Exhibit 99.2

NORTH AMERICAN ENERGY PARTNERS INC.

Consolidated Financial Statements

For the years ended
March 31, 2010, 2009 and 2008

(Expressed in thousands of Canadian Dollars)



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|     |  |                                                                              |  |                        |  |                                          
|---- |  | ---------------------------------------------------------------------------- |  | ---------------------- |  | -----------------------------------------
|LOGO |  | KPMG
LLP Chartered Accountants 10125  102
Street Edmonton AB T5J 3V8 Canada |  | Telephone Fax
Internet |  | (780) 429-7300 (780) 429-7379
www.kpmg.ca

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

of North American Energy Partners Inc.

We have audited the
accompanying consolidated balance sheets of North American Energy Partners Inc. (the Company) as of March 31, 2010 and 2009 and the related consolidated statements of operations and comprehensive income (loss), shareholders
equity and cash flows for each of the years in the three-year period ended March 31, 2010. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2010 and 2009 and the results of its operations and its cash flows for each of the years in the three-year
period ended March 31, 2010 in conformity with U.S. generally accepted accounting principles.

As discussed in Note 3 bb) iii) to the consolidated
financial statements, the Company adopted new accounting pronouncements related to business combinations in 2010.

U.S. generally accepted accounting
principles vary in certain significant respects from Canadian generally accepted accounting principles. Information relating to the nature and effect of such differences is presented in Note 34 to the consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal control over
financial reporting as of March 31, 2010, based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 9,
2010 expressed our opinion that the Company did not maintain effective internal control over financial reporting as of March 31, 2010.

LOGO

Chartered Accountants

Edmonton,
Canada

June 9, 2010



| |  |                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International, a Swiss cooperative.
KPMG Canada provides services to KPMG LLP.



2Report of Independent Registered
Public Accounting FirmNorth American Energy Partners Inc.



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|     |  |                                                                              |  |                        |  |                                          
|---- |  | ---------------------------------------------------------------------------- |  | ---------------------- |  | -----------------------------------------
|LOGO |  | KPMG
LLP Chartered Accountants 10125  102
Street Edmonton AB T5J 3V8 Canada |  | Telephone Fax
Internet |  | (780) 429-7300 (780) 429-7379
www.kpmg.ca

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

of North American Energy Partners Inc.

We have audited North
American Energy Partners Inc. (the Company)s internal control over financial reporting as of March 31, 2010, based on the criteria established in Internal Control  Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting included in Managements Report on Internal Control over Financial Reporting in the accompanying Managements Discussion and Analysis for the year ended March 31, 2010. Our responsibility is to express an opinion
on the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the companys financial statements will not be prevented or detected on a timely basis. A material weakness in revenue recognition has been identified and included in managements assessment. We also have
audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the 2010 consolidated financial statements of the Company. The material weakness was
considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2010 consolidated financial statements, and this report does not affect our report dated June 9, 2010, which expressed an unqualified opinion on
those consolidated financial statements.

In our opinion, because of the effect of the aforementioned material weakness on the achievement of the
objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of March 31, 2010, based on criteria established in Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

LOGO

Chartered Accountants

Edmonton,
Canada

June 9, 2010



| |  |                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International, a Swiss cooperative.
KPMG Canada provides services to KPMG LLP.



North American Energy Partners
Inc.Report of Independent Registered Public Accounting Firm3



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LOGO



Consolidated Balance Sheets

As at March 31 (Expressed in thousands of Canadian Dollars)



|                                                                                                                                                                                                                              |  |          |   |  |          |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | - |  | -------- | -
|                                                                                                                                                                                                                              |  | 2010     |   |  | 2009     |  
|Assets                                                                                                                                                                                                                        |  |          |   |  |          |  
|Current assets:                                                                                                                                                                                                               |  |          |   |  |          |  
|Cash and cash equivalents                                                                                                                                                                                                     |  | $103,005 |   |  | $98,880  |  
|Accounts receivable, net(note
6)                                                                                                                                                                                              |  | 111,884  |   |  | 78,323   |  
|Unbilled revenue(note 7)                                                                                                                                                                                                      |  | 84,702   |   |  | 55,907   |  
|Inventories(note 8)                                                                                                                                                                                                           |  | 5,659    |   |  | 11,814   |  
|Prepaid expenses and deposits(note
9)                                                                                                                                                                                         |  | 6,881    |   |  | 4,781    |  
|Deferred tax assets(note
20)                                                                                                                                                                                                  |  | 3,481    |   |  | 7,033    |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|                                                                                                                                                                                                                              |  | 315,612  |   |  | 256,738  |  
|Prepaid expenses and deposits(note
9)                                                                                                                                                                                         |  | 4,005    |   |  | 3,504    |  
|Assets held for sale(note
10)                                                                                                                                                                                                 |  | 838      |   |  | 2,760    |  
|Property, plant and equipment, net(note
11)                                                                                                                                                                                   |  | 328,743  |   |  | 316,115  |  
|Intangible assets(note 12)                                                                                                                                                                                                    |  | 7,669    |   |  | 5,944    |  
|Deferred financing costs(note
13)                                                                                                                                                                                             |  | 6,725    |   |  | 7,910    |  
|Investment in and advances to unconsolidated joint ventures(note
14)                                                                                                                                                          |  | 2,917    |   |  |         |  
|Goodwill(note 4)                                                                                                                                                                                                              |  | 25,111   |   |  | 23,872   |  
|Deferred tax assets(note
20)                                                                                                                                                                                                  |  | 10,997   |   |  | 12,432   |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|Total assets                                                                                                                                                                                                                  |  | $702,617 |   |  | $629,275 |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|Liabilities and Shareholders Equity                                                                                                                                                                                          |  |          |   |  |          |  
|Current liabilities:                                                                                                                                                                                                          |  |          |   |  |          |  
|Accounts payable                                                                                                                                                                                                              |  | $66,876  |   |  | $56,204  |  
|Accrued liabilities(note
16)                                                                                                                                                                                                  |  | 47,191   |   |  | 45,001   |  
|Billings in excess of costs incurred and estimated earnings on uncompleted
contracts(note 7)                                                                                                                                  |  | 1,614    |   |  | 2,155    |  
|Current portion of capital lease obligations(note
17)                                                                                                                                                                         |  | 5,053    |   |  | 5,409    |  
|Current portion of derivative financial instruments(note
24(a))                                                                                                                                                               |  | 22,054   |   |  | 11,439   |  
|Current portion of long term debt(note
18(a))                                                                                                                                                                                 |  | 6,072    |   |  |         |  
|Deferred tax liabilities(note
20)                                                                                                                                                                                             |  | 16,781   |   |  | 7,749    |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|                                                                                                                                                                                                                              |  | 165,641  |   |  | 127,957  |  
|Deferred lease inducements(note
15)                                                                                                                                                                                           |  | 761      |   |  | 836      |  
|Long term accrued liabilities(note 16)                                                                                                                                                                                        |  | 14,943   |   |  | 7,134    |  
|Capital lease obligations(note
17)                                                                                                                                                                                            |  | 8,340    |   |  | 12,075   |  
|Long term debt(note 18(a))                                                                                                                                                                                                    |  | 22,374   |   |  |         |  
|Senior notes(note 18(b))                                                                                                                                                                                                      |  | 203,120  |   |  | 255,756  |  
|Director deferred stock unit liability(note
30(d))                                                                                                                                                                            |  | 2,548    |   |  | 546      |  
|Restricted share unit liability(note
30(c))                                                                                                                                                                                   |  | 1,030    |   |  |         |  
|Derivative financial instruments(note
24(a))                                                                                                                                                                                  |  | 75,001   |   |  | 43,048   |  
|Asset retirement obligation(note
19)                                                                                                                                                                                          |  | 360      |   |  | 386      |  
|Deferred tax liabilities(note
20)                                                                                                                                                                                             |  | 27,441   |   |  | 30,745   |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|                                                                                                                                                                                                                              |  | 521,559  |   |  | 478,483  |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|Shareholders equity:                                                                                                                                                                                                         |  |          |   |  |          |  
|Common shares (authorized  unlimited number of voting and non-voting common shares; issued and outstanding  March 31, 2010
 36,049,276 voting common shares (March 31, 2009  36,038,476 voting common shares)(note 21(a)) |  | 303,505  |   |  | 303,431  |  
|Additional paid-in capital(note 21(b))                                                                                                                                                                                        |  | 7,439    |   |  | 5,466    |  
|Deficit                                                                                                                                                                                                                       |  | (129,886 | ) |  | (158,105 | )
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|                                                                                                                                                                                                                              |  | 181,058  |   |  | 150,792  |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|Total liabilities and shareholders equity                                                                                                                                                                                    |  | $702,617 |   |  | $629,275 |  
|                                                                                                                                                                                                                              |  |          |   |  |          |  
|Commitments(note 28)                                                                                                                                                                                                          |  |          |   |  |          |  
|Contingencies(note 31)                                                                                                                                                                                                        |  |          |   |  |          |  
|Subsequent event(note 33)                                                                                                                                                                                                     |  |          |   |  |          |  
|United States and Canadian accounting policy differences(note 34)                                                                                                                                                             |  |          |   |  |          |  

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board



|                             |  |                         
|---------------------------- |  | ------------------------
|/s/ Ronald A. Mclntosh       |  | /s/ Allen R. Sello      
|Ronald A. Mclntosh, Director |  | Allen R. Sello, Director



4Financial
StatementsNorth American Energy Partners Inc.



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Consolidated Statements of Operations
and Comprehensive Income (Loss)

For the years ended March 31 (Expressed in thousands of Canadian Dollars, except per share amounts)



|                                                                                    |  |          |  |           |  |         
|----------------------------------------------------------------------------------- |  | -------- |  | --------- |  | --------
|                                                                                    |  | 2010     |  | 2009      |  | 2008    
|Revenue                                                                             |  | $758,965 |  | $972,536  |  | $989,696
|Project costs                                                                       |  | 301,307  |  | 505,026   |  | 592,458 
|Equipment costs                                                                     |  | 209,408  |  | 217,120   |  | 176,190 
|Equipment operating lease expense                                                   |  | 66,329   |  | 43,583    |  | 22,319  
|Depreciation                                                                        |  | 42,636   |  | 36,389    |  | 35,720  
|                                                                                    |  |          |  |           |  |         
|Gross profit                                                                        |  | 139,285  |  | 170,418   |  | 163,009 
|General and administrative costs                                                    |  | 62,530   |  | 74,460    |  | 69,806  
|Loss on disposal of property, plant and equipment                                   |  | 1,233    |  | 5,325     |  | 179     
|Loss on disposal of assets held for sale                                            |  | 373      |  | 24        |  | 493     
|Amortization of intangible assets(note 12)                                          |  | 1,719    |  | 1,501     |  | 804     
|Equity in earnings of unconsolidated joint venture(note
14)                         |  | (44)     |  |          |  |        
|Impairment of goodwill(note
4)                                                      |  |         |  | 176,200   |  |        
|                                                                                    |  |          |  |           |  |         
|Operating income (loss) before the undernoted                                       |  | 73,474   |  | (87,092)  |  | 91,727  
|Interest expense, net(note
22)                                                      |  | 26,080   |  | 29,612    |  | 29,080  
|Foreign exchange (gain) loss                                                        |  | (48,901) |  | 47,272    |  | (25,660)
|Realized and unrealized loss (gain) on derivative financial instruments(note 24(a)) |  | 54,411   |  | (37,250)  |  | 30,075  
|Other income(note
24(c)(i))                                                         |  | (14)     |  | (5,955)   |  | (418)   
|                                                                                    |  |          |  |           |  |         
|Income (loss) before income taxes                                                   |  | 41,898   |  | (120,771) |  | 58,650  
|Income taxes(note 20):                                                              |  |          |  |           |  |         
|Current income taxes                                                                |  | 3,803    |  | 5,546     |  | 80      
|Deferred income taxes                                                               |  | 9,876    |  | 9,087     |  | 17,036  
|                                                                                    |  |          |  |           |  |         
|Net income (loss) and comprehensive income (loss) for the year                      |  | 28,219   |  | (135,404) |  | 41,534  
|                                                                                    |  |          |  |           |  |         
|Net income (loss) per share  basic (note
21(c))                                    |  | $0.78    |  | $(3.76)   |  | $1.16   
|                                                                                    |  |          |  |           |  |         
|Net income (loss) per share  diluted (note
21(c))                                  |  | $0.77    |  | $(3.76)   |  | $1.13   
|                                                                                    |  |          |  |           |  |         

See accompanying notes to consolidated financial statements.



North American Energy Partners
Inc.Financial Statements5



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Consolidated Statements of Changes in
Shareholders Equity

(Expressed in thousands of Canadian Dollars)



|                                                |  |              |  |                        |   |  |                          |   |  |           |   |  |          |  
|----------------------------------------------- |  | ------------ |  | ---------------------- | - |  | ------------------------ | - |  | --------- | - |  | -------- | -
|                                                |  | Commonshares |  | Commonnon-votingshares |   |  | Additionalpaid-incapital |   |  | Deficit   |   |  | Total    |  
|Balance at March 31, 2007                       |  | $297,594     |  | $2,062                 |   |  | $3,606                   |   |  | $(64,235  | ) |  | $239,027 |  
|Net income                                      |  |             |  |                       |   |  |                         |   |  | 41,534    |   |  | 41,534   |  
|Conversion to common voting shares              |  | 2,062        |  | (2,062                 | ) |  |                         |   |  |          |   |  |         |  
|Stock-based compensation                        |  |             |  |                       |   |  | 1,937                    |   |  |          |   |  | 1,937    |  
|Reclassification on exercise of stock options   |  | 611          |  |                       |   |  | (611                     | ) |  |          |   |  |         |  
|Cash settlement of stock options                |  |             |  |                       |   |  | (581                     | ) |  |          |   |  | (581     | )
|Issued upon exercise of stock options           |  | 1,627        |  |                       |   |  |                         |   |  |          |   |  | 1,627    |  
|                                                |  |              |  |                        |   |  |                          |   |  |           |   |  |          |  
|Balance at March 31, 2008                       |  | $301,894     |  | $                     |   |  | $4,351                   |   |  | $(22,701  | ) |  | $283,544 |  
|Net loss                                        |  |             |  |                       |   |  |                         |   |  | (135,404  | ) |  | (135,404 | )
|Stock-based compensation                        |  |             |  |                       |   |  | 1,888                    |   |  |          |   |  | 1,888    |  
|Deferred performance share unit plan            |  |             |  |                       |   |  | 61                       |   |  |          |   |  | 61       |  
|Reclassification on exercise of stock options   |  | 834          |  |                       |   |  | (834                     | ) |  |          |   |  |         |  
|Issued upon exercise of stock options           |  | 703          |  |                       |   |  |                         |   |  |          |   |  | 703      |  
|                                                |  |              |  |                        |   |  |                          |   |  |           |   |  |          |  
|Balance at March 31, 2009                       |  | $303,431     |  | $                     |   |  | $5,466                   |   |  | $(158,105 | ) |  | $150,792 |  
|Net income                                      |  |             |  |                       |   |  |                         |   |  | 28,219    |   |  | 28,219   |  
|Stock-based compensation                        |  |             |  |                       |   |  | 2,135                    |   |  |          |   |  | 2,135    |  
|Deferred performance share unit plan            |  |             |  |                       |   |  | 123                      |   |  |          |   |  | 123      |  
|Reclassified to restricted share unit liability |  |             |  |                       |   |  | (20                      | ) |  |          |   |  | (20      | )
|Reclassification on exercise of stock options   |  | 21           |  |                       |   |  | (21                      | ) |  |          |   |  |         |  
|Cash settlement of stock options                |  |             |  |                       |   |  | (244                     | ) |  |          |   |  | (244     | )
|Issued upon exercise of stock options           |  | 53           |  |                       |   |  |                         |   |  |          |   |  | 53       |  
|                                                |  |              |  |                        |   |  |                          |   |  |           |   |  |          |  
|Balance at March 31, 2010                       |  | $303,505     |  | $                     |   |  | $7,439                   |   |  | $(129,886 | ) |  | $181,058 |  
|                                                |  |              |  |                        |   |  |                          |   |  |           |   |  |          |  

See accompanying notes to consolidated financial statements.



6Financial
StatementsNorth American Energy Partners Inc.



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Consolidated Statements of Cash Flows

For the years ended March 31 (Expressed in thousands of Canadian Dollars)



|                                                                                  |  |          |   |  |      |          |   |      |         |  
|--------------------------------------------------------------------------------- |  | -------- | - |  | ---- | -------- | - | ---- | ------- | -
|Cash provided by (used in):                                                       |  | 2010     |   |  | 2009 |          |   | 2008 |        
|Operating activities:                                                             |  |          |   |  |      |          |   |      |         |  
|Net income (loss) for the year                                                    |  | $28,219  |   |  | $    | (135,404 | ) |      | $41,534 |  
|Items not affecting cash:                                                         |  |          |   |  |      |          |   |      |         |  
|Depreciation                                                                      |  | 42,636   |   |  |      | 36,389   |   |      | 35,720  |  
|Equity in earnings of unconsolidated joint venture(note
14)                       |  | (44      | ) |  |      |         |   |      |        |  
|Amortization of intangible assets                                                 |  | 1,719    |   |  |      | 1,501    |   |      | 804     |  
|Impairment of goodwill(note
4)                                                    |  |         |   |  |      | 176,200  |   |      |        |  
|Amortization of deferred lease inducements                                        |  | (107     | ) |  |      | (105     | ) |      | (104    | )
|Amortization of deferred financing costs(note
22)                                 |  | 3,348    |   |  |      | 2,970    |   |      | 2,899   |  
|Loss on disposal of property, plant and equipment                                 |  | 1,233    |   |  |      | 5,325    |   |      | 179     |  
|Loss on disposal of assets held for sale                                          |  | 373      |   |  |      | 24       |   |      | 493     |  
|Unrealized foreign exchange (gain) loss on senior notes                           |  | (48,920  | ) |  |      | 46,466   |   |      | (25,006 | )
|Unrealized loss (gain) on derivative financial instruments measured at fair value |  | 38,852   |   |  |      | (39,921  | ) |      | 27,406  |  
|Stock-based compensation expense(note 30)                                         |  | 5,270    |   |  |      | 2,305    |   |      | 2,127   |  
|Accretion of asset retirement obligation(note
19)                                 |  | 5        |   |  |      | 155      |   |      |        |  
|Deferred income taxes                                                             |  | 9,876    |   |  |      | 9,087    |   |      | 17,036  |  
|Net changes in non-cash working capital(note
25(b))                               |  | (39,591  | ) |  |      | 46,193   |   |      | (8,291  | )
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|                                                                                  |  | 42,869   |   |  |      | 151,185  |   |      | 94,797  |  
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|Investing activities:                                                             |  |          |   |  |      |          |   |      |         |  
|Acquisition, net of cash acquired(note
5(a))                                      |  | (5,410   | ) |  |      |         |   |      | (1,581  | )
|Purchase of property, plant and equipment                                         |  | (51,989  | ) |  |      | (84,437  | ) |      | (52,805 | )
|Addition to intangible assets                                                     |  | (3,362   | ) |  |      | (3,102   | ) |      | (2,274  | )
|Additions to assets held for sale                                                 |  | (1,739   | ) |  |      | (2,035   | ) |      | (3,499  | )
|Investment in and advances to unconsolidated joint venture(note
14)               |  | (2,873   | ) |  |      |         |   |      |        |  
|Proceeds on disposal of property, plant and equipment                             |  | 1,440    |   |  |      | 11,164   |   |      | 6,862   |  
|Proceeds of disposal of assets held for sale                                      |  | 2,482    |   |  |      | 325      |   |      | 10,200  |  
|Net changes in non-cash working capital(note
25(b))                               |  | 1,840    |   |  |      | (630     | ) |      | (2,835  | )
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|                                                                                  |  | (59,611  | ) |  |      | (78,715  | ) |      | (45,932 | )
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|Financing activities:                                                             |  |          |   |  |      |          |   |      |         |  
|Repayment of long term debt                                                       |  | (6,906   | ) |  |      |         |   |      | (20,500 | )
|Increase in long term debt(note 18(a))                                            |  | 34,700   |   |  |      |         |   |      |        |  
|Cash settlement of stock options(note
21(b))                                      |  | (244     | ) |  |      |         |   |      | (581    | )
|Proceeds from stock options exercised(note
21(a))                                 |  | 53       |   |  |      | 703      |   |      | 1,627   |  
|Financing costs(note 13)                                                          |  | (1,123   | ) |  |      |         |   |      | (776    | )
|Repayment of capital lease obligations                                            |  | (5,613   | ) |  |      | (6,156   | ) |      | (3,762  | )
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|                                                                                  |  | 20,867   |   |  |      | (5,453   | ) |      | (23,992 | )
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|Increase in cash and cash equivalents                                             |  | 4,125    |   |  |      | 67,017   |   |      | 24,873  |  
|Cash and cash equivalents, beginning of year                                      |  | 98,880   |   |  |      | 31,863   |   |      | 6,990   |  
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|Cash and cash equivalents, end of year                                            |  | $103,005 |   |  |      | $98,880  |   |      | $31,863 |  
|                                                                                  |  |          |   |  |      |          |   |      |         |  
|Supplemental cash flow information(note 25(a))                                    |  |          |   |  |      |          |   |      |         |  

See accompanying notes to consolidated financial statements.



North American Energy Partners
Inc.Financial Statements7



---

LOGO



Notes to Consolidated Financial
Statements

For the years ended March 31, 2010, 2009 and 2008

(Expressed in thousands of Canadian Dollars, except per share amounts or unless otherwise specified)

1. Nature of operations

North American Energy Partners Inc.
(the Company), formerly NACG Holdings Inc. (NACG), was incorporated under the Canada Business Corporations Act on October 17, 2003. On November 26, 2003, the Company purchased all the issued and outstanding shares
of North American Construction Group Inc. (NACGI), including subsidiaries of NACGI, from Norama Ltd. which had been operating continuously in Western Canada since 1953. The Company had no operations prior to November 26, 2003. The
Company undertakes several types of projects including heavy construction, industrial and commercial site development and pipeline and piling installations in Canada.

2. Change in generally accepted accounting principles

As a
Canadian-based company, the Company historically prepared its consolidated financial statements in conformity with accounting principles generally accepted in Canada (Canadian GAAP) and also provided reconciliation to United States generally
accepted accounting principles (U.S. GAAP).

The Accounting Standards Board of the Canadian Institute of Chartered Accountants previously announced its
decision to require all publicly accountable enterprises to report under International Financial Reporting Standards (IFRS) for years beginning on or after January 1, 2011. However, National Instrument 52-107 allows Securities and Exchange
Commission (SEC) registrants, such as the Company, to file financial statements with Canadian securities regulators that are prepared in accordance with U.S. GAAP. It is proposed that SEC registrants would be permitted to continue to
report under U.S. GAAP beyond 2011. As such, the Company has decided to adopt U.S. GAAP instead of IFRS as its primary basis of financial reporting commencing in fiscal 2010.

The decision to adopt U.S. GAAP was also made to enhance communication with shareholders and improve the comparability of financial information reported with
competitors and peer group. All comparative financial information contained herein has been revised to reflect the Companys results as if they had been historically reported in accordance with U.S. GAAP.

3. Significant accounting policies

a) Basis of
presentation

These consolidated financial statements are prepared in accordance with U.S. GAAP. Material inter-company transactions and balances are
eliminated on consolidation. Material items that give rise to measurement differences to the consolidated financial statements under Canadian GAAP are outlined in note 34.

These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, North American Construction Group Inc.
(NACGI) and North American Fleet Company Ltd. (NAFCL), and the following 100% owned subsidiaries of NACGI:



|                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|North American Caisson Ltd.
North American Construction Ltd.
North American Engineering Inc.
North American Enterprises Ltd.
North American Industries Inc.
North American Maintenance Ltd.
North American Mining Inc.
North American Pipeline Inc. |  | North American Road Inc.
North American Services Inc.
North American Site Development Ltd.
North American Site Services Inc.
North American Pile Driving Inc.
DF Investments Limited
Drillco Foundation Co. Ltd.

b) Use of estimates

The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosures reported in these consolidated financial statements and accompanying
notes.

Significant estimates made by management include the assessment of the percentage of completion on time-and-materials, unit-price or lump-sum
contracts (including estimated total costs and provisions for estimated losses) and the recognition of claims and change orders on revenue contracts, assumptions used to value free standing derivatives and other financial instruments, assumptions
used in periodic impairment testing, and estimates and assumptions used in the determination of the allowance for doubtful accounts, the recoverability of deferred tax assets and the useful lives of property, plant and equipment. Actual results
could differ materially from those estimates.



8Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The accuracy of the Companys
revenue and profit recognition in a given period is dependent, in part, on the accuracy of its estimates of the cost to complete each time-and-materials, unit-price, or lump-sum project. The Companys cost estimates use a detailed bottom
up approach, using inputs such as labour and equipment hours, detailed drawings and material lists. These estimates are reviewed and updated monthly. The Company believes its experience allows it to produce materially reliable estimates.
However, the Companys projects can be highly complex. Profit margin estimates for a project may either increase or decrease from the amount that was originally estimated at the time of the related bid. With many projects of varying levels of
complexity and size in process at any given time, changes in estimates can offset each other without materially impacting the Companys profitability. Major changes in cost estimates, particularly in larger, more complex projects, can have a
significant effect on profitability.

c) Revenue recognition

The Company performs its projects under the following types of contracts: time-and-materials; cost-plus; unit-price; and lump-sum. Revenue is recognized as costs
are incurred for time-and-materials and cost-plus service contracts with no clearly defined scope. Revenue on cost-plus, unit-price, lump-sum and time-and-materials contracts with defined scope are recognized using the percentage-of-completion
method, measured by the ratio of costs incurred to date to estimated total costs. The estimated total cost of the contract and percent complete is determined based upon estimates made by management. The costs of items that do not relate to
performance of contracted work, particularly in the early stages of the contract, are excluded from costs incurred to date. The resulting percent complete methodology is applied to the approved contract value to determine the revenue recognized.
Customer payment milestones typically occur on a periodic basis over the period of contract completion.

The length of the Companys contracts
varies from less than one year for typical contracts to several years for certain larger contracts. Contract project costs include all direct labour, material, subcontract and equipment costs and those indirect costs related to contract performance
such as indirect labour, supplies, and tools. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in
project performance, project conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenue that are recognized in the period in which
such adjustments are determined. Profit incentives are included in revenue when their realization is reasonably assured.

Once a project is underway, the
Company will often experience changes in conditions, client requirements, specifications, designs, materials and work schedule. Generally, a change order will be negotiated with the customer to modify the original contract to approve
both the scope and price of the change. Occasionally, however, disagreements arise regarding changes, their nature, measurement, timing and other characteristics that impact costs and revenue under the contract. When a change becomes a point of
dispute between the Company and a customer, the Company will then consider it as a claim.

Costs related to unapproved change orders and claims are
recognized when they are incurred. Revenues related to unapproved change orders and claims are included in total estimated contract revenue when they are approved.

