Exhibit
99.3
 NORTH AMERICAN ENERGY PARTNERS INC.




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 The following discussion and analysis is as of June 20, 2008 and should be read in conjunction with
the attached audited consolidated financial statements for the fiscal year ended March 31, 2008,
which have been prepared in accordance with Canadian generally accepted accounting principles
(GAAP) and reconciled to US GAAP. These financial statements and
additional information
relating to our business, including our AIF is available on
SEDAR at www.sedar.com and EDGAR at www.sec.gov . Except where otherwise specifically indicated, all
dollar amounts are expressed in Canadian dollars.
  Prior Year Comparisons
  A. Business Overview and Strategy
 Business Overview
      1




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
    Canadian Oil Sands
  Oil Sands Outlook
     
  2




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  Strategy
  
    
    Capitalize on growth opportunities in the Canadian oil sands:We intend to build on our
market leadership position and successful track record with our customers to benefit from
any continued growth in this market. We intend to increase our fleet size to be ready to
meet the challenges from the projected growth in oil sands.
    
    Leverage our complementary services:Our complementary service segments, including site
preparation, pipeline installation, Piling and other mining services allow us to compete for
many different forms of business. We intend to build on our first-in position to
cross-sell our other services and pursue selective acquisition opportunities that expand our
complementary service offerings.
    
    Increase our recurring revenue base:We provide services both during the construction
phase and once the project is in operation. These mining services include overburden
removal, reclamation, road construction and maintenance and mining services.
    
    Leverage our long term relationships with customers:Several of our oil sands customers
have announced their intentions to increase their production capacity by expanding the
infrastructure at their sites. We intend to continue to build on our relationships with
these and other existing oil sands customers to win a substantial share of the heavy
construction and mining, Piling and pipeline services outsourced in connection with these
projects.
    
    Increase our presence outside the oil sands:We intend to increase our presence outside
the oil sands and extend our services to other resource industries across Canada. Canada
has significant natural resources and we believe that we have the equipment and the
experience to assist those companies with developing those natural
resources.
    
    Enhance operating efficiencies to improve revenues and margins:We aim to increase the
availability and efficiency of our equipment through enhanced maintenance, providing the
opportunity for improved revenue, margins and profitability.
 Operations
  
  3




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  Year Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2008
    
    
    Total
    
    
    2007
    
    
    Total
    
    
    2006
    
    
    Total(dollars in thousands)Revenue by operating segment:Heavy Construction and Mining
    
    $
    626,582
    
    
    
    63.3
    %
    
    $
    473,179
    
    
    
    75.2
    %
    
    $
    366,721
    
    
    
    74.5
    %Piling
    
    
    162,397
    
    
    
    16.4
    %
    
    
    109,266
    
    
    
    17.4
    %
    
    
    91,434
    
    
    
    18.6
    %Pipeline
    
    
    200,717
    
    
    
    20.3
    %
    
    
    47,001
    
    
    
    7.5
    %
    
    
    34,082
    
    
    
    6.9
    %Total
    
    $
    989,696
    
    
    
    100.0
    %
    
    $
    629,446
    
    
    
    100.0
    %
    
    $
    492,237
    
    
    
    100.0
    %
 B. Financial Results
 Consolidated Results
 Year
Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue(dollars in thousands, except per share
information)Revenue
    
    $
    989,696
    
    
    
    100.0
    %
    
    $
    629,446
    
    
    
    100.0
    %
    
    $
    492,237
    
    
    
    100.0
    %Project costs
    
    
    592,458
    
    
    
    59.9
    %
    
    
    363,930
    
    
    
    57.8
    %
    
    
    308,949
    
    
    
    62.8
    %Equipment costs
    
    
    174,873
    
    
    
    17.7
    %
    
    
    122,306
    
    
    
    19.4
    %
    
    
    64,832
    
    
    
    13.2
    %Equipment operating lease expense
    
    
    22,319
    
    
    
    2.3
    %
    
    
    19,740
    
    
    
    3.1
    %
    
    
    16,405
    
    
    
    3.3
    %Depreciation
    
    
    36,729
    
    
    
    3.7
    %
    
    
    31,034
    
    
    
    4.9
    %
    
    
    21,725
    
    
    
    4.4
    %Gross profit
    
    
    163,317
    
    
    
    16.5
    %
    
    
    92,436
    
    
    
    14.7
    %
    
    
    80,326
    
    
    
    16.3
    %General & administrative costs
    
    
    69,670
    
    
    
    7.0
    %
    
    
    39,769
    
    
    
    6.3
    %
    
    
    30,903
    
    
    
    6.3
    %Operating income
    
    
    92,397
    
    
    
    9.3
    %
    
    
    51,126
    
    
    
    8.1
    %
    
    
    49,426
    
    
    
    10.0
    %Net income (loss)
    
    
    39,784
    
    
    
    4.0
    %
    
    
    21,079
    
    
    
    3.3
    %
    
    
    (21,941
    )
    
    
    -4.5
    %Per share informationNet income (loss)  basic
    
    $
    1.11
    
    
    
