                                                                                                        | **Other  Public Board Directorships:  **Emera Inc. and  Manulife Financial Corporation                                     |
|                                                                                                                             |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  |  |  |

 

 
| **76** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 
|  

**CLAUDE FONTAINE, Q.C.**

 

Independent1Age: 67Montréal, Quebec, Canada

 

Director since 1987 |                                                                                                                                 | Claude Fontaine, Corporate  Director, is a former partner of Ogilvy Renault LLP (barristers and  solicitors). He serves as a Director or on the advisory board of a number of  for-profit and not-for-profit organizations, including AAER inc. and the  Montreal Heart Institute Foundation. Mr. Fontaine holds a Bachelor of  Arts (BA), a Licence in Law (LL.L) and an Institute of Corporate Directors  certification (ICD.D). |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                     | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | Board of Directors                                                                                                                   | 7 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                  | 88% |
|                                                                                                                     | Environment, Health and  Safety Committee                                                                                            | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                                     | Management Resources and  Compensation Committee (Chair)                                                                             | 6 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                  | 86% |
|                                                                                                                     |                                                                                                                                 |
|                                                                                                                     |                                                                                                                                 |
|                                                                                                                     | **Securities Held**                                                                                                                  |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                         | DSUs3 | Total of  Common  Shares and DSUs | Total  Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                     | 2008                                                                                                                                 | 20,585                                                                                                                                                                                                                                                                                                                                                                                                                                  | 30,864 | 51,449 | $1,530,283 | $420,000 |
|                                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|                                                                                                                     | 2007                                                                                                                                 | 16,598                                                                                                                                                                                                                                                                                                                                                                                                                                  | 30,535 | 47,133 | $2,482,961 |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | **Options  Held:**  None. Non-employee Directors are not  eligible to participate in the Company’s stock option plan. |
|                                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|                                                                                                                     | **Other  Public Board Directorships:**  AAER inc.                                                                          |
|                                                                                                                          |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  |  |  |

 

 
|  

**PAUL HASELDONCKX**

 

Independent1  Age: 60  Essen, Germany

 

Director since 2002 |                                                                                                                                 | Paul Haseldonckx, Corporate  Director, is the past Chairman of the Executive Board of Veba Oil &  Gas GmbH (global upstream) and its predecessor companies. He has also  been a Member of the Management Board of Veba Oel AG, Germany’s largest  downstream company, including Aral. Mr. Haseldonckx represented Veba’s  interests at the Board of the Cerro Negro joint venture, an *in situ* oil sands development including an upgrader,  during the construction and early production phase. Mr. Haseldonckx  holds a Master of Science. |
|----------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                     | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                     | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 100% |
|                                                                                                     | Audit, Finance and Risk  Committee                                                                                                   | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 100% |
|                                                                                                     | Environment, Health and  Safety Committee (Chair)                                                                                    | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 100% |
|                                                                                                     |                                                                                                                                 |
|                                                                                                     |                                                                                                                                 |
|                                                                                                     | **Securities Held**                                                                                                                  |
|                                                                                                     | ** **                                                                                                                           |
|                                                                                                     | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | DSUs3 | Total of  Common  Shares and DSUs | Total  Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | (Cdn $) | (Cdn $) |
|                                                                                                     | 2008                                                                                                                                 | 8,089                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 6,249 | 14,338 | $548,060 | $420,000 |
|                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |
|                                                                                                     | 2007                                                                                                                                 | 8,047                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 6,186 | 14,233 | $752,464 |
|                                                                                                     | ** **                                                                                                                           |
|                                                                                                     | ** **                                                                                                                           |
|                                                                                                     | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                     | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                                                                                                     | **Other Public Board  Directorships:**  None                                                                               |
|                                                                                                          |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |  |  |  |  |

 

 
|  | Annual Information  Form **PETRO-CANADA** | **77** |
|--|-------------------------------------------|--------|

 

 
|  

**THOMAS E. KIERANS, O.C.**7

 

Independent1,6

Age: 68

Toronto, Ontario, Canada

 

Director since 1991 |                                                                                                                                 | Tom Kierans is Chair of Council and  Vice-President of the Social Sciences and Humanities Research Council and a  Senior Fellow of Massey College in the University of Toronto. Before that he  was Chair of the Canadian Journalism Foundation and Chair of CSI Global  Markets. Mr. Kierans holds a Bachelor of Arts (Honours) and a  Master of Business Administration (Finance, Dean’s Honours List), and is a  Fellow of the Canadian Institute of Corporate Directors. He serves as a  Director of Manulife Financial Corporation, Mount Sinai Hospital and the  Canadian Institute for Advanced Research. Mr. Kierans also sits on a  number of advisory boards of for-profit and not-for-profit organizations,  including the Schulich School of Business, York University. |
|------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                         | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                         | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                         | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                         | Board of Directors                                                                                                                   | 7 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 88% |
|                                                                                                                         | Corporate Governance and  Nominating Committee                                                                                       | 3 of 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 75% |
|                                                                                                                         | Management Resources and  Compensation Committee                                                                                     | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                                         |                                                                                                                                 |
|                                                                                                                         |                                                                                                                                 |
|                                                                                                                         | **Securities Held**                                                                                                                  |
|                                                                                                                         | ** **                                                                                                                           |
|                                                                                                                         | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                         |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                         | 2008                                                                                                                                 | 50,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 6,855 | 56,855 | $1,554,354 | $420,000 |
|                                                                                                                         |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|                                                                                                                         | 2007                                                                                                                                 | 50,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 6,780 | 56,780 | $3,017,569 |
|                                                                                                                         | ** **                                                                                                                           |
|                                                                                                                         | ** **                                                                                                                           |
|                                                                                                                         | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                         | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|                                                                                                                         | **Other Public Board  Directorships:**  Manulife  Financial Corporation                                                    |
|                                                                                                                              |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  |  |  |

 

 
| ** **

**BRIAN F. MACNEILL, C.M.**

** **

Independent1

Age: 69

Calgary, Alberta, Canada

 

Director since 1995 |                                                                                                                                 | Brian MacNeill is the Chairman of  the Board of Directors of Petro-Canada. Prior to that he was President and  CEO of Enbridge Inc. Mr. MacNeill is a Chartered Accountant and a  Certified Public Accountant and holds a Bachelor of Commerce. He is a member  of the Canadian Institute of Chartered Accountants and the Financial  Executives Institute. He is also a Fellow of the Alberta Institute of  Chartered Accountants and of the Institute of Corporate Directors. |
|-----------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                              | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                              | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                              | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 100% |
|                                                                                                                              |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                                                                                                                              | As Chair of the Board,  Mr. MacNeill is an *ex-officio*  member of all Committees.                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                                                                                                                              |                                                                                                                                 |
|                                                                                                                              |                                                                                                                                 |
|                                                                                                                              | **Securities Held**                                                                                                                  |
|                                                                                                                              | ** **                                                                                                                           |
|                                                                                                                              | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                              |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                              | 2008                                                                                                                                 | 10,200                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 55,659 | 65,839 | $2,214,487 | $1,095,000 |
|                                                                                                                              |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |
|                                                                                                                              | 2007                                                                                                                                 | 10,200                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 47,798 | 57,998 | $3,046,331 |
|                                                                                                                              | ** **                                                                                                                           |
|                                                                                                                              | ** **                                                                                                                           |
|                                                                                                                              | **Options Held:  **None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                              | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
|                                                                                                                              | **Other Public Board  Directorships:  **Toronto-Dominion Bank,  Telus Corp. and West-Fraser Timber Co. Ltd.                |
|                                                                                                                                   |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |  |  |  |

 

 
| **78** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 
|  

**MAUREEN MCCAW**

 

Independent1

Age: 54

Edmonton, Alberta, Canada

 