Revenues related to unapproved change orders and claims are included in total estimated contract revenue only to the extent that contract costs related to the claim
have been incurred and when it is probable that the unapproved change order or claim will result in:



| |  | a bona fide addition to contract value; and
|- |  | -------------------------------------------

| |  | revenues can be reliably estimated.
|- |  | -----------------------------------

These two
conditions are satisfied when:



| |  | the contract or other evidence provides a legal basis for the unapproved change order or claim or a legal opinion is obtained providing a reasonable basis to
support the unapproved change order or claim;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | additional costs incurred were caused by unforeseen circumstances and are not the result of deficiencies in the Companys performance;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------

| |  | costs associated with the unapproved change order or claim are identifiable and reasonable in view of work performed; and
|- |  | -------------------------------------------------------------------------------------------------------------------------

| |  | evidence supporting the unapproved change order or claim is objective and verifiable.
|- |  | -------------------------------------------------------------------------------------

This can lead to a situation where costs are recognized in one period and revenue is recognized when customer agreement is obtained or claim resolution occurs,
which can be in subsequent periods. Historical claim recoveries should not be considered indicative of future claim recoveries.

The Companys long
term contracts typically allow its customers to unilaterally reduce or eliminate the scope of the work as contracted without cause. These long term contracts represent higher risk due to uncertainty of total contract value and estimated costs to
complete; therefore, potentially impacting revenue recognition in future periods.

A contract is regarded as substantially completed when remaining costs
and potential risks are insignificant in amount.

Revenue recognition from equipment rentals occurs when there is a written arrangement in the form of a
contract or purchase order with the customer, a fixed or determinable sales price is established with the customer, performance



North American Energy Partners
Inc.Notes to Consolidated Financial Statements9



---



requirements are achieved, and ultimate collection of the revenue is reasonably assured. Equipment rental revenue is recognized as performance requirements are achieved in accordance with the
terms of the relevant agreement with the customer, either at a monthly fixed rate or on a usage basis dependent on the number of hours that the equipment is used.

d) Balance sheet classifications

Included in current assets
and liabilities are amounts receivable and payable under construction contracts (principally holdbacks) that may extend beyond one year. A one-year time period is used as the basis for classifying all other current assets and liabilities.

e) Cash and cash equivalents

Cash and cash
equivalents include cash on hand, bank balances net of outstanding cheques and short-term investments with maturities of three months or less when purchased.

f) Accounts receivable and unbilled revenue

Accounts
receivable in the accompanying Consolidated Balance Sheets are primarily comprised of amounts billed to clients for services already provided, but which have not yet been collected. Unbilled revenue represents revenue recognized in advance of
amounts invoiced.

g) Billings in excess of costs incurred and estimated earnings on uncompleted contracts

Billings in excess of costs incurred and estimated earnings on uncompleted contracts represent amounts invoiced in excess of revenue recognized.

h) Allowance for doubtful accounts

The Company evaluates the
probability of collection of accounts receivable and records an allowance for doubtful accounts, which reduces accounts receivable to the amount management reasonably believes will be collected. In determining the amount of the allowance, the
following factors are considered: the length of time the receivable has been outstanding, specific knowledge of each customers financial condition, and historical experience.

i) Inventories

Inventories are carried at the lower of
weighted average cost and market, and consist primarily of spare parts and tires.

j) Property, plant and equipment

Property, plant and equipment are recorded at cost. Major components of heavy construction equipment in use such as engines and transmissions are recorded
separately. Equipment under capital lease is recorded at the present value of minimum lease payments at the inception of the lease. Depreciation is not recorded until an asset is available for use. Depreciation for each category is calculated based
on the cost, net of the estimated residual value, over the estimated useful life of the assets on the following bases and annual rates:



|                              |  |                   |  |                                                     
|----------------------------- |  | ----------------- |  | ----------------------------------------------------
|Assets                        |  | Basis             |  | Rate                                                
|Heavy equipment               |  | Straight-line     |  | Operating hours                                     
|Major component parts in use  |  | Straight-line     |  | Operating hours                                     
|Other equipment               |  | Straight-line     |  | 5  10 years                                        
|Licensed motor vehicles       |  | Declining balance |  | 30%                                                 
|Office and computer equipment |  | Straight-line     |  | 4 years                                             
|Buildings                     |  | Straight-line     |  | 10 years                                            
|Leasehold improvements        |  | Straight-line     |  | Over shorter of estimated useful life and lease term
|Assets under capital lease    |  | Declining balance |  | Over life of lease                                  
|                              |  |                   |  |                                                     

The costs for periodic repairs and maintenance are expensed to the extent the
expenditures serve only to restore the assets to their normal operating condition without enhancing their service potential or extending their useful lives.

k) Capitalized interest

The Company capitalizes interest
incurred on debt during the construction of assets for the Companys own use. The capitalization period covers the duration of the activities required to get the asset ready for its intended use, provided that expenditures for the asset have
been made and interest cost incurred. Interest capitalization continues as long as those activities and the incurrence of interest cost continue. The capitalized interest is amortized at the same rate as the respective asset.

l) Goodwill

Goodwill is an asset representing the future
economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized but instead is tested for impairment annually or more frequently if events or
changes in circumstances indicate that it may be impaired. Goodwill is assigned, as of the date of the business combination, to reporting units that are expected to benefit from the business combination. The impairment test is carried out in two
steps. In the first step, the carrying amount of the



10Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



reporting unit, including goodwill, is compared to its fair value. When the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be
impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case, the implied fair value of the reporting units goodwill,
determined in the same manner as the value of goodwill is determined in a business combination, is compared with its carrying amount to measure the amount of the impairment loss, if any.

The Company performs its annual goodwill assessment on October 1 of each year and when a triggering event occurs between annual impairment tests.

m) Intangible assets

Intangible assets include:



| |  | customer contracts in process and related relationships, which are being amortized over the remaining lives of the related contracts and relationships;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | trade names, which are being amortized on a straight-line basis over their estimated useful lives of five and ten years;
|- |  | ------------------------------------------------------------------------------------------------------------------------

| |  | non-competition agreements, which are being amortized on a straight-line basis between the three and five-year terms of the respective agreements; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | capitalized computer software and development costs.
|- |  | ----------------------------------------------------

The Company expenses or capitalizes costs associated with the development of internal-use software as follows:

Preliminary project stage: Both internal and external costs incurred during this stage are expensed as incurred.

Application development stage: Both internal and external costs incurred to purchase and develop computer software are capitalized after the preliminary
project stage is completed and management authorizes the computer software project. However, training costs and the process of data conversion from the old system to the new system, which includes purging or cleansing of existing data,
reconciliation or balancing of old data to the converted data in the new system, are expensed as incurred.

Post implementation/operation stage:
All training costs and maintenance costs incurred during this stage are expensed as incurred.

Costs of upgrades and enhancements are capitalized if the
expenditures will result in adding functionality to the software. Capitalized software costs are depreciated using the straight-line method over the estimated useful life of the related software, which may be up to four years.

n) Impairment of long-lived assets

Long-lived assets or
asset groups held and used including plant, equipment and identifiable intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of an asset or group of assets is less than its carrying amount, it is considered to be impaired. The Company measures the
impairment loss as the amount by which the carrying amount of the asset or group of assets exceeds its fair value, which is charged to depreciation expense. In determining whether an impairment exists, the Company makes assumptions about the future
cash flows expected from the use of its long-lived assets, such as: applicable industry performance and prospects; general business and economic conditions that prevail and are expected to prevail; expected growth; maintaining its customer base;
and, achieving cost reductions. There can be no assurance that expected future cash flows will be realized, or will be sufficient to recover the carrying amount of long-lived assets. Furthermore, the process of determining fair values is subjective
and requires management to exercise judgment in making assumptions about future results, including revenue and cash flow projections and discount rates.

o) Assets held for sale

Long-lived assets are classified as
held for sale when certain criteria are met, which include:



| |  | Management, having the authority to approve the action, commits to a plan to sell the assets;
|- |  | ---------------------------------------------------------------------------------------------

| |  | the assets are available for immediate sale in their present condition;
|- |  | -----------------------------------------------------------------------

| |  | an active program to locate buyers and other actions to sell the assets have been initiated;
|- |  | --------------------------------------------------------------------------------------------

| |  | the sale of the assets is probable and their transfer is expected to qualify for recognition as a completed sale within one year;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------

| |  | the assets are being actively marketed at reasonable prices in relation to their fair value; and
|- |  | ------------------------------------------------------------------------------------------------

| |  | it is unlikely that significant changes will be made to the plan to sell the assets or that the plan will be withdrawn.
|- |  | -----------------------------------------------------------------------------------------------------------------------

Assets to be disposed of by sale are reported at the lower of their carrying amount or fair value less costs to sell and are disclosed separately on the
Consolidated Balance Sheets. These assets are not depreciated.

p) Asset retirement obligations

Asset retirement obligations are legal obligations associated with the retirement of property, plant and equipment that result from their acquisition, lease,
construction, development or normal operations. The Company recognizes its contractual obligations for the retirement of certain tangible long-lived assets. The fair value of a liability for an asset



North American Energy Partners
Inc.Notes to Consolidated Financial Statements11



---



retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of a liability for an asset retirement obligation is
the amount at which that liability could be settled in a current transaction between willing parties, that is, other than in a forced or liquidation transaction and, in the absence of observable market transactions, is determined as the present
value of expected cash flows. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and then amortized using a systematic and rational method over its estimated useful life. In subsequent
reporting periods, the liability is adjusted for the passage of time through an accretion charge and any changes in the amount or timing of the underlying future cash flows are recognized as an additional asset retirement cost.

q) Foreign currency translation

The functional currency of
the Company is Canadian Dollars. Transactions denominated in foreign currencies are recorded at the rate of exchange on the transaction date. Monetary assets and liabilities, denominated in foreign currencies, are translated into Canadian Dollars at
the rate of exchange prevailing at the balance sheet date. Foreign exchange gains and losses are included in the determination of earnings.

r) Fair
value measurement

Financial instruments are categorized using a valuation hierarchy for disclosure of the inputs used to measure fair value, which
prioritizes the inputs into three broad levels. Fair value of financial assets and financial liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Financial assets and
financial liabilities in Level 2 include valuations using inputs based on observable market data, either directly or indirectly other than the quoted prices. Level 3 valuations are based on inputs that are not based on observable market data. The
classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

s) Derivative financial instruments

The Company uses
derivative financial instruments to manage financial risks from fluctuations in exchange rates and interest rates. These instruments include cross-currency and interest rate swap agreements as well as embedded price escalation features in revenue
and supplier contracts. All such instruments are only used for risk management purposes. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. Derivative financial instruments are subject to
standard credit terms and conditions, financial controls, management and risk monitoring procedures. These derivative financial instruments are not designated as hedges for accounting purposes and are recorded at fair value with realized and
unrealized gains and losses recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss).

t) Income taxes

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are
recognized for the deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in
the period of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not (greater than 50%) of being sustained. Changes in recognition or measurement are reflected in the period in which the
change in judgement occurs. The Company accrues interest and penalties for uncertain tax positions in the period in which these uncertainties are identified. Interest and penalties are included in Other income in the Consolidated
Statements of Operations and Comprehensive Income (Loss). A valuation allowance is recorded against any deferred tax asset if it is more likely than not that the asset will not be realized.

u) Stock-based compensation

The Company accounts for all
stock-based compensation payments that are settled by the issuance of equity instruments at fair value. Compensation cost is measured using the Black-Scholes model at the grant date and is expensed on a straight-line basis over the awards
vesting period, with a corresponding increase to additional paid-in capital. Upon exercise of a stock option, share capital is recorded at the sum of proceeds received and the related amount of additional paid-in capital.

The Company has a Deferred Performance Share Unit (DPSU) plan, which is described in note 30(b). This compensation plan is settled, at the
Companys option, either by the issuance of equity instruments or by cash payment. Compensation cost is measured using the Black-Scholes model at the grant date and is expensed on a straight-line basis over the awards vesting period, with
a corresponding increase to additional paid-in capital. The vesting of awards under the DPSU is contingent upon certain performance criteria being achieved. The fair value of each share option grant under the DPSU plan assumes that the relevant
performance criteria will be achieved and compensation cost is recorded to the extent that vesting of the award is considered probable. When it is determined that such criteria are not probable of being achieved, no compensation cost is recognized
and any previously recognized compensation cost is reversed.



12Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The Company has a Restricted Share Unit
(RSU) plan which is described in note 30(c). RSUs will be granted effective April 1 of each fiscal year with respect to services to be provided in that fiscal year and the following two fiscal years. The RSUs vest at the end of a
three-year term. The Company classifies RSUs as a liability as the Company has the ability and intent to settle the awards in cash. The compensation expense is calculated based on the fair value of each RSU as determined by the number of RSUs vested
and the closing value of the Companys common shares on each period end date.

The Company has a Directors Deferred Stock Unit
(DDSU) plan, which is described in note 30(d). The DDSU plan enables directors to receive all or a portion of their fee for that fiscal year in the form of deferred stock units. The deferred stock units are settled in cash and are
classified as a liability on the Consolidated Balance Sheets. The measurement of the liability and compensation costs for these awards is based on the fair value of the award and is recorded as a charge to operating income over the vesting period of
the award. Subsequent changes in the Companys payment obligation after vesting of the award and prior to the settlement date are recorded as a charge to operating income in the period such changes occur.

v) Net income (loss) per share

Basic net income (loss) per
share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the year (see note 21(c)). Diluted per share amounts are calculated using the treasury stock method. The treasury
stock method increases the diluted weighted average shares outstanding to include additional shares from the assumed exercise of stock options, if dilutive. The number of additional shares is calculated by assuming outstanding in-the-money stock
options were exercised and the proceeds from such exercises, including any unamortized stock-based compensation cost, were used to acquire shares of common stock at the average market price during the year.

w) Leases

Leases entered into by the Company in which
substantially all the benefits and risks of ownership transferred to the Company are recorded as obligations under capital leases, and under the corresponding category of property, plant and equipment. Obligations under capital leases reflect the
present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments net of imputed interest. All other leases are classified as operating leases and leasing costs, including any rent holidays,
leasehold incentives, and rent concessions, are amortized on a straight line basis over the lease term.

x) Deferred financing costs

Underwriting, legal and other direct costs incurred in connection with the issuance of debt not measured under the fair value option is presented as deferred
financing costs. The deferred financing costs related to the senior notes and the revolving and term loan facilities are amortized over the term of the related debt using the effective interest method.

y) Investments in unconsolidated joint ventures or affiliates

Investments in unconsolidated joint ventures or affiliates over which the Company has significant influence including the Companys investment in Noramac
Ventures Inc. are accounted for under the equity method of accounting, whereby the investment is carried at the cost of acquisition, including subsequent capital contributions and loans from the Company, plus the Companys equity in
undistributed earnings or losses since acquisition. Investments in unconsolidated joint ventures are included as investment in and advances to unconsolidated joint venture in the Companys Consolidated Balance Sheets.

z) Business combinations

The Company accounts for all
business combinations using the acquisition method. Acquisition related costs which include finders fees, advisory, legal, accounting, valuation, other professional or consulting fees, and administrative costs are expensed as incurred.

aa) Adjustments related to prior year financial statements

The financial statements for fiscal 2009 and fiscal 2008 as initially reconciled to U.S. GAAP have been amended to correct the following errors identified during
the preparation of the Companys 2010 financial statements under U.S. GAAP:



|(i) | Adoption of CICA Handbook Section 3031, Inventories. The Company identified an error related to the adoption of Canadian Handbook Section 3031,
Inventories in fiscal 2009. The change in accounting policy was accounted for on a retrospective basis, without restatement of prior periods under Canadian GAAP resulting in a decrease to deficit of $991, net of taxes of $392, to reverse
a tire impairment recorded in fiscal 2008. This decrease in deficit should have been adjusted for in the reconciliation to U.S. GAAP as the tire impairment should not have been recorded in fiscal 2008 under U.S. GAAP. As a result of this error, net
income under U.S. GAAP for fiscal 2008 increased by $991 and the deficit under U.S. GAAP as of March 31, 2008 decreased by $991;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | Reclassification of accrued liabilities. The financial statements for fiscal 2009 have been amended to correct a classification error with respect to accrued
liabilities identified during the preparation of the Companys fiscal 2010 consolidated financial statements. Certain operating lease agreements provide a maximum hourly usage limit,
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



North American Energy Partners
Inc.Notes to Consolidated Financial Statements13



---



| | above which the Company will be required to pay for the over hour usage. These contingent rentals are recognized when payment is considered probable and are due at the end of the lease
term. The Company has historically classified the contingent rentals as a current liability; however, certain of the amounts are due beyond one year from the balance sheet date. In the current year, the Company has reclassified amounts due
beyond one year, from the balance sheet date, as a long term liability and has reclassified comparative figures accordingly. The amount reclassified on the Consolidated Balance Sheet was $7,134 as at March 31, 2009;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | Buy-out of leased assets. The financial statements for fiscal 2008 have been amended under U.S. GAAP to correct an error related to the method of accounting for an incentive at
the time of buying a previously leased asset, which was identified during the preparation of the Companys fiscal 2010 consolidated financial statements. When an asset is leased under an operating lease agreement, as stated in the paragraph
above, contingent rentals are recognized when payment is considered probable and are due at the end of the lease term. The Company can buy the asset at the end of the lease term at a pre-determined market price at which point the liability is
extinguished since the lease agreement is cancelled. The Company has been traditionally extinguishing the liability for such lease buyouts by reducing equipment costs related to leased equipment, instead of considering the extinguishment of the
liability as an incentive to purchase the asset and therefore reducing the cost of the asset. The correction of this error increased Equipment costs by $2,700, reduced Depreciation by $120, reduced Deferred income
taxes by $774 and reduced Net income and comprehensive income for the year by $1,806 from the amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income for the year ended March 31, 2008.
It also reduced Property, plant and equipment by $2,580, reduced long term Deferred tax liabilities by $774 and increased Deficit for the year by $1,806 from the amounts originally reported in the Consolidated
Balance Sheet as at March 31, 2008. The financial statements for fiscal 2009 have also been amended under U.S. GAAP to correct an error related to the method of accounting for an incentive at time of buying a previously leased asset, which was
identified during the preparation of the Companys fiscal 2010 consolidated financial statements as stated above. The correction of this error increased Equipment costs by $6,600, reduced Depreciation by $600, reduced
Deferred income taxes by $1,800 and increased Net loss and comprehensive loss for the year by $4,200 from the amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the
year ended March 31, 2009. It also reduced Property, plant and equipment by $8,580, reduced long term Deferred tax liabilities by $2,574 and increased Deficit for the year by $6,006 from the amounts
originally reported in the Consolidated Balance Sheet as at March 31, 2009.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iv) | Valuation of derivative financial instruments. The financial statements for fiscal 2009 have also been amended under U.S. GAAP to correct an error related to the determination of
the fair value of the cross-currency and interest rate swap liabilities (collectively, the swap liability) which was identified on settlement of the swap liability on April 8, 2010. The Company recorded the fair value of the swap
liability and in addition recorded accrued interest on the swap liability. This resulted in the swap liability being misstated and the changes in the fair value of the swap liability being misstated by the change in the amount of the accrued
interest at each reporting period from March 31, 2009. The periods before March 31, 2009 were not materially impacted because prior to February 2, 2009, the U.S. Dollar interest rate swap was still in place (note 24(c)(ii)), and
therefore the net accrued interest payable under the swap liability was not material. The error increased Realized and unrealized gain on derivative financial instruments by $7,514, increased income tax expense by $1,676 and reduced net
loss by $5,838 from amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income (loss) for the year ended March 31, 2009. It also reduced Derivative financial instruments by $7,514, increased
long term Deferred tax liabilities by $1,676 and reduced Deficit by $5,838 in the Consolidated Balance Sheet as at March 31, 2009.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The impact of the above corrections under U.S. GAAP on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended March 31,
2009 and March 31, 2008 are as follows:



|                                                                 |  |                       |   |  |             |   |  |            |  
|---------------------------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ---------- | -
|For the year ended March 31, 2009                                |  | As previouslyreported |   |  | Adjustments |   |  | As amended |  
|Equipment costs                                                  |  | $210,520              |   |  | $6,600      |   |  | $217,120   |  
|Depreciation                                                     |  | 36,989                |   |  | (600        | ) |  | 36,389     |  
|Realized and unrealized gain on derivative financial instruments |  | $(29,736              | ) |  | $(7,514     | ) |  | $(37,250   | )
|Deferred income taxes                                            |  | 9,211                 |   |  | (124        | ) |  | 9,087      |  
|Net loss and comprehensive loss for the year                     |  | (137,042              | ) |  | 1,638       |   |  | (135,404   | )
|Deficit, end of year                                             |  | (157,937              | ) |  | (168        | ) |  | (158,105   | )
|Net loss per share  basic                                       |  | $(3.80                | ) |  | $0.04       |   |  | $(3.76     | )
|Net loss per share  diluted                                     |  | $(3.80                | ) |  | $0.04       |   |  | $(3.76     | )
|                                                                 |  |                       |   |  |             |   |  |            |  



14Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



|                                                 |  |                       |   |  |             |   |  |            |  
|------------------------------------------------ |  | --------------------- | - |  | ----------- | - |  | ---------- | -
|For the year ended March 31, 2008                |  | As previouslyreported |   |  | Adjustments |   |  | As amended |  
|Equipment costs                                  |  | $174,873              |   |  | $1,317      |   |  | $176,190   |  
|Depreciation                                     |  | 35,840                |   |  | (120        | ) |  | 35,720     |  
|Deferred income taxes                            |  | 17,418                |   |  | (382        | ) |  | 17,036     |  
|Net income and comprehensive income for the year |  | 42,349                |   |  | (815        | ) |  | 41,534     |  
|Deficit, end of year                             |  | (21,886               | ) |  | (815        | ) |  | (22,701    | )
|Net income per share  basic                     |  | $1.18                 |   |  | $(0.02      | ) |  | $1.16      |  
|Net income per share  diluted                   |  | $1.15                 |   |  | $(0.02      | ) |  | $1.13      |  
|                                                 |  |                       |   |  |             |   |  |            |  

The impact of the above corrections under U.S. GAAP on the Consolidated Balance Sheets as at March 31, 2009 is as follows:



|                                 |  |                       |   |  |             |   |  |            |  
|-------------------------------- |  | --------------------- | - |  | ----------- | - |  | ---------- | -
|March 31, 2009                   |  | As previouslyreported |   |  | Adjustments |   |  | As amended |  
|Property, plant and equipment    |  | $324,695              |   |  | $(8,580     | ) |  | $316,115   |  
|Accrued liabilities              |  | 52,135                |   |  | (7,134      | ) |  | 45,001     |  
|Long term accrued liabilities    |  |                      |   |  | 7,134       |   |  | 7,134      |  
|Derivative financial instruments |  | 50,562                |   |  | (7,514      | ) |  | 43,048     |  
|Deferred tax liabilities         |  | 31,643                |   |  | (898        | ) |  | 30,745     |  
|Deficit, end of period           |  | (157,937              | ) |  | (168        | ) |  | (158,105   | )
|                                 |  |                       |   |  |             |   |  |            |  

The impact of the above corrections under U.S. GAAP on the Consolidated Statements of Cash Flows for the years ended March 31,
2009 and March 31, 2008 are as follows:



|                                                                           |  |                       |   |  |             |   |  |            |  
|-------------------------------------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ---------- | -
|For the year ended March 31, 2009                                          |  | As previouslyreported |   |  | Adjustments |   |  | As amended |  
|Net loss for the year                                                      |  | $(137,042             | ) |  | $1,638      |   |  | $(135,404  | )
|Depreciation                                                               |  | 36,989                |   |  | (600        | ) |  | 36,389     |  
|Unrealized gain on derivative financial instruments measured at fair value |  | (32,407               | ) |  | (7,514      | ) |  | (39,921    | )
|Deferred income taxes                                                      |  | 9,211                 |   |  | (124        | ) |  | 9,087      |  
|Cash flow from operating activities                                        |  | 157,785               |   |  | (6,600      | ) |  | 151,185    |  
|Purchase of property, plant and equipment                                  |  | (91,037               | ) |  | 6,600       |   |  | (84,437    | )
|Cash flow from investing activities                                        |  | (85,315               | ) |  | 6,600       |   |  | (78,715    | )
|                                                                           |  |                       |   |  |             |   |  |            |  



|                                               |  |                       |   |  |             |   |  |            |  
|---------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ---------- | -
|For the year ended March 31, 2008              |  | As previouslyreported |   |  | Adjustments |   |  | As amended |  
|Net income for the year                        |  | $42,349               |   |  | $(815       | ) |  | $41,534    |  
|Depreciation                                   |  | 35,840                |   |  | (120        | ) |  | 35,720     |  
|Deferred income taxes                          |  | 17,418                |   |  | (382        | ) |  | 17,036     |  
|Write-down of other assets to replacement cost |  | 1,383                 |   |  | (1,383      | ) |  | 0          |  
|Cash flow from operating activities            |  | 97,497                |   |  | (2,700      | ) |  | 94,797     |  
|Purchase of property, plant and equipment      |  | (55,505               | ) |  | 2,700       |   |  | (52,805    | )
|Cash flow from investing activities            |  | (48,632               | ) |  | 2,700       |   |  | (45,932    | )
|                                               |  |                       |   |  |             |   |  |            |  

bb) United States accounting pronouncements recently adopted

i) The FASB accounting standards codification and the hierarchy of generally accepted accounting principles

In June 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (ASC) 105. The ASC amended the hierarchy of
generally accepted accounting principles (GAAP) such that the ASC became the single source of authoritative nongovernmental U.S. GAAP, except for SEC rules and interpretative releases which, for the Company, are also authoritative U.S. GAAP. The ASC
did not change current U.S. GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents
were superseded and all other accounting literature not included in the ASC is considered non-authoritative. The ASC identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of
financial statements in accordance with U.S. GAAP. The Company adopted this standard during the quarter ended September 30, 2009.

ii) Fair value
measurements

In September 2006, the FASB issued an accounting standard codified in ASC 820, Fair Value Measurements and
Disclosures. This standard established a single definition of fair value and a framework for measuring fair value, set out a fair value hierarchy to be used to classify the source of information used in fair value measurements, and required
disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. This standard applies under other accounting standards that require or permit fair value measurements. One of the amendments deferred the



North American Energy Partners
Inc.Notes to Consolidated Financial Statements15



---



effective date for one year relative to nonfinancial assets and liabilities that are measured at fair value, but are recognized or disclosed at fair value on a nonrecurring basis. This deferral
applied to such items as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) or nonfinancial long-lived asset groups measured at fair value for an
impairment assessment. These remaining aspects of the fair value measurement standard were adopted by the Company prospectively beginning April 1, 2009. Refer to Note 24(a) for additional disclosures of assets and liabilities that are measured
at fair value on a non-recurring basis as a result of this adoption.

iii) Business combinations

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS 141(R)), and, in April 2009, issued FAS 141 (R)-1,
Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, to amend and clarify SFAS No. 141(R), Business Combinations, now part of ASC 805, Business
Combinations. Effective for the Company beginning on April 1, 2009, the standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any non-controlling interest in the acquiree, and any goodwill and establishes disclosure requirements that enable users of the Companys financial statements to evaluate the nature and financial effects of the business
combination. This new standard was applied to the acquisition of DF Investments Limited and its subsidiary Drillco Foundation Co. Ltd. (note 5(a)).

iv) Non-controlling interests in consolidated financial statements

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements  An Amendment of ARB No. 51
(SFAS 160), which is now a part of ASC 810. The amendments to ASC 810 are effective for the fiscal year beginning April 1, 2009 and changes the accounting and reporting for ownership interests in subsidiaries held by parties other
than the parent. These non-controlling interests are to be presented in the consolidated balance sheet within equity but separate from the parents equity. The amount of consolidated net income attributable to the parent and to the
non-controlling interest is to be clearly identified and presented on the face of the consolidated statement of operations. In addition, this ASC establishes standards for a change in a parents ownership interest in a subsidiary and the
valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The ASC also establishes reporting requirements for providing sufficient disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. The Company prospectively adopted this ASC effective April 1, 2009. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

v) Determination of the useful life of intangible assets

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the list of factors an
entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. The guidance, now part of ASC 350,
Intangibles  Goodwill and Others, and ASC 275, Risks and Uncertainties, applies to (i) intangible assets that are acquired individually or with a group of other assets and (ii) intangible assets acquired in
both business combinations and asset acquisitions. Entities estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the absence of historical
experience, must consider assumptions that market participants would use about renewal or extension. The Company adopted this standard effective April 1, 2009. The adoption of this standard did not have a material impact on the Companys
consolidated financial statements.

vi) Equity method investment accounting considerations

In November 2008, the FASB issued EITF 08-06, Equity Method Investment Accounting Considerations, now part of ASC 323, Investments  Equity
Method and Joint Ventures, which clarifies the accounting for certain transactions and impairment considerations involving equity method investments. The intent is to provide guidance on: (i) determining the initial measurement of an
equity method investment, (ii) recognizing other-than-temporary impairments of an equity method investment and (iii) accounting for an equity method investees issuance of shares. The Company adopted this standard effective
April 1, 2009. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

vii)
Determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly

In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly. The guidance, now part of ASC 820, Fair Value Measurements and Disclosures, provides additional guidance for estimating fair value when the volume and level of activity
for the asset or liability have significantly decreased. It also includes guidance on identifying circumstances that indicate a transaction is not orderly. The Company adopted this standard effective April 1, 2009. The adoption of this standard did
not have a material impact on the Companys consolidated financial statements.



16Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



viii) Subsequent events

In May 2009, the FASB issued ASC 855, Subsequent Events (formerly SFAS No. 165 Subsequent Events) which requires SEC
filers to evaluate subsequent events through the date the financial statements are issued. In February 2010, the FASB issued ASU 2010-09, Amendments to Certain Recognition and Disclosure Requirements, which amended the guidance in ASC
855 to remove the requirement to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The adoption of this guidance did not have a material impact on the Companys
consolidated financial statements.

ix) Measuring liabilities at fair value

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies
should measure liabilities at fair value under ASC 820, Fair Value Measurements and Disclosures. The ASU clarifies that the quoted price for an identical liability should be used; however, if such information is not available, an entity
may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also
indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical
liability traded as an asset may be considered Level 1 fair value measurements. The Company adopted this ASU effective October 1, 2009. The adoption of this standard did not have a material impact on the Companys consolidated financial
statements.

x) Accounting and reporting for decreases in ownership of a subsidiary

In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810)  Accounting and Reporting for Decreases in Ownership of a Subsidiary  A
Scope Clarification. The ASU clarifies that the scope of the decrease in ownership provisions included in ASC 810, Consolidations and related guidance applies to: (i) a subsidiary or a group of assets that is a business or a
non-profit activity; (ii) a subsidiary that is a business or a non-profit activity that is transferred to an equity method investee or a joint venture; and (iii) an exchange of a group of assets that constitutes a business or non-profit
activity for a non-controlling interest in an entity. The standard also clarifies that the decrease in ownership guidance does not apply to certain transactions, such as sales of in substance real estate or conveyance of oil and gas properties. The
Company adopted this standard effective April 1, 2009 in conjunction with adoption of the non-controlling interest standard. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

xi) Equity

In January 2010, the FASB issued ASU
No. 2010-01, Equity, which clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or shares with a potential limitation on the total amount of cash that all shareholders can
elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of earnings per share calculations. The Company adopted this ASU effective December 31, 2009. The
adoption of this standard did not have a material impact on the Companys consolidated financial statements.

xii) Improving disclosures about
fair value measurements

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures About Fair Value Measurements,
that amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of Levels 1 and Level 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and
settlements relative to Level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. The ASU is effective for the Company beginning on January 1, 2010, except for disclosures
about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which is effective for the Company beginning on April 1, 2011. The Company adopted this ASU effective January 1, 2010.
The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

cc) Recent United States
accounting pronouncements not yet adopted

i) Revenue recognition

In October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition: Multiple-Deliverable Revenue Arrangements, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit. The amendments establish a selling price hierarchy for determining the selling price of a deliverable. The
amendments also eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. For the Company, this ASU is
effective prospectively for revenue arrangements entered into or materially modified on or after April 1, 2011. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.



North American Energy Partners
Inc.Notes to Consolidated Financial Statements17



---



ii) Improvements to financial
reporting by enterprises involved with variable interest entities

In December 2009, the FASB issued ASU No. 2009-17, Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities, which amends ASC 810, Consolidation. The amendments give guidance and clarification of how to determine when a reporting entity should include the assets,
liabilities, non-controlling interests and results of activities of a variable interest entity in its consolidated financial statements. The amendments in this ASU are effective for the Company beginning on April 1, 2010. The Company is
currently evaluating the impact of this ASU on its consolidated financial statements.

iii) Embedded credit derivatives

In March 2010, the FASB issued ASU No. 2010-11, Scope Exception Related to Embedded Credit Derivatives, which clarifies that financial instruments
that contain embedded credit-derivative features related only to the transfer of credit risk in the form of subordination of one instrument to another are not subject to bifurcation and separate accounting. The scope exception only applies to an
embedded derivative feature that relates to subordination between tranches of debt issued by an entity and other features that relate to another type of risk must be evaluated for separation as an embedded derivative. The ASU is effective for the
Company beginning on July 1, 2010, with early adoption permitted in first fiscal quarter beginning after March 5, 2010. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

iv) Share based payment awards

In April 2010, the FASB
issued ASU No. 2010-13, Effect of Denominating the Exercise Price of Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades which clarifies that an employee share-based payment award
with an exercise price denominated in the currency of a market in which a substantial portion of the entitys equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition.
Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. This ASU will amend ASC 718, Compensation- Stock Compensation and it is effective for the Company beginning on April 1, 2011.
The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

4. Goodwill

In accordance with the Companys accounting policy, a goodwill impairment test is completed annually on October 1 of each fiscal year or whenever events
or changes in circumstances indicate that impairment may exist. The Company conducted its annual goodwill impairment test on October 1, 2009 and concluded that there was no goodwill impairment as the fair value of the Piling reporting unit
exceeded its carrying value. There have been no triggering events between October 1, 2009 and March 31, 2010.

For the year ended
March 31, 2009, the Company conducted its annual goodwill impairment test on October 1, 2008 and concluded that the fair value of each of its reporting units exceeded its carrying amount. However, at December 31, 2008 and at
March 31, 2009, based on adverse changes in the Companys principal markets, the decline in the Companys market capitalization and updated long term financial forecasts, which resulted in lower near-term and longer-term revenues and
cash flows for each reporting unit, the Company concluded that an interim test for impairment of goodwill was appropriate.

In performing the goodwill
assessment at December 31, 2008, the Company considered discounted cash flows, market capitalization and other factors, including observable market data to determine the fair value of each reporting unit. Although implied market comparable
valuation multiples and transaction premiums were considered in the analysis, there were significant differences in the products, services, and operating characteristics of the reporting units as compared to a set of selected comparable companies.
As a result, the Company relied primarily on the discounted cash flow method, using management projections for each reporting unit and risk-adjusted discount rates to determine fair value. Expected cash flows of each of the reporting units were
discounted using estimated discount rates ranging from 18.0% to 27.0% to calculate fair value and a terminal growth rate of 3.0% was used. Based on this analysis, the Company concluded that the carrying value of the Pipeline Operating Segment (also
a separate reporting unit) exceeded its fair value and the Company recorded an impairment charge of $32,753, calculated as the difference between the carrying value of goodwill of the Pipeline Operating Segment and the implied fair value of the
Pipeline Operating Segment of $nil at December 31, 2008.

During the three months ended March 31, 2009, the Company observed further
deterioration in industry conditions, global economic and credit conditions. The economic environment had impacted the Companys ability to forecast future demand and in turn resulted in the use of higher discounts rates, reflecting the risk
and uncertainty in the current market. Furthermore, the Company experienced a significant and sustained quarter over quarter decline in its operating results due primarily to challenging market conditions. As a result, the Company concluded that
events had occurred and circumstances had changed that required it to perform an additional interim goodwill impairment test for the Heavy Construction and Mining and Piling Operating Segments (also separate reporting units) as at March 31,
2009, which was corroborated by a combination of factors including a significant and sustained decline in the Companys market capitalization, which was significantly below its book value, and a deteriorating environment, which resulted in a
decline in expected future demand.



18Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



As part of the March 31, 2009
goodwill impairment test, the Company updated its discounted cash flow (DCF) analysis for the Heavy Construction and Mining and Piling reporting segments using estimated discount rates ranging from 22.0% to 32.0% and a decreased terminal
growth rate of 2.5% to calculate fair value. The Company also updated its forecasted cash flows. These updates were based on the economic volatility experienced during the three months ended March 31, 2009 and considered managements view
of economic conditions and trends, estimated future operating results, sector growth rates, anticipated future economic conditions and the Companys strategic alternatives to respond to these conditions. Although implied market comparable
valuation multiples and transaction premiums were considered in the analysis, there are significant differences in the products, services and operating characteristics of the reporting units as compared to a set of selected comparable companies. The
fair value utilizing the DCF model was determined to be reasonable when compared to the market capitalization at the end of the year plus a reasonable control premium. The process of determining fair value is subjective and requires management to
exercise a significant amount of judgment in determining future growth rates, discount and tax rates and other factors.

As a result of this analysis,
the Company concluded that the carrying value of the Heavy Construction and Mining and Piling reporting units exceeded their fair value and the Company recorded an impairment charge of $125,447 and $18,000 respectively, calculated as the difference
between the carrying value of goodwill of the Heavy Construction and Mining reporting unit of $125,447 and of the Piling reporting unit of $46,372 and the implied fair value of goodwill at March 31, 2009 of $nil for the Heavy Construction and
Mining reporting unit and $28,372 for the Piling reporting unit.

The implied fair value of goodwill was determined in the same manner as the value of
goodwill is determined in a business combination. The impairment charge is included in the caption Impairment of goodwill in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended March 31,
2009.

There was no goodwill impairment recorded for the years ended March 31, 2008 and March 31, 2010.

The change in goodwill during the years ended March 31, 2010 and 2009 are as follows:



|                                                                               |  |          |  
|------------------------------------------------------------------------------ |  | -------- | -
|Balance at March 31, 2008                                                      |  | $200,072 |  
|Impairment of goodwill (assigned to the Pipeline segment)                      |  | (32,753  | )
|Impairment of goodwill (assigned to the Heavy Construction and Mining segment) |  | (125,447 | )
|Impairment of goodwill (assigned to the Piling segment)                        |  | (18,000  | )
|                                                                               |  |          |  
|Balance at March 31, 2009                                                      |  | $23,872  |  
|Acquisition of goodwill (assigned to the Piling segment) (note 5(a))           |  | 1,239    |  
|                                                                               |  |          |  
|Balance at March 31, 2010                                                      |  | $25,111  |  
|                                                                               |  |          |  

5. Acquisitions

a)
Acquisitions in fiscal 2010

On August 1, 2009, the Company acquired all of the issued and outstanding shares of DF Investments Limited (the
holding company) and its subsidiary Drillco Foundation Co. Ltd., a piling company based in Milton, Ontario, for a consideration of $5,410. This acquisition gives the Company access to piling markets and customers in the Toronto area. The transaction
has been accounted for using the acquisition method with the results of operations included in the financial statements from the date of acquisition. The goodwill acquired is not deductible for tax purposes. The purchase price allocation is as
follows:



|                                          |  |        |  
|----------------------------------------- |  | ------ | -
|Accounts receivable                       |  | $4,101 |  
|Inventories                               |  | 59     |  
|Prepaid expenses and deposits             |  | 11     |  
|Property, plant and equipment             |  | 2,873  |  
|Land                                      |  | 281    |  
|Intangible assets                         |  | 547    |  
|Goodwill (assigned to the Piling segment) |  | 1,239  |  
|Accounts payable and accrued liabilities  |  | (2,211 | )
|Deferred tax liabilities                  |  | (838   | )
|Long term debt                            |  | (652   | )
|                                          |  |        |  
|                                          |  | $5,410 |  
|                                          |  |        |  

The amount of revenue and net loss since acquisition on August 1, 2009 included in the Consolidated Statements of Operations and
Comprehensive Income (Loss) for the year ended March 31, 2010 are $4,158 and $(2,287) respectively.



North American Energy Partners
Inc.Notes to Consolidated Financial Statements19



---



b) Acquisitions in fiscal 2009

The Company did not acquire any businesses in fiscal 2009.

c) Acquisitions in fiscal 2008

On May 1, 2007, the
Company acquired all of the assets of Active Auger Services 2001 Ltd., a piling company specializing in the design and installation of screw piles in north central Saskatchewan, for total cash consideration and acquisition costs of $1,581. The
transaction was accounted for using the purchase method with the results of operations included in the financial statements from the date of acquisition. The goodwill acquired is deductible for tax purposes. The purchase price allocation was as
follows:



|                                          |  |       
|----------------------------------------- |  | ------
|Net assets acquired at assigned values:   |  |       
|Plant and equipment                       |  | $700  
|Intangible assets                         |  | 201   
|Goodwill (assigned to the Piling segment) |  | 680   
|                                          |  |       
|                                          |  | $1,581
|                                          |  |       

6. Accounts receivable





|                                             |  |                |   |  |                |  
|-------------------------------------------- |  | -------------- | - |  | -------------- | -
|                                             |  | March 31, 2010 |   |  | March 31, 2009 |  
|Accounts receivable  trade                  |  | $103,067       |   |  | $67,123        |  
|Accounts receivable  holdbacks              |  | 3,899          |   |  | 9,376          |  
|Income and other taxes receivable            |  | 4,486          |   |  | 2,651          |  
|Accounts receivable  other                  |  | 2,123          |   |  | 1,770          |  
|Allowance for doubtful accounts (note 24(d)) |  | (1,691         | ) |  | (2,597         | )
|                                             |  |                |   |  |                |  
|                                             |  | $111,884       |   |  | $78,323        |  
|                                             |  |                |   |  |                |  

Accounts receivable  holdbacks represent amounts up to 10% under certain contracts that the customer is contractually entitled to
withhold until completion of the project or until certain project milestones are achieved.

7. Costs incurred and estimated earnings net of billings
on uncompleted contracts



|                                                               |  |                |   |  |                |  
|-------------------------------------------------------------- |  | -------------- | - |  | -------------- | -
|                                                               |  | March 31, 2010 |   |  | March 31, 2009 |  
|Costs incurred and estimated earnings on uncompleted contracts |  | $1,193,821     |   |  | $955,763       |  
|Less billings to date                                          |  | (1,110,733     | ) |  | (902,011       | )
|                                                               |  |                |   |  |                |  
|                                                               |  | $83,088        |   |  | $53,752        |  
|                                                               |  |                |   |  |                |  

Costs incurred and estimated earnings net of billings on uncompleted contracts is presented in the Consolidated Balance Sheets under
the following captions:



|                                                                                     |  |                |   |  |                |  
|------------------------------------------------------------------------------------ |  | -------------- | - |  | -------------- | -
|                                                                                     |  | March 31, 2010 |   |  | March 31, 2009 |  
|Unbilled revenue                                                                     |  | $84,702        |   |  | $55,907        |  
|Billings in excess of costs incurred and estimated earnings on uncompleted contracts |  | (1,614         | ) |  | (2,155         | )
|                                                                                     |  |                |   |  |                |  
|                                                                                     |  | $83,088        |   |  | $53,752        |  
|                                                                                     |  |                |   |  |                |  

8. Inventories



|                        |  |                |  |               
|----------------------- |  | -------------- |  | --------------
|                        |  | March 31, 2010 |  | March 31, 2009
|Spare tires             |  | $1,868         |  | $10,533       
|Job materials and other |  | 3,791          |  | 1,281         
|                        |  |                |  |               
|                        |  | $5,659         |  | $11,814       
|                        |  |                |  |               

9. Prepaid expenses and deposits

Current:



|                                     |  |                |  |               
|------------------------------------ |  | -------------- |  | --------------
|                                     |  | March 31, 2010 |  | March 31, 2009
|Prepaid insurance and property taxes |  | $1,203         |  | $1,535        
|Prepaid lease payments               |  | 5,678          |  | 3,246         
|                                     |  |                |  |               
|                                     |  | $6,881         |  | $4,781        
|                                     |  |                |  |               



20Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



Long term:



|                       |  |                |  |               
|---------------------- |  | -------------- |  | --------------
|                       |  | March 31, 2010 |  | March 31, 2009
|Prepaid lease payments |  | 4,005          |  | 3,504         
|                       |  |                |  |               

10. Assets held for sale

Equipment disposal decisions are made using an approach in which a target is set for each type of equipment. The target life is based on the manufacturers
recommendations and the Companys past experience in the various operating environments. Once a piece of equipment reaches its target life it is evaluated to determine if disposal is warranted based on its expected operating cost and
reliability in its current state. If the expected operating cost exceeds the average operating cost for the fleet, the unit is deemed ready for disposal. Also if the expected reliability is lower than the average reliability of the fleet, the unit
is deemed ready for disposal. If either of these conditions is met the unit is disposed. Expected operating costs and reliability are based on the past history of the unit and experience in the various operating environments. Assets held for sale
are sold on the Companys used equipment website and syndicated on third party equipment sale websites. If a sale is not realized after a reasonable length of time, the equipment will be sent to auction for disposal.

During the year ended March 31, 2010, impairments of assets held for sale amounting to $806 have been included in depreciation expense in the Consolidated
Statements of Operations and Comprehensive Income (Loss) (2009  $883; 2008  $1,564). The impairment charge is the amount by which the carrying value of the related assets exceeded their fair value less costs to sell. Included in
depreciation expense for the year ended March 31, 2010, is a loss on disposal of assets held for sale of $373 (2009  $24; 2008  $493) relating to the decision to dispose of heavy construction assets held by the Heavy
Construction & Mining segment.

11. Property, plant and equipment



|                              |  |          |  |                         |  |               
|----------------------------- |  | -------- |  | ----------------------- |  | --------------
|March 31, 2010                |  | Cost     |  | AccumulatedDepreciation |  | Net Book Value
|Heavy equipment               |  | $339,312 |  | $95,473                 |  | $243,839      
|Major component parts in use  |  | 33,452   |  | 8,297                   |  | 25,155        
|Other equipment               |  | 25,666   |  | 10,910                  |  | 14,756        
|Licensed motor vehicles       |  | 16,296   |  | 10,692                  |  | 5,604         
|Office and computer equipment |  | 9,746    |  | 3,786                   |  | 5,960         
|Buildings                     |  | 21,710   |  | 6,832                   |  | 14,878        
|Land                          |  | 281      |  |                        |  | 281           
|Leasehold improvements        |  | 9,314    |  | 2,960                   |  | 6,354         
|Assets under capital lease    |  | 24,304   |  | 12,388                  |  | 11,916        
|                              |  |          |  |                         |  |               
|                              |  | $480,081 |  | $151,338                |  | $328,743      
|                              |  |          |  |                         |  |               



|                              |  |          |  |                         |  |               
|----------------------------- |  | -------- |  | ----------------------- |  | --------------
|March 31, 2009                |  | Cost     |  | AccumulatedDepreciation |  | Net Book Value
|Heavy equipment               |  | $310,406 |  | $75,410                 |  | $234,996      
|Major component parts in use  |  | 25,187   |  | 2,535                   |  | 22,652        
|Other equipment               |  | 22,056   |  | 8,268                   |  | 13,788        
|Licensed motor vehicles       |  | 12,760   |  | 7,445                   |  | 5,315         
|Office and computer equipment |  | 6,759    |  | 3,459                   |  | 3,300         
|Buildings                     |  | 20,823   |  | 5,308                   |  | 15,515        
|Leasehold improvements        |  | 6,589    |  | 1,929                   |  | 4,660         
|Assets under capital lease    |  | 27,953   |  | 12,064                  |  | 15,889        
|                              |  |          |  |                         |  |               
|                              |  | $432,533 |  | $116,418                |  | $316,115      
|                              |  |          |  |                         |  |               

During the year ended March 31, 2010, additions to property, plant and
equipment included $1,523 of assets that were acquired by means of capital leases (2009  $8,863; 2008  $8,829). Depreciation of equipment under capital lease of $4,081 (2009  $5,138; 2008  $2,928) was included in depreciation
expense.

12. Intangible assets



|                                                         |  |         |  |                         |  |               
|-------------------------------------------------------- |  | ------- |  | ----------------------- |  | --------------
|March 31, 2010                                           |  | Cost    |  | AccumulatedAmortization |  | Net Book Value
|Customer contracts in progress and related relationships |  | $624    |  | $329                    |  | $295          
|Other intangible assets                                  |  | 915     |  | 531                     |  | 384           
|Internal-use software                                    |  | 10,721  |  | 3,731                   |  | 6,990         
|                                                         |  |         |  |                         |  |               
|                                                         |  | $12,260 |  | $4,591                  |  | $7,669        
|                                                         |  |         |  |                         |  |               



North American Energy Partners
Inc.Notes to Consolidated Financial Statements21



---



|                                                         |  |        |  |                         |  |               
|-------------------------------------------------------- |  | ------ |  | ----------------------- |  | --------------
|March 31, 2009                                           |  | Cost   |  | AccumulatedAmortization |  | Net Book Value
|Customer contracts in progress and related relationships |  | $340   |  | $260                    |  | $80           
|Other intangible assets                                  |  | 721    |  | 527                     |  | 194           
|Internal-use software                                    |  | 7,855  |  | 2,185                   |  | 5,670         
|                                                         |  |        |  |                         |  |               
|                                                         |  | $8,916 |  | $2,972                  |  | $5,944        
|                                                         |  |        |  |                         |  |               

During the year ended March 31, 2010, the Company capitalized $3,362 (2009
 $3,102) related to the development of internally developed computer software. Internal-use software with a cost of $496 and accumulated amortization of $288 were written off and the net book value of $208 was included in amortization of
intangible assets during the year ended March 31, 2010.

Amortization of intangible assets for the year ended March 31, 2010 was $1,719 (2009
 $1,501; 2008  $804).The estimated amortization expense for future years is as follows:



|                              |  |       
|----------------------------- |  | ------
|For the year ending March 31, |  |       
|2011                          |  | $2,720
|2012                          |  | 2,405 
|2013                          |  | 1,651 
|2014                          |  | 824   
|2015 and thereafter           |  | 69    
|                              |  |       
|                              |  | $7,669
|                              |  |       

During the year ended March 31, 2010, $547 in additions were made to
intangible assets as a result of the acquisition of DF Investments Limited and its subsidiary, Drillco Foundation Co. Ltd. (note 5(a)).

13. Deferred
financing costs



|                                     |  |         |  |                         |  |               
|------------------------------------ |  | ------- |  | ----------------------- |  | --------------
|March 31, 2010                       |  | Cost    |  | AccumulatedAmortization |  | Net Book Value
|Senior notes                         |  | $16,521 |  | $12,014                 |  | $4,507        
|Term Facility and Revolving Facility |  | 4,328   |  | 3,150                   |  | 1,178         
|9.125% debentures                    |  | 1,040   |  |                        |  | 1,040         
|                                     |  |         |  |                         |  |               
|                                     |  | $21,889 |  | $15,164                 |  | $6,725        
|                                     |  |         |  |                         |  |               



|                                     |  |         |  |                         |  |               
|------------------------------------ |  | ------- |  | ----------------------- |  | --------------
|March 31, 2009                       |  | Cost    |  | AccumulatedAmortization |  | Net Book Value
|Senior notes                         |  | $16,521 |  | $9,613                  |  | $6,908        
|Term Facility and Revolving Facility |  | 3,205   |  | 2,203                   |  | 1,002         
|                                     |  |         |  |                         |  |               
|                                     |  | $19,726 |  | $11,816                 |  | $7,910        
|                                     |  |         |  |                         |  |               

Amortization of deferred financing costs included in interest expense for the year
ended March 31, 2010 was $3,348 (2009  $2,970; 2008  $2,899).

During the year ended March 31, 2010, financing fees totalling
$1,123 (2009  $nil; 2008  $776) paid in connection with an amendment of the Revolving Facility (note 18(a)) were recorded as deferred financing costs.

During the year ended March 31, 2010, financing fees totalling $1,040 were incurred and accrued in connection with the 9.125% Debenture issuance subsequent to
year-end (note 33).

14. Investment in and advances to unconsolidated joint venture

The Company is engaged in one joint venture, Noramac Ventures Inc.. The joint venture is with Fort McKay Construction Ltd. and was formed for the
purpose of expanding the Companys market opportunities and establishing strategic alliances in Northern Alberta. The Company has a 50% proportionate interest in the Noramac Joint Venture.