    
    
    
    $
    0.87
    
    
    
    
    
    
    $
    (1.18
    )Net income (loss)  diluted
    
    
    1.08
    
    
    
    
    
    
    
    0.83
    
    
    
    
    
    
    
    (1.18
    )EBITDA(1)
    
    $
    121,982
    
    
    
    12.3
    %
    
    $
    87,351
    
    
    
    13.9
    %
    
    $
    70,027
    
    
    
    14.2
    %Consolidated EBITDA per bank (1)
    
    
    135,094
    
    
    
    13.7
    %
    
    
    90,235
    
    
    
    14.3
    %
    
    
    72,422
    
    
    
    14.7
    %
 
 (1)
    
    Non GAAP Financial measures  4




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  
    
    do not reflect our cash expenditures or requirements for capital expenditures or capital
commitments;
    
    do not reflect changes in or cash requirements for, our working capital needs;
    
    do not reflect the interest expense or the cash requirements necessary to service
interest or principal payments on our debt;
    
    exclude tax payments that represent a reduction in cash available to us; and
    
    do not reflect any cash requirements for assets being depreciated and amortized that may
have to be replaced in the future.
  Year Ended March 31,2008
    
    
    2007
    
    
    2006(dollars
in thousands)Net income (loss)
    
    $
    39,784
    
    
    $
    21,079
    
    
    $
    (21,941
    )Adjustments:Interest expense
    
    
    27,019
    
    
    
    37,249
    
    
    
    68,776Income taxes
    
    
    17,379
    
    
    
    (2,593
    )
    
    
    737Depreciation
    
    
    36,729
    
    
    
    31,034
    
    
    
    21,725Amortization of intangible assets
    
    
    1,071
    
    
    
    582
    
    
    
    730EBITDA
    
    $
    121,982
    
    
    $
    87,351
    
    
    $
    70,027Adjustments:Unrealized foreign exchange loss (gain) on senior notes
    
    
    (24,788
    )
    
    
    (5,017
    )
    
    
    (14,258
    )Realized and
unrealized loss (gain) on derivative financial instruments
    
    
    34,075
    
    
    
    (196
    )
    
    
    14,689Loss (gain) on disposal of plant and equipment and assets held for sale
    
    
    179
    
    
    
    959
    
    
    
    (733
    )Stock-based compensation
    
    
    1,991
    
    
    
    2,101
    
    
    
    923Director deferred stock unit expense
    
    
    (190
    )
    
    
    
    
    
    
    Write-off of deferred financing costs
    
    
    
    
    
    
    4,342
    
    
    
    1,774Write-down of other assets to replacement cost
    
    
    1,845
    
    
    
    695
    
    
    
    -Consolidated EBITDA per bank
    
    $
    135,094
    
    
    $
    90,235
    
    
    $
    72,422
 5




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 Analysis of Results:
       6




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Consolidated Results (Fourth Quarter)
 Three Months Ended March 31,% of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue(dollars in thousands,
except per share
information)Revenue
    
    $
    323,600
    
    
    
    100.0
    %
    
    $
    205,422
    
    
    
    100.0
    %Project costs
    
    
    195,196
    
    
    
    60.3
    %
    
    
    131,815
    
    
    
    64.2
    %Equipment costs
    
    
    43,291
    
    
    
    13.4
    %
    
    
    43,529
    
    
    
    21.2
    %Equipment operating lease expense
    
    
    9,990
    
    
    
    3.1
    %
    
    
    4,083
    
    
    
    2.0
    %Depreciation
    
    
    12,550
    
    
    
    3.9
    %
    
    
    12,369
    
    
    
    6.0
    %Gross profit
    
    
    62,573
    
    
    
    19.3
    %
    
    
    13,626
    
    
    
    6.6
    %General & administrative costs
    
    
    20,674
    
    
    
    6.4
    %
    
    
    8,875
    
    
    
    4.3
    %Operating income
    
    
    42,581
    
    
    
    13.2
    %
    
    
    4,541
    
    
    
    2.2
    %Net income (loss)
    
    
    22,662
    
    
    
    7.0
    %
    
    
    1,303
    
    
    
    0.6
    %Per share informationNet income (loss)  basic
    
    $
    0.63
    
    
    
    
    
    
    $
    0.04Net income (loss)  diluted
    
    
    0.62
    
    
    
    
    
    
    
    0.04EBITDA(1)
    
    $
    53,500
    
    
    
    16.5
    %
    
    $
    18,283
    
    
    
    8.9
    %Consolidated EBITDA per bank (1)
    
    
    55,754
    
    
    
    17.2
    %
    
    
    22,656
    
    
    
    11.0
    %
 
 (1)
    
    Non GAAP Financial measures  see footnote on
page 4  Three Months Ended March 31,2008
    
    
    2007(dollars in thousands)Net income (loss)
    
    $
    22,662
    
    
    $
    1,303Adjustments:Interest expense
    
    
    6,686
    
    
    
    7,463Income taxes
    
    
    11,297
    
    
    