Director since 2004 |                                                                                                                                 | Maureen McCaw is Senior  Vice-President (Edmonton) of Leger Marketing (marketing research), formerly  Criterion Research Corp., a company she founded in 1986. Ms. McCaw holds  a Bachelor of Arts from the University of Alberta and an Institute of  Corporate Directors certification (ICD.D). She is a past Chair of the  Edmonton Chamber of Commerce and also serves on a number of Alberta boards  and advisory committees. |
|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                             | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                             | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                             | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                             | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                             | Corporate Governance and  Nominating Committee                                                                                       | 4 of 4                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                             | Pension Committee                                                                                                                    | 2 of 2                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                             |                                                                                                                                 |
|                                                                                                             |                                                                                                                                 |
|                                                                                                             | **Securities Held**                                                                                                                  |
|                                                                                                             | ** **                                                                                                                           |
|                                                                                                             | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                         | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                             |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (Cdn $) | (Cdn $) |
|                                                                                                             | 2008                                                                                                                                 | 2,610                                                                                                                                                                                                                                                                                                                                                                                                                                   | 9,410 | 12,020 | $495,291 | $420,000 |
|                                                                                                             |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|                                                                                                             | 2007                                                                                                                                 | 2,414                                                                                                                                                                                                                                                                                                                                                                                                                                   | 5,824 | 8,238 | $433,548 |
|                                                                                                             | ** **                                                                                                                           |
|                                                                                                             | ** **                                                                                                                           |
|                                                                                                             | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                             | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|                                                                                                             | **Other Public Board  Directorships:  **None                                                                               |
|                                                                                                                  |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  |  |  |

 

 
|  

**PAUL D. MELNUK**

 

Independent1

Age: 54

Winter Garden, Florida, U.S.

 

Director since 2000 |                                                                                                                                 | Paul Melnuk is Chairman and Chief  Executive Officer of Thermadyne Holdings Corporation (industrial products)  and Managing Partner of FTL Capital Partners LLC (merchant banking). He  is past President and Chief Executive Officer of Bracknell Corporation and  Barrick Gold Corporation and Clark USA Inc (an oil refining and marketing  company). Mr. Melnuk holds a Bachelor of Commerce. He is a member of the  Canadian Institute of Chartered Accountants and of the World Presidents’  Organization, St. Louis chapter. |
|----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                 | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                 | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                 | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                 | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                                 | Audit, Finance and Risk  Committee (Chair)                                                                                           | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                                 | Environment, Health and  Safety Committee                                                                                            | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 100% |
|                                                                                                                 |                                                                                                                                 |
|                                                                                                                 |                                                                                                                                 |
|                                                                                                                 | **Securities Held**                                                                                                                  |
|                                                                                                                 | ** **                                                                                                                           |
|                                                                                                                 | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                 |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                 | 2008                                                                                                                                 | 4,400                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 29,436 | 33,836 | $1,228,580 | $420,000 |
|                                                                                                                 |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|                                                                                                                 | 2007                                                                                                                                 | 4,400                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 23,320 | 27,720 | $1,455,568 |
|                                                                                                                 | ** **                                                                                                                           |
|                                                                                                                 | ** **                                                                                                                           |
|                                                                                                                 | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                 | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|                                                                                                                 | **Other Public Board  Directorships:**  Thermadyne  Holdings Corporation                                                   |
|                                                                                                                      |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  |  |  |

 

 
|  | Annual Information  Form **PETRO-CANADA** | **79** |
|--|-------------------------------------------|--------|

 

 
|  

**GUYLAINE SAUCIER, F.C.A., C.M.**8

 

Independent1

Age: 62

Montréal, Quebec, Canada

 

Director since 1991 |                                                                                                                                 | Guylaine Saucier, Corporate  Director, is a former Chair of the Board of Directors of the Canadian  Broadcasting Corporation, a former Director of the Bank of Canada, a former  Chair of the Canadian Institute of Chartered Accountants, a former Director  of the International Federation of Accountants and former Chair of the Joint  Committee on Corporate Governance established by the Canadian Institute of  Chartered Accountants, the Toronto Stock Exchange and the Canadian Venture  Exchange. She was also the first woman to serve as President of the Quebec  Chamber of Commerce. Mme. Saucier obtained a Bachelor of Arts from Collège  Marguerite-Bourgeois and a Bachelor of Commerce from the École des Hautes  Études Commerciales, Université de Montréal. She is a Fellow of “Ordre des  compatables agréés du Québec” and a Member of the Order of Canada. In 2004,  she received the Fellowship Award from the Institute of Corporate Directors. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                  | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                  | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                  | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                  | Board of Directors                                                                                                                   | 7 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 88% |
|                                                                                                                                                  | Corporate Governance and  Nominating Committee (Chair)                                                                               | 4 of 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                                                  | Management Resources and  Compensation Committee10                                                                                   | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                                                  | Pension Committee                                                                                                                    | 2 of 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 100% |
|                                                                                                                                                  |                                                                                                                                 |
|                                                                                                                                                  |                                                                                                                                 |
|                                                                                                                                                  | **Securities Held**                                                                                                                  |
|                                                                                                                                                  | ** **                                                                                                                           |
|                                                                                                                                                  | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                                                  |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                                                  | 2008                                                                                                                                 | 4,520                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 37,205 | 41,725 | $1,323,937 | $420,000 |
|                                                                                                                                                  |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |
|                                                                                                                                                  | 2007                                                                                                                                 | 4,520                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 36,804 | 43,324 | $2,168,115 |
|                                                                                                                                                  | ** **                                                                                                                           |
|                                                                                                                                                  | ** **                                                                                                                           |
|                                                                                                                                                  | **Options Held:  **None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                                                  | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |
|                                                                                                                                                  | **Other Public Board  Directorship:  **AXA Assurance Inc., Bank  of Montreal, Groupe Danone and Groupe Areva               |
|                                                                                                                                                       |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |  |  |  |  |

 

 
| ** **

**JAMES W. SIMPSON**

 

Independent1

Age: 64

Danville, California, U.S.

 

Director since 2004 |                                                                                                                                 | Jim Simpson is past President of  Chevron Canada Resources (oil and gas). He serves as Lead Director for  Canadian Utilities Limited and is on its Corporate Governance, Nomination,  Compensation and Succession Committee and Risk Review Committee, as well as  being the Chairman for the Audit Committee. Mr. Simpson holds a Bachelor  of Science and Master of Science, and graduated from the Program for Senior  Executives at M.I.T.’s Sloan School of Business. He is also past Chairman of  the Canadian Association of Petroleum Producers and past Vice-Chairman of the  Canadian Association of the World Petroleum Congresses. |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                     | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                     | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 100% |
|                                                                                                                     | Audit, Finance and Risk  Committee                                                                                                   | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 100% |
|                                                                                                                     | Management Resources and  Compensation Committee                                                                                     | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 100% |
|                                                                                                                     |                                                                                                                                 |
|                                                                                                                     |                                                                                                                                 |
|                                                                                                                     | **Securities Held**                                                                                                                  |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                     | 2008                                                                                                                                 | 3,700                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 8,693 | 12,393 | $469,735 | $420,000 |
|                                                                                                                     |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                                                     | 2007                                                                                                                                 | 3,700                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 5,814 | 7,814 | $606,244 |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | ** **                                                                                                                           |
|                                                                                                                     | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                     | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
|                                                                                                                     | **Other Public Board  Directorships:**  Canadian  Utilities Limited                                                        |
|                                                                                                                          |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |  |  |  |  |  |

 

 
| **80** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 
|  

**DANIEL L. VALOT**

 

Independent1

Age: 64

Boulogne-Billancourt,  France

 