As of March 31, 2010, the Companys investment in and advances to unconsolidated joint venture totaled $2,917 (March 31, 2009  $nil). Condensed
financial data as at and for the year ended March 31, 2010 is as follows:



|                      |  |               
|--------------------- |  | --------------
|                      |  | March 31, 2010
|Current assets        |  | $8,952        
|Long term assets      |  | 153           
|Current liabilities   |  | 3,271         
|Long term liabilities |  | 5,940         
|                      |  |               



22Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



|                                                   |  |       
|-------------------------------------------------- |  | ------
|Year ended March 31,                               |  | 2010  
|Gross revenues                                     |  | $8,774
|Gross profit                                       |  | 1,610 
|Net income                                         |  | 87    
|                                                   |  |       
|Equity in earnings of unconsolidated joint venture |  | $44   
|                                                   |  |       

15. Deferred lease inducements

Lease inducements applicable to lease contracts are deferred and amortized as a reduction of general and administrative costs on a straight-line basis over the
lease term, which includes the initial lease term and renewal periods only where renewal is determined to be reasonably assured.



|                                           |  |               |   |  |               |  
|------------------------------------------ |  | ------------- | - |  | ------------- | -
|                                           |  | March 31,2010 |   |  | March 31,2009 |  
|Balance, beginning of year                 |  | $836          |   |  | $941          |  
|Additions                                  |  | 32            |   |  |              |  
|Amortization of deferred lease inducements |  | (107          | ) |  | (105          | )
|                                           |  |               |   |  |               |  
|Balance, end of year                       |  | $761          |   |  | $836          |  
|                                           |  |               |   |  |               |  

16. Accrued liabilities

Current



|                                        |  |               |  |              
|--------------------------------------- |  | ------------- |  | -------------
|Current                                 |  | March 31,2010 |  | March 31,2009
|Accrued interest payable                |  | $14,725       |  | $16,022      
|Payroll liabilities                     |  | 21,741        |  | 15,083       
|Liabilities related to equipment leases |  | 4,720         |  | 5,047        
|Income and other taxes payable          |  | 6,005         |  | 8,849        
|                                        |  |               |  |              
|                                        |  | $47,191       |  | $45,001      
|                                        |  |               |  |              

Long term



|                                                  |  |                |  |               
|------------------------------------------------- |  | -------------- |  | --------------
|                                                  |  | March 31, 2010 |  | March 31, 2009
|Long term liabilities related to equipment leases |  | 14,943         |  | 7,134         
|                                                  |  |                |  |               

17. Capital lease obligations

The Companys capital leases primarily relate to licensed motor vehicles. The minimum lease payments due in each of the next five fiscal years are as follows:



|                                                                            |  |         |  
|--------------------------------------------------------------------------- |  | ------- | -
|2011                                                                        |  | $5,734  |  
|2012                                                                        |  | 5,209   |  
|2013                                                                        |  | 2,987   |  
|2014                                                                        |  | 462     |  
|2015                                                                        |  | 169     |  
|                                                                            |  |         |  
|Subtotal:                                                                   |  | $14,561 |  
|Less: amount representing interest  weighted average interest rate of 8.7% |  | (1,168  | )
|                                                                            |  |         |  
|Present value of minimum lease payments                                     |  | $13,393 |  
|Less: current portion                                                       |  | (5,053  | )
|                                                                            |  |         |  
|Long term portion                                                           |  | $8,340  |  
|                                                                            |  |         |  

18. Debt

a) Long term debt

On June 24, 2009, the Company entered into an amended and restated credit agreement which matures on June 8, 2011 to provide for
borrowings of up to $125.0 million under which revolving loans, term loans and letters of credit may be issued. This facility includes a $75.0 million Revolving Facility and a $50.0 million Term Facility. The Term Facility commitments were available
until August 31, 2009 and aggregate borrowings under this facility had to exceed $25.0 million. Any undrawn amount under the Term Facility, up to a maximum of $15.0 million, could be reallocated to the Revolving Facility. On August 31,
2009, the maximum undrawn portion of the Term Facility totaling $15.0 million was reallocated to the Revolving Facility resulting in Revolving Facility commitments of $90.0 million.

As of March 31, 2010, the Company had issued $10.4 million (March 31, 2009  $20.8 million) in letters of credit under the Revolving Facility to support
performance guarantees associated with customer contracts. The total credit



North American Energy Partners
Inc.Notes to Consolidated Financial Statements23



---



facility commitments are $118.4 million at March 31, 2010 and include the $90.0 million Revolving Facility and the outstanding borrowings of $28.4 million, (March 31, 2009  $nil) under
the Term Facility after mandatory principal repayments of $4.6 million in the year. The funds available under the Revolving Facility are reduced by any outstanding letters of credit. The Companys unused borrowing availability under the
Revolving Facility was $79.6 million at March 31, 2010.

Borrowings under the Revolving Facility may be repaid and borrowed from time to time at the
option of the Company. The Term Facility is fully utilized and requires quarterly principal repayments. At March 31, 2010, there were no borrowings under the Revolving Facility.

Beginning September 30, 2009, and at the end of each fiscal quarter thereafter, the Company must make quarterly repayments on the Term Facility of $1,518
through June 2011, with the balance due at that time. The credit facility bears interest at Canadian prime rate, U.S. Dollar Base Rate, Canadian bankers acceptance rate or London interbank offered rate (LIBOR) (all such terms as used or
defined in the credit facility), plus applicable margins. In each case, the applicable pricing margin depends on the Companys credit rating.

The
credit facility is secured by a first priority lien on substantially all of the Companys existing and after acquired property and contains certain restrictive covenants including, but not limited to, incurring additional debt, transferring or
selling assets, making investments including acquisitions or to pay dividends or redeem shares of capital stock. The Company is also required to meet certain financial covenants under the credit agreement and was in compliance with these covenants
at March 31, 2010.

Financing fees of $1,123 paid in connection with an amendment of the Revolving Facility was recorded during the year ended
March 31, 2010 (March 31, 2009  $nil, 2008  $776). These fees have been recorded as deferred financing costs (note 13).

During the year
ended March 31, 2010, the Company extinguished $652 of long term debt acquired through its August 1, 2009 acquisition of DF Investments Limited and its subsidiary Drillco Foundations Co. Ltd. (note 5(a)).

b) Senior notes



|                                                            |  |               |  |              
|----------------------------------------------------------- |  | ------------- |  | -------------
|                                                            |  | March 31,2010 |  | March 31,2009
|83/4% senior unsecured notes due 2011 ($U.S.)               |  | $200,000      |  | $200,000     
|Unrealized foreign exchange                                 |  | 3,120         |  | 52,040       
|Fair value of embedded early redemption option (note 24(a)) |  |              |  | 3,716        
|                                                            |  |               |  |              
|                                                            |  | $203,120      |  | $255,756     
|                                                            |  |               |  |              

The
83/4% senior notes were issued on November 26, 2003 in
the amount of U.S. $200.0 million (Canadian $263.0 million). These notes mature on December 1, 2011 with interest payable semi-annually on June 1 and December 1 of each year.

The
83/4% senior notes are unsecured senior obligations and rank
equally with all other existing and future unsecured senior debt and senior to any subordinated debt that may be issued by the Company or any of its subsidiaries. The notes are effectively subordinated to all secured debt to the extent of the
outstanding amount of such debt.

The
83/4% senior notes are redeemable at the option of the
Company, in whole or in part, at any time on or after December 1, 2009 at 100% of the principal amount plus interest accrued to the redemption date.

If a change of control occurs, the Company will be required to offer to purchase all or a portion of each holders
83/4% senior notes, at a purchase price in cash equal to 101%
of the principal amount of the notes offered for repurchase plus accrued interest to the date of purchase.

In March 2010, the
Company elected to redeem all the outstanding 83/4% senior
notes. In accordance with the terms of the 83/4% senior
notes, the Company will redeem them at 100% of the principal amount plus interest accrued to the redemption date of April 28, 2010. The Company financed the repayment of the
83/4% senior notes by issuing a new long term obligation
subsequent to year-end (note 33) and therefore; has continued to classify the
83/4% senior notes as a long term obligation.

19. Asset retirement obligation

The Company recorded an asset retirement obligation related to the future retirement of a facility on leased land. Accretion expense associated with this obligation
is included in equipment costs in the Consolidated Statements of Operations and Comprehensive Income (Loss).



24Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The following table presents a continuity
of the liability for the asset retirement obligation:



|                                                                          |  |      |  
|------------------------------------------------------------------------- |  | ---- | -
|Balance at March 31, 2008                                                 |  | $   |  
|Obligation relating to the future retirement of a facility on leased land |  | 231  |  
|Accretion expense                                                         |  | 155  |  
|                                                                          |  |      |  
|Balance at March 31, 2009                                                 |  | $386 |  
|Obligation relating to the future retirement of a facility on leased land |  | (31  | )
|Accretion expense                                                         |  | 5    |  
|                                                                          |  |      |  
|Balance at March 31, 2010                                                 |  | $360 |  
|                                                                          |  |      |  

At March 31, 2010, estimated undiscounted cash flows required to settle the obligation were $1,084. The credit adjusted risk-free
rate assumed in measuring the asset retirement obligation was 9.42%. The Company expects to settle this obligation in 2021.

20. Income taxes

Income tax provision (recovery) differs from the amount that would be computed by applying the Federal and Provincial statutory income tax rates to
income before income taxes. The reasons for the differences are as follows:



|                                                    |  |         |   |  |            |   |  |         |  
|--------------------------------------------------- |  | ------- | - |  | ---------- | - |  | ------- | -
|Year ended March 31,                                |  | 2010    |   |  | 2009       |   |  | 2008    |  
|Income (loss) before income taxes statutory         |  | $41,898 |   |  | $(120,771) |   |  | $58,650 |  
|Tax rate                                            |  | 28.91%  |   |  | 29.38%     |   |  | 31.47%  |  
|                                                    |  |         |   |  |            |   |  |         |  
|Expected provision (recovery) at statutory tax rate |  | $12,113 |   |  | $(35,483)  |   |  | $18,457 |  
|                                                    |  |         |   |  |            |   |  |         |  
|Decrease related to:                                |  |         |   |  |            |   |  |         |  
|Impact of enacted future statutory income tax rates |  | (673    | ) |  | (1,005     | ) |  | (1,287  | )
|Income tax adjustments and reassessments            |  | 1,442   |   |  |           |   |  |        |  
|Impairment of goodwill                              |  |        |   |  | 51,767     |   |  |        |  
|Other                                               |  | 797     |   |  | (646       | ) |  | (54     | )
|                                                    |  |         |   |  |            |   |  |         |  
|Income tax provision                                |  | $13,679 |   |  | $14,633    |   |  | $17,116 |  
|                                                    |  |         |   |  |            |   |  |         |  

Classified as:



|                      |  |         |  |         |  |        
|--------------------- |  | ------- |  | ------- |  | -------
|Year ended March 31,  |  | 2010    |  | 2009    |  | 2008   
|Current income taxes  |  | $3,803  |  | $5,546  |  | $80    
|Deferred income taxes |  | 9,876   |  | 9,087   |  | 17,036 
|                      |  |         |  |         |  |        
|                      |  | $13,679 |  | $14,633 |  | $17,116
|                      |  |         |  |         |  |        



|                                                     |  |                |  |               
|---------------------------------------------------- |  | -------------- |  | --------------
|                                                     |  | March 31, 2010 |  | March 31, 2009
|Deferred tax assets:                                 |  |                |  |               
|Non-capital losses carried forward                   |  | $2,205         |  | $2,867        
|Deferred financing costs                             |  | 12             |  |              
|Derivative financial instruments and senior notes    |  | 8,892          |  | 13,813        
|Billings in excess of costs on uncompleted contracts |  | 448            |  | 620           
|Capital lease obligations                            |  | 3,692          |  | 4,961         
|Intangible assets                                    |  | 104            |  |              
|Long term over hour accrual                          |  | 1,965          |  | 360           
|Deferred lease inducements                           |  | 199            |  | 214           
|Other                                                |  | 370            |  | 420           
|DSU/DPSU/RSU compensation costs                      |  | 894            |  | 105           
|                                                     |  |                |  |               
|                                                     |  | $18,781        |  | $23,360       
|                                                     |  |                |  |               



|                                                                         |  |                |  |               
|------------------------------------------------------------------------ |  | -------------- |  | --------------
|                                                                         |  | March 31, 2010 |  | March 31, 2009
|Deferred tax liabilities:                                                |  |                |  |               
|Unbilled revenue and uncertified revenue included in accounts receivable |  | $15,975        |  | $7,081        
|Assets held for sale                                                     |  | 233            |  | 794           
|Accounts receivable  holdbacks                                          |  | 1,083          |  | 2,696         
|Property, plant and equipment                                            |  | 31,234         |  | 30,856        
|Deferred financing costs                                                 |  |               |  | 950           
|Intangible assets                                                        |  |               |  | 12            
|                                                                         |  |                |  |               
|                                                                         |  | 48,525         |  | 42,389        
|                                                                         |  |                |  |               
|Net deferred income taxes                                                |  | $(29,744)      |  | $(19,029)     
|                                                                         |  |                |  |               



North American Energy Partners
Inc.Notes to Consolidated Financial Statements25



---



Classified as:



|                    |  |                |   |  |                |  
|------------------- |  | -------------- | - |  | -------------- | -
|                    |  | March 31, 2010 |   |  | March 31, 2009 |  
|Current asset       |  | $3,481         |   |  | $7,033         |  
|Long term asset     |  | 10,997         |   |  | 12,432         |  
|Current liability   |  | (16,781        | ) |  | (7,749         | )
|Long term liability |  | (27,441        | ) |  | (30,745        | )
|                    |  |                |   |  |                |  
|                    |  | $(29,744)      |   |  | $(19,029)      |  
|                    |  |                |   |  |                |  

The Company and its subsidiaries file income tax returns in the Canadian federal jurisdiction, and several provincial jurisdictions.
For years before 2006, the Company is no longer subject to Canadian federal or provincial examinations.

The Company has no unrecognized tax benefits as
at March 31, 2010 or March 31, 2009. At March 31, 2010, the Company has non-capital losses for income tax purposes of $7,913 which expire as follows and are expected to be fully used in 2011.



|     |  |       
|---- |  | ------
|2015 |  | $11   
|2026 |  | 3     
|2027 |  | 3,095 
|2029 |  | 464   
|2030 |  | 4,340 
|     |  |       
|     |  | $7,913
|     |  |       

21. Shares

a) Common shares

Authorized:

Unlimited number of common voting shares

Unlimited number of common non-voting shares

Issued
and outstanding:



|                                                                         |  |                 |   |  |          |  
|------------------------------------------------------------------------ |  | --------------- | - |  | -------- | -
|                                                                         |  | Number ofShares |   |  | Amount   |  
|Common voting shares                                                     |  |                 |   |  |          |  
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2007                                 |  | 35,192,260      |   |  | $297,594 |  
|Issued upon exercise of stock options                                    |  | 324,816         |   |  | 1,627    |  
|Transferred from additional paid-in capital on exercise of stock options |  |                |   |  | 611      |  
|Conversion of common non-voting shares                                   |  | 412,400         |   |  | 2,062    |  
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2008                                 |  | 35,929,476      |   |  | $301,894 |  
|Issued upon exercise of stock options                                    |  | 109,000         |   |  | 703      |  
|Transferred from additional paid-in capital on exercise of stock options |  |                |   |  | 834      |  
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2009                                 |  | 36,038,476      |   |  | $303,431 |  
|Issued upon exercise of stock options                                    |  | 10,800          |   |  | 53       |  
|Transferred from additional paid-in capital on exercise of stock options |  |                |   |  | 21       |  
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2010                                 |  | 36,049,276      |   |  | $303,505 |  
|                                                                         |  |                 |   | 
|Common non-voting shares                                                 |  |                 |   |  |          |  
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2007                                 |  | 412,400         |   |  | $2,062   |  
|Conversion to common voting shares                                       |  | (412,400        | ) |  | (2,062   | )
|                                                                         |  |                 |   |  |          |  
|Issued and outstanding at March 31, 2010, 2009 and 2008                  |  |                |   |  | $       |  
|                                                                         |  |                 |   |  |          |  



26Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



b) Additional paid-in capital



|                                                             |  |        |  
|------------------------------------------------------------ |  | ------ | -
|Balance at March 31, 2007                                    |  | $3,606 |  
|Stock-based compensation (note 30(a))                        |  | 1,937  |  
|Transferred to common shares on exercise of stock options    |  | (611   | )
|Cash settlement of stock options                             |  | (581   | )
|                                                             |  |        |  
|Balance at March 31, 2008                                    |  | $4,351 |  
|Stock-based compensation (note 30(a))                        |  | 1,888  |  
|Deferred performance share unit plan (note 30(b))            |  | 61     |  
|Transferred to common shares on exercise of stock options    |  | (834   | )
|                                                             |  |        |  
|Balance at March 31, 2009                                    |  | $5,466 |  
|Stock-based compensation (note 30(a))                        |  | 2,135  |  
|Deferred performance share unit plan (note 30(b))            |  | 123    |  
|Reclassified to restricted share unit liability (note 30(c)) |  | (20    | )
|Transferred to common shares on exercise of stock options    |  | (21    | )
|Cash settlement of stock options                             |  | (244   | )
|                                                             |  |        |  
|Balance at March 31, 2010                                    |  | $7,439 |  
|                                                             |  |        |  

c) Net income (loss) per share



|                                                   |  |            |  |            |   |  |           
|-------------------------------------------------- |  | ---------- |  | ---------- | - |  | ----------
|Year ended March 31,                               |  | 2010       |  | 2009       |   |  | 2008      
|Net income (loss) available to common shareholders |  | $28,219    |  | $(135,404  | ) |  | $41,534   
|Weighted average number of common shares           |  | 36,040,857 |  | 36,020,763 |   |  | 35,788,776
|                                                   |  |            |  |            |   |  |           
|Basic net income (loss) per share                  |  | $0.78      |  | $(3.76     | ) |  | $1.16     
|                                                   |  |            |  |            |   |  |           



|                                                       |  |            |  |            |   |  |           
|------------------------------------------------------ |  | ---------- |  | ---------- | - |  | ----------
|Year ended March 31,                                   |  | 2010       |  | 2009       |   |  | 2008      
|                                                       |  |            |  |            |   |  |           
|Net income (loss) available to common shareholders     |  | $28,219    |  | $(135,404  | ) |  | $41,534   
|Weighted average number of common shares               |  | 36,040,857 |  | 36,020,763 |   |  | 35,788,776
|Dilutive effect of stock options and performance units |  | 680,169    |  |           |   |  | 1,126,859 
|Weighted average number of diluted common shares       |  | 36,721,026 |  | 36,020,763 |   |  | 36,915,635
|                                                       |  |            |  |            |   |  |           
|Diluted net income (loss) per share                    |  | $0.77      |  | $(3.76     | ) |  | $1.13     
|                                                       |  |            |  |            |   |  |           

For the year ended March 31, 2010, there were 820,641 and 57,311 options and
performance units respectively which were anti-dilutive and therefore were not considered in computing diluted earnings per share (March 31, 2009  2,071,884 and 91,005; March 31, 2008  283,674 and nil options and performance
units respectively).

For the year ended March 31, 2009, the effect of outstanding stock options on net loss per share was anti-dilutive. As such,
the effect of outstanding stock options used to calculate the diluted net loss per share was not disclosed.

22. Interest expense



|                                                 |  |         |  |         |   |  |        
|------------------------------------------------ |  | ------- |  | ------- | - |  | -------
|Year ended March 31,                             |  | 2010    |  | 2009    |   |  | 2008   
|Interest expense on
83/4% senior notes and swaps |  | $19,041 |  | $25,379 |   |  | $23,338
|Interest on capital lease obligations            |  | 1,032   |  | 1,234   |   |  | 780    
|Amortization of deferred financing costs         |  | 3,348   |  | 2,970   |   |  | 2,899  
|Interest on credit facility                      |  | 2,375   |  | 298     |   |  | 769    
|                                                 |  |         |  |         |   |  |        
|Interest on long term debt                       |  | $25,796 |  | $29,881 |   |  | $27,786
|Other interest                                   |  | 284     |  | (269    | ) |  | 1,294  
|                                                 |  |         |  |         |   |  |        
|                                                 |  | $26,080 |  | $29,612 |   |  | $29,080
|                                                 |  |         |  |         |   |  |        

23. Claims Revenue



|                                                            |  |        |  |         |  |       
|----------------------------------------------------------- |  | ------ |  | ------- |  | ------
|Year ended March 31,                                        |  | 2010   |  | 2009    |  | 2008  
|Claims revenue recognized                                   |  | $4,541 |  | $55,999 |  | $    
|                                                            |  |        |  |         |  |       
|Claims revenue uncollected (classified as unbilled revenue) |  | $785   |  | $1,768  |  | $3,124
|                                                            |  |        |  |         |  |       

24. Financial instruments and risk management

a) Fair value of financial instruments

In determining the
fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing on each reporting date. Counterparty confirmations and standard market



North American Energy Partners
Inc.Notes to Consolidated Financial Statements27



---



conventions and techniques, such as discounted cash flow analysis and option pricing models, are used to determine the fair value of the Companys financial instruments, including
derivatives. All methods of fair value measurement result in a general approximation of value and such value may never actually be realized.

The fair
values of the Companys cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short periods to maturity for the instruments.

The fair values of amounts due under the Revolving Facility and the Term Facility are based on management estimates which are determined by discounting
cash flows required under the instruments at the interest rate currently estimated to be available for instruments with similar terms. Based on these estimates and by using the outstanding balance of $28.4 million at March 31, 2010 and $nil at
March 31, 2009, the fair value of amounts due under the Revolving Facility and the Term Facility as at March 31, 2010 and March 31, 2009 are not significantly different than their carrying value.

The fair values of the Companys cross-currency and interest rate swap agreements and the Companys embedded derivatives are based on appropriate price
modeling commonly used by market participants to estimate fair value. Such modeling includes option pricing models and discounted cash flow analysis, using observable market based inputs to estimate fair value. Fair value determined using valuation
models requires the use of assumptions concerning the amount and timing of future cash flows. Fair value amounts reflect managements best estimates using external readily observable market data such as future prices, interest rate yield
curves, foreign exchange rates and discount rates for time value. It is possible that the assumptions used in establishing fair value amounts will differ from future outcomes and the impact of such variations could be material.

Financial instruments with carrying amounts that differ from their fair values are as follows:



|                              |  |                |  |                |  |                |  |           
|----------------------------- |  | -------------- |  | -------------- |  | -------------- |  | ----------
|                              |  | March 31, 2010 |  | March 31, 2009
|                              |  | CarryingAmount |  | Fair Value     |  | CarryingAmount |  | Fair Value
|Senior notes(i)               |  | $203,120       |  | $203,526       |  | $255,756       |  | $181,469  
|Capital lease obligations(ii) |  | 13,393         |  | 13,291         |  | 17,484         |  | 17,345    
|                              |  |                |  |                |  |                |  |           



|(i) | The fair value of the U.S. Dollar denominated
83/4% senior notes is based upon their period end closing
market price translated into Canadian Dollars at period end exchange rates as at March 31, 2010 and March 31, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | The fair values of amounts due under capital leases are based on management estimates which are determined by discounting cash flows required under the instruments at the
interest rates currently estimated to be available for instruments with similar terms.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Derivative financial instruments that are used for
risk management purposes, as described in note 24(b) under  Risk Management consist of the following:



|                                                                                |  |                                |   |  |            
|------------------------------------------------------------------------------- |  | ------------------------------ | - |  | -----------
|March 31, 2010                                                                  |  | DerivativeFinancialInstruments |   |  | SeniorNotes
|Cross-currency and interest rate swaps                                          |  | $81,111                        |   |  | $         
|Embedded price escalation features in a long term revenue construction contract |  | 6,481                          |   |  |           
|Embedded price escalation features in certain long term supplier contracts      |  | 9,463                          |   |  |           
|                                                                                |  |                                |   |  |            
|Total fair value of derivative financial instruments                            |  | $97,055                        |   |  | $         
|Less: current portion                                                           |  | (22,054                        | ) |  |           
|                                                                                |  |                                |   |  |            
|                                                                                |  | $75,001                        |   |  | $         
|                                                                                |  |                                |   |  |            



|                                                                                |  |                                |   |  |            
|------------------------------------------------------------------------------- |  | ------------------------------ | - |  | -----------
|March 31, 2009                                                                  |  | DerivativeFinancialInstruments |   |  | SeniorNotes
|Cross-currency and interest rate swaps                                          |  | $32,033                        |   |  | $         
|Embedded price escalation features in a long term revenue construction contract |  | (324                           | ) |  |           
|Embedded price escalation features in certain long term supplier contracts      |  | 22,778                         |   |  |           
|Embedded early redemption option on senior notes                                |  |                               |   |  | 3,716      
|                                                                                |  |                                |   |  |            
|Total fair value of derivative financial instruments                            |  | $54,487                        |   |  | $3,716     
|Less: current portion                                                           |  | (11,439                        | ) |  |           
|                                                                                |  |                                |   |  |            
|                                                                                |  | $43,048                        |   |  | $3,716     
|                                                                                |  |                                |   |  |            

Fair value hierarchy of financial instruments

The Company has segregated all financial assets and financial liabilities that are measured at fair value on a recurring basis into the most appropriate level
within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. Effective April 1, 2009, the Company adopted the remaining aspects of the new fair value measurement standards codified in ASC 820-10
for non-financial assets and liabilities that are not re-measured at fair value on a recurring basis.



28Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



Financial assets and liabilities measured
at fair value net of accrued interest in the financial statements on a recurring basis are summarized below:



|                                                                                |  |                                  |  |               |  |        
|------------------------------------------------------------------------------- |  | -------------------------------- |  | ------------- |  | -------
|March 31, 2010                                                                  |  | Location on Balance Sheet        |  | CarryingValue |  | Level 2
|Cross-currency swaps for U.S. dollar 83/4% senior notes                         |  | Derivative financial instruments |  | $66,268       |  | $66,268
|Interest rate swaps for U.S. dollar
83/4% senior notes                          |  | Derivative financial instruments |  | 14,843        |  | 14,843 
|                                                                                |  |                                  |  |               |  |        
|Cross-currency and interest rate swaps for U.S. dollar
83/4% senior notes       |  | Derivative financial instruments |  | $81,111       |  | $81,111
|Embedded price escalation features in a long term revenue construction contract |  | Derivative financial instruments |  | 6,481         |  | 6,481  
|Embedded price escalation features in certain long term supplier contracts      |  | Derivative financial instruments |  | 9,463         |  | 9,463  
|                                                                                |  |                                  |  |               |  |        
|                                                                                |  |                                  |  | $97,055       |  | $97,055
|                                                                                |  |                                  |  |               |  |        



|                                                                                |  |                                  |  |               |   |  |         |  
|------------------------------------------------------------------------------- |  | -------------------------------- |  | ------------- | - |  | ------- | -
|March 31, 2009                                                                  |  | Location on Balance Sheet        |  | CarryingValue |   |  | Level 2 |  
|Cross-currency swaps for U.S. dollar 83/4% senior notes                         |  | Derivative financial instruments |  | $11,573       |   |  | $11,573 |  
|Interest rate swaps for U.S. dollar
83/4% senior notes                          |  | Derivative financial instruments |  | 20,460        |   |  | 20,460  |  
|                                                                                |  |                                  |  |               |   |  |         |  
|Cross-currency and interest rate swaps for U.S. dollar
83/4% senior notes       |  | Derivative financial instruments |  | $32,033       |   |  | $32,033 |  
|Embedded price escalation features in a long term revenue construction contract |  | Derivative financial instruments |  | (324          | ) |  | (324    | )
|Embedded price escalation features in certain long term supplier contracts      |  | Derivative financial instruments |  | 22,778        |   |  | 22,778  |  
|Embedded early redemption option on
83/4% senior notes                          |  | Senior notes                     |  | 3,716         |   |  | 3,716   |  
|                                                                                |  |                                  |  |               |   |  |         |  
|                                                                                |  |                                  |  | $58,203       |   |  | $58,203 |  
|                                                                                |  |                                  |  |               |   |  |         |  

At March 31, 2010, the Company has no financial assets or financial liabilities classified as Level 1 or Level 3 under the fair
value hierarchy. Since the Company primarily uses observable inputs of similar instruments and discounted cash flows in its valuation of its derivative financial instruments, it has been concluded that the valuation of derivatives is a Level 2. The
fair values of the Companys cross-currency and interest rate swap agreements and the Companys embedded derivatives are based on appropriate price modeling commonly used by market participants to estimate fair value. Such modeling
includes option pricing models and discounted cash flow analysis, using observable market based inputs to estimate fair value. The Company considers its own credit risk or the credit risk of the counterparty in determining fair value, depending on
whether the fair values are in an asset or liability position. Fair value determined using valuation models requires the use of assumptions concerning the amount and timing of future cash flows. Fair value amounts reflect managements best
estimates using external readily observable market data such as future prices, interest rate yield curves, foreign exchange rates and discount rates for time value. It is possible that the assumptions used in establishing fair value amounts will
differ from future outcomes and the impact of such variations could be material.