    (2,942
    )Depreciation
    
    
    12,550
    
    
    
    12,369Amortization of intangible assets
    
    
    305
    
    
    
    90EBITDA
    
    $
    53,500
    
    
    $
    18,283Adjustments:(Gain) loss on disposal of plant and equipment
    
    
    (671
    )
    
    
    120Unrealized foreign exchange loss (gain) on senior notes
    
    
    7,838
    
    
    
    (2,480
    )Stock-based compensation
    
    
    968
    
    
    
    359Director deferred stock unit expense
    
    
    (190
    )
    
    
    Write-down of other assets to replacement cost
    
    
    
    
    
    
    695Write-off financing costs
    
    
    
    
    
    
    4,342Realized and
unrealized loss (gain) on derivative financial instruments
    
    
    (5,691
    )
    
    
    1,337Consolidated EBITDA per bank
    
    $
    55,754
    
    
    $
    22,656
    Segment results
  7




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Heavy Construction and Mining
 Year Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    626,582
    
    
    
    
    
    
    $
    473,179
    
    
    
    
    
    
    $
    366,721Segment profit:
    
    $
    105,378
    
    
    
    16.8
    %
    
    $
    71,062
    
    
    
    15.0
    %
    
    $
    50,730
    
    
    
    13.8
    %
  Piling
 Year Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    162,397
    
    
    
    
    
    
    $
    109,266
    
    
    
    
    
    
    $
    91,434Segment profit:
    
    $
    45,362
    
    
    
    27.9
    %
    
    $
    34,395
    
    
    
    31.5
    %
    
    $
    22,586
    
    
    
    24.7
    %
  Pipeline
 Year Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    200,717
    
    
    
    
    
    
    $
    47,001
    
    
    
    
    
    
    $
    34,082Segment profit:
    
    $
    25,465
    
    
    
    12.7
    %
    
    $
    (10,539
    )
    
    
    -22.4
    %
    
    $
    8,996
    
    
    
    26.4
    %
  8




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Fourth Quarter Segment Results
 Heavy Construction and Mining
 Three Months Ended March 31,% of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    195,442
    
    
    
    
    
    
    $
    150,131Segment profit:
    
    $
    36,747
    
    
    
    18.8
    %
    
    $
    23,512
    
    
    
    15.7
    %
  Piling
 Three Months Ended March 31,% of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    40,699
    
    
    
    
    
    
    $
    29,872Segment profit:
    
    $
    13,637
    
    
    
    33.5
    %
    
    $
    8,822
    
    
    
    29.5
    %
  Pipeline
 Three Months Ended March 31,% of
    
    
    
    
    
    
    % of2008
    
    
    Revenue
    
    
    2007
    
    
    Revenue(dollars
in thousands)Segment revenue
    
    $
    87,459
    
    
    
    
    
    
    $
    25,419Segment profit:
    
    $
    11,311
    
    
    
    12.9
    %
    
    $
    (9,829
    )
    
    
    -38.7
    %
  9




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Non  operating expense (income)
 Three Months Ended March 31,
    
    
    Year Ended March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Interest expense
Interest on senior debt
    
    $
    5,835
    
    
    $
    5,835
    
    
    $
    23,338
    
    
    $
    27,417
    
    
    $
    28,838Interest on revolving credit facility
and other interest
    
    
    399
    
    
    
    635
    
    
    
    2,063
    
    
    
    1,157
    
    
    
    1,421Interest on capital lease obligations
    
    
    283
    
    
    
    245
    
    
    
    780
    
    
    
    725
    
    
    
    457Interest on NACG Preferred Corp.
 Series A preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,400
    
    
    
    Accretion
and change in redemption value of mandatorily redeemable
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,114
    
    
    
    34,722Amortization of deferred bond issue costs
    
    
    169
    
    
    
    
    
    
    
    838
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    
    
    
    
    748
    
    
    
    
    
    
    
    3,436
    
    
    
    3,338Total Interest expense
    
    $
    6,686
    
    
    $
    7,463
    
    
    $
    27,019
    
    
    $
    37,249
    
    
    $
    68,776Foreign exchange (gain) loss on senior
notes
    
    $
    7,694
    
    
    $
    (2,547
    )
    
    $
    (25,442
    )
    
    $
    (5,044
    )
    
    $
    (13,953
    )Realized and unrealized (gain) loss on
derivative financial instruments
    
    
    (5,691
    )
    
    
    1,337
    
    
    
    34,075
    
    
    
    (196
    )
    
    
    14,689Gain on repurchase of NACG Preferred
Corp. Series A preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,400
    )
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    10,935
    
    
    
    2,095Other income
    
    
    (67
    )
    
    
    (80
    )
    
    
    (418
    )
    
    
    (904
    )
    
    
    (977
    )Income tax (recovery) expense
    
    
    11,297
    
    
    
    (2,942
    )
    
    
    17,379
    
    
    
    (2,593
    )
    
    
    737
 3 4
 3 4 3 4 3 4
 3 4 3 4
 10




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 3 4
 
    
    Our 83/4% senior notes include certain embedded derivatives, notably optional
redemption and change of control redemption rights. These embedded derivatives met
the criteria for separation from the debt contract and separate measurement at fair
value. Upon adoption of Section 3855, we recorded a reduction in the carrying amount
of our 83/4% senior notes of $8.5 million together with related impacts on retained
earnings and future income taxes on April 1, 2007. The change in the fair value of
these embedded derivatives resulted in a pre-tax increase to earnings
of $0.3 million in
the fourth quarter and a change to earnings of $4.2 million in fiscal 2008.
    