Director  since 2007 |                                                                                                                                 | Daniel Valot, Corporate Director,  is the past Chairman and Chief Executive Officer of Technip S.A. (oil and gas  engineering and construction). Prior to that, Mr. Valot held a number of  leadership roles in exploration and production, refining, and North American  operations with Total. A former student of the National School of  Administration, Mr. Valot served as a civil servant in various  positions. He holds a degree from the Paris Institute of Political Science  and of the National School of Administration (ENA). |
|-------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                    | ** **                                                                                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                    | **Board and Committee Membership**                                                                                                   | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                    | Board of Directors                                                                                                                   | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 100% |
|                                                                                                                    | Audit, Finance and Risk  Committee                                                                                                   | 7 of 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 100% |
|                                                                                                                    | Environment, Health and  Safety Committee                                                                                            | 3 of 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 100% |
|                                                                                                                    |                                                                                                                                 |
|                                                                                                                    |                                                                                                                                 |
|                                                                                                                    | **Securities Held**                                                                                                                  |
|                                                                                                                    | ** **                                                                                                                           |
|                                                                                                                    | Year                                                                                                                                 | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                    |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                    | 2008                                                                                                                                 | 1,375                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 5,695 | 7,070 | $265,836 | $420,000 |
|                                                                                                                    |                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |
|                                                                                                                    | 2007                                                                                                                                 | 1,375                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 640 | 2,015 | $106,736 |
|                                                                                                                    | ** **                                                                                                                           |
|                                                                                                                    | ** **                                                                                                                           |
|                                                                                                                    | **Options Held:**  None.  Non-employee Directors are not eligible to participate in the Company’s stock  option plan. |
|                                                                                                                    | ** **                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |
|                                                                                                                    | **Other Public Board  Directorships:  **CGGVeritas and SCOR                                                                |
|                                                                                                                         |                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  |  |  |  |

 

 
| ** **

**RON A. BRENNEMAN**

 

Non-independent1, Management

Age: 62

Calgary, Alberta, Canada

 

Director since 2000 |                                                                                                                                                                                | Ron Brenneman is the President and  Chief Executive Officer of the Company. Prior to joining the Company in 2000,  he held various positions within Exxon Corporation and its affiliated  companies. He leads the Company’s Executive Leadership Team (ELT). He is  responsible for the overall strategic direction of the Company and its sound  management and performance. Mr. Brenneman holds a Bachelor of Science  and a Master of Science. He is a member of the Board of Directors of the  Canadian Council of Chief Executives. |
|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                   | ** **                                                                                                                                                                          | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                   | ** **                                                                                                                                                                          | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                   | **Board and Committee Membership**                                                                                                                                                  | **Attendance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                   | Board of Directors                                                                                                                                                                  | 8 of 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 100% |
|                                                                                                                                   |                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                   | As a member of management,  Mr. Brenneman is not a member of any Committee of the Board, but he is  invited to attend all Committee meetings other than *in camera*  sessions. |
|                                                                                                                                   |                                                                                                                                                                                |
|                                                                                                                                   |                                                                                                                                                                                |
|                                                                                                                                   | **Securities Held**                                                                                                                                                                 |
|                                                                                                                                   | ** **                                                                                                                                                                          |
|                                                                                                                                   | Year                                                                                                                                                                                | Common  Shares2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | DSUs3 | Total of Common  Shares and DSUs | Total Market Value of  Common Shares and DSUs4 | Minimum  Required5 |
|                                                                                                                                   |                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (Cdn $) | (Cdn $) |
|                                                                                                                                   | 2008                                                                                                                                                                                | 88,547                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 221,215 | 309,762 | $  9,563,988 | $5,250,000 |
|                                                                                                                                   |                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |
|                                                                                                                                   | 2007                                                                                                                                                                                | 84,457                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 219,823 | 304,280 | $16,009,466 |
|                                                                                                                                   | ** **                                                                                                                                                                          |
|                                                                                                                                   | ** **                                                                                                                                                                          |
|                                                                                                                                   | **Options Held:**  1,319,800                                                                                                                                              |
|                                                                                                                                   | ** **                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |
|                                                                                                                                   | **Other Public Board  Directorships:  **Bank of Nova Scotia and  BCE Inc.                                                                                                 |
|                                                                                                                                        |                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  |  |  |  |

 

 
| 1      | Independent:  refers to the standards of independence established under  Section 303A.02 of the NYSE Listed Company Manual, Section 301 and  Rule 10A-3 of the*Sarbanes-Oxley Act of  2002* and Section 1.2 of Canadian Securities Administrators’  National Instrument 58-101.                                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 2      | Common  Shares refers to the number of common shares beneficially owned, controlled  or directed, directly or indirectly, by the Director, as of December 31,  2008.                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 3      | DSUs  refers to the number of Deferred Stock Units held by the Director as of  December 31, 2008.                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4      | The  Total Market Value of Common Shares and DSUs for 2008 is based on the greater  of purchase price, grant price or market value for the shares/units held by  that Director. The Total Market Value of Common Shares for 2007 is determined  by multiplying the number of common shares held by the closing price of the  common shares on the TSX on December 31, 2007 of $53.25. The Total  Market Value of DSUs is |

 

 
|  | Annual Information  Form **PETRO-CANADA** | **81** |
|--|-------------------------------------------|--------|

 

 
|   | based  on the previous five-day average market value of Petro-Canada’s common shares  as of December 31, 2007 of $52.37. Dividend equivalents are used to  purchase additional DSUs and are credited on a quarterly basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 5      | Each  non-employee Director is required to hold a minimum number of Company shares  or share equivalents equal in value to three times the annual retainer  ($420,000 for non-employee Directors and $1,095,000 for the Chair).  Non-employee Directors have until December 31, 2011 or five years (if  later) from being appointed a Director to achieve the required share  ownership guidelines. Mr. Brenneman, as an employee Director,  participates in the Company’s Officer Share Ownership Program and is required  to hold four times his annual base salary. Refer to Compensation Discussion  and Analysis beginning on page 21 of the Company’s Management Proxy  Circular dated March 5, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 6      | Ms. Cook-Bennett  and Mr. Kierans both serve on the Board (but not on any of the same  committees) of Manulife Financial.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 7      | Mr. Kierans  was a Director of Teleglobe Inc. from December 2000 until  April 2002. Teleglobe Inc. filed for court protection under insolvency  statutes on May 28, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 8      | Mme.  Saucier was a Director of Nortel Networks Corporation until June 2005, and  was subject to a cease trade order issued on May 17, 2004 as a result of  Nortel’s failure to file financial statements. The cease trade order was  cancelled on June 21, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 9      | Mr. Brenninkmeyer  was appointed to the Board of Directors in July 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10     | MMe.  Saucier joined the Management Resources and Compensation Committee in  September 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

The term of office for each of the Directors named above ends at theclose of the next Annual Meeting of the shareholders of the Company, or whenhis or her successor is elected or appointed.

 

 

The following table provides the five-yearemployment history of each of the officers of the Company.

 

 
| **Name and  Municipality of Residence** | ** ** | **Served  as an  Officer  Since** | ** ** | **Principal Occupation****1**                            | ** ** | **Employment History Previous Five Years**                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Brian F. MacNeill,  Calgary, Alberta                   |       | 2000                                   |       | Chairman of the Board of the Company                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                             |
| **Executive Leadership Team**                          | ** ** | ** **                             | ** ** | ** **                                                    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                             |
| Ron A.  Brenneman,  Calgary, Alberta                   |       | 2000                                   |       | President and Chief Executive Officer of  the Company         |       |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Peter S. Kallos,  London, England                      |       | 2003                                   |       | Executive Vice-President, *International & Offshore* |       | Prior to 2003, Mr. Kallos was the  Company’s Vice-President, Corporate Planning and Communications, and prior  thereto was External Affairs Director of Shell Exploration and Production  U.K., and prior thereto was General Manager of Enterprise’s  U.K. Business Unit, and prior thereto was Chief Executive Officer of  Enterprise’s Italian subsidiary. |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Boris J. Jackman,  Mississauga, Ontario                |       | 1993                                   |       | Executive Vice-President, Downstream                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| E.F.H. Roberts,  Calgary, Alberta                      |       | 1989                                   |       | Executive Vice-President and Chief  Financial Officer         |       | Mr. Roberts has held the position  of Executive Vice-President and Chief Financial Officer since 2004, and prior  thereto was Senior Vice-President and Chief Financial Officer since 2000.                                                                                                                                                                                       |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Neil J. Camarta,  Calgary, Alberta                     |       | 2005                                   |       | Senior Vice-President, Oil Sands                              |       | Prior to 2006, Mr. Camarta was the  Company’s Vice-President, Corporate Planning and Communications, and prior  thereto was Senior Vice-President, Oil Sands for Shell Canada Limited.                                                                                                                                                                                       |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Kathleen E. Sendall,  Calgary, Alberta                 |       | 1996                                   |       | Senior Vice-President, North American  Natural Gas            |       |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |
| Andrew Stephens,  Calgary, Alberta                     |       | 1993                                   |       | Senior Vice-President, Corporate  Relations                   |       | Mr. Stephens was appointed Senior  Vice-President, Corporate Relations in 2007. Prior thereto Mr. Stephens  held the position of Vice-President, Human Resources since 2005, and prior  thereto was Vice-President, Corporate Planning and Communications, and prior  thereto was Vice-President, Refining and Supply.                                                       |
|                                                   |       |                                   |       |                                                          |       |                                                                                                                                                                                                                                                                                                                                                                                   |