The Company used the following methodologies and inputs to estimate the
fair value of each class of Level 2 financial instruments:



| |  | To determine fair value of the Companys cross-currency and interest rate swap agreements, discounted cash flow analysis with inputs of observable market
data including foreign currency exchange rates, implied volatilities, interest rates and the credit risk of the Company or the counterparties were used as appropriate, with resulting valuations periodically validated through third-party or
counterparty quotes;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | To determine fair value of the Companys optional redemption rights included in the senior notes, discounted cash flow analysis with input of observable
market data including foreign currency exchange rates, implied volatilities and interest rates were used as appropriate; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | To determine fair value of the price escalation features in revenue and maintenance service contracts containing embedded derivatives, generally accepted
valuation models based on discounted cash flows with inputs of observable market data, including foreign currency rates and discount factors were used.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-financial assets that were re-measured at fair value on a non-recurring basis as at March 31, 2010 in the financial statements are summarized below:



|                     |  |                |  |         |  |                      |  
|-------------------- |  | -------------- |  | ------- |  | -------------------- | -
|March 31, 2010       |  | Carrying Value |  | Level 3 |  | Change in Fair Value |  
|Assets held for sale |  | 838            |  | 838     |  | (125                 | )
|                     |  |                |  |         |  |                      |  

Long-lived assets held for sale with a carrying amount of $963 were written down to their fair value of $838, resulting in a loss of
$(125), which was included in depreciation expense in the Consolidated Statements of Operations and



North American Energy Partners
Inc.Notes to Consolidated Financial Statements29



---



Comprehensive Income (Loss) for the year ended March 31, 2010. The fair value of the assets held for sale is determined internally by analyzing recent auction prices for equipment with
similar specifications and hours used, the net book value, the residual value of the asset and the useful life of the asset. The inputs to estimate the fair value of the assets held for sale are classified under level 3 of the fair value hierarchy.

The Company did not re-measure non-financial liabilities to fair value as at March 31, 2010.

The realized and unrealized loss (gain) on derivative financial instruments is comprised as follows:



|                                                                                                          |  |         |   |  |           |   |  |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------- | - |  | --------- | - |  | ------- | -
|Year ended March 31,                                                                                      |  | 2010    |   |  | 2009      |   |  | 2008    |  
|Realized and unrealized loss (gain) on cross-currency and interest rate swaps                             |  | $64,637 |   |  | $(46,945) |   |  | $23,456 |  
|Unrealized loss (gain) on embedded price escalation features in a long term revenue construction contract |  | 6,805   |   |  | (15,145   | ) |  | 7,575   |  
|Unrealized (gain) loss on embedded price escalation features in certain long term supplier contracts      |  | (13,315 | ) |  | 21,509    |   |  | (1,205  | )
|Unrealized (gain) loss on embedded early redemption option on senior notes                                |  | (3,716  | ) |  | 3,331     |   |  | 249     |  
|                                                                                                          |  |         |   |  |           |   |  |         |  
|                                                                                                          |  | $54,411 |   |  | $(37,250) |   |  | $30,075 |  
|                                                                                                          |  |         |   |  |           |   |  |         |  

b) Risk Management

The Company
is exposed to market and credit risks associated with its financial instruments. The Company will from time to time use various financial instruments to reduce market risk exposures from changes in foreign currency exchange rates and interest rates.
The Company does not hold or use any derivative instruments for trading or speculative purposes.

Overall, the Companys Board of Directors has
responsibility for the establishment and approval of the Companys risk management policies. Management performs a risk assessment on a continual basis to help ensure that all significant risks related to the Company and its operations have
been reviewed and assessed to reflect changes in market conditions and the Companys operating activities.

c) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices such as foreign
currency exchange rates and interest rates. The level of market risk to which the Company is exposed at any point in time varies depending on market conditions, expectations of future price or market rate movements and composition of the
Companys financial assets and liabilities held, non-trading physical assets and contract portfolios.

To manage the exposure related to changes in
market risk, the Company uses various risk management techniques including the use of derivative instruments. Such instruments may be used to establish a fixed price for a commodity, an interest bearing obligation or a cash flow denominated in a
foreign currency.

The sensitivities provided below are hypothetical and should not be considered to be predictive of future performance or indicative of
earnings on these contracts.

i) Foreign exchange risk

Foreign exchange risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate
due to changes in foreign exchange rates. The Company has
83/4% senior notes denominated in U.S. Dollars in the amount
of U.S. $200.0 million. In order to reduce its exposure to changes in the U.S. to Canadian Dollar exchange rate, the Company entered into a cross-currency swap agreement to manage this foreign currency exposure for both the principal balance due on
December 1, 2011 as well as the semi-annual interest payments from the issue date to the maturity date. In conjunction with the cross-currency swap agreement, the Company also entered into a U.S. Dollar interest rate swap and a Canadian
Dollar interest rate swap as discussed in note 24(c)(ii) below. These derivative financial instruments were not designated as hedges for accounting purposes. At March 31, 2010 and March 31, 2009, the notional principal amount of the
cross-currency swap was U.S. $200.0 million and Canadian $263.0 million.

On December 17, 2008, the Company received notice that all three
swap counterparties had exercised the cancellation option on the U.S. Dollar interest rate swap and, effective February 2, 2009, the U.S. Dollar interest rate swap was terminated. In addition to net accrued interest to the termination
date of U.S. $0.7 million, the counterparties paid a cancellation premium of 2.2% on the notional amount of U.S. $200.0 million or U.S. $4.4 million (equivalent to Canadian $5.3 million), which is included in the caption Other income in
the Consolidated Statements of Operations and Comprehensive (Loss) Income for the year ended March 31, 2009.

The Companys Canadian Dollar
interest rate swap and cross-currency swap agreements are not cancellable at the option of the counterparties and remained in effect at March 31, 2010. The Company will continue to pay the counterparties an average fixed rate of 9.889% on the
notional amount of Canadian $263.0 million or Canadian $13.0 million semi-annually until December 1, 2011. Beginning March 1, 2009, the Company received quarterly floating rate payments in U.S. Dollars on the cross-currency swap agreement
at the prevailing three month LIBOR rate plus a spread of 4.2% on the notional amount of U.S. $200.0 million.



30Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



As a result of the
cancellation of the U.S. Dollar interest rate swap, the Company is exposed to changes in the value of the Canadian Dollar versus the U.S. Dollar. To the extent that the three month LIBOR rate is less than 4.6% (the difference between the
83/4% senior notes coupon and the 4.2% spread over the three
month LIBOR on the cross-currency swap agreement), the Company will have to acquire U.S. Dollars to fund a portion of its semi-annual coupon payment on its senior notes. At the three month U.S. Dollar LIBOR rate of 0.2684% at March 31,
2010, a $0.01 increase (decrease) in exchange rates in the Canadian Dollar would result in an insignificant decrease (increase) in the amount of Canadian Dollars required to fund each semi-annual coupon payment.

The Company also regularly transacts in foreign currencies when purchasing equipment, spare parts as well as certain general and administrative goods and services.
These exposures are generally of a short-term nature and the impact of changes in exchange rates has not been significant in the past. The Company may fix its exposure in either the Canadian Dollar or the U.S. Dollar for these short-term
transactions, if material.

At March 31, 2010, with other variables unchanged, a $0.01 increase (decrease) in exchange rates of the Canadian Dollar
to the U.S. Dollar related to the U.S. Dollar denominated senior notes would decrease (increase) net income and decrease (increase) equity by approximately $1.9 million. With other variables unchanged, a $0.01 increase (decrease) in
exchange rates in the Canadian to the U.S. Dollar related to the cross-currency swap would increase (decrease) net income and increase (decrease) equity by approximately $1.9 million. The impact of similar exchange rate changes on short-term
exposures would be insignificant and there would be no impact to other comprehensive income.

ii) Interest rate risk

The Company is exposed to interest rate risk from the possibility that changes in interest rates will affect future cash flows or the fair values of its financial
instruments. Amounts outstanding under the Companys Revolving Facility are subject to a floating rate. The Companys senior notes are subject to a fixed rate. The Companys interest risk arises from long term borrowings issued at
fixed rates that create fair value interest rate risk and variable borrowings that create cash flow interest rate risk. Changes in market interest rates cause the fair value of long term debt with fixed interest rates to fluctuate but do not affect
earnings, as the Companys debt is carried at amortized cost and the carrying value does not change as interest rates change.

In some
circumstances, floating rate funding may be used for short-term borrowings and other liquidity requirements. The Company may use derivative instruments to manage interest rate risk. The Company manages its interest rate risk exposure by using a mix
of fixed and variable rate debt and may use derivative instruments to achieve the desired proportion of variable to fixed-rate debt.

In conjunction with the cross-currency swap agreement discussed in note 24(c)(i) above, the Company also entered into a U.S. Dollar
interest rate swap and a Canadian Dollar interest rate swap with the net effect of economically converting the
83/4% rate payable on the
83/4% senior notes into a fixed rate of 9.889% for the
duration that the 83/4% senior notes are outstanding. These
derivative financial instruments were not designated as hedges for accounting purposes.

As a result of the
U.S. Dollar interest swap cancellation described in note 24(c)(i), the Company is exposed to changes in interest rates. The Company has a fixed semi-annual coupon payment of
83/4% on its U.S. $200.0 million senior notes. With the
termination of the U.S. Dollar interest rate swap, the Company will no longer receive fixed U.S. Dollar payments from the counterparties to offset the coupon payment on its senior notes. As a result of this termination, the Companys
effective annual interest costs at the current LIBOR rate will increase by U.S. $8.6 million. In addition, the Company is now exposed to interest rate risk where a 100 basis point increase (decrease) in the three month U.S. Dollar LIBOR rate
will result in a U.S. $2.0 million decrease (increase) in effective annual interest costs.

At March 31, 2010 and March 31, 2009, the
notional principal amounts of the interest rate swaps were U.S. $200.0 million and Canadian $263.0 million.

As at March 31, 2010, holding all other
variables constant, a 100 basis point increase (decrease) to Canadian interest rates would impact the fair value of the interest rate swaps by $2.4 million with this change in fair value being recorded in net income. As at March 31, 2010,
holding all other variables constant, a 100 basis point increase (decrease) to U.S. interest rates would impact the fair value of the interest rate swaps by $0.2 million with this change in fair value being recorded in net income. As at
March 31, 2010, holding all other variables constant, a 100 basis point increase (decrease) of Canadian to U.S. interest rate volatility would impact the fair value of the interest rate swaps by $nil million with this change in fair value being
recorded in net income.

At March 31, 2010, the Company held $28.4 million of floating rate debt pertaining to its Term Facility (March 31, 2009
 $nil). As at March 31, 2010, holding all other variables constant, a 100 basis point increase (decrease) to interest rates on floating rate debt will result in $0.3 million increase (decrease) in annual interest expense. This assumes
that the amount of floating rate debt remains unchanged from that which was held at March 31, 2010.

d) Credit Risk

Credit risk is the risk that financial loss to the Company may be incurred if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. The Company manages the credit risk associated with its cash by



North American Energy Partners
Inc.Notes to Consolidated Financial Statements31



---



holding its funds with what it believes to be reputable financial institutions. The Company is also exposed to credit risk through its accounts receivable and unbilled revenue. Credit risk for
trade and other accounts receivables, and unbilled revenue are managed through established credit monitoring activities.

The Company has a concentration
of customers in the oil and gas sector. The concentration risk is mitigated primarily by the customers being large investment grade organizations. The credit worthiness of new customers is subject to review by management through consideration of the
type of customer and the size of the contract.

At March 31, 2010 and March 31, 2009, the following customers represented 10% or more of
accounts receivable and unbilled revenue:



|           |  |                |  |               
|---------- |  | -------------- |  | --------------
|           |  | March 31, 2010 |  | March 31, 2009
|Customer A |  | 38%            |  | 29%           
|Customer B |  | 36%            |  | 17%           
|Customer C |  | 4%             |  | 13%           
|Customer D |  | 3%             |  | 11%           
|           |  |                |  |               

The Company reviews its accounts receivable amounts regularly and amounts are
written down to their expected realizable value when outstanding amounts are determined not to be fully collectible. This generally occurs when the customer has indicated an inability to pay, the Company is unable to communicate with the customer
over an extended period of time, and other methods to obtain payment have been considered and have not been successful. Bad debt expense is charged to net income in the period that the account is determined to be doubtful. Estimates of the allowance
for doubtful accounts are determined on a customer-by-customer evaluation of collectability at each reporting date taking into consideration the following factors: the length of time the receivable has been outstanding, specific knowledge of each
customers financial condition and historical experience.

The Companys maximum exposure to credit risk for accounts receivable and unbilled
revenue is as follows:



|                           |  |                |  |               
|-------------------------- |  | -------------- |  | --------------
|                           |  | March 31, 2010 |  | March 31, 2009
|Trade accounts receivables |  | $106,966       |  | $76,499       
|Other receivables          |  | 4,918          |  | 1,824         
|                           |  |                |  |               
|Total accounts receivable  |  | $111,884       |  | $78,323       
|                           |  |                |  |               
|Unbilled revenue           |  | $84,702        |  | $55,907       
|                           |  |                |  |               

On a geographic basis as at March 31, 2010, approximately 98% (March 31, 2009
 99%) of the balance of trade accounts receivable (before considering the allowance for doubtful accounts) was due from customers based in Western Canada.

Payment terms are generally net 30 days. As at March 31, 2010 and March 31, 2009, trade receivables are aged as follows:



|                    |  |                |  |               
|------------------- |  | -------------- |  | --------------
|                    |  | March 31, 2010 |  | March 31, 2009
|Not past due        |  | $83,797        |  | $47,197       
|Past due 1-30 days  |  | 15,635         |  | 13,282        
|Past due 31-60 days |  | 1,543          |  | 2,085         
|More than 61 days   |  | 5,991          |  | 13,935        
|                    |  |                |  |               
|Total               |  | $106,966       |  | $76,499       
|                    |  |                |  |               

As at March 31, 2010, the Company has recorded an allowance for doubtful
accounts of $1,691 (March 31, 2009  $2,597) of which 100% relates to amounts that are more than 61 days past due.

The allowance is an estimate of
the March 31, 2010 trade receivable balances that are considered uncollectible. Changes to the allowance are as follows:



|                                       |  |        |   |  |        |   |  |      |  
|-------------------------------------- |  | ------ | - |  | ------ | - |  | ---- | -
|Year ended March 31,                   |  | 2010   |   |  | 2009   |   |  | 2008 |  
|Opening balance                        |  | $2,597 |   |  | $742   |   |  | $87  |  
|Payments received on provided balances |  | (846   | ) |  | (100   | ) |  | (184 | )
|Current year allowance                 |  | 334    |   |  | 4,324  |   |  | 950  |  
|Write-offs                             |  | (394   | ) |  | (2,369 | ) |  | (111 | )
|                                       |  |        |   |  |        |   |  |      |  
|Ending balance                         |  | $1,691 |   |  | $2,597 |   |  | $742 |  
|                                       |  |        |   |  |        |   |  |      |  

Credit risk on derivative financial instruments arises from the possibility that the counterparties to the agreements may default on
their respective obligations under the agreements. This credit risk only arises in instances where these agreements have positive fair value for the Company.



32Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



25. Other information

a) Supplemental cash flow information



|                                                                        |  |         |  |         |  |        
|----------------------------------------------------------------------- |  | ------- |  | ------- |  | -------
|Year ended March 31,                                                    |  | 2010    |  | 2009    |  | 2008   
|Cash paid during the year for:                                          |  |         |  |         |  |        
|Interest (including realized interest on interest rate swap)            |  | $49,999 |  | $29,336 |  | $29,568
|Income taxes                                                            |  | 10,395  |  | 52      |  | 80     
|Cash received during the year for:                                      |  |         |  |         |  |        
|Interest                                                                |  | 10,998  |  | 477     |  | 345    
|Income taxes                                                            |  | 453     |  | 2,734   |  | 300    
|Non-cash transactions:                                                  |  |         |  |         |  |        
|Acquisition of property, plant and equipment by means of capital leases |  | 1,523   |  | 8,863   |  | 8,829  
|                                                                        |  |         |  |         |  |        

b) Net change in non-cash working capital



|                                                                                     |  |      |         |   |      |         |   |      |          |  
|------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | ------- | - | ---- | -------- | -
|Year ended March 31,                                                                 |  | 2010 |         |   | 2009 |         |   | 2008 |         
|Operating activities:                                                                |  |      |         |   |      |         |   |      |          |  
|Accounts receivable                                                                  |  | $    | (28,522 | ) |      | $86,832 |   |      | $(59,415 | )
|Allowance for doubtful accounts                                                      |  |      | (906    | ) |      | 1,855   |   |      | 654      |  
|Unbilled revenue                                                                     |  |      | (28,795 | ) |      | 14,976  |   |      | (2,174   | )
|Inventories                                                                          |  |      | 6,214   |   |      | (6,617  | ) |      | (1,337   | )
|Prepaid expenses and deposits                                                        |  |      | (2,620  | ) |      | 1,015   |   |      | 2,632    |  
|Other assets                                                                         |  |      |        |   |      |        |   |      | 6,461    |  
|Accounts payable                                                                     |  |      | 6,620   |   |      | (56,308 | ) |      | 21,430   |  
|Accrued liabilities                                                                  |  |      | 1,150   |   |      | 5,626   |   |      | 18,802   |  
|Long term accrued liabilities                                                        |  |      | 7,809   |   |      | 1,431   |   |      | 2,883    |  
|Billings in excess of costs incurred and estimated earnings on uncompleted contracts |  |      | (541    | ) |      | (2,617  | ) |      | 1,773    |  
|                                                                                     |  |      |         |   |      |         |   |      |          |  
|                                                                                     |  | $    | (39,591 | ) |      | $46,193 |   |      | $(8,291  | )
|                                                                                     |  |      |         |   |      |         |   |      |          |  
|                                                                                     |  |      |        
|Investing activities:                                                                |  |      |         |   |      |         |   |      |          |  
|Accounts payable                                                                     |  |      | $1,840  |   |      | $(630)  |   |      | $(2,835  | )
|                                                                                     |  |      |         |   |      |         |   |      |          |  

26. Segmented information

a)
General overview

The Company operates in the following reportable business segments, which follow the organization, management and reporting
structure within the Company:



| |  | Heavy Construction and Mining:
|- |  | ------------------------------

The Heavy Construction and Mining segment provides mining and site preparation services, including overburden removal and reclamation services,
project management underground utility construction and equipment rental, to a variety of customers throughout Canada.

| |  | Piling:
|- |  | -------

The Piling segment
provides deep foundation construction and design build services to a variety of industrial and commercial customers throughout Western Canada and Ontario.

| |  | Pipeline:
|- |  | ---------

The Pipeline segment
provides both small and large diameter pipeline construction and installation services as well as equipment rental to energy and industrial clients throughout Western Canada.

The accounting policies of the reportable operating segments are the same as those described in the significant accounting policies in note 3. Certain business
units of the Company have been aggregated into the Heavy Construction and Mining segment as they have similar economic characteristics. These business units are considered to have similar economic characteristics based on similarities in the nature
of the services provided, the customer base and the resources used to provide these services.

b) Results by business segment



|                                              |  |                             |  |         |  |          |   |  |         
|--------------------------------------------- |  | --------------------------- |  | ------- |  | -------- | - |  | --------
|For the year ended March 31, 2010             |  | HeavyConstructionand Mining |  | Piling  |  | Pipeline |   |  | Total   
|Revenue from external customers               |  | $665,514                    |  | $68,531 |  | $24,920  |   |  | $758,965
|Depreciation of property, plant and equipment |  | 34,419                      |  | 2,842   |  | 153      |   |  | 37,414  
|Segment profits                               |  | 111,016                     |  | 11,288  |  | (3,851   | ) |  | 118,453 
|Segment assets                                |  | 435,098                     |  | 92,980  |  | 14,765   |   |  | 542,843 
|Capital expenditures                          |  | 40,532                      |  | 1,081   |  | 948      |   |  | 42,561  
|                                              |  |                             |  |         |  |          |   |  |         



North American Energy Partners
Inc.Notes to Consolidated Financial Statements33



---



|                                              |  |                             |   |  |          |   |  |          |   |  |          |  
|--------------------------------------------- |  | --------------------------- | - |  | -------- | - |  | -------- | - |  | -------- | -
|For the year ended March 31, 2009             |  | HeavyConstructionand Mining |   |  | Piling   |   |  | Pipeline |   |  | Total    |  
|Revenue from external customers               |  | $716,053                    |   |  | $155,076 |   |  | $101,407 |   |  | $972,536 |  
|Depreciation of property, plant and equipment |  | 25,690                      |   |  | 3,380    |   |  | 581      |   |  | 29,651   |  
|Segment profits                               |  | 109,580                     |   |  | 38,776   |   |  | 22,470   |   |  | 170,826  |  
|Impairment of goodwill                        |  | (125,447                    | ) |  | (18,000  | ) |  | (32,753  | ) |  | (176,200 | )
|Segment assets                                |  | 373,861                     |   |  | 88,908   |   |  | 7,898    |   |  | 470,667  |  
|Capital expenditures                          |  | 73,689                      |   |  | 8,679    |   |  | 75       |   |  | 82,443   |  
|                                              |  |                             |   |  |          |   |  |          |   |  |          |  



|                                              |  |                             |  |          |  |          |  |         
|--------------------------------------------- |  | --------------------------- |  | -------- |  | -------- |  | --------
|For the year ended March 31, 2008             |  | HeavyConstructionand Mining |  | Piling   |  | Pipeline |  | Total   
|Revenue from external customers               |  | $626,582                    |  | $162,397 |  | $200,717 |  | $989,696
|Depreciation of property, plant and equipment |  | 23,260                      |  | 3,340    |  | 969      |  | 27,569  
|Segment profits                               |  | 102,686                     |  | 45,362   |  | 25,465   |  | 173,513 
|Segment assets                                |  | 498,722                     |  | 110,288  |  | 88,143   |  | 697,153 
|Capital expenditures                          |  | 35,216                      |  | 12,945   |  | 5,229    |  | 53,390  
|                                              |  |                             |  |          |  |          |  |         

c) Reconciliations

i) Income (loss) before income taxes



|                                                                        |  |          |   |  |            |   |  |          |  
|----------------------------------------------------------------------- |  | -------- | - |  | ---------- | - |  | -------- | -
|Year ended March 31,                                                    |  | 2010     |   |  | 2009       |   |  | 2008     |  
|Total profit for reportable segments                                    |  | $118,453 |   |  | $170,826   |   |  | $173,513 |  
|Less: unallocated corporate items:                                      |  |          |   |  |            |   |  |          |  
|General and administrative costs                                        |  | 62,530   |   |  | 74,460     |   |  | 69,806   |  
|Loss on disposal of property, plant and equipment                       |  | 1,233    |   |  | 5,325      |   |  | 179      |  
|Loss on disposal of assets held for sale                                |  | 373      |   |  | 24         |   |  | 493      |  
|Amortization of intangible assets                                       |  | 1,719    |   |  | 1,501      |   |  | 804      |  
|Equity in earnings of unconsolidated joint venture                      |  | (44      | ) |  |           |   |  |         |  
|Impairment of goodwill                                                  |  |         |   |  | 176,200    |   |  |         |  
|Interest expense, net                                                   |  | 26,080   |   |  | 29,612     |   |  | 29,080   |  
|Foreign exchange (gain) loss                                            |  | (48,901  | ) |  | 47,272     |   |  | (25,660  | )
|Realized and unrealized loss (gain) on derivative financial instruments |  | 54,411   |   |  | (37,250    | ) |  | 30,075   |  
|Other income                                                            |  | (14      | ) |  | (5,955     | ) |  | (418     | )
|Unallocated equipment (recoveries) costs(i)                             |  | (20,832  | ) |  | 408        |   |  | 10,504   |  
|                                                                        |  |          |   |  |            |   |  |          |  
|Income (loss) before income taxes                                       |  | $41,898  |   |  | $(120,771) |   |  | $58,650  |  
|                                                                        |  |          |   |  |            |   |  |          |  



|(i) | Unallocated equipment costs represent actual equipment costs, including non-cash items such as depreciation which have not been allocated to reportable segments. Unallocated
equipment recoveries arise when actual equipment costs charged to reported segment exceed actual equipment costs incurred.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ii) Total
assets



|                                     |  |                |  |               
|------------------------------------ |  | -------------- |  | --------------
|                                     |  | March 31, 2010 |  | March 31, 2009
|Total assets for reportable segments |  | $542,843       |  | $470,667      
|Corporate assets:                    |  |                |  |               
|Cash                                 |  | $103,005       |  | $98,880       
|Property, plant and equipment        |  | 17,883         |  | 19,890        
|Deferred tax assets                  |  | 14,478         |  | 19,465        
|Other                                |  | 24,408         |  | 20,373        
|                                     |  |                |  |               
|Total corporate assets               |  | $159,774       |  | $158,608      
|                                     |  |                |  |               
|Total assets                         |  | $702,617       |  | $629,275      
|                                     |  |                |  |               

The Companys goodwill of $25,111 is assigned to the Piling segment. All of
the Companys assets are located in Canada.

iii) Depreciation of property, plant and equipment



|                                           |  |         |  |         |  |        
|------------------------------------------ |  | ------- |  | ------- |  | -------
|Year ended March 31,                       |  | 2010    |  | 2009    |  | 2008   
|Total depreciation for reportable segments |  | $37,414 |  | $29,651 |  | $27,569
|Depreciation for corporate assets          |  | 5,222   |  | 6,738   |  | 8,151  
|                                           |  |         |  |         |  |        
|Total depreciation                         |  | $42,636 |  | $36,389 |  | $35,720
|                                           |  |         |  |         |  |        



34Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



iv) Capital expenditures for property,
plant and equipment



|                                                                    |  |         |  |         |  |        
|------------------------------------------------------------------- |  | ------- |  | ------- |  | -------
|Year ended March 31,                                                |  | 2010    |  | 2009    |  | 2008   
|Total capital expenditures for reportable segments                  |  | $42,561 |  | $82,443 |  | $53,390
|Capital expenditures for corporate assets                           |  | 12,790  |  | 5,096   |  | 1,689  
|                                                                    |  |         |  |         |  |        
|Total capital expenditures including additions to intangible assets |  | $55,351 |  | $87,539 |  | $55,079
|                                                                    |  |         |  |         |  |        

d) Customers

The following customers accounted for 10% or more of total revenues:



|                     |  |      |  |      |  |     
|-------------------- |  | ---- |  | ---- |  | ----
|Year ended March 31, |  | 2010 |  | 2009 |  | 2008
|Customer A           |  | 51%  |  | 31%  |  | 23% 
|Customer B           |  | 19%  |  | 9%   |  | 13% 
|Customer C           |  | 9%   |  | 18%  |  | 13% 
|Customer D           |  | 5%   |  | 15%  |  | 13% 
|Customer E           |  | 0%   |  | 10%  |  | 19% 
|                     |  |      |  |      |  |     

The revenue by major customer was earned in Heavy Construction and Mining, Piling
and Pipeline segments.