    A long-term construction contract contains a price escalation feature that
represents an embedded foreign currency and price index derivative that meets the
criteria for separation from the host contract and separate measurement at fair value.
Upon adoption of Section 3855, we recorded a liability of $7.2 million together with
related impacts on retained earnings and future income taxes on April 1, 2007. The
change in the fair value of the liability resulted in a pre-tax benefit to earnings of
$1.4 million in the fourth quarter and a pre-tax charge to earnings of $7.6 million
for fiscal 2008.
    
    We identified an additional embedded derivative that is not closely related to the
host contract in the fourth quarter of 2008 with respect to a price escalation feature
in a supplier contract. The embedded derivative has been measured at
fair value. Upon
adoption of Section 3855, we recorded a liability of $2.5 million together with
related impacts on retained earnings and future income taxes on April 1, 2007. The
change in the fair value of the liability resulted in a pre-tax gain of
$1.2 million in the fourth quarter and a pre-tax gain of $1.2 million for fiscal 2008.
 3 4
    11




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Consolidated Financial Position
 (in thousands)
    
    March 31, 2008
    
    
    March 31, 2007
    
    
    % ChangeCurrent assets
    
    $
    291,086
    
    
    $
    229,061
    
    
    
    27.1
    %Current liabilities
    
    
    (183,353
    )
    
    
    (151,458
    )
    
    
    21.1
    %Net working capital
    
    
    107,733
    
    
    
    77,603
    
    
    
    38.8
    %Plant and equipment
    
    
    281,039
    
    
    
    255,963
    
    
    
    9.8
    %Total assets
    
    
    793,598
    
    
    
    710,736
    
    
    
    11.7
    %Capital Lease obligations (including current portion)
    
    
    14,776
    
    
    
    9,709
    
    
    
    55.7
    %Total long-term financial liabilities (1)
    
    
    (301,497
    )
    
    
    (295,288
    )
    
    
    2.1
    %
 
 (1)
    
    Total long-term financial liabilities exclude the current portions of capital lease
obligations, current portions of derivative financial instruments, both current and non-current
future income taxes balances, and deferred leasehold inducement.    Claims and change orders
  
    
    Client requirements, specifications and design;
    
    Materials and work schedules; and
    
    Changes in ground and weather conditions.
    Quarterly
Operating Results
  (dollars in millions, except per
    
    Fiscal 2008
    
    
    Fiscal 2007share amounts)
    
    Q4
    
    Q3
    
    Q2
    
    Q1
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1Revenue
    
    $
    323.6
    
    
    $
    274.9
    
    
    $
    223.6
    
    
    $
    167.6
    
    
    
    $
    205.3
    
    
    $
    155.9
    
    
    $
    130.1
    
    
    $
    138.1Gross profit
    
    
    62.6
    
    
    
    50.6
    
    
    
    35.2
    
    
    
    14.9
    
    
    
    
    13.6
    
    
    
    26.0
    
    
    
    20.2
    
    
    
    32.6Operating income (loss)
    
    
    42.6
    
    
    
    33.2
    
    
    
    17.1
    
    
    
    (0.4
    )
    
    
    
    4.5
    
    
    
    13.8
    
    
    
    9.7
    
    
    
    23.1Net income (loss)
    
    
    22.7
    
    
    
    25.4
    
    
    
    2.1
    
    
    
    (10.3
    )
    
    
    
    1.3
    
    
    
    6.6
    
    
    
    (4.6
    )
    
    
    17.9EPS  Basic (1)
    
    $
    0.63
    
    
    $
    0.71
    
    
    $
    0.06
    
    
    $
    (0.29
    )
    
    
    $
    0.04
    
    
    $
    0.27
    
    
    $
    (0.26
    )
    
    $
    0.96EPS  Diluted (1)
    
    
    0.61
    
    
    
    0.69
    
    
    
    0.06
    
    
    
    (0.29
    )
    
    
    
    0.04
    
    
    
    0.26
    
    
    
    (0.26
    )
    
    
    0.71
 
 (1)
    
    Net income (loss) per share for each quarter has been computed based on the
weighted average number of shares issued and outstanding during the respective quarter;
therefore, quarterly amounts may not add to the annual total. Per share calculations
are based on full dollar and share amounts.  12




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
     Claims
and Change Orders.
   13




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 C. Key Trends
 Seasonality
  Claims and Change Orders.
  Backlog
    14




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
   By Segment
    
    March 31,2008
    
    
    2007Heavy Construction & Mining
    
    $
    896.3
    
    
    $
    732.0Piling
    
    
    20.5
    
    
    
    40.0Pipeline
    
    
    65.5
    
    
    
    16.0Total
    
    $
    982.3
    
    
    $
    788.0
  By Contract Type
    
    March 31,2008
    
    
    2007Unit-Price
    
    $
    905.2
    
    
    $
    778.0Lump-Sum
    
    
    11.6
    
    
    
    10.0Time-and-Material, Cost-Plus
    
    
    65.5
    
    
    
    Total
    
    $
    982.3
    
    
    $
    788.0
  Revenue Sources:
   
 Long-term contracts.
 Master Services Agreements.
 