 

 
| **82** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 
| **Name and  Municipality of Residence**  | ** ** | **Served  as an  Officer  Since** | ** ** | **Principal Occupation****1**                                                         | ** ** | **Employment History Previous Five Years**                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------------------------------------------|------------|----------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                              | ** ** | ** **                             | ** ** | ** **                                                                                 | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Upstream**                                            | ** ** | ** **                             | ** ** | ** **                                                                                 | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                                              | ** ** | ** **                             | ** ** | ** **                                                                                 | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Alan Brown  St. John’s, Newfoundland  and Labrador |       | 2008                                   |       | Vice-President, East Coast                                                                 |       | Prior to 2008, Mr. Brown was Regional Manager, East  Coast, and prior  thereto held a number of managerial and technical positions with  ExxonMobil.                                                                                                                                                                                                                                                                                                                              |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Gordon  Carrick,  London, England                       |       | 2002                                   |       | Senior  Vice-President, Development and Production                                         |       | Until  the end of 2008, Mr. Carrick was Senior Vice-President, Operations  and Technology.                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Nicholas  A. Maden,  London, England                    |       | 2003                                   |       | Vice-President,  *International &  Offshore* Exploration                          |       | Prior  to 2003, Mr. Maden was the Company’s Exploration Manager,  International business unit, and prior thereto was Business Development  Manager with Veba Oil & Gas GmbH, and prior thereto held  various  exploration management positions with ARCO.                                                                                                                                                                                                      |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Donald  M. Clague,  Calgary, Alberta                    |       | 2002                                   |       | Vice-President,*In Situ*Development and Operations                                         |       | Mr. Clague  had been the Vice-President, Operations U.S. since 2002, prior  to then he had been the Manager, Exploration East Coast/Offshore, and  prior thereto was Chief Geophysicist.                                                                                                                                                                                                                                                                                          |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Francois  Langlois,  Calgary, Alberta                   |       | 2002                                   |       | Vice-President,  Western  Canada Production and North  American Exploration                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| John  D. Miller,  Calgary, Alberta                      |       | 2004                                   |       | Vice-President,  Natural Gas  Marketing, Acquisition &  Disposition and Midstream |       | Prior  to 2004, Mr. Miller was General Manager of Gas Marketing, and prior  thereto was Manager of Gas Marketing, and prior thereto was Manager, Oil  Sands Infrastructure, and prior thereto was Portfolio Manager, Oil Sands  Business Integration, and prior thereto was Portfolio Manager, Natural Gas  Marketing.                                                                                                                                                            |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Leon  Sorenson,  London, England                        |       | 2004                                   |       | Vice-President,  Technology                                                                |       | Mr. Sorenson  had been the Vice-President Arctic Island Project since 2007.  Prior thereto Mr. Sorenson was Vice-President Canadian Operations, North  American Natural Gas since 2004, and prior thereto Mr. Sorenson was Manager  of Production Engineering and Operations, Western Canada  Productions, and prior thereto was Manager of Northern Development,  Western Canada Development and Operations, and prior thereto was  Manager of Engineering Technology. |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Edward L. McLaughlin,  Denver, Colorado                 |       | 2007                                   |       | Vice-President, Operations – U.S. Rockies                                             |       | Prior to his appointment, Mr. McLaughlin was  Vice-President, Land for   Petro-Canada Resources (USA) Inc., and prior thereto had been  Vice-President, Land and Business Development for Prima Energy  Corporation, and prior thereto had been Vice-President, Land and  Business Development with Ensign Oil and Gas Corporation.                                                                                                                                               |
|                                                    |       |                                   |       |                                                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Colin  H. Cook,  Calgary, Alberta                       |       | 2006                                   |       | Vice-President,  Marketing and  Development, Oil Sands                                     |       | Prior  to 2006, Mr. Cook was General Manager, Marketing and Integration,  Oil Sands, and prior thereto was General Manager, Business Integration,  Oil Sands.                                                                                                                                                                                                                                                                                                                     |

 

 
|  | Annual Information Form **PETRO-CANADA** | **83** |
|--|------------------------------------------|--------|

 

 
| **Name and  Municipality of Residence** | ** ** | **Served  as an  Officer  Since** | ** ** | **Principal Occupation****1**                                        | ** ** | **Employment History Previous Five Years**                                                                                                                                                                                                                                                                                 |
|--------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| **Downstream**                                         | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| Randall B.  Koenig,  Oakville, Ontario                 |       | 1996                                   |       | Vice-President, Lubricants                                                |       |                                                                                                                                                                                                                                                                                                                                           |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Frederick  Scharf,  Mississauga, Ontario               |       | 2003                                   |       | Vice-President,  Wholesale/Retail Sales,  Service and Operations          |       | Prior  to 2003, Mr. Scharf was General Manager, Western Canada  Wholesale/Retail.                                                                                                                                                                                                                                                         |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Philip  Churton,  Burlington, Ontario                  |       | 2005                                   |       | Vice-President,  Marketing                                                |       | Prior  to 2005, Mr. Churton was General Manager, Sales Services and  Operations, Central Canada.                                                                                                                                                                                                                                     |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Daniel  P. Sorochan,  Mississauga, Ontario             |       | 2003                                   |       | Vice-President,  Refining and Supply                                      |       | Prior  to 2003, Mr. Sorochan was Senior Director of Business Development,  Refining and Supply, and prior thereto was General Manager, Oakville  refinery.                                                                                                                                                                                |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| **Shared Services**                                    | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |
| Scott R. Miller,Calgary, Alberta                       |       | 2006                                   |       | Vice-President, General Counsel                                           |       | Prior to 2006, Mr. Miller was Associate General  Counsel, Upstream. Mr. Miller is an Associate Member of the Executive  Leadership Team.                                                                                                                                                                                             |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Susan  M. MacKenzie,  Calgary, Alberta                 |       | 2006                                   |       | Vice-President,  Human Resources                                          |       | Ms. MacKenzie,  prior to her appointment, held the position of Vice-President, *In Situ*Development and Operations, Oil Sands since 2006,  and prior thereto was Senior Director, Bitumen, and prior thereto was Project  Manager, Oil Sands Bitumen.                                                                                     |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| M.  A. (Greta) Raymond,  Calgary, Alberta              |       | 2001                                   |       | Vice-President,  Environment, Safety and Social Responsibility            |       | Ms. Raymond  has held the position of Vice-President, Environment, Safety and Social  Responsibility since 2005, and prior thereto was also responsible for Human  Resources. Ms. Raymond is an Associate Member of the Executive  Leadership Team.                                                                                  |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Helen  Wesley,  London, England                        |       | 2006                                   |       | Vice-President,  Finance *International & Offshore*              |       | Prior  to 2006, Ms. Wesley was the Company’s Senior Director, Corporate  Communications, and prior thereto was Manager, Planning, and prior to that  was with Nova Chemicals as Vice-President, Purchasing and Supply.                                                                                                               |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Wayne  R. Pennington,  Calgary, Alberta                |       | 2006                                   |       | Treasurer                                                                 |       | Prior  to 2006, Mr. Pennington was the Company’s Assistant Controller,  Corporate, and prior thereto was Senior Director, Financial Reporting and  Accounting, and prior thereto was with EnCana Corporation as Assistant  Controller, and prior thereto was with PanCanadian Energy as Manager,  Financial Reporting and Forecasts. |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Hugh  L. Hooker,  Calgary, Alberta                     |       | 2004                                   |       | Chief  Compliance Officer, Corporate Secretary, Associate General Counsel |       | In  2006, Mr. Hooker added Chief Compliance Officer to his responsibilities.  Prior to 2004, Mr. Hooker was Associate General Counsel.                                                                                                                                                                                               |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Michael  Danyluk,  Calgary, Alberta                    |       | 2004                                   |       | Vice-President  and Chief Information Officer                             |       | Prior  to 2004, Mr. Danyluk was Senior Director of Information Systems.                                                                                                                                                                                                                                                                   |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Michael  C. Barkwell,  Calgary, Alberta                |       | 2005                                   |       | Vice-President  and Controller                                            |       | Prior  to 2005, Mr. Barkwell was Assistant Controller, Downstream, and prior  thereto was Director of Financial Reporting.                                                                                                                                                                                                                |
|                                                   |       |                                   |       |                                                                      |       |                                                                                                                                                                                                                                                                                                                                           |
| Leonard Chow-Wah                                       |       | 2008                                   |       | Vice-President, Tax                                                       |       | Prior to his appointment, Mr. Chow-Wah had been the  Senior Director, Tax since 2000.                                                                                                                                                                                                                                                     |
| ** **                                             | ** ** | ** **                             | ** ** | ** **                                                                | ** ** | ** **                                                                                                                                                                                                                                                                                                                                     |