27. Related party transactions

The Sterling Group, L.P., Perry Strategic Capital Inc., and SF Holding Corp. are collectively the Sponsors of the Company. The Company may receive
consulting and advisory services provided by the Sponsors (principals or employees of such Sponsors are directors of the Company) with respect to the organization of the companies, employee benefit and compensation arrangements, and other matters,
and no fee is charged for these consulting and advisory services.

In order for the Sponsors to provide such advisory and consulting services, the
Company provides reports, financial data and other information to the Sponsors. This permits them to consult with and advise the Companys management on matters relating to its operations, company affairs and finances. In addition, this permits
them to visit and inspect any of the Companys properties and facilities.

Additionally, the Company entered into a shared service agreement with
its joint venture, Noramac Ventures Inc. There have been no transactions under this agreement during the year ended March 31, 2010. (note 14).

There
were no material related party transactions during the year ended March 31, 2010, 2009 and 2008. All related party transactions were in the normal course of operations and were measured at the exchange amount, being the consideration
established and agreed to by the related parties.

28. Commitments

The annual future minimum lease payments for heavy equipment, office equipment and premises in respect of operating leases, excluding contingent rentals, for the
next five years and thereafter are as follows:



|                              |  |         
|----------------------------- |  | --------
|For the year ending March 31, |  |         
|2011                          |  | $62,862 
|2012                          |  | 52,999  
|2013                          |  | 37,899  
|2014                          |  | 25,942  
|2015 and thereafter           |  | 15,965  
|                              |  |         
|                              |  | $195,667
|                              |  |         

Contingent rental expense is recognized when the achievement of specified targets
is considered probable. The contingent rental expenses are included in Equipment operating lease expense and equipment costs in the Consolidated Statements of Operations and Comprehensive Income (Loss). Total contingent rentals on
operating leases consisting principally of usage charges in excess of minimum contracted amounts for the years ended March 31, 2010, 2009 and 2008 amounted to $10,246, $7,665 and $15,482 respectively.

29. Employee benefit plans

The Company and its subsidiaries
match voluntary contributions made by the employees to their Registered Retirement Savings Plans to a maximum of 5% of base salary for each employee. Contributions made by the Company during the year ended March 31, 2010 were $1,393 (2009
 $2,540; 2008  $2,053).



North American Energy Partners
Inc.Notes to Consolidated Financial Statements35



---



30. Stock-based compensation plan

Stock-based compensation expenses included in general and administrative costs are as follows:



|                                     |  |        |  |        |  |       
|------------------------------------ |  | ------ |  | ------ |  | ------
|Year ended March 31,                 |  | 2010   |  | 2009   |  | 2008  
|Share option plan                    |  | $2,135 |  | $1,888 |  | $1,937
|Deferred performance share unit plan |  | 123    |  | 61     |  |      
|Restricted share unit plan           |  | 1,010  |  |       |  |      
|Directors share unit plan           |  | 2,002  |  | 356    |  | 190   
|                                     |  |        |  |        |  |       
|                                     |  | $5,270 |  | $2,305 |  | $2,127
|                                     |  |        |  |        |  |       

a) Share option plan

Under the 2004 Amended and Restated Share Option Plan, directors, officers, employees and certain service providers to the Company are eligible to receive stock
options to acquire voting common shares in the Company. Each stock option provides the right to acquire one common share in the Company and expires ten years from the grant date or on termination of employment. Options may be exercised at a price
determined at the time the option is awarded, and vest as follows: no options vest on the award date and twenty percent vest on each subsequent anniversary date.



|                              |  |                   |   |  |                                           |  
|----------------------------- |  | ----------------- | - |  | ----------------------------------------- | -
|                              |  | Number of options |   |  | Weighted averageexercise price$ per share |  
|Outstanding at March 31, 2007 |  | 2,146,840         |   |  | 6.03                                      |  
|Granted                       |  | 481,600           |   |  | 13.80                                     |  
|Exercised(i)                  |  | (324,816          | ) |  | (5.00                                     | )
|Options settled for cash      |  | (62,760           | ) |  | (5.00                                     | )
|Forfeited                     |  | (204,500          | ) |  | (11.56                                    | )
|                              |  |                   |   |  |                                           |  
|Outstanding at March 31, 2008 |  | 2,036,364         |   |  | 7.54                                      |  
|Granted                       |  | 344,800           |   |  | 8.22                                      |  
|Exercised(i)                  |  | (109,000          | ) |  | (6.45                                     | )
|Forfeited                     |  | (200,280          | ) |  | (9.40                                     | )
|                              |  |                   |   |  |                                           |  
|Outstanding at March 31, 2009 |  | 2,071,884         |   |  | 7.53                                      |  
|Granted                       |  | 375,700           |   |  | 8.88                                      |  
|Exercised(i)                  |  | (10,800           | ) |  | (4.90                                     | )
|Options settled for cash      |  | (95,720           | ) |  | (4.95                                     | )
|Forfeited                     |  | (90,260           | ) |  | (8.53                                     | )
|                              |  |                   |   |  |                                           |  
|Outstanding at March 31, 2010 |  | 2,250,804         |   |  | 7.84                                      |  
|                              |  |                   |   |  |                                           |  

|(i) | All stock options exercised resulted in new common shares being issued (note 21(a)).
|--- | ------------------------------------------------------------------------------------

Cash received from the option exercises for the year ended March 31, 2010 was $53 (March 31, 2009 $703, March 31, 2008  $1,627). Cash
paid for options settled for cash for the year ended March 31, 2010 was $244 (March 31, 2009  $nil, March 31, 2008  $581). The total intrinsic value of options exercised for the years ended March 31, 2010, 2009 and
2008 was $277, $1,238, and $4,855 respectively.

The following table summarizes information about stock options outstanding at March 31, 2010:



|               |  |                     |  |                               |  |                               |  |           |  |                               |  |                              
|-------------- |  | ------------------- |  | ----------------------------- |  | ----------------------------- |  | --------- |  | ----------------------------- |  | -----------------------------
|               |  | Options outstanding |  | Options exercisable          
|Exercise price |  | Number              |  | Weightedaverageremaining life |  | Weightedaverageexercise price |  | Number    |  | Weightedaverageremaining life |  | Weightedaverageexercise price
|$5.00          |  | 1,171,504           |  | 4.8 years                     |  | $5.00                         |  | 1,015,952 |  | 4.7 years                     |  | $5.00                        
|$16.75         |  | 27,760              |  | 6.5 years                     |  | $16.75                        |  | 16,656    |  | 6.5 years                     |  | $16.75                       
|$13.50         |  | 230,960             |  | 7.7 years                     |  | $13.50                        |  | 93,800    |  | 7.7 years                     |  | $13.50                       
|$13.21         |  | 75,000              |  | 7.8 years                     |  | $13.21                        |  | 30,000    |  | 7.8 years                     |  | $13.21                       
|$15.37         |  | 81,500              |  | 8.0 years                     |  | $15.37                        |  | 32,600    |  | 8.0 years                     |  | $15.37                       
|$16.01         |  | 75,000              |  | 8.0 years                     |  | $16.01                        |  | 15,000    |  | 8.0 years                     |  | $16.01                       
|$16.46         |  | 50,000              |  | 8.0 years                     |  | $16.46                        |  | 10,000    |  | 8.0 years                     |  | $16.46                       
|$3.69          |  | 163,380             |  | 8.7 years                     |  | $3.69                         |  | 30,900    |  | 8.7 years                     |  | $3.69                        
|$8.28          |  | 160,000             |  | 9.2 years                     |  | $8.28                         |  |          |  |                              |  |                             
|$9.33          |  | 215,700             |  | 9.9 years                     |  | $9.33                         |  |          |  |                              |  |                             
|               |  |                     |  |                               |  |                               |  |           |  |                               |  |                              
|               |  | 2,250,804           |  | 6.6 years                     |  | $7.84                         |  | 1,244,908 |  | 5.3 years                     |  | $6.46                        
|               |  |                     |  |                               |  |                               |  |           |  |                               |  |                              

At March 31, 2010, the weighted average remaining contractual life of
outstanding options is 6.6 years (March 31, 2009  7.0 years). The fair value of options vested during the year ended March 31, 2010 was $1,594.

At March 31, 2010, the total compensation costs related to non-vested awards not yet recognized was $3,351 and these costs are expected to be recognized over a
weighted average period of 3.4 years.



36Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The fair value of each option granted by
the Company was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:



|                                                   |  |         |  |         |  |        
|-------------------------------------------------- |  | ------- |  | ------- |  | -------
|Year ended March 31,                               |  | 2010    |  | 2009    |  | 2008   
|Number of options granted                          |  | 375,700 |  | 344,800 |  | 481,600
|Weighted average fair value per option granted ($) |  | 6.25    |  | 4.53    |  | 4.92   
|Weighted average assumptions:                      |  |         |  |         |  |        
|Dividend yield                                     |  | Nil%    |  | Nil%    |  | Nil%   
|Expected volatility                                |  | 76.27%  |  | 59.01%  |  | 38.80% 
|Risk-free interest rate                            |  | 3.39%   |  | 3.24%   |  | 4.25%  
|Expected life (years)                              |  | 6.5     |  | 6.5     |  | 6.5    
|                                                   |  |         |  |         |  |        

The Company uses company specific historical data to estimate the expected life of
the option, such as employee option exercise and employee post-vesting departure behaviour. Since the Companys shares have been publicly traded for a period that is shorter than the expected life of the share option, expected volatility is
estimated based on the historical volatility of a peer group of similar entities in addition to its own historical volatility.

On October 6, 2006,
the Company approved the Amended and Restated 2004 Share Option Plan. The amended plan was approved by the shareholders on November 3, 2006 and became effective on the closing of the IPO. Option grants under the amended option plan may be made
to directors, officers, employees and service providers selected by the Compensation Committee of the Companys Board of Directors. The Compensation Committee may provide that any options granted will vest immediately or in increments over a
period of time. Options to be granted under the amended option plan will have an exercise price of not less than the volume weighted average trading price of the common shares on the Toronto Stock Exchange or the New York Stock Exchange at the time
of grant. The amended option plan provides that up to 10% of the Companys issued and outstanding common shares from time to time may be reserved for issue or issued from treasury under the amended option plan.

In the event of certain change of control events as defined in the amended option plan, all outstanding options will become immediately vested and exercisable. The
amended option plan provides that the Companys Board of Directors can make certain specified amendments to the option plan subject to receipt of shareholder and regulatory approval, and further authorizes the Board of Directors to make all
other amendments to the plan, subject only to regulatory approval but without shareholder approval. The amendments the Board of Directors may make without shareholder approval include amendments of a housekeeping nature, changes to the vesting
provisions of an option or the option plan, changes to the termination provisions of an option or the option plan which do not entail an extension beyond the original expiry date, the discontinuance of the option plan, and the addition of provisions
relating to phantom share units, such as restricted share units and deferred share units which result in participants receiving cash payments, and the terms governing such features.

The amended option plan provides that each option includes a cashless exercise alternative which provides a holder of an option with the right to elect to receive
cash in lieu of purchasing the number of shares under the option. Notwithstanding such right, the amended option plan provides that the Company may elect, at its sole discretion, to net settle the option in common shares.

All outstanding options granted under the 2004 Stock Option Plan remained outstanding after the amended and restated plan became effective.

b) Deferred performance share unit plan

On March 19,
2008, the Company approved a Deferred Performance Share Unit (DPSU) Plan which became effective April 1, 2008.

DPSUs will be granted
effective April 1 of each fiscal year in respect of services to be provided in that fiscal year and the following two fiscal years. The DPSUs vest at the end of a three-year term and are subject to the performance criteria approved by the
Compensation Committee of the Board of Directors at the date of grant. Such performance criterion includes the passage of time and is based upon return on invested capital calculated on operating income and average operating assets. The date of the
third fiscal year-end following the date of the grant of DPSUs is the maturity date for such DPSUs. At the maturity date, the Compensation Committee assesses the participant against the performance criteria and determines the number of DPSUs that
have been earned (earned DPSUs).

The settlement of the participants entitlement is made either in cash in an amount equivalent to the number of
earned DPSUs multiplied by the value of the Companys common shares at the date of maturity or in a number of common shares equal to the number of earned DPSUs. If settled in common shares, the common shares are purchased on the open market or
through the issuance of shares from treasury.



North American Energy Partners
Inc.Notes to Consolidated Financial Statements37



---



The fair value of each unit under the
DPSU Plan was estimated on the date of the grant using Black-Scholes option pricing model. The weighted average assumptions used in estimating the fair value of the share options issued under the DPSU Plan at April 1, 2009 and April 1,
2008 are as follows:



|                                                 |  |         |  |        
|------------------------------------------------ |  | ------- |  | -------
|Year ended March 31,                             |  | 2010    |  | 2009   
|Number of units granted                          |  | 908,165 |  | 111,020
|Weighted average fair value per unit granted ($) |  | 4.71    |  | 12.34  
|Weighted average assumptions:                    |  |         |  |        
|Dividend yield                                   |  | Nil%    |  | Nil%   
|Expected volatility                              |  | 96.89%  |  | 56.25% 
|Risk-free interest rate                          |  | 1.47%   |  | 2.83%  
|Expected life (years)                            |  | 3.00    |  | 3.00   
|                                                 |  |         |  |        

Since the Companys shares have been publicly traded for a period that is
shorter than the expected life of the DPSU, expected volatility is estimated based on the average historical volatility of a peer group of similar entities in addition to its own historical volatility.



|                                |  |                 |  
|------------------------------- |  | --------------- | -
|                                |  | Number of units |  
|Outstanding at March 31, 2008   |  |                |  
|Granted                         |  | 111,020         |  
|Exercised                       |  |                |  
|Forfeited                       |  | (20,015         | )
|                                |  |                 |  
|Outstanding at March 31, 2009   |  | 91,005          |  
|Granted                         |  | 908,165         |  
|Exercised                       |  |                |  
|Forfeited                       |  | (102,671        | )
|Converted to RSUs (note 30 (c)) |  | (389,204        | )
|                                |  |                 |  
|Outstanding at March 31, 2010   |  | 507,295         |  
|                                |  |                 |  

The weighted average exercise price per unit is $nil.

None of the DPSUs have vested as of March 31, 2010. At March 31, 2010, the weighted average remaining contractual life of outstanding DPSU Plan units is
2.2 years (March 31, 2009  2.0 years). For the years ended March 31, 2010 and March 31, 2009, respectively, the Company granted 908,165 and 111,020 units under the Plan. Compensation expense was adjusted based upon
managements assessment of performance against return on invested capital targets and the ultimate number of units expected to be issued. As at March 31, 2010, there was approximately $792 of total unrecognized compensation cost related to
non-vested share-based payment arrangements under the DPSU Plan, which is expected to be recognized over a weighted average period of 2.2 years and is subject to performance adjustments. On December 18, 2009, the Company converted 389,204 DPSUs
into RSUs (note 30(c)).

c) Restricted share unit plan

On December 3, 2009, the Company approved a Restricted Share Unit (RSU) Plan which became effective December 18, 2009.

RSUs will be granted effective April 1 of each fiscal year with respect to services to be provided in that fiscal year and the following two fiscal years. The
RSUs vest at the end of a three-year term. The Company classifies RSUs as a liability as the Company has the ability and intent to settle the awards in cash.

Compensation expense is calculated based on the fair value of each RSU as determined by the closing value of the Companys common shares on each period end
date. The Company recognizes compensation expense over the vesting period of the RSU term.

On December 18, 2009, the Company converted certain
middle managers DPSUs (note 30(b)) into RSUs at a conversion factor of 80%.



|                                                   |  |                 |  
|-------------------------------------------------- |  | --------------- | -
|                                                   |  | Number of units |  
|Outstanding at March 31, 2009                      |  |                 |  
|Converted from DPSUs at a conversion factor of 80% |  | 311,358         |  
|Granted                                            |  | 169,489         |  
|Exercised                                          |  |                 |  
|Forfeited                                          |  | (12,032         | )
|                                                   |  |                 |  
|Outstanding at March 31, 2010                      |  | 468,815         |  
|                                                   |  |                 |  

None of the RSUs have vested as of March 31, 2010. At March 31, 2010, the weighted average remaining contractual life of the
RSUs outstanding was 2.3 years.



38Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



At March 31, 2010, the redemption
value of these units was $9.68/unit (March 31, 2009  $nil/unit).

Using the redemption value of $9.68/unit at March 31, 2010, there was
approximately $3,508 of total unrecognized compensation cost related to non-vested share-based payment arrangement under the RSU Plan and these costs are expected to be recognized over a weighted average period of 2.3 years. On approval of the RSU
Plan, the Company reclassified $20 from additional paid-in capital to restricted share unit liability related to the conversion of those employees converted from the DPSU Plan to the RSU Plan.

d) Directors deferred stock unit plan

On
November 27, 2007, the Company approved a Directors Deferred Stock Unit (DDSU) Plan, which became effective January 1, 2008. Under the DDSU Plan, non-officer directors of the Company receive 50% of their annual fixed
remuneration (which is included in general and administrative costs in the Consolidated Statements of Operations and Comprehensive Income (Loss)) in the form of DDSUs and may elect to receive all or a part of their annual fixed remuneration in
excess of 50% in the form of DDSUs. The number of DDSUs to be credited to the participants deferred unit account shall be determined by dividing the amount of the participants deferred remuneration by the fair market value per common share on
the date the DDSUs are credited to the participant (the date the services are rendered by the participant). The DDSUs vest immediately upon grant and are only redeemable upon death or retirement of the participant for cash determined by the market
price of the Companys common shares for the 5 trading days immediately preceding death or retirement. Directors, who are not U.S. taxpayers, may elect to defer the maturity date until a date no later than December 1st of the calendar year
following the year in which the actual maturity date occurred.



|                              |  |                
|----------------------------- |  | ---------------
|                              |  | Number of units
|Outstanding at March 31, 2007 |  |               
|Granted                       |  | 11,807         
|                              |  |                
|Outstanding at March 31, 2008 |  | 11,807         
|Granted                       |  | 127,884        
|                              |  |                
|Outstanding at March 31, 2009 |  | 139,691        
|Granted                       |  | 123,575        
|                              |  |                
|Outstanding at March 31, 2010 |  | 263,266        
|                              |  |                

At March 31, 2010, the redemption value of these units was $9.68/unit (March
31, 2009  $3.91/unit). There is no unrecognized compensation expense related to deferred share units, since these awards vest immediately when granted.

31. Contingencies

During the normal course of the
Companys operations, various legal and tax matters are pending. In the opinion of management, these matters will not have a material effect on the Companys consolidated financial position or results of operations.

32. Comparative figures

Certain of the comparative figures
have been reclassified from statements previously presented to conform to the presentation of the current year consolidated financial statements.

33.
Subsequent event

On April 7, 2010, the Company issued, through private placement in Canada and the U.S. $225.0 million of 9.125% Series 1
Senior Unsecured Debentures (the Debentures). The Debentures mature on April 7, 2017. The Debentures will bear interest from the date of issue at 9.125% per annum and such interest is payable in equal installments semi-annually
in arrears on April 7 and October 7 in each year, commencing on October 7, 2010.

The Debentures are unsecured senior obligations and rank
equally with all other existing and future unsecured senior debt and senior to any subordinated debt that may be issued by the Company or any of its subsidiaries. The Debentures are effectively subordinated to all secured debt to the extent of
collateral on such debt.

At any time prior to April 7, 2013, the Company may redeem up to 35% of the aggregate principal amount of the Debentures,
with the net cash proceeds of one or more of the Companys Public Equity Offerings at a redemption price equal to 109.125% of the principal amount; plus accrued and unpaid interest to the date of redemption, so long as:



|i) | at least 65% of the original aggregate amount of the Debentures remains outstanding after each redemption; and
|-- | --------------------------------------------------------------------------------------------------------------



|ii) | any redemption by the Company is made within 90 days of the equity offering.
|--- | ----------------------------------------------------------------------------

At any time prior to April 7, 2013, the Company may on one or more occasions redeem the Debentures, in whole or in part, at a redemption price which is equal
to the greater of (a) the Canada Yield Price and (b) 100% of the aggregate



North American Energy Partners
Inc.Notes to Consolidated Financial Statements39



---



principal amount of Debentures redeemed, plus, in each case, accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date).

The Debentures are redeemable at the option of the Company, in whole or in part, at any time on or
after: April 7, 2013 at 104.563% of the principal amount; April 7, 2014 at 103.042% of the principal amount; April 7, 2015 at 101.520% of the principal amount; April 7, 2016 and thereafter at 100% of the principal amount; plus,
in each case, interest accrued to the redemption date.

If a change of control occurs, the Company will be required to offer to purchase all or a portion
of each Debenture holders Debentures, at a purchase price in cash equal to 101% of the principal amount of the Debentures offered for repurchase plus accrued interest to the date of purchase.

On April 8, 2010, the Company settled the cross-currency and interest rate swaps for a total of $92.5 million. On April 28, 2010, the
Company redeemed the 83/4% senior notes for a total of $207.6
million and wrote off deferred financing costs of $4.5 million. These payments were funded by the net proceeds received from the issuance of the Debentures and available cash on hand.

On April 30, 2010, the Company entered into an amended and restated credit agreement to extend the term of the credit facilities and increase the amount of the
term loans. The new credit facilities provide for total borrowings of up to $163.4 million (previously $125.0 million) under which revolving loans, term loans and letters of credit may be issued. The Revolving Facility of $85.0 million (previously
$90.0 million) was undrawn at closing. The new agreement includes two term facilities providing for borrowings of up to $78.4 million. At April 30, 2010, the Term A Facility and Term B Facility were both fully drawn at $28.4 million and $50.0
million, respectively. The new facilities mature on April 30, 2013.

Advances under the Revolving Facility may be repaid from time to time at the
Companys option. The term facilities include mandatory repayments totaling $10.0 million per year with $2.5 million paid on the last day of each quarter commencing June 30, 2010. In addition, the Company must make annual payments within
120 days of the end of its fiscal year in the amount of 50% of Consolidated Excess Cash Flow (as defined in the credit agreement) to a maximum of $4.0 million.

Interest on Canadian base rate loans is paid at variable rates based on the Canadian prime rate plus the applicable pricing margin (as defined within the credit
agreement). Interest on US base rate loans is paid at a rate per annum equal to the US base rate plus the applicable pricing margin. Interest on prime and US base rate loans is payable monthly in arrears and computed on the basis of a 365 day or 366
day year, as the case may be. Interest on LIBOR loans is paid during each interest period at a rate per annum, calculated on a 360 day year, equal to the LIBOR rate with respect to such interest period plus the applicable pricing margin.

Subsequent to March 31, 2010, the Company recorded additional financing costs on the Debentures and the amended credit agreement of $6.9 million and $1.0
million respectively. These additional costs will be recorded as deferred financing costs in the Interim Consolidated Balance Sheets.



40Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



34. United States and Canadian
accounting policy differences

These consolidated financial statements have been prepared in accordance with U.S. GAAP, which differs in certain
respects from Canadian GAAP. If Canadian GAAP were employed, the Companys net income (loss) would be adjusted as follows:



|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|----------------------------------------------------------------------------------------------------------- |  | --------- | -------- | - | ----------- | ------ | - | ------------- | - | -------- | -
|Consolidated Statements of Operations, Comprehensive Income and Deficit - for the
year ended March 31, 2010 |  | U.S. GAAP |          |   | Adjustments |        |   | Canadian GAAP |  
|Revenue(g)                                                                                                  |  |           | $758,965 |   |             | $4,336 |   |               |   | $763,301 |  
|Project costs(g)                                                                                            |  |           | 301,307  |   |             | 3,542  |   |               |   | 304,849  |  
|Equipment costs                                                                                             |  |           | 209,408  |   |             |       |   |               |   | 209,408  |  
|Equipment operating lease expense                                                                           |  |           | 66,329   |   |             |       |   |               |   | 66,329   |  
|Depreciation(a)                                                                                             |  |           | 42,636   |   |             | (124   | ) |               |   | 42,512   |  
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Gross profit                                                                                                |  |           | 139,285  |   |             | 918    |   |               |   | 140,203  |  
|General and administrative costs(c)and(g)                                                                   |  |           | 62,530   |   |             | 706    |   |               |   | 63,236   |  
|Loss on disposal of property, plant and equipment                                                           |  |           | 1,233    |   |             |       |   |               |   | 1,233    |  
|Loss on disposal of assets held for sale                                                                    |  |           | 373      |   |             |       |   |               |   | 373      |  
|Amortization of intangible assets(b)                                                                        |  |           | 1,719    |   |             | 831    |   |               |   | 2,550    |  
|Equity in earnings of unconsolidated joint venture(g)                                                       |  |           | (44      | ) |             | 44     |   |               |   |         |  
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Operating income before the undernoted                                                                      |  |           | 73,474   |   |             | (663   | ) |               |   | 72,811   |  
|Interest expense, net(b)                                                                                    |  |           | 26,080   |   |             | (2,486 | ) |               |   | 23,594   |  
|Foreign exchange gain(b)                                                                                    |  |           | (48,901  | ) |             | 496    |   |               |   | (48,405  | )
|Realized and unrealized loss on derivative financial instruments(d)                                         |  |           | 54,411   |   |             |       |   |               |   | 54,411   |  
|Other income                                                                                                |  |           | (14      | ) |             |       |   |               |   | (14      | )
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Income before income taxes                                                                                  |  |           | 41,898   |   |             | 1,327  |   |               |   | 43,225   |  
|Income taxes:                                                                                               |  |           |          |   |             |        |   |               |   |          |  
|Current income taxes                                                                                        |  |           | 3,803    |   |             |       |   |               |   | 3,803    |  
|Deferred income taxes(h)                                                                                    |  |           | 9,876    |   |             | 372    |   |               |   | 10,248   |  
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Net income and comprehensive income for the year                                                            |  |           | 28,219   |   |             | 955    |   |               |   | 29,174   |  
|Deficit, beginning of year                                                                                  |  |           | (158,105 | ) |             | 126    |   |               |   | (157,979 | )
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Deficit, end of year                                                                                        |  | $         | (129,886 | ) |             | $1,081 |   |               | $ | (128,805 | )
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Net income per share  basic                                                                                |  |           | $0.78    |   |             | $0.03  |   |               |   | $0.81    |  
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  
|Net income per share  diluted                                                                              |  |           | $0.77    |   |             | $0.02  |   |               |   | $0.79    |  
|                                                                                                            |  |           |          |   |             |        |   |               |   |          |  



North American Energy Partners
Inc.Notes to Consolidated Financial Statements41



---



|                                                                                                          |  |            |   |  |             |   |  |               |  
|--------------------------------------------------------------------------------------------------------- |  | ---------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Statements of Operations, Comprehensive Loss and Deficit  for the
year ended March 31, 2009 |  | U.S. GAAP  |   |  | Adjustments |   |  | Canadian GAAP |  
|Revenue                                                                                                   |  | $972,536   |   |  | $          |   |  | $972,536      |  
|Project costs                                                                                             |  | 505,026    |   |  |            |   |  | 505,026       |  
|Equipment costs                                                                                           |  | 217,120    |   |  |            |   |  | 217,120       |  
|Equipment operating lease expense                                                                         |  | 43,583     |   |  |            |   |  | 43,583        |  
|Depreciation(a)                                                                                           |  | 36,389     |   |  | (162        | ) |  | 36,227        |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Gross profit                                                                                              |  | 170,418    |   |  | 162         |   |  | 170,580       |  
|General and administrative costs(c)                                                                       |  | 74,460     |   |  | (55         | ) |  | 74,405        |  
|Loss on disposal of property, plant and equipment                                                         |  | 5,325      |   |  |            |   |  | 5,325         |  
|Loss on disposal of assets held for sale                                                                  |  | 24         |   |  |            |   |  | 24            |  
|Amortization of intangible assets(b)                                                                      |  | 1,501      |   |  | 837         |   |  | 2,338         |  
|Impairment of goodwill                                                                                    |  | 176,200    |   |  |            |   |  | 176,200       |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Operating loss before the undernoted                                                                      |  | (87,092    | ) |  | (620        | ) |  | (87,712       | )
|Interest expense, net(b)                                                                                  |  | 29,612     |   |  | (2,162      | ) |  | 27,450        |  
|Foreign exchange loss(b)                                                                                  |  | 47,272     |   |  | (606        | ) |  | 46,666        |  
|Realized and unrealized gain on derivative financial instruments(d)                                       |  | (37,250    | ) |  | 4,655       |   |  | (32,595       | )
|Other income                                                                                              |  | (5,955     | ) |  |            |   |  | (5,955        | )
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Loss before income taxes                                                                                  |  | (120,771   | ) |  | (2,507      | ) |  | (123,278      | )
|Income taxes:                                                                                             |  |            |   |  |             |   |  |               |  
|Current income taxes                                                                                      |  | 5,546      |   |  |            |   |  | 5,546         |  
|Deferred income taxes(h)                                                                                  |  | 9,087      |   |  | (34         | ) |  | 9,053         |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Net loss and comprehensive loss for the year                                                              |  | (135,404   | ) |  | (2,473      | ) |  | (137,877      | )
|Deficit, beginning of year                                                                                |  | (22,701    | ) |  | 1,608       |   |  | (21,093       | )
|Change in accounting policy related to inventories(f)                                                     |  |           |   |  | 991         |   |  | 991           |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Deficit, end of year                                                                                      |  | $(158,105) |   |  | $126        |   |  | $(157,979)    |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Net loss per share  basic                                                                                |  | $(3.76)    |   |  | $(0.07)     |   |  | $(3.83)       |  
|                                                                                                          |  |            |   |  |             |   |  |               |  
|Net loss per share  diluted                                                                              |  | $(3.76)    |   |  | $(0.07)     |   |  | $(3.83)       |  
|                                                                                                          |  |            |   |  |             |   |  |               |  



|                                                                                                            |  |           |   |  |             |   |  |               |  
|----------------------------------------------------------------------------------------------------------- |  | --------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Statements of Operations, Comprehensive Income and Deficit - for the
year ended March 31, 2008 |  | U.S. GAAP |   |  | Adjustments |   |  | Canadian GAAP |  
|Revenue                                                                                                     |  | $989,696  |   |  | $          |   |  | $989,696      |  
|Project costs                                                                                               |  | 592,458   |   |  |            |   |  | 592,458       |  
|Equipment costs(f)                                                                                          |  | 176,190   |   |  | 1,383       |   |  | 177,573       |  
|Equipment operating lease expense                                                                           |  | 22,319    |   |  |            |   |  | 22,319        |  
|Depreciation(a)                                                                                             |  | 35,720    |   |  | (131        | ) |  | 35,589        |  
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Gross profit                                                                                                |  | 163,009   |   |  | (1,252      | ) |  | 161,757       |  
|General and administrative costs(c)                                                                         |  | 69,806    |   |  | (136        | ) |  | 69,670        |  
|Loss on disposal of property, plant and equipment                                                           |  | 179       |   |  |            |   |  | 179           |  
|Loss on disposal assets held for sale                                                                       |  | 493       |   |  |            |   |  | 493           |  
|Amortization of intangible assets(b)                                                                        |  | 804       |   |  | 794         |   |  | 1,598         |  
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Operating income before the undernoted                                                                      |  | 91,727    |   |  | (1,910      | ) |  | 89,817        |  
|Interest expense, net(b)                                                                                    |  | 29,080    |   |  | (2,061      | ) |  | 27,019        |  
|Foreign exchange gain(b)                                                                                    |  | (25,660   | ) |  | 218         |   |  | (25,442       | )
|Realized and unrealized loss on derivative financial instruments(d)                                         |  | 30,075    |   |  | 4,000       |   |  | 34,075        |  
|Other income                                                                                                |  | (418      | ) |  |            |   |  | (418          | )
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Income before income taxes                                                                                  |  | 58,650    |   |  | (4,067      | ) |  | 54,583        |  
|Income taxes:                                                                                               |  |           |   |  |             |   |  |               |  
|Current income taxes                                                                                        |  | 80        |   |  |            |   |  | 80            |  
|Deferred income taxes(h)                                                                                    |  | 17,036    |   |  | (511        | ) |  | 16,525        |  
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Net income and comprehensive income for the year                                                            |  | 41,534    |   |  | (3,556      | ) |  | 37,978        |  
|Deficit, beginning of year  as previously reported                                                         |  | (64,235   | ) |  | 8,709       |   |  | (55,526       | )
|Change in accounting policy related to financial instruments(j)                                             |  |          |   |  | (3,545      | ) |  | (3,545        | )
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Deficit, end of year                                                                                        |  | $(22,701) |   |  | $1,608      |   |  | $(21,093)     |  
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Net income per share  basic                                                                                |  | $1.16     |   |  | $(0.10)     |   |  | $1.06         |  
|                                                                                                            |  |           |   |  |             |   |  |               |  
|Net income per share  diluted                                                                              |  | $1.13     |   |  | $(0.10)     |   |  | $1.03         |  
|                                                                                                            |  |           |   |  |             |   |  |               |  



42Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The cumulative effect of material
differences between U.S. and Canadian GAAP on the consolidated balance sheets of the Company is as follows:



|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Balance Sheets as at March 31, 2010                                                                                                                   |  | U.S. GAAP |   |  | Adjustments |   |  | Canadian GAAP |  
|Assets                                                                                                                                                             |  |           |   |  |             |   |  |               |  
|Current assets:                                                                                                                                                    |  |           |   |  |             |   |  |               |  
|Cash and cash equivalents(g)                                                                                                                                       |  | $103,005  |   |  | $1,240      |   |  | $104,245      |  
|Accounts receivable(g)                                                                                                                                             |  | 111,884   |   |  | 1,432       |   |  | 113,316       |  
|Unbilled revenue(g)                                                                                                                                                |  | 84,702    |   |  | 1,794       |   |  | 86,496        |  
|Inventories                                                                                                                                                        |  | 5,659     |   |  |            |   |  | 5,659         |  
|Prepaid expenses and deposits(g)                                                                                                                                   |  | 6,881     |   |  | 87          |   |  | 6,968         |  
|Deferred taxes assets                                                                                                                                              |  | 3,481     |   |  |            |   |  | 3,481         |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | 315,612   |   |  | 4,553       |   |  | 320,165       |  
|Prepaid expenses and deposits                                                                                                                                      |  | 4,005     |   |  |            |   |  | 4,005         |  
|Assets held for sale                                                                                                                                               |  | 838       |   |  |            |   |  | 838           |  
|Property, plant and equipment(a)                                                                                                                                   |  | 328,743   |   |  | (536        | ) |  | 328,207       |  
|Intangible assets(b)                                                                                                                                               |  | 7,669     |   |  | 1,051       |   |  | 8,720         |  
|Deferred financing costs(b)                                                                                                                                        |  | 6,725     |   |  | (5,685      | ) |  | 1,040         |  
|Investment in and advances to unconsolidated joint venture(g)                                                                                                      |  | 2,917     |   |  | (2,917      | ) |  |              |  
|Goodwill                                                                                                                                                           |  | 25,111    |   |  |            |   |  | 25,111        |  
|Deferred taxes assets                                                                                                                                              |  | 10,997    |   |  |            |   |  | 10,997        |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | $702,617  |   |  | $(3,534     | ) |  | $699,083      |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|Liabilities and Shareholders Equity                                                                                                                               |  |           |   |  |             |   |  |               |  
|Current liabilities:                                                                                                                                               |  |           |   |  |             |   |  |               |  
|Accounts payable(g)                                                                                                                                                |  | $66,876   |   |  | $1,637      |   |  | $68,513       |  
|Accrued liabilities                                                                                                                                                |  | 47,191    |   |  |            |   |  | 47,191        |  
|Billings in excess of costs incurred and estimated earnings on uncompleted contracts                                                                               |  | 1,614     |   |  |            |   |  | 1,614         |  
|Current portion of capital lease obligations                                                                                                                       |  | 5,053     |   |  |            |   |  | 5,053         |  
|Current portion of derivative financial instruments                                                                                                                |  | 22,054    |   |  | (1,506      | ) |  | 20,548        |  
|Current portion of long term debt                                                                                                                                  |  | 6,072     |   |  |            |   |  | 6,072         |  
|Deferred taxes liabilities                                                                                                                                         |  | 16,781    |   |  |            |   |  | 16,781        |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | 165,641   |   |  | 131         |   |  | 165,772       |  
|Deferred lease inducements                                                                                                                                         |  | 761       |   |  |            |   |  | 761           |  
|Long term accrued liabilities                                                                                                                                      |  | 14,943    |   |  |            |   |  | 14,943        |  
|Capital lease obligations                                                                                                                                          |  | 8,340     |   |  |            |   |  | 8,340         |  
|Long term debt                                                                                                                                                     |  | 22,374    |   |  |            |   |  | 22,374        |  
|Senior notes(b)and(d)                                                                                                                                              |  | 203,120   |   |  | (1,506      | ) |  | 201,614       |  
|Director deferred stock unit liability                                                                                                                             |  | 2,548     |   |  |            |   |  | 2,548         |  
|Restricted share unit liability                                                                                                                                    |  | 1,030     |   |  |            |   |  | 1,030         |  
|Derivative financial instruments                                                                                                                                   |  | 75,001    |   |  | 1,506       |   |  | 76,507        |  
|Asset retirement obligation                                                                                                                                        |  | 360       |   |  |            |   |  | 360           |  
|Deferred taxes liabilities(h)                                                                                                                                      |  | 27,441    |   |  | (1,052      | ) |  | 26,389        |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | 521,559   |   |  | (921        | ) |  | 520,638       |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|Shareholders equity:                                                                                                                                              |  |           |   |  |             |   |  |               |  
|Common shares (authorized  unlimited number of voting and non-voting common shares; issued and outstanding  March 31, 2010
 36,049,276 voting common shares)(e) |  | 303,505   |   |  | (3,458      | ) |  | 300,047       |  
|Additional paid-in capital(c)and(h)                                                                                                                                |  | 7,439     |   |  | (236        | ) |  | 7,203         |  
|Deficit(a 
h)                                                                                                                                                     |  | (129,886  | ) |  | 1,081       |   |  | (128,805      | )
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | 181,058   |   |  | (2,613      | ) |  | 178,445       |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  
|                                                                                                                                                                   |  | $702,617  |   |  | $(3,534     | ) |  | $699,083      |  
|                                                                                                                                                                   |  |           |   |  |             |   |  |               |  



North American Energy Partners
Inc.Notes to Consolidated Financial Statements43



---



|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------- | - |  | ----------- | ------ | - | ------------- | -------- | -
|Consolidated Balance Sheets as at March 31, 2009                                                                                                                   |  | U.S. GAAP |   |  | Adjustments |        |   | Canadian GAAP |         
|Assets                                                                                                                                                             |  |           |   |  |             |        |   |               |          |  
|Current assets:                                                                                                                                                    |  |           |   |  |             |        |   |               |          |  
|Cash and cash equivalents                                                                                                                                          |  | $98,880   |   |  |             | $     |   |               | $98,880  |  
|Accounts receivable                                                                                                                                                |  | 78,323    |   |  |             |       |   |               | 78,323   |  
|Unbilled revenue                                                                                                                                                   |  | 55,907    |   |  |             |       |   |               | 55,907   |  
|Inventories                                                                                                                                                        |  | 11,814    |   |  |             |       |   |               | 11,814   |  
|Prepaid expenses and deposits                                                                                                                                      |  | 4,781     |   |  |             |       |   |               | 4,781    |  
|Deferred taxes assets                                                                                                                                              |  | 7,033     |   |  |             |       |   |               | 7,033    |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | 256,738   |   |  |             |       |   |               | 256,738  |  
|Prepaid expenses and deposits                                                                                                                                      |  | 3,504     |   |  |             |       |   |               | 3,504    |  
|Assets held for sale                                                                                                                                               |  | 2,760     |   |  |             |       |   |               | 2,760    |  
|Property, plant and equipment(a)                                                                                                                                   |  | 316,115   |   |  |             | (660   | ) |               | 315,455  |  
|Intangible assets(b)                                                                                                                                               |  | 5,944     |   |  |             | 767    |   |               | 6,711    |  
|Deferred financing costs(b)                                                                                                                                        |  | 7,910     |   |  |             | (7,910 | ) |               |         |  
|Goodwill                                                                                                                                                           |  | 23,872    |   |  |             |       |   |               | 23,872   |  
|Deferred taxes assets                                                                                                                                              |  | 12,432    |   |  |             |       |   |               | 12,432   |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | $629,275  |   |  | $           | (7,803 | ) |               | $621,472 |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|Liabilities and Shareholders Equity                                                                                                                               |  |           |   |  |             |        |   |               |          |  
|Current liabilities:                                                                                                                                               |  |           |   |  |             |        |   |               |          |  
|Accounts payable                                                                                                                                                   |  | $56,204   |   |  |             | $     |   |               | $56,204  |  
|Accrued liabilities                                                                                                                                                |  | 45,001    |   |  |             |       |   |               | 45,001   |  
|Billings in excess of costs incurred and estimated earnings on uncompleted contracts                                                                               |  | 2,155     |   |  |             |       |   |               | 2,155    |  
|Current portion of capital lease obligations                                                                                                                       |  | 5,409     |   |  |             |       |   |               | 5,409    |  
|Current portion of derivative financial instruments                                                                                                                |  | 11,439    |   |  |             |       |   |               | 11,439   |  
|Deferred taxes liabilities                                                                                                                                         |  | 7,749     |   |  |             |       |   |               | 7,749    |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | 127,957   |   |  |             |       |   |               | 127,957  |  
|Deferred lease inducements                                                                                                                                         |  | 836       |   |  |             |       |   |               | 836      |  
|Long term accrued liabilities                                                                                                                                      |  | 7,134     |   |  |             |       |   |               | 7,134    |  
|Capital lease obligations                                                                                                                                          |  | 12,075    |   |  |             |       |   |               | 12,075   |  
|Senior notes(b)and(d)                                                                                                                                              |  | 255,756   |   |  |             | (2,857 | ) |               | 252,899  |  
|Director deferred stock unit liability                                                                                                                             |  | 546       |   |  |             |       |   |               | 546      |  
|Derivative financial instruments                                                                                                                                   |  | 43,048    |   |  |             |       |   |               | 43,048   |  
|Asset retirement obligation                                                                                                                                        |  | 386       |   |  |             |       |   |               | 386      |  
|Deferred taxes liabilities(h)                                                                                                                                      |  | 30,745    |   |  |             | (1,423 | ) |               | 29,322   |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | 478,483   |   |  |             | (4,280 | ) |               | 474,203  |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|Shareholders equity:                                                                                                                                              |  |           |   |  |             |        |   |               |          |  
|Common shares (authorized  unlimited number of voting and non-voting common shares; issued and outstanding  March 31, 2009
 36,038,476 voting common shares)(e) |  | 303,431   |   |  |             | (3,458 | ) |               | 299,973  |  
|Additional paid-in capital(c)and(h)                                                                                                                                |  | 5,466     |   |  |             | (191   | ) |               | 5,275    |  
|Deficit(a 
h)                                                                                                                                                     |  | (158,105  | ) |  |             | 126    |   |               | (157,979 | )
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | 150,792   |   |  |             | (3,523 | ) |               | 147,269  |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  
|                                                                                                                                                                   |  | $629,275  |   |  | $           | (7,803 | ) |               | $621,472 |  
|                                                                                                                                                                   |  |           |   |  |             |        |   |               |          |  



44Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



|                                                                           |  |           |   |  |             |   |  |               |  
|-------------------------------------------------------------------------- |  | --------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Statements of Cash Flows  for the year ended March 31,
2010  |  |           |   |  |             |   |  |               |  
|Cash provided by (used in):                                                |  | U.S. GAAP |   |  | Adjustments |   |  | Canadian GAAP |  
|Operating activities:                                                      |  |           |   |  |             |   |  |               |  
|Net income for the year                                                    |  | $28,219   |   |  | $955        |   |  | $29,174       |  
|Items not affecting cash:                                                  |  |           |   |  |             |   |  |               |  
|Depreciation                                                               |  | 42,636    |   |  | (124        | ) |  | 42,512        |  
|Equity in earnings of unconsolidated joint venture                         |  | (44       | ) |  | 44          |   |  |              |  
|Amortization of intangible assets                                          |  | 1,719     |   |  | 831         |   |  | 2,550         |  
|Amortization of deferred lease inducements                                 |  | (107      | ) |  |            |   |  | (107          | )
|Amortization of deferred financing costs                                   |  | 3,348     |   |  | (2,486      | ) |  | 862           |  
|Loss on disposal of property, plant and equipment                          |  | 1,233     |   |  |            |   |  | 1,233         |  
|Loss on disposal of assets held for sale                                   |  | 373       |   |  |            |   |  | 373           |  
|Unrealized foreign exchange gain on senior notes                           |  | (48,920   | ) |  | 496         |   |  | (48,424       | )
|Unrealized loss on derivative financial instruments measured at fair value |  | 38,852    |   |  |            |   |  | 38,852        |  
|Stock-based compensation expense                                           |  | 5,270     |   |  | (46         | ) |  | 5,224         |  
|Accretion of asset retirement obligation                                   |  | 5         |   |  |            |   |  | 5             |  
|Deferred income taxes                                                      |  | 9,876     |   |  | 372         |   |  | 10,248        |  
|Net changes in non-cash working capital                                    |  | (39,591   | ) |  | (1,675      | ) |  | (41,266       | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | 42,869    |   |  | (1,633      | ) |  | 41,236        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Investing activities:                                                      |  |           |   |  |             |   |  |               |  
|Acquisition, net of cash acquired                                          |  | (5,410    | ) |  |            |   |  | (5,410        | )
|Purchase of property, plant and equipment                                  |  | (51,989   | ) |  |            |   |  | (51,989       | )
|Purchase of intangible assets                                              |  | (3,362    | ) |  |            |   |  | (3,362        | )
|Additions to assets held for sale                                          |  | (1,739    | ) |  |            |   |  | (1,739        | )
|Investment in and advances to unconsolidated joint venture                 |  | (2,873    | ) |  | 2,873       |   |  |              |  
|Proceeds on disposal of property, plant and equipment                      |  | 1,440     |   |  |            |   |  | 1,440         |  
|Proceeds of disposal of assets held for sale                               |  | 2,482     |   |  |            |   |  | 2,482         |  
|Net changes in non-cash working capital                                    |  | 1,840     |   |  |            |   |  | 1,840         |  
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | (59,611   | ) |  | 2,873       |   |  | (56,738       | )
|                                                                           |  |           |   |  |             |   |  |               |  
|Financing activities:                                                      |  |           |   |  |             |   |  |               |  
|Repayment of long term debt                                                |  | (6,906    | ) |  |             |   |  | (6,906        | )
|Increase in long term debt                                                 |  | 34,700    |   |  |            |   |  | 34,700        |  
|Cash settlement of stock options                                           |  | (244      | ) |  |            |   |  | (244          | )
|Proceeds from stock options exercised                                      |  | 53        |   |  |            |   |  | 53            |  
|Financing costs                                                            |  | (1,123    | ) |  |            |   |  | (1,123        | )
|Repayment of capital lease obligations                                     |  | (5,613    | ) |  |            |   |  | (5,613        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | 20,867    |   |  |            |   |  | 20,867        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Increase in cash and cash equivalents                                      |  | 4,125     |   |  | 1,240       |   |  | 5,365         |  
|Cash and cash equivalents, beginning of year                               |  | 98,880    |   |  |            |   |  | 98,880        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Cash and cash equivalents, end of year                                     |  | $103,005  |   |  | $1,240      |   |  | $104,245      |  
|                                                                           |  |           |   |  |             |   |  |               |  



North American Energy Partners
Inc.Notes to Consolidated Financial Statements45



---



|                                                                           |  |           |   |  |             |   |  |               |  
|-------------------------------------------------------------------------- |  | --------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Statements of Cash Flows  for the year ended March 31,
2009  |  |           |   |  |             |   |  |               |  
|Cash provided by (used in):                                                |  | U.S. GAAP |   |  | Adjustments |   |  | Canadian GAAP |  
|Operating activities:                                                      |  |           |   |  |             |   |  |               |  
|Net loss for the year                                                      |  | $(135,404 | ) |  | $(2,473     | ) |  | $(137,877     | )
|Items not affecting cash:                                                  |  |           |   |  |             |   |  |               |  
|Depreciation                                                               |  | 36,389    |   |  | (162        | ) |  | 36,227        |  
|Amortization of intangible assets                                          |  | 1,501     |   |  | 837         |   |  | 2,338         |  
|Impairment of goodwill                                                     |  | 176,200   |   |  |            |   |  | 176,200       |  
|Amortization of deferred lease inducements                                 |  | (105      | ) |  |            |   |  | (105          | )
|Amortization of deferred financing costs                                   |  | 2,970     |   |  | (2,162      | ) |  | 808           |  
|Loss on disposal of property, plant and equipment                          |  | 5,325     |   |  |            |   |  | 5,325         |  
|Loss on disposal of assets held for sale                                   |  | 24        |   |  |            |   |  | 24            |  
|Unrealized foreign exchange loss on senior notes                           |  | 46,466    |   |  | (606        | ) |  | 45,860        |  
|Unrealized gain on derivative financial instruments measured at fair value |  | (39,921   | ) |  | 4,655       |   |  | (35,266       | )
|Stock-based compensation expense                                           |  | 2,305     |   |  | (55         | ) |  | 2,250         |  
|Accretion of asset retirement obligation                                   |  | 155       |   |  |            |   |  | 155           |  
|Deferred income taxes                                                      |  | 9,087     |   |  | (34         | ) |  | 9,053         |  
|Net changes in non-cash working capital                                    |  | 46,193    |   |  |            |   |  | 46,193        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | 151,185   |   |  |            |   |  | 151,185       |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Investing activities:                                                      |  |           |   |  |             |   |  |               |  
|Purchase of property, plant and equipment                                  |  | (84,437   | ) |  |            |   |  | (84,437       | )
|Purchase of intangible assets                                              |  | (3,102    | ) |  |            |   |  | (3,102        | )
|Additions to assets held for sale                                          |  | (2,035    | ) |  |            |   |  | (2,035        | )
|Proceeds on disposal of property, plant and equipment                      |  | 11,164    |   |  |            |   |  | 11,164        |  
|Proceeds of disposal of assets held for sale                               |  | 325       |   |  |            |   |  | 325           |  
|Net changes in non-cash working capital                                    |  | (630      | ) |  |            |   |  | (630          | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | (78,715   | ) |  |            |   |  | (78,715       | )
|                                                                           |  |           |   |  |             |   |  |               |  
|Financing activities:                                                      |  |           |   |  |             |   |  |               |  
|Proceeds from stock options exercised                                      |  | 703       |   |  |            |   |  | 703           |  
|Repayment of capital lease obligations                                     |  | (6,156    | ) |  |            |   |  | (6,156        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | (5,453    | ) |  |            |   |  | (5,453        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|Increase in cash and cash equivalents                                      |  | 67,017    |   |  |            |   |  | 67,017        |  
|Cash and cash equivalents, beginning of year                               |  | 31,863    |   |  |            |   |  | 31,863        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Cash and cash equivalents, end of year                                     |  | $98,880   |   |  | $          |   |  | $98,880       |  
|                                                                           |  |           |   |  |             |   |  |               |  



46Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



|                                                                           |  |           |   |  |             |   |  |               |  
|-------------------------------------------------------------------------- |  | --------- | - |  | ----------- | - |  | ------------- | -
|Consolidated Statements of Cash Flows  for the year ended March 31,
2008  |  |           |   |  |             |   |  |               |  
|Cash provided by (used in):                                                |  | U.S. GAAP |   |  | Adjustments |   |  | Canadian GAAP |  
|Operating activities:                                                      |  |           |   |  |             |   |  |               |  
|Net income for the year                                                    |  | $41,534   |   |  | $(3,556     | ) |  | $37,978       |  
|Items not affecting cash:                                                  |  |           |   |  |             |   |  |               |  
|Depreciation                                                               |  | 35,720    |   |  | (131        | ) |  | 35,589        |  
|Write-down of other assets to replacement cost                             |  |          |   |  | 1,845       |   |  | 1,845         |  
|Amortization of intangible assets                                          |  | 804       |   |  | 794         |   |  | 1,598         |  
|Amortization of deferred lease inducements                                 |  | (104      | ) |  |            |   |  | (104          | )
|Amortization of deferred financing costs                                   |  | 2,899     |   |  | (2,061      | ) |  | 838           |  
|Loss on disposal of property, plant and equipment                          |  | 179       |   |  |            |   |  | 179           |  
|Loss on disposal of assets held for sale                                   |  | 493       |   |  |            |   |  | 493           |  
|Unrealized foreign exchange gain on senior notes                           |  | (25,006   | ) |  | 218         |   |  | (24,788       | )
|Unrealized loss on derivative financial instruments measured at fair value |  | 27,406    |   |  | 4,000       |   |  | 31,406        |  
|Stock-based compensation expense                                           |  | 2,127     |   |  | (136        | ) |  | 1,991         |  
|Deferred income taxes                                                      |  | 17,036    |   |  | (511        | ) |  | 16,525        |  
|Net changes in non-cash working capital                                    |  | (8,291    | ) |  | (462        | ) |  | (8,753        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | 94,797    |   |  |            |   |  | 94,797        |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Investing activities:                                                      |  |           |   |  |             |   |  |               |  
|Acquisition, net of cash acquired                                          |  | (1,581    | ) |  |            |   |  | (1,581        | )
|Purchase of property, plant and equipment                                  |  | (52,805   | ) |  |            |   |  | (52,805       | )
|Purchase of intangible assets                                              |  | (2,274    | ) |  |            |   |  | (2,274        | )
|Additions to assets held for sale                                          |  | (3,499    | ) |  |            |   |  | (3,499        | )
|Proceeds on disposal of property, plant and equipment                      |  | 6,862     |   |  |            |   |  | 6,862         |  
|Proceeds of disposal of assets held for sale                               |  | 10,200    |   |  |            |   |  | 10,200        |  
|Net changes in non-cash working capital                                    |  | (2,835    | ) |  |            |   |  | (2,835        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | (45,932   | ) |  |            |   |  | (45,932       | )
|                                                                           |  |           |   |  |             |   |  |               |  
|Financing activities:                                                      |  |           |   |  |             |   |  |               |  
|Repayment of long term debt                                                |  | (20,500   | ) |  |            |   |  | (20,500       | )
|Cash settlement of stock options                                           |  | (581      | ) |  |            |   |  | (581          | )
|Proceeds from stock options exercised                                      |  | 1,627     |   |  |            |   |  | 1,627         |  
|Financing costs                                                            |  | (776      | ) |  |            |   |  | (776          | )
|Repayment of capital lease obligations                                     |  | (3,762    | ) |  |            |   |  | (3,762        | )
|                                                                           |  |           |   |  |             |   |  |               |  
|                                                                           |  | (23,992   | ) |  |            |   |  | (23,992       | )
|                                                                           |  |           |   |  |             |   |  |               |  
|Increase in cash and cash equivalents                                      |  | 24,873    |   |  |            |   |  | 24,873        |  
|Cash and cash equivalents, beginning of year                               |  | 6,990     |   |  |            |   |  | 6,990         |  
|                                                                           |  |           |   |  |             |   |  |               |  
|Cash and cash equivalents, end of year                                     |  | $31,863   |   |  | $          |   |  | $31,863       |  
|                                                                           |  |           |   |  |             |   |  |               |  

The areas of material difference between Canadian and U.S. GAAP and their impact on the Companys consolidated financial
statements are described below:

a) Capitalization of interest

U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare
for their intended use. This is not required under Canadian GAAP. The capitalized amount is subject to depreciation in accordance with the Companys policies when the asset is placed into service.

b) Financing costs, discounts and premiums

Under U.S. GAAP,
deferred financing costs incurred in connection with the Companys senior notes are being amortized over the term of the related debt using the effective interest method. Prior to April 1, 2007, for Canadian GAAP purposes, these
transaction costs were recorded as a deferred asset under Canadian GAAP and these deferred financing costs were being amortized on a straight-line basis over the term of the debt.