  15




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Major Projects.
 Other Projects.
 
  16




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 
 Contracts
  Cost-plus.
 Time-and-materials.
 Unit-price.
 Lump sum.
 17




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Major Suppliers
   Competition
    
  18




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 D. Outlook
      E. Legal and Labour Matters
 Laws and Regulations and Environmental Matters
  
    
    permitting and licensing requirements applicable to contractors in their respective
trades;
    
    building and similar codes and zoning ordinances;
    
    laws and regulations relating to consumer protection; and
    
    laws and regulations relating to worker safety and protection of human health.
   
  19




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
    Employees and Labor Relations
  F. Resources and Systems
 Outstanding Share Data
  Liquidity
 Liquidity
requirements
  3 4
 
  20




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 3 4 3 4
 st st
   Sources
of liquidity
     21




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
  Revolving credit facility
     Working capital fluctuations effect on cash
  Debt Ratings
  22




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
  Cash Flow
 Three Months Ended March 31,
    
    
    Year Ended March 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006Cash provided by operating activities
    
    $
    36,183
    
    
    $
    7,392
    
    
    $
    17,152
    
    
    $
    97,600
    
    
    $
    2,130
    
    
    $
    33,701Cash (used in) investing activities
    
    
    (2,746
    )
    
    
    (10,901
    )
    
    
    (5,814
    )
    
    
    (48,632
    )
    
    
    (100,050
    )
    
    
    (22,005
    )Cash (used
in) provided by financing activities
    
    
    (21,809
    )
    
    
    4,297
    
    

    (332
    )

    
    
    (23,992
    )
    
    
    63,011
    
    
    
    13,184Net increase (decrease) in cash and cash equivalents
    
    $
    11,628
    
    
    $
    788
    
    
$
    11,006
    

    
    $
    24,976
    
    
    $
    (34,909
    )
    
    $
    24,880
 Operating activities
  Investing activities
  .
 Financing activities
  23




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##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Capital commitments
 Contractual Obligations and Other Commitments
   Payments due by fiscal year2013 and(in millions)
    
    Total
    
    2009
    
    2010
    
    2011
    
    2012
    
    afterSenior notes (1)
    
    $
    263.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    263.0
    
    
    $
    Capital leases (including interest)
    
    
    16.4
    
    
    
    5.5
    
    
    
    4.7
    
    
    
    3.3
    
    
    
    2.7
    
    
    
    0.2Operating leases
    
    
    96.0
    
    
    
    31.1
    
    
    
    26.0
    
    
    
    16.5
    
    
    
    10.9
    
    
    
    11.5Supplier contracts
    
    
    36.6
    
    
    
    5.3
    
    
    
    6.0
    
    
    
    8.2
    
    
    
    9.8
    
    
    
    7.3Total contractual obligations
    
    $
    412.0
    
    
    $
    41.9
    
    
    $
    36.7
    
    
    $
    28.0
    
    
    $
    286.4
    
    
    $
    19.0
 
 (1)
    
    We have entered into cross-currency and interest rate swaps, which represent an economic
hedge of the 83/4% senior notes. At maturity, we will be required to pay $263.0 million in
order to retire these senior notes and the swaps. This amount reflects the fixed exchange
rate of C$1.315=US$1.00 established as of November 26, 2003, the inception of the swap
contracts. At March 31, 2008 the carrying value of these derivative financial instruments was
$81.6 million, inclusive of the interest components. Off-Balance Sheet Arrangements
  Cash Requirements
  Internal Systems and Processes
 Overview of information systems
     Evaluation of Disclosure Controls and Procedures
 
  24




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
   Managements Report on Internal Controls over Financial Reporting (ICFR):
     
    
    Specific to complex and non routine transactions and period end controls: There was a lack
of sufficient accounting and finance personnel with an appropriate level of technical
accounting knowledge and training commensurate with the complexity of the Companys
financial accounting and reporting requirements. Complex and non routine financial
reporting matters that would be affected by this deficiency include the identification of embedded derivatives and
preparation of the Companys US GAAP reconciliation note.
Additionally, we did not
adequately perform period end controls related to the review and approval of account analysis,
verification of inputs and reconciliations. The accounts that would be affected by these
deficiencies are cash, senior notes, contributed surplus, stock-based
compensation expense, foreign exchange gain and related financial
statement disclosures.
    