 
| 1 |   | Each of the officers has been engaged in  the principal occupation indicated above or in executive positions with  Petro-Canada for the five preceding years, except as indicated. |
|---|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| **84** | **PETRO-CANADA**Annual Information Form |  |
|--------|-----------------------------------------|--|

 

 

## **SHARE OWNERSHIP**

 

Asat December 31, 2008, the Directors and officers of Petro-Canada, as agroup, beneficially owned or exercised control or direction over396,754 common shares, or less than 1% of the common shares, of theCompany outstanding as of such date.

 

 

## **AUDITCOMMITTEE DISCLOSURE**

## ** **

Thefollowing reviews certain information regarding the Company’s Audit, Financeand Risk Committee, as required pursuant to National Instrument 52-110.

 

 

### **Audit,Finance and Risk Committee**

### ** **

Chair:Paul D. Melnuk (Designated Financial Expert)

 

Members:Gail Cook-Bennett, Paul Haseldonckx, James W. Simpson, Daniel Valot, HansBrenninkmeyer, and Brian MacNeill (*ex officio*)

 

2008Committee Meetings: seven

 

ThisCommittee is composed entirely of independent Directors, each of whom is veryknowledgeable in financial matters and is financially literate within themeaning of National Instrument 52-110. Details as to each Committee member’seducation and experience that provide the member with the necessary knowledgeand understanding of accounting principles and procedures can be found aboveunder Directors, starting on page 76. The Committee is responsible forreviewing and providing recommendations to the Board regarding the Company’saccounting policies, reporting practices, internal controls, the Company’sannual and interim financial statements, financial information included in theCompany’s disclosure documents, risk management matters, and oil and gasreserves booking and reporting. The Committee also reviews significant auditfindings, material litigation and claims, and any issues between management andthe auditors. The Committee maintains direct relationships with the Company’scontract internal auditor and external auditor. The Committee meets *in camera* with both the contract internal auditor andexternal auditor at least once per year. The Committee is responsible forrecommending the appointment and compensation of the external auditor. TheCommittee has a policy in place that non-audit work may not be performed by theexternal auditor. All services performed by the external auditor are approvedby the Committee. The Terms of Reference of the Audit, Finance and RiskCommittee are attached to this AIF as Schedule C and can also befound on the Company’s website at www.petro-canada.ca.

 

 

#### **AuditFees**

#### ** **

Deloitte &Touche LLP were appointed as external auditors of the Company on June 7,2002. Deloitte & Touche LLP billed the Company for servicesrendered in the year ended December 31, 2008 as follows: (a) AuditFees – $4,310,000 (2007 – $5,548,000), (b) Audit Related Fees –audit related services for pension plan and attest services – $633,000(2007 – $705,000), (c) Tax Fees – nil (2007 – nil), and (d) AllOther Fees – nil (2007 – nil).

 

TheBoard adheres to a practice of limiting the external auditors from providingservices not related to the audit. All services provided by the externalauditors are pre-approved by the Audit, Finance and Risk Committee.

 

 
|  | Annual Information Form **PETRO-CANADA** | **85** |
|--|------------------------------------------|--------|

 

 
| **Interest of Management  and Others in Material Transactions** |
|-----------------------------------------------------------------|

# ** **

NoDirector, executive officer or principal shareholder of Petro-Canada, orassociate or affiliate of those persons, has any material interest, direct orindirect, in any transaction within the last three years that has materiallyaffected or will materially affect Petro-Canada.

 

 

# **Transfer Agents and Registrars**

 
| In Canada:  CIBC Mellon Trust Company  600, 333 – 7 Avenue S.W.  Calgary, Alberta T2P 2Z1  Telephone: 1-800-387-0825 or   416-643-5500 outside of North America  Website: www.cibcmellon.com |   | In the U.S.:  The Bank of New York Mellon  Telephone: 1-800-387-0825  Website: www.cibcmellon.com |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|

# ** **

# ** **

# **Interests of Experts**

 

Deloitte &Touche LLP is the auditor of the Company and is independent in accordancewith the Rules of Professional Conduct as outlined by the Institute ofChartered Accountants of Alberta. Kathleen E. Sendall is a SeniorVice-President with the Company and has certified a report with respect toNI 51-101 oil and gas reserves disclosure. Ms. Sendall does nothold more than 1% of the Company’s outstanding securities.

 

 

# **Additional Information**

 

Financialinformation is provided in the Company’s Consolidated Financial Statements andMD&A for its most recently completed financial year. Additionalinformation, including Directors’ and Officers’ remuneration and indebtednessof principal holders of the Company’s securities and securities authorized forissuance under equity compensation plans, is contained in the Company’sManagement Proxy Circular, dated March 5, 2009.

 

Copiesof this AIF, as well as the Company’s latest Management Proxy Circular andAnnual Report (which includes the Company’s Consolidated Financial Statementsand MD&A) for the year ended December 31, 2008 may be obtained fromthe Company’s website at www.petro-canada.ca or by mail upon request from theCorporate Secretary, 150 – 6 Avenue S.W., Calgary, Alberta,T2P 3E3.

 

Youmay also access disclosure documents and any reports, statements or otherinformation that Petro-Canada files with the Canadian provincial securitiescommissions or other similar regulatory authorities through the Internet on theCanadian System for Electronic Document Analysis and Retrieval, which iscommonly known by the acronym SEDAR, and which may be accessed atwww.sedar.com. SEDAR is the Canadian equivalent of the SEC’s Electronic DataGathering, Analysis and Retrieval System, which is commonly known by theacronym EDGAR, and which may be accessed at www.sec.gov.

 

 
| **86** | **PETRO-CANADA**Annual Information Form |  |
|--------|-----------------------------------------|--|

 

 

# **ScheduleA**

# **Report on Reserves Data by Senior Officer Responsible forReserves Data**

 

Tothe Board of Directors of Petro-Canada (the Company):

 

1.             TheCompany’s staff of qualified reserves evaluators has evaluated the Company’sreserves data as at December 31, 2008. The reserves data consist of thefollowing:

 

(i)              provedoil and gas reserves and oil sands mining quantities estimated as at December 31,2008, using constant prices and costs; and

 

(ii)            theStandardized Measure of Discounted Future Net Cash Flows relating to proved oiland gas reserves and oil sands mining quantities.

 

2.             Thereserves data are the responsibility of the Company’s management. As the memberof the executive responsible for the Company’s hydrocarbon reserves data, myresponsibility is to certify that the reserves data has been properlycalculated in accordance with industry generally accepted procedures for theestimation of reserves data.

 

3.             TheCompany’s reserves staff and management carried out their evaluations inaccordance with industry generally accepted procedures for the estimation ofreserves data and standards as set out in the Canadian Oil and Gas EvaluationHandbook (the COGE Handbook), prepared jointly by the Society of PetroleumEvaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining,Metallurgy & Petroleum (Petroleum Society), with the necessarymodifications to reflect the definition of proved reserves under the applicableU.S. Financial Accounting Standards Board policies (the FASBStandards) and the legal requirements of the U.S. Securities and ExchangeCommission (SEC Requirements). The Company’s reserves staff and managementare not independent of the Company within the meaning of the term “independent”under those standards.

 

4.             Thestandards require that they plan and perform an evaluation to obtain reasonableassurance as to whether the reserves data are free of material misstatement. Anevaluation also includes assessing whether the reserves data are developed inaccordance with the evaluation practices and procedures presented in the COGEHandbook as modified to meet the requirements of the FASB Standards and SECRequirements.

 

5.             Thefollowing sets forth the Standardized Measure of future net cash flowsattributed to proved oil and gas reserves and oil sands mining quantities,estimated using constant prices and costs and calculated using a discount rateof 10%, included in the reserves data of the Company evaluated for the yearended December 31, 2008:

 

 

##### *StandardizedMeasure of Future Net Cash Flows Proved Oil and Gas Reserves and Oil SandsMining*

##### *(10%discount rate)*

##### *As at December 31,2008*

 

 
| Location of Reserves (by business) After Deducting Income Taxes |   | Oil and Gas  Standardized  Measure |   |   | Oil Sands Mining  Standardized  Measure |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|--------|---------------------------------------------------|
| Western Canada1                                                                                         | $      | 1,937                                        |   | $      | –                                            |
| U.S. Rockies                                                                                            |   | 329                                          |   |   | –                                            |
| East Coast Canada                                                                                       |   | 1,032                                        |   |   | –                                            |
| North Sea                                                                                               |   | 1,542                                        |   |   | –                                            |
| Other International                                                                                     |   |                                         |   |   |                                              |
| North Africa/Near East                                                                                  |   | 152                                          |   |   | –                                            |
| Northern Latin America                                                                                  |   | 163                                          |   |   | –                                            |
| Syncrude Oil Sands Mining Operation                                                                     | $      | —                                       |   | $      | 1,263                                             |

 

1  Western Canada includes the cash flows of MacKay River.

 

The Standardized Measure values above werecalculated consistent with the methodology prescribed in Financial AccountingStandards Board Statement No. 69 for Oil and Gas activities, and SECIndustry Guide 7 for Oil Sands Mining.

 

 
|  | Annual Information  Form **PETRO-CANADA** | **87** |
|--|-------------------------------------------|--------|

 

 

6.             In myopinion, the reserves data evaluated by the Company’s reserves evaluation staffand management has, in all material respects, been determined in accordancewith evaluation practices and procedures presented in the COGE Handbook withthe necessary modifications to reflect reserves definitions and legalrequirements under the applicable FASB Standards and SEC Requirements.

 

7.             Thereservoir engineering staff and management review and evaluate the reservesdata on an ongoing basis and advise the executive of the Company of significantchanges to the evaluations for events and circumstances occurring after theeffective date of this report.

 

8.             Reservesare estimates only and not exact quantities. In addition, the reserves data arebased on judgments regarding future events; actual results will vary and thevariations may be material. However, any variations should be consistent withthe fact that reserves are categorized according to the probability of theirrecovery.

 
| /Signed/

 

**Kathleen E. Sendall**Senior Vice-President, North American Natural Gas  Member of Executive Leadership Team Responsible for Reserves

Dated March 18, 2009 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| **88** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 

# **Schedule B**

# **Report of Management and Directors on Reserves Data and OtherInformation**

# ** **

Themanagement of Petro-Canada (the Company) is responsible for thepreparation and disclosure of information with respect to the Company’s oil andgas activities in accordance with securities regulatory requirements. Thisinformation includes reserves data, which consist of the following:

 

(i)              provedoil and gas reserves and oil sands mining quantities estimated as at December 31,2008, using constant prices and costs; and

 

(ii)            theStandardized Measure of Discounted Future Net Cash Flows relating to proved oiland gas reserves and oil sands mining quantities.

 

Petro-Canada’sreserves evaluation process involves applying generally accepted practices andprocedures for the estimation of reserves data as set out in the COGE Handbookand modified to reflect the definitions and standards as set out in theapplicable provisions of the U.S. Financial Accounting Standards BoardStatement of Financial Accounting Standards No. 69 and the relevantlegal requirements of the U.S. Securities and Exchange Commission (SEC),(collectively the Reserves Data Process). Petro-Canada’s qualified internalreserves evaluation staff and management have evaluated the Company’s reservesand the executive member responsible for reserves data certifies that theReserves Data Process has been followed. The report of the executive memberresponsible for reserves data will be filed with securities regulatoryauthorities concurrently with this report.

 

TheCompany has designated the Audit, Finance and Risk Committee of its Board ofDirectors as performing the roles and responsibilities of the ReservesCommittee of the Board of Directors as set out in NationalInstrument 51-101. The Audit, Finance and Risk Committee of the Board ofDirectors has:

 

(a)          reviewedthe Company’s procedures for providing information to the internal and externalqualified reserves evaluators;

 

(b)          met withthe internal and external qualified reserves evaluators to determine whetherany restrictions placed by management affect the ability of the internal andexternal qualified reserves evaluators to report without reservation; and

 

(c)          reviewedthe reserves data with reserves management and each of the qualified externalreserves evaluators.

 

TheAudit, Finance and Risk Committee of the Board of Directors has reviewed theCompany’s procedures for assembling and reporting other information associatedwith oil and gas activities and has reviewed that information with management.The Board of Directors has, on the recommendation of the Audit, Finance andRisk Committee, approved:

 

(a)          thecontent and filing with securities regulatory authorities of the reserves dataand other oil and gas information;

 

(b)          thefiling of the report of the executive member responsible for reserves on thereserves data; and

 

(c)          thecontent and filing of this report.

 

TheCompany has sought from, and was granted by, securities regulatory authoritiesan exemption from the requirement under securities legislation to involveindependent qualified reserves evaluators or independent qualified reservesauditors. Notwithstanding this exemption, the Company involves independentqualified reserves evaluators or auditors as part of its corporate governancepractices. In 2008, the independent evaluators/auditors assessed approximately77% of the Company’s proved oil and gas reserves data by volume. If Oil Sandsproved reserves are excluded, the percentage of total Company reserves auditedwas 55%. Their involvement helps assure that our internal reserves data arematerially correct.

 

Inthe Company’s view, the reliability of the internally generated reserves datais not materially less than would be afforded by Petro-Canada involvingindependent qualified reserves evaluators or independent qualified reservesauditors to evaluate, audit and/or review the reserves data. Petro-Canada’sreserves data are international in nature. The Company’s securities regulatoryreporting is as an SEC registrant and, therefore, Petro-Canada’s reserves dataare developed in accordance with practices and procedures set out in the COGEHandbook and modified to meet the applicable U.S. Financial AccountingStandards Board and SEC reserves definitions, and the legal requirements of theSEC. Petro-Canada’s procedures, records and controls relating to theaccumulation of source data and preparation of reserves data by the Company’sinternal reserves evaluation staff have been established, refined anddocumented over many years. Petro-Canada’s internal reserves evaluation staffand 

 

 
|  | Annual Information  Form **PETRO-CANADA** | **89** |
|--|-------------------------------------------|--------|

 

 

managementinclude 74 persons, with an average of more than 11 years of relevantexperience in evaluating reserves, of whom 50 are qualified reservesevaluators for purposes of Canadian securities regulatory requirements. TheCompany’s internal reserves evaluation management personnel includes12 persons, with an average of 22 years of relevant experience inevaluating and managing the evaluation of reserves.