    Specific to revenue recognition: A formal process to track claims and unapproved change
orders and sufficient monitoring controls over the completeness and accuracy of forecasts,
including the consideration of project changes subsequent to the end of each reporting
period, were not effectively implemented. The accounts that would be affected by these
deficiencies are revenue, project costs, unbilled revenue and billings in excess of costs
incurred and estimated earnings on uncompleted contracts.
    
    Specific to accounts payable and procurement  We did not have an effectively
implemented procurement
 25




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 process to track purchase commitments, reconcile vendor accounts
and accurately accrue costs not invoiced by vendors at each reporting date. The accounts
that would be affected by these deficiencies are accounts payable, accrued liabilities,
unbilled revenue, billings in excess of costs incurred and
estimated earnings on uncompleted contracts, revenue, project costs, equipment costs, general and administrative costs
and other expenses.
 Notwithstanding the above
mentioned weaknesses, we have concluded that the Consolidated Financial Statements included in this
report fairly present the Companys consolidated financial position and consolidated results of
operations as of and for the fiscal year ending March 31, 2008.
 Remediation plans
  
    
    We have taken steps to rectify the complex and non-routine transactions and period end
control weaknesses by reorganizing the corporate accounting group and recruiting new
staff with the appropriate levels of experience and technical skills to prevent a
reoccurrence of these issues.
    
    We implemented new processes over revenue recognition in the last quarter of fiscal
2008. These processes have not been in place long enough to fully evaluate the
effectiveness of the controls. We are evaluating the results of the implementation over
the next two quarters to ensure that the new controls adequately address our ability to
recognize revenue in the correct period.
    
    During the last quarter of fiscal 2008 we developed new procurement processes and
started a redesign of our ERP system to address the internal control deficiencies.
During this redesign and implementation phase we implemented monitoring and detective
controls to address our deficiencies. We are evaluating the results of the
implementation over the next two quarters to ensure that these mitigating controls
adequately address our ability to identify our costs in a timely manner.
 Changes to Internal Control over Financial Reporting
  
    
    Income taxes  there was a lack of review and monitoring controls as well as a lack of
segregation of duties of the income tax function. New review processes together with
increased technical support from third party experts have improved the review and
monitoring controls and addressed the segregation of duties issues in the income tax
function.
    
    IT General Controls (ITGCs)  A number of deficiencies in ITGCs were identified,
including appropriate controls around spreadsheets and end-user computing, controls over
access to and the accuracy of one of our systems, as well as general maintenance of access
rights and nominal program change controls. When aggregated, these deficiencies
represented a material weakness in ICFR. Improvements to access rights and program change
controls were implemented in fiscal 2008 to address certain of the deficiencies identified in
fiscal 2007.
 Significant Accounting Policies
 Critical Accounting Estimates
  26




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
 Revenue recognition
    
    
    site conditions that differ from those assumed in the original bid, to the extent that
contract remedies are unavailable;
    
    identification and evaluation of scope modifications during the execution of the project;
    
    the availability and cost of skilled workers in the geographic location of the project;
    
    the availability and proximity of materials;
    
    unfavorable weather conditions hindering productivity;
    
    equipment productivity and timing differences resulting from project construction not
starting on time; and
    
    general coordination of work inherent in all large projects we undertake.
   27




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
   Plant and equipment
   Goodwill impairment
  Financial
Instruments
  Related Parties
   28




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
  Recently adopted Accounting Policies
 Financial Instruments
    Increase(decrease)Deferred financing costs
    
    $
    (11,356
    )Intangible assets
    
    
    1,622Long-term future income tax asset
    
    
    3,293Senior notes
    
    
    (12,634
    )Derivative financial instruments
    
    
    9,720Long-term
future income tax liability
    
    
    18Opening deficit
    
    
    3,545
    Three Months
    
    
    Twelve MonthsEnded March 31,
    
    
    Ended March 31,2008
    
    
    2008Decrease in interest expense due to change in method of amortizing deferred
financing costs and discounts (premiums), net
    
    $
    (353
    )
    
    $
    (1,250
    )(Increase)
decrease in unrealized foreign exchange gain on senior notes
    
    
    (121
    )
    
    
    212Increase (decrease) in unrealized loss on derivative financial instruments
    
    
    (490
    )
    
    
    4,530Decrease (increase) in income before income taxes
    
    $
    (964
    )
    
    $
    3,492
  29




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
          30




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.
Managements Discussion and Analysis
For the year ended March 31, 2008
   Comprehensive Income and Equity
   Accounting Changes
  Accounting Policy Choice For Transaction Costs
  31




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 Recent Accounting pronouncements not yet adopted
 Capital disclosures
  Financial Instruments  disclosure and presentation
   Inventories
  Going concern
  32