 

Reservesdata are estimates only and are not exact quantities. Because the reserves dataare based on judgments regarding future events, actual results will vary andthe variations may be material. However, any variations should be consistentwith the fact that reserves are categorized according to the probability oftheir recovery.

 
| /Signed/

**Ron  A. Brenneman**

President and Chief Executive Officer                |   |
|---------------------------------------------------------------------------------------|--------|
|                                                                                  |   |
|                                                                                  |   |
| /Signed/

**Kathleen  E. Sendall**

Senior Vice-President, North American Natural Gas |   |
|                                                                                  |   |
|                                                                                  |   |
| /Signed/

**Paul  D. Melnuk**

Director                                               |   |
|                                                                                  |   |
|                                                                                  |   |
| /Signed/

**Brian  F. MacNeill**

Director

 

 

Dated March 18, 2009 |   |

 

 
| **90** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 

# **Schedule C**

# **Audit, Finance and Risk Committee**

# ** **

| **1.**     | ** ** | **The duties and responsibilities of the Audit,  Finance and Risk Committee (the Committee) shall include the following:** |
|------------|------------|----------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                 | ** ** | ** ** |
| ** ** | ** ** | (i)                                                                                                                        |   | assist the Board of Directors in the discharge of its fiduciary  responsibilities relating to the Company’s accounting policies, reporting  practices and internal controls, as well as to its risk management policies  and practices; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (ii)                                                                                                                       |   | maintain direct lines of communications with the Chief Financial  Officer and with the contract auditor and the external auditors; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (iii)                                                                                                                      |   | monitor the scope and costs of the activity of the contract and  external auditors, and assess their performance; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (iv)                                                                                                                       |   | formally consider the continuation of or a change in the external  auditors and review all issues related to a change of external auditor,  including any differences between the Company and the auditor that relate to  the auditor’s opinion or a qualification thereof or an auditor comment; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (v)                                                                                                                        |   | recommend to the Board of Directors a firm of external auditors for  approval by the shareholders of the Company; review and approve the terms of  their engagement; review and approve the fee, scope and timing of the audit,  and be apprised of and approve in advance any audit related services and any  non-audit services (which are not prohibited non-audit services) to be  provided by the external auditors and the costs thereof and consider any  impact of the provision of such services on the maintenance of their  independence and review the Company’s hiring policies regarding employees and  former employees of the present and former external auditors; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (vi)                                                                                                                       |   | review all issues related to any proposed change in or renewal of the  contract with the contract auditor; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (vii)                                                                                                                      |   | review and recommend approval by the Board of the Company’s audited  annual financial statements and Management’s Discussion and Analysis; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (viii)                                                                                                                     |   | review before publication the Company’s unaudited quarterly financial  statements, reports of quarterly earnings, and Management’s Discussion and  Analysis with particular attention to the presentation of unusual or  sensitive matters such as disclosure of related party transactions,  significant non-recurring events, significant risks, changes in accounting  principles, and estimates or reserves, and all significant variances between  comparative reporting periods, and approve the publication of the Company’s  unaudited quarterly financial statements and reports of quarterly earnings; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (ix)                                                                                                                       |   | review all financial information included in annual information forms,  prospectuses, other offering memoranda or other documents requiring approval  by the Board of Directors; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (x)                                                                                                                        |   | review the Statement of Management’s Responsibility for the Financial  Statements as signed by senior management and included in any published  document, and review and approve the Statement regarding the role of the  Committee as signed by the Chairman of the Committee and included in any  published documents; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xi)                                                                                                                       |   | review the Report of Management on Oil and Gas Disclosure as signed by  senior management and directors and included in any published document; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xii)                                                                                                                      |   | review any litigation, claim or other contingency, including tax  assessments, that could have a material effect upon the financial position or  operating results of the Company, monitor disclosure thereof in documents  reviewed by the Committee; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xiii)                                                                                                                     |   | review the appropriateness and quality of the accounting policies used  in the preparation of the Company’s financial statements, and consider any  proposed changes to such policies; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xiv)                                                                                                                      |   | review with the external auditor the contents of the annual audit  report and review any significant recommendations from the external auditor  to strengthen the internal controls of the Company; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xv)                                                                                                                       |   | review the results of the external audit, any significant problems  encountered in performing the audit, and the contents of any Management  Letter issued by the external auditor to the Company, and management’s  response thereto; |
| ** ** | ** ** |                                                                                                                       |   |   |
| ** ** | ** ** | (xvi)                                                                                                                      |   | annually review a report on the contract audit function with respect  to the terms of reference, organization, staffing, independence, performance  and effectiveness of the contract audit services, receive and approve the |

 

 
|  | Annual Information  Form **PETRO-CANADA** | **91** |
|--|-------------------------------------------|--------|

 

 
| ** ** | ** ** |                            |   | annual contract audit plan, and obtain assurances in respect of  conformity with CICA and AICPA professional standards, and other regulatory  bodies’ requirements, the outsourcing contract and recommendations of  management and the contract auditor;                                                                                                                                                                                                                                                                                                                                           |
|------------|------------|---------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xvii)                          |   | review significant contract audit findings and recommendations, and  management’s response thereto;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xviii)                         |   | oversee management’s responsibility for designing, installing and  maintaining an effective control environment; approve in advance any internal  control-related services performed by the external auditor; and receive  regular reports on the Company’s internal control policies and procedures  with particular emphasis on accounting and financial controls, and recommend  changes where appropriate;                                                                                                                                                                                 |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xix)                           |   | review any unresolved significant issues between management and the  external auditor that could affect the financial reporting or internal  controls of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xx)                            |   | annually (a) review the Company’s internal procedures for  providing reserves information to its reserves evaluators; (b) meet with  internal and external reserves evaluators to determine their independence and  effectiveness in preparing the reserves data of the Company; (c) review  the reserves data included in the annual disclosure made by the Company; and  (d) review the Company’s internal procedures for assembling and reporting  other information associated with oil and gas activities and included in the  annual disclosure made by the Company; |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xxi)                           |   | receive reports on and review any other items deriving from the  foregoing, either in respect of the Company, or a subsidiary or any other  entity or relationship in which the Company has a significant interest, as  requested by the Board;                                                                                                                                                                                                                                                                                                                                                          |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xxii)                          |   | review and make recommendations to the Board concerning the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** |                            |   | 1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | the Company’s policies regarding hedging, investments,  credit and risk management; and |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
| ** ** | ** ** |                            |   | 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | the Company’s risk identification, analysis and  management procedures; |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xxiii)                         |   | review, prior to each annual shareholders’ meeting, the policies and  practices concerning the regular examination of officers’ expenses and  perquisites, including the use of Company assets;                                                                                                                                                                                                                                                                                                                                                                                                |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xxiv)                          |   | report annually to the full Board, on the state of completion of the  Audit, Finance and Risk Committee Annual Agenda Items, with appropriate  recommendations; and                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (xxv)                           |   | report annually to the full Board on the Committee’s review of the  Company’s reserves procedures and disclosure and recommend to the Board the  approval of the reserves data and other information associated with the  Company’s oil and gas activities and included in the annual disclosure made  by the Company.                                                                                                                                                                                                                                                                    |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **2.**     | ** ** | **Organization and Procedures** |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (i)                             |   | The Committee shall meet regularly, not less than four times per year,  and at such other times as may be requested by the Chair of the Committee.  The Chief Executive Officer, the Chief Financial Officer, the Controller, the  contract auditor, the external auditor or any member of the Committee may  also request a meeting of the Committee.                                                                                                                                                                                                                                                   |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (ii)                            |   | The Chair of the Committee, in consultation with the Chief Financial  Officer, shall set the agenda for each meeting which shall then be circulated  among the Committee Members.                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (iii)                           |   | The Chief Executive Officer, the Chief Financial Officer and the  Controller shall have direct access to the Committee and shall receive notice  of and attend all meetings of the Committee, except private sessions.                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (iv)                            |   | The external auditor and the contract auditor shall ultimately report  to the Board and the Committee and shall at any time have direct access to  the Committee and shall receive notice of and be invited to attend all  meetings of the Committee, except private sessions.                                                                                                                                                                                                                                                                                                                           |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (v)                             |   | The contract auditor, the external auditor, and one or more  representatives of senior management, shall each meet separately with the  Committee, in private sessions, at least once annually.                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** ** | ** ** |                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** ** | (vi)                            |   | The Committee may contact directly any employee in the Company and the  contract auditor as it deems necessary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

 
| **92** | **PETRO-CANADA**Annual Information  Form |  |
|--------|------------------------------------------|--|

 

 
| ** ** | ** ** | (vii)  |   | The Committee will establish procedures for: |
|------------|------------|--------|--------|----------------------------------------------|
| ** ** | ** ** |   |   |                                         |
| ** ** | ** ** |   |   | 1)                                           |   | receipt, retention and treatment of complaints regarding accounting  controls or auditing matters; and |
| ** ** | ** ** |   |   |                                         |   |   |
| ** ** | ** ** |   |   | 2)                                           |   | confidential anonymous submission by employees of concerns regarding  questionable accounting or auditing matters; and annual review of compliance  under the Company’s Code of Ethics for Senior Financial Officers. |

 

TheCommittee will periodically review its own Terms of Reference, and makerecommendations to the Board as required.