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 Goodwill and intangible assets
      (a)
    
    the limited risk that royalty changes will cause our customers to cancel, delay or reduce the
scope of any significant mining developments presently underway;(b)
    
    the expected continued rapid growth of operators in the oil sands business, their planned
projects and our intention to pursue business opportunities from
these projects;(c)
    
    our intention to increase our fleet size to be ready to meet the challenges from the
projected growth in oil sands;(d)
    
    that acquisition opportunities will materialize that will allow us to expand our
complementary service offerings which we will be able to cross-sell
with our existing services;(e)
    
    our intention to increase our presence outside the oil sands and extend our services to other
resource industries across Canada;(f)
    
    the success of the enhancements to maintenance practices resulting in improved availability
through reduced repair time and increased utilization of our equipment with a consequent
improvement in our revenue, margins and profitability;(g)
    
    the amount of our backlog expected to be performed and
realized in the 12 months ending March 31, 2009 (such
estimates assist us in planning our activity level and may not be
suitable for other purposes);(h)
    
    the expected growth in Master Services Agreements through
2009;
 33




---



##### 



(i)
    
    the arrival of new projects and our required participation in
the bidding process for work on such projects;(j)
    
    the continued development of the oil sands and the expectation that it will drive a
significant portion of our 2009 revenue;(k)
    
    our commencement of work in the latter half of fiscal 2009 at Imperial Oils upcoming Kearl
project;(l)
    
    the anticipated increased demand for our services at Petro-Canadas Fort Hills site;(m)
    
    our expected increased involvement with Baffinland Iron Mines
Corp.;(n)
    
    the demand for our piling services remaining strong in fiscal
2009;(o)
    
    the anticipated temporary slowdown in our pipeline activity once the TMX project concludes in
October 2008 and significant long-term opportunities for this
division; and(p)
    
    our expected generation of a net cash surplus in fiscal 2009.
   
    
    anticipated major projects in the oil sands may not materialize;
    
    demand for our services may be adversely impacted by regulations affecting the energy
industry;
    
    failure by our customers to obtain required permits and licenses may affect the demand for
our services;
    
    changes in our customers perception of oil prices over the long-term could cause our
customers to defer, reduce or stop their investment in oil sands projects, which would, in
turn, reduce our revenue from those customers;
    
    insufficient pipeline, upgrading and refining capacity or lack of sufficient governmental
infrastructure to support growth in the oil sands region could cause our customers to delay,
reduce or cancel plans to construct new oil sands projects or expand existing projects, which
would, in turn, reduce our revenue from those customers;
    
    a change in strategy by our customers to reduce outsourcing could adversely affect our
results;
    
    cost overruns by our customers on their projects may cause our customers to terminate
future projects or expansions which could adversely affect the amount of work we receive from
those customers;
    
    because most of our customers are Canadian energy companies, a downturn in the Canadian
energy industry could result in a decrease in the demand for our services;
    
    shortages of qualified personnel or significant labour disputes could adversely affect our
business; and
    
    unanticipated short term shutdowns of our customers operating facilities may result in
temporary cessation or cancellation of projects in which we are
participating.
 34




---



##### 




    
    our ability to grow our operations in the future may be hampered by our inability to obtain
long lead time equipment and tires, which are currently in limited supply;
    
    if we are unable to obtain surety bonds or letters of credit required by some of our
customers, our business could be impaired;
    
    we are dependent on our ability to lease equipment, and a tightening of this form of credit
could adversely affect our ability to bid for new work and/or supply some of our existing
contracts;
    
    our business is highly competitive and competitors may outbid us on major projects that are
awarded based on bid proposals;
    
    our customer base is concentrated, and the loss of or a significant reduction in business
from a major customer could adversely impact our financial condition;
    
    lump-sum and unit-price contracts expose us to losses when our estimates of project costs
are lower than actual costs;
    
    our operations are subject to weather-related factors that may cause delays in our project
work;
    
    environmental laws and regulations may expose us to liability arising out of our operations
or the operations of our customers; and
    
    many of our senior officers have either recently joined the company or have just been
promoted and have only worked together as a management team for a short period of time.
 There can be no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ materially from those expected or
estimated in such statements. Accordingly, readers should not place undue reliance on
forward-looking information.
 35




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 Risk Factors
 Anticipated major projects in the oil sands may not materialize.
  
    
    changes in the perception of the economic viability of these projects;
    
    shortage of pipeline capacity to transport production to major markets;
    
    lack of sufficient governmental infrastructure to support growth;
    
    delays in issuing environmental permits or refusal to grant such permits;
    
    shortage of skilled workers in this remote region of Canada; and
    
    cost overruns on announced projects.
 Demand for our services may be adversely impacted by regulations affecting the energy
industry.
  Failure by our customers to obtain required permits and licenses may affect the demand for our
services.
  Changes in our customers perception of oil prices over the long-term could cause our
customers to defer, reduce or stop their investment in oil sands projects, which would, in turn,
reduce our revenue from those customers.
  36




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  Insufficient pipeline, upgrading and refining capacity could cause our customers to delay,
reduce or cancel plans to construct new oil sands projects or expand existing projects, which
would, in turn, reduce our revenue from those customers.
  Lack of sufficient governmental infrastructure to support the growth in the oil sands region
could cause our customers to delay, reduce or cancel their future expansions, which would, in turn,
reduce our revenue from those customers.
  Shortages of qualified personnel or significant labor disputes could adversely affect our
business.
  37