 

 
|  | Annual Information  Form **PETRO-CANADA** | **93** |
|--|-------------------------------------------|--------|

 

 

 
|                                             |
|--------------------------------------------------|
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
| **GENERAL INQUIRIES**                            |
| ** **                                       |
| Petro-Canada                                     |
| P.O. Box 2844, Calgary, Alberta, Canada T2P  3E3 |
| Telephone: 403-296-8000  Fax: 403-296-3030  |
|                                             |
| To learn more about Petro-Canada,                |
| Please visit our website at  www.petro-canada.ca |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                             |
|                                                  |
|                                             |
|                                             |
| Publié également en français      |
| www.petro-canada.ca                              |
|                                             |
|                                             |

 

 

**CONTROLSAND PROCEDURES**

** **

The company has performed an evaluation of itsdisclosure controls and procedures (as defined by Exchange Act rule 13a-15(e)),as of December 31, 2008.  Based onthis evaluation, the Company’s Chief Executive Officer and Chief FinancialOfficer have concluded that the disclosure controls and procedures areeffective within the meaning of the rule.

 

 

**MANAGEMENT’S REPORT ON INTERNALCONTROL OVER FINANCIAL REPORTING**

 

 

**[See page 1 of the FinancialStatements Exhibit forming part of this report]**

 

 

**ATTESTATION REPORT OF THE REGISTERED PUBLICACCOUNTING FIRM**

 

 

**[See pages 3 and 4 of theFinancial Statements Exhibit forming part of this report]**

 

 

**CHANGES IN INTERNAL CONTROL OVER FINANCIALREPORTING**

 

The company hasnot made any changes in internal control over financial reporting that occurredduring the period covered by this annual report that has materially affected,or is reasonably likely to materially affect, the company’s internal controlover financial reporting.

 

 

**IDENTIFICATION OF THE AUDIT COMMITTEE**

 

Petro-Canada has aseparately-designed standing Audit, Finance and Risk Committee.  The members of the Audit, Finance and RiskCommittee are:

 
|   | Chair:   | P. D. Melnuk                     |
|--------|----------|----------------------------------|
|   | Members: | G. Cook-Bennett                  |
|   |     | H. Brenninkmeyer

P. Haseldonckx |
|   |     | J. W. Simpson                    |
|   |     | D. Valot                         |
|   |     | B. F. MacNeill *(ex officio)*    |
|   |     |                             |

 

**AUDIT COMMITTEE FINANCIAL EXPERT**

 

 

Petro-Canada’sBoard of Directors has determined that Petro-Canada has an “audit committeefinancial expert” as defined by regulations of the U.S. Securities and ExchangeCommission.  The audit committeefinancial expert is 

 

 

Paul D. Melnuk,Chairman of the Audit, Finance and Risk Committee.  Mr. Melnuk has been determined to be “independent”,as that term is defined by the New York Stock Exchange’s listing standardsapplicable to Petro-Canada.

 

 

**CODE OF ETHICS**

 

The company hasadopted a code of ethics applicable to its Chief Executive Officer, ChiefFinancial Officer, principal accounting officer and Controller.  A copy of the company’s code of ethics and,if applicable, any future amendments or waivers of the code of ethics can befound at the company’s website located at www.petro-canada.ca.

 

 

**PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

Deloitte &Touche LLP billed the company for services rendered in the year ended December 31,2008 as follows:

 

(a)    **audit fees** -$4,310,000

(b)    **audit related fees**  - fees for audit of pension plans and attestservices $633,000

(c)**    tax fees –**  nil

(d)    **all other fees —**nil

 

 

Deloitte &Touche LLP billed the company for services rendered in the year ended December 31,2007 as follows:

 

(a)    **audit fees** -$5,548,000

(b)               **audit related fees**  -audits of pension plans and attest services - $705,000

(c)               **tax fees –** nil

(d)               **all other fees**— nil

 

 

AUDITCOMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES: The Audit, Finance and RiskCommittee of Petro-Canada’s Board of Directors approves in advance any audit ornon-audit service proposed to be provided by Deloitte & Touche LLP forPetro-Canada or its subsidiaries.  TheCommittee has delegated to the Chairman of the Committee full authority toapprove any such request, as long as the Chairman presents any such approval tothe Committee at its next scheduled meeting. No services were approved pursuant to a waiver within the meaning of Rule 2-01(c) (7)(i)(C) ofRegulation S-X in the years ended December 31, 2006 and December 31,2007.

 

 

**OFF-BALANCE SHEET ARRANGEMENTS**

 

**See page 26 of the Management’s Discussionand Analysis Exhibit forming part of this report**

 

 

**CONTRACTUAL OBLIGATIONS**

 

**See page 27 of the Management’s Discussionand Analysis Exhibit forming part of this report**

 

 

##### **UNDERTAKING AND CONSENT TO SERVICE OFPROCESS**

##### ** **

**A.      Undertaking**

 

                                        Petro-Canada(the “Registrant”) undertakes to make available, in person or by telephone,representatives to respond to inquiries made by the staff of the Securities andExchange Commission (“SEC”), and to furnish promptly, when requested to do soby the SEC staff, information relating to the securities in relation to whichthe obligation to file an annual report on Form 40-F arises ortransactions in said securities.

 

**B.****                        ****Consent to Service ofProcess**

 

                                        TheRegistrant has previously filed a Form F-X with the SEC on March 10,1994.

 

 

###### **SIGNATURE**

###### ** **

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant certifiesthat it meets all of the requirements for filing on Form 40-F and has dulycaused this annual report to be signed on its behalf by the undersigned,thereto duly authorized.

 
|                            |   | **PETRO-CANADA**                                                          |
|---------------------------------|--------|---------------------------------------------------------------------------|
|                            |   |                                                                      |
|                            |   |                                                                      |
| Date:  March 18, 2009 |   | /s/ Hugh L.  Hooker                                                       |
| Name:                           |   | Hugh L. Hooker                                                            |
| Title:                          |   | Chief Compliance  Officer, Corporate Secretary, Associate General Counsel |

 

 

**EXHIBITS**

 

 
| **Exhibits** | ** ** | **Description** |
|--------------|------------|-----------------|

 
|   |   |                                                                                                                                      |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| 99.1   |   | Petro-Canada  Consolidated Financial Statements for the year ended December 31, 2008                                                 |
| 99.2   |   | Petro-Canada Management’s  Discussion and Analysis                                                                                   |
| 99.3   |   | Certification of the  CEO pursuant to Section 302 of the Sarbanes-Oxley Act                                                          |
| 99.4   |   | Certification of the  CFO pursuant to Section 302 of the Sarbanes-Oxley Act                                                          |
| 99.5   |   | Certification of CEO  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |
| 99.6   |   | Certification of CFO  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |
| 99.7   |   | Consent of  Deloitte & Touche LLP, Independent Registered Chartered Accountants                                                  |