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
   Cost overruns by our customers on their projects may cause our customers to terminate future
projects or expansions which could adversely affect the amount of work we receive from those
customers.
  Our ability to grow our operations in the future may be hampered by our inability to obtain
long lead time equipment and tires, which are currently in limited supply.
   Our customer base is concentrated, and the loss of or a significant reduction in business from
a major customer could adversely impact our financial condition.
  Because most of our customers are Canadian energy companies, a downturn in the Canadian energy
industry could result in a decrease in the demand for our services.
  Lump-sum and unit-price contracts expose us to losses when our estimates of project costs are
lower than actual costs.
 38




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  
    
    site conditions differing from those assumed in the original bid;
    
    scope modifications during the execution of the project;
    
    the availability and cost of skilled workers;
    
    the availability and proximity of materials;
    
    unfavorable weather conditions hindering productivity;
    
    inability or failure of our customers to perform their contractual commitments;
    
    equipment availability and productivity and timing differences resulting from project
construction not starting on time; and
    
    the general coordination of work inherent in all large projects we undertake.
  Until we establish and maintain effective internal controls over financial reporting, we
cannot assure you that we will have appropriate procedures in place to eliminate future financial
reporting inaccuracies and avoid delays in financial reporting.
  Our substantial debt could adversely affect us, make us more vulnerable to adverse economic or
industry conditions and prevent us from fulfilling our debt obligations.
  
    
    limiting our ability to obtain additional financing to fund our working capital, capital
expenditures, debt service requirements, potential growth or other purposes;
    
    limiting our ability to use operating cash flow in other areas of our business;
    
    limiting our ability to post surety bonds required by some of our customers;
    
    placing us at a competitive disadvantage compared to competitors with less debt;
 39




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 
    
    increasing our vulnerability to, and reducing our flexibility in planning for, adverse
changes in economic, industry and competitive conditions; and
    
    increasing our vulnerability to increases in interest rates because borrowings under our
revolving credit facility and payments under some of our equipment leases are subject to
variable interest rates.
  The terms of our debt agreements may restrict our current and future operations, particularly
our ability to respond to changes in our business or take certain actions.
  
    
    incur or guarantee additional debt, issue certain equity securities or enter into sale
and leaseback transactions;
    
    pay dividends or distributions on our shares or repurchase our shares, redeem
subordinated debt or make other restricted payments;
    
    incur dividend or other payment restrictions affecting certain of our subsidiaries;
    
    issue equity securities of subsidiaries;
    
    make certain investments or acquisitions;
    
    create liens on our assets;
    
    enter into transactions with affiliates;
    
    consolidate, merge or transfer all or substantially all of our assets; and
    
    transfer or sell assets, including shares of our subsidiaries.
   We may not be able to generate sufficient cash flow to meet our debt service and other
obligations due to events beyond our control.
  40




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
   Currency
rate fluctuations could adversely affect our ability to repay our
83⁄4%
senior notes and may affect the cost of goods we purchase.
   If we are unable to obtain surety bonds or letters of credit required by some of our
customers, our business could be impaired.
   A change in strategy by our customers to reduce outsourcing could adversely affect our
results.
  Our operations are subject to weather-related factors that may cause delays in our project
work.
  41




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
  We are dependent on our ability to lease equipment, and a tightening of this form of credit
could adversely affect our ability to bid for new work and/or supply some of our existing
contracts.
  Our business is highly competitive and competitors may outbid us on major projects that are
awarded based on bid proposals.
   A significant amount of our revenue is generated by providing non-recurring services.
  Environmental laws and regulations may expose us to liability arising out of our operations or
the operations of our customers.
   42




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 Our projects expose us to potential professional liability, product liability, warranty or
other claims.
  We may not be able to achieve the expected benefits from any future acquisitions, which would
adversely affect our financial condition and results of operations.
  Aboriginal peoples may make claims against our customers or their projects regarding the lands
on which their projects are located.
  Unanticipated short term shutdowns of our customers operating facilities may result in
temporary cessation or cancellation of projects in which we are participating.
  Many of our senior officers have either recently joined the company or have just been promoted
and have only worked together as a management team for a short period of time.
  43




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 H. General Matters
 History and Development of the Company
        Transition to IFRS
  44




---



##### 



NORTH AMERICAN ENERGY PARTNERS INC.  Managements Discussion and Analysis
For the year ended March 31, 2008
 
    
    Accounting policies, including choices among policies permitted under IFRS, and
implementation decisions, such as whether certain changes will be applied on a retrospective
or a prospective basis
    
    Information technology and data systems
    
    Internal controls over financial reporting
    
    Disclosure controls and procedures, including investor relations and external
communications plans
    
    Sufficiency of financial reporting expertise, including training requirements
    
    Business activities that may be influenced by GAAP measures, such as foreign currency,
hedging, debt covenants, capital requirements, and compensation arrangements.
 45