Effective April 1, 2007, the Company adopted CICA Handbook Section 3855, Financial Instruments  Recognition and Measurement, on a
retrospective basis without restatement as described below. Although Section 3855 also requires the use of the effective interest method to account for the amortization of finance costs, the requirement to bifurcate the issuers early
prepayment option on issuance of the debt (which is not required under U.S. GAAP) resulted in an additional premium that is being amortized over the term of the debt under Canadian GAAP. In addition, foreign denominated transaction costs, discounts
and premiums are considered as part of the carrying value of the related financial liability under Canadian GAAP and are subject to foreign currency gains or losses resulting from periodic translation procedures as they are treated as a monetary
item under Canadian GAAP. Under U.S. GAAP, foreign denominated transaction costs are considered non-monetary and are not subject to foreign currency gains and losses resulting from periodic translation procedures.



North American Energy Partners
Inc.Notes to Consolidated Financial Statements47



---



In connection with the adoption of
Section 3855, transaction costs incurred in connection with the Companys Revolving Facility of $1,622 were reclassified from deferred financing costs to intangible assets on April 1, 2007 under Canadian GAAP and these costs continue
to be amortized on a straight-line basis over the term of the facility. Under U.S. GAAP, the Company continues to amortize these transaction costs over the stated term of the related debt using the effective interest method. The Company discloses
the financing costs for both the senior notes and the Revolving Facility as deferred financing costs on the Consolidated Balance Sheets with the amortization charge classified as interest on the Consolidated Statements of Operations and
Comprehensive Income (Loss). Under Canadian GAAP, the financing costs related to the senior notes are included in the senior notes balance on the Consolidated Balance Sheets.

c) Stock-based compensation

Up until April 1, 2006, the
Company followed the provisions of ASC 718, Share-Based Payment (formerly Statement of Financial Accounting Standards No. 123, Stock-Based Compensation), for U.S. GAAP purposes. As the Company uses the fair value method
of accounting for all stock-based compensation payments under Canadian GAAP, there were no differences between Canadian and U.S. GAAP prior to April 1, 2006. On April 1, 2006, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment (SFAS 123R), which is now a part of ASC 718. As the Company used the minimum value method for purposes of complying with Statement of Financial Accounting Standards
No. 123, it was required to adopt the provisions under the revised guidance prospectively. Under Canadian GAAP, the Company was permitted to exclude volatility from the determination of the fair value of stock options granted until the filing
of its initial registration statement relating to the initial public offering of voting shares on July 21, 2006. As a result, for options issued between April 1, 2006 and July 21, 2006, there is a difference between Canadian and U.S.
GAAP relating to the determination of the fair value of options granted.

d) Derivative financial instruments

Under Canadian GAAP, the Company determined that the issuers early prepayment option included in the senior notes should be bifurcated from the host contract,
along with a contingent embedded derivative in the senior notes that provide for accelerated redemption by the holders in certain instances. These embedded derivatives were measured at fair value at the inception of the senior notes and the residual
amount of the proceeds was allocated to the debt. Changes in fair value of the embedded derivatives are recognized in net income and the carrying amount of the senior notes is accreted to par value over the term of the notes using the effective
interest method and is recognized as interest expense as discussed in b) above. Prior to April 1, 2007 under Canadian GAAP, separate accounting of embedded derivatives from the host contract was not permitted by EIC-117.

Under U.S. GAAP, ASC 815 (formerly Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS
133)) establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The contingent embedded derivative in the senior notes that provide for accelerated redemption by the holders in certain instances met the criteria for bifurcation from the debt contract and separate measurement
at fair value. The embedded derivative has been measured at fair value and changes in fair value recorded in net income for all periods presented. The issuers early prepayment option included in the senior notes does not meet the criteria as
an embedded derivative under ASC 815 (formerly SFAS 133) and was not bifurcated from the host contract and measured at fair value resulting in a U.S. GAAP and Canadian GAAP difference.

On adoption of CICA Handbook Section 3855, Financial Instruments  Recognition and Measurement, the Company reviewed the accounting treatment
of a number of outstanding contracts and determined that a price escalation feature in a revenue construction contract and supplier contracts entered into prior to April 1, 2007 contained embedded derivatives that are not closely related to the
host contract under Canadian GAAP. The Company recorded the fair value of these embedded derivatives on April 1, 2007 of $9,720, with a corresponding increase in opening deficit of $6,950, net of future income taxes of $2,770 for Canadian GAAP
purposes. Under U.S. GAAP, the Company had recognized and measured these embedded derivatives since inception of the related contracts.

e) NAEPI
Series B Preferred Shares

Prior to the modification of the terms of the North American Energy Partners Inc. (NAEPI) Series B preferred
shares on March 30, 2006, there were no differences between Canadian GAAP and U.S. GAAP related to the NAEPI Series B preferred shares. As a result of the modification of terms of NAEPIs Series B preferred shares, under Canadian GAAP,
NACG continued to classify the NAEPI Series B preferred shares as a liability and was accreting the carrying amount of $42.2 million on the amendment date (March 30, 2006) to their December 31, 2011 redemption value of $69.6 million using the
effective interest method. Under U.S. GAAP, NACG recognized the fair value of the amended NAEPI Series B preferred shares as minority interest as such amount was recognized as temporary equity in the accounts of NAEPI in accordance with EITF Topic
D-98 and recognized a charge of $3.7 million to retained earnings for the difference between the fair value and the carrying amount of the Series B preferred shares on the amendment date. Under U.S. GAAP, NACG was accreting the initial fair value of
the amended NAEPI Series B preferred shares of $45.9 million recorded on their amendment date (March 30, 2006) to the December 31, 2011 redemption value of $69.6 million using the effective



48Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



interest method, which was consistent with the treatment of the NAEPI Series B preferred shares as temporary equity in the financial statements of NAEPI. The accretion charge was recognized by
NACG as a charge to minority interest (as opposed to retained earnings in the accounts of NAEPI) under U.S. GAAP and interest expense in NACGs financial statements under Canadian GAAP.

On November 28, 2006, NACG exercised a call option to acquire all of the issued and outstanding NAEPI Series B preferred shares in exchange for 7,524,400
common shares of NACG. For Canadian GAAP purposes, NACG recorded the exchange by transferring the carrying value of the NAEPI Series B preferred shares on the exercise date of $44,682 to common shares. For U.S. GAAP purposes, the conversion has been
accounted for as a combination of entities under common control as all of the shareholders of the NAEPI Series B preferred shares are also common shareholders of NACG resulting in the reclassification of the carrying value of the minority interest
on the exercise date of $48,140 to common shares. NACG and NAEPI were amalgamated later in 2006 and the amalgamated entity continued as NAEPI.

f)
Inventories

Effective April 1, 2008, the Company retrospectively adopted CICA Handbook Section 3031, Inventories, without
restatement of prior periods. This standard requires inventories to be measured at the lower of cost and net realizable value and provides guidance on the determination of cost, including the allocation of overheads and other costs to inventories,
the requirement for an entity to use a consistent cost formula for inventory of a similar nature and use, and the reversal of previous write-downs to net realizable value when there are subsequent increases in the value of inventories. This new
standard also clarifies that spare component parts that do not qualify for recognition as property, plant and equipment should be classified as inventory. In adopting this new standard, the Company reversed a tire impairment that was previously
recorded at March 31, 2008 in other assets of $1,383 with a corresponding decrease to opening deficit of $991 net of future taxes of $392.

During the year ended March 31, 2008, the replacement cost (i.e. market) of spare tire inventory was lower than the original carrying amount of inventory. As a
result, the Company recorded an inventory write-down of $1.4 million under Canadian GAAP. Under U.S. GAAP, market means current replacement cost. However, market under U.S. GAAP should not exceed the net realizable value nor should it be less than
net realizable value reduced by an allowance for a normal profit margin. The Company established that the net realizable value and net realizable value less an allowance for a normal profit margin was greater than or equal to cost and as such a
write-down of spare tires was not appropriate under U.S. GAAP for the year ended March 31, 2008. Please refer to note 3 aa).

g) Joint venture

The Company owns a 49% interest in Noramac Ventures Inc., a nominee company for the Companys Noramac Joint Venture (JV) and the Company has
joint control of this entity. Under U.S. GAAP, the Company records its share of earnings of the JV using the equity method of accounting. Under Canadian GAAP, the Company uses the proportionate consolidation method of accounting for the JV. Under
the proportionate consolidation method the Company recognizes its share of the results of operations, cash flows, and financial position of the JV on a line-by-line basis in its consolidated financial statements and eliminates its share of all
material intercompany transactions with the JV. While there is no impact on net income or earnings per share as a result of the U.S. GAAP treatment of the joint venture, as compared to Canadian GAAP, there are presentation differences affecting the
disclosures in the consolidated financial statements and supporting notes. Under Canadian GAAP, the following assets, liabilities, revenues, expenses and cash flows would be recorded using the proportionate consolidation method.



|                      |  |               
|--------------------- |  | --------------
|                      |  | March 31, 2010
|Current assets        |  | $4,476        
|Long term assets      |  | 77            
|Current liabilities   |  | 1,636         
|Long term liabilities |  | 2,970         
|                      |  |               
|Net equity            |  | $(53)         
|                      |  |               



|               |  |                |  
|-------------- |  | -------------- | -
|Year ended     |  | March 31, 2010 |  
|Gross revenues |  | $4,387         |  
|Gross profit   |  | 805            |  
|Expenses       |  | (761           | )
|               |  |                |  
|Net income     |  | $44            |  
|               |  |                |  



|                                      |  |               
|------------------------------------- |  | --------------
|Year ended                            |  | March 31, 2010
|Cash flow from operating activities   |  | $1,240        
|Cash flow from investing activities   |  |              
|Cash flow from financing activities   |  |              
|                                      |  |               
|Increase in cash and cash equivalents |  | $1,240        
|                                      |  |               



North American Energy Partners
Inc.Notes to Consolidated Financial Statements49



---



h) Other matters

Other adjustments relate to the tax effect of items (a) through (f) above. The tax effects of temporary differences are described as future income taxes
under Canadian GAAP whereas in these financial statements such amounts are described as deferred income taxes under U.S. GAAP. In addition, Canadian GAAP generally refers to additional paid-in capital as contributed surplus for financial statement
presentation purposes.

i) Adjustments related to prior year financial statements

The financial statements for fiscal 2009 and fiscal 2008 under Canadian GAAP have been amended to correct the following errors identified during the preparation of
the Companys fiscal 2010 financial statements:



|(i) | Reclassification of accrued liabilities. The financial statements for fiscal 2009 have been amended to correct a classification error with respect to accrued liabilities
identified during the preparation of the Companys fiscal 2010 consolidated financial statements. Certain operating lease agreements provide a maximum hourly usage limit, above which the Company will be required to pay for the over hour
usage. These contingent rentals are recognized when payment is considered probable and are due at the end of the lease term. The Company has historically classified the contingent rentals as a current liability; however, certain of the amounts
are due beyond one year from the balance sheet date. In the current year, the Company has reclassified amounts due beyond one year, from the balance sheet date, as a long term liability and has reclassified comparative figures
accordingly. The amount reclassified on the Consolidated Balance Sheet was $7,134 as at March 31, 2009;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | Buy-out of leased assets. The financial statements for fiscal 2008 have been amended under Canadian GAAP to correct an error related to the method of accounting for an incentive
at the time of buying previously leased assets, which was identified during the preparation of the Companys fiscal 2010 consolidated financial statements. When an asset is leased under an operating lease agreement, as stated in the paragraph
above, contingent rentals are recognized when payment is considered probable and are due at the end of the lease term. The Company can buy the asset at the end of the lease term at a pre-determined market price at which point the liability is
extinguished since the lease agreement is cancelled. The Company has been traditionally extinguishing the liability for such lease buyouts by reducing equipment costs related to leased equipment, instead of considering the extinguishment of the
liability as an incentive to purchase the asset and therefore reducing the cost of the asset. The correction of this error increased Equipment costs by $2,700, reduced Depreciation by $120, reduced Future income
taxes by $774 and reduced Net income and comprehensive income for the year by $1,806 from the amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended
March 31, 2008. It also reduced Property, plant and equipment by $2,580, reduced long-term future income tax liabilities by $774 and increased Deficit for the year by $1,806 from the amounts originally reported in the
Consolidated Balance Sheet as at March 31, 2008. The financial statements for fiscal 2009 have also been amended under Canadian GAAP to correct an error related to the method of accounting for an incentive at time of buying previously leased
assets, which was identified during the preparation of the Companys fiscal 2010 consolidated financial statements as stated above. The correction of this error increased Equipment costs by $6,600, reduced Depreciation
by $600, reduced Future income taxes by $1,800 and increased Net loss and comprehensive loss for the year by $4,200 from the amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income
(Loss) for the year ended March 31, 2009. It also reduced Property, plant and equipment by $8,580, reduced long-term future income tax liabilities by $2,574 and increased Deficit for the year by $6,006 from the amounts
originally reported in the Consolidated Balance Sheet as at March 31, 2009.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | Valuation of derivative financial instruments. The financial statements for fiscal 2009 have also been amended under Canadian GAAP to correct an error related to the
determination of the fair value of the cross-currency and interest rate swap liabilities (collectively, the swap liability) which was identified on settlement of the swap liability on April 8, 2010. The Company recorded the fair
value of the swap liability and in addition recorded accrued interest on the swap liability. This resulted in the swap liability being misstated and the changes in the fair value of the swap liability being misstated by the change in the amount of
the accrued interest at each reporting period from March 31, 2009. The periods before March 31, 2009 were not materially impacted because prior to February 2, 2009, the Canadian Dollar interest rate swap was still in place (note
24(c)(ii)), and therefore the net accrued interest payable under the swap liability was not material. The error increased Realized and unrealized gain on derivative financial instruments by $7,514, increased income tax expense by $1,676
and reduced net loss by $5,838 from amounts originally reported in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended March 31, 2009. It also reduced Derivative financial instruments by
$7,514, increased long term future income taxes liabilities by $1,676 and reduced Deficit by $5,838 in the Consolidated Balance Sheet as at March 31, 2009.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



50Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The impact of the above corrections under
Canadian GAAP on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended March 31, 2009 and March 31, 2008 are as follows:



|                                                                 |  |                       |  |             |  |           
|---------------------------------------------------------------- |  | --------------------- |  | ----------- |  | ----------
|For the year ended March 31, 2009                                |  | As previouslyreported |  | Adjustments |  | As amended
|Equipment costs                                                  |  | $210,520              |  | $6,600      |  | $217,120  
|Depreciation                                                     |  | 36,827                |  | (600)       |  | 36,227    
|Realized and unrealized gain on derivative financial instruments |  | (25,081)              |  | (7,514)     |  | (32,595)  
|Future income taxes                                              |  | 9,177                 |  | (124)       |  | 9,053     
|Net loss and comprehensive loss for the year                     |  | (139,515)             |  | 1,638       |  | (137,877) 
|Deficit, end of year                                             |  | (157,811)             |  | (168)       |  | (157,979) 
|Net loss per share  basic                                       |  | $(3.87)               |  | $0.04       |  | $(3.83)   
|Net loss per share  diluted                                     |  | $(3.87)               |  | $0.04       |  | $(3.83)   
|                                                                 |  |                       |  |             |  |           



|                                                 |  |                       |  |             |  |           
|------------------------------------------------ |  | --------------------- |  | ----------- |  | ----------
|For the year ended March 31, 2008                |  | As previouslyreported |  | Adjustments |  | As amended
|Equipment costs                                  |  | $174,873              |  | $2,700      |  | $177,573  
|Depreciation                                     |  | 35,709                |  | (120)       |  | 35,589    
|Future income taxes                              |  | 17,299                |  | (774)       |  | 16,525    
|Net income and comprehensive income for the year |  | 39,784                |  | (1,806)     |  | 37,978    
|Deficit, end of year                             |  | (19,287)              |  | (1,806)     |  | (21,093)  
|Net income per share  basic                     |  | $1.11                 |  | $(0.05)     |  | $1.06     
|Net income per share  diluted                   |  | $1.08                 |  | $(0.05)     |  | $1.03     
|                                                 |  |                       |  |             |  |           

The impact of the above corrections under Canadian GAAP on the Consolidated
Balance Sheet as at March 31, 2009 is as follows:



|                                 |  |                       |  |             |  |           
|-------------------------------- |  | --------------------- |  | ----------- |  | ----------
|March 31, 2009                   |  | As previouslyreported |  | Adjustments |  | As amended
|Property, plant and equipment    |  | $324,035              |  | $(8,580)    |  | $315,455  
|Accrued liabilities              |  | 52,135                |  | (7,134)     |  | 45,001    
|Long term accrued liabilities    |  |                      |  | 7,134       |  | 7,134     
|Derivative financial instruments |  | 50,562                |  | (7,514)     |  | 43,048    
|Future income taxes              |  | 30,220                |  | (898)       |  | 29,322    
|Deficit                          |  | (157,811)             |  | (168)       |  | (157,979) 
|                                 |  |                       |  |             |  |           

The impact of the above corrections under Canadian GAAP on the Consolidated
Statements of Cash Flows for the years ended March 31, 2009 and March 31, 2008 are as follows:



|                                                                           |  |                       |  |             |  |           
|-------------------------------------------------------------------------- |  | --------------------- |  | ----------- |  | ----------
|For the year ended March 31, 2009                                          |  | As previouslyreported |  | Adjustments |  | As amended
|Net loss for the year                                                      |  | $(139,515)            |  | $1,638      |  | $(137,877)
|Depreciation                                                               |  | 36,827                |  | (600)       |  | 36,227    
|Unrealized gain on derivative financial instruments measured at fair value |  | (27,752)              |  | (7,514)     |  | (35,266)  
|Future income taxes                                                        |  | 9,177                 |  | (124)       |  | 9,053     
|Cash flow from operating activities                                        |  | 157,785               |  | (6,600)     |  | 151,185   
|Purchase of property, plant and equipment                                  |  | (91,037)              |  | 6,600       |  | (84,437)  
|Cash flow from investing activities                                        |  | (85,315)              |  | 6,600       |  | (78,715)  
|                                                                           |  |                       |  |             |  |           



|                                          |  |                       |  |             |  |           
|----------------------------------------- |  | --------------------- |  | ----------- |  | ----------
|For the year ended March 31, 2008         |  | As previouslyreported |  | Adjustments |  | As amended
|Net income for the year                   |  | $39,784               |  | $(1,806)    |  | $37,978   
|Depreciation                              |  | 35,709                |  | (120)       |  | 35,589    
|Future income taxes                       |  | 17,299                |  | (774)       |  | 16,525    
|Cash flow from operating activities       |  | 97,497                |  | (2,700)     |  | 94,797    
|Purchase of property, plant and equipment |  | (55,505)              |  | 2,700       |  | (52,805)  
|Cash flow from investing activities       |  | (48,632)              |  | 2,700       |  | (45,932)  
|                                          |  |                       |  |             |  |           

j) Financial instruments  recognition and measurement

Effective April 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3855, Financial
Instruments  Recognition and Measurement, and Handbook Section 3865, Hedges.



North American Energy Partners
Inc.Notes to Consolidated Financial Statements51



---



On April 1, 2007, the Company made
the following transitional adjustments to the consolidated balance sheet to adopt the new standards:



|                                        |  |                    
|--------------------------------------- |  | -------------------
|                                        |  | Increase (decrease)
|Deferred financing costs                |  | $(11,356)          
|Intangible assets                       |  | 1,622              
|Long term future income tax assets      |  | 3,293              
|Senior notes                            |  | (12,634)           
|Derivative financial instruments        |  | 9,720              
|Long term future income tax liabilities |  | 18                 
|Opening deficit                         |  | 3,545              
|                                        |  |                    

The adoption of these standards resulted in the following adjustments as of
April 1, 2007 in accordance with the transition provisions:



| |  | Deferred financing costs related to the issue of the senior notes that were previously presented as a separate asset on the consolidated balance sheet are now
included in the carrying value of the senior notes and are being amortized using the effective interest method over the remaining term of the debt. Prior to April 1, 2007, these deferred financing costs were amortized on a straight-line basis
over the term of the debt. As a result of the change in method of accounting, financing costs were re-measured on April 1, 2007 using the effective interest method. This re-measurement resulted in a $9,734 decrease in deferred financing costs,
a decrease of $9,815 in senior notes, a decrease of $63 in opening deficit and an increase of $18 in the future income tax liability;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Transaction costs incurred in connection with the Companys Revolving Facility of $1,622 were reclassified from deferred financing costs to intangible
assets on April 1, 2007 and these costs continue to be amortized on a straight-line basis over the term of the facility.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company determined that the issuers early prepayment option included in the senior notes should be bifurcated from the host contract, along with a
contingent embedded derivative in the senior notes that provide for accelerated redemption by the holders in certain instances. These embedded derivatives were measured at fair value at the inception of the senior notes and the residual amount of
the proceeds was allocated to the debt. Changes in fair value of the embedded derivatives are recognized in net income and the carrying amount of the senior notes is accreted to par value over the term of the notes using the effective interest
method and is recognized as interest expense. At transition on April 1, 2007, the Company recorded the fair value of $8,519 related to these embedded derivatives and a corresponding decrease in opening deficit of $7,305, net of future income
taxes of $1,214. The impact of the bifurcation of these embedded derivatives at issuance of the senior notes resulted in an increase of senior notes of $5,700 and an increase in opening deficit of $3,963, net of income taxes of $1,737 after
applying the effective interest method to the premium resulting from the bifurcation of these embedded derivatives to April 1, 2007; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company determined that price escalation features in certain revenue and maintenance service contracts contain embedded derivatives that are not closely
related to the host contracts. The embedded derivatives have been measured at fair value and included in derivative financial instruments on the consolidated balance sheet, with changes in the fair value recognized in net income. The Company
recorded the fair value of $9,720 related to these embedded derivatives on April 1, 2007, with a corresponding increase in opening deficit of $6,950, net of future income taxes of $2,770.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

k) Liquidity Risk

Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk through management of its capital structure and financial leverage, as outlined in note 34(l). It also manages liquidity risk by
continuously monitoring actual and projected cash flows to ensure that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Companys reputation. The Company believes that forecasted cash flows from operating activities, along with amounts available under the Revolving Facility, will provide sufficient cash requirements to cover the Companys forecasted normal
operating and budgeted capital expenditures.

The Companys Revolving Facility contains covenants that restrict its activities, including, but not
limited to, incurring additional debt, transferring or selling assets and making investments including acquisitions. Under the revolving credit agreement, Consolidated Capital Expenditures, as defined in the revolving credit agreement, during any
applicable period cannot exceed 120% of the amount in the capital expenditure plan. In addition, the Company is required to satisfy certain financial covenants, including a minimum interest coverage ratio and a maximum senior leverage ratio, both of
which are calculated using Consolidated EBITDA, as defined in the revolving credit agreement, as well as a minimum current ratio.

At March 31,
2010, the Company was in compliance with its senior leverage, its interest coverage, and working capital covenants.



52Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.



---



The following are the undiscounted
contractual cash flows of financial liabilities and other contractual cash flows measured at period end exchange rates:



|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|---------------------------------------------- |  | -------------- |  | --------------------- |  | -------- |  | ------ |  | ----- |  | ---- |  | ------------------
|Fiscal year                                   
|                                               |  | CarryingAmount |  | ContractualCash Flows |  | 2011     |  | 2012   |  | 2013  |  | 2014 |  | 2015 andThereafter
|Accounts payable and accrued liabilities       |  | $100,979       |  | $100,979              |  | $100,979 |  | $     |  | $    |  | $   |  | $                
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Long term accrued liabilities                  |  | 14,943         |  | 14,943                |  |         |  | 7,537  |  | 3,989 |  | 783  |  | $2,634            
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Capital lease obligations (including interest) |  | 13,393         |  | 14,561                |  | 5,734    |  | 5,209  |  | 2,987 |  | 462  |  | 169               
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Long term debt                                 |  | 28,446         |  | 31,242                |  | 7,637    |  | 23,605 |  |      |  |     |  |                  
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Senior notes(i)                                |  | 201,614        |  | 203,120               |  | 203,120  |  |       |  |      |  |     |  |                  
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Interest on senior
notes(i)                    |  | 6,099          |  | 7,405                 |  | 7,405    |  |       |  |      |  |     |  |                  
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   
|Cross-currency and interest rate swaps(ii)     |  | 89,013         |  | 92,519                |  | 92,519   |  |       |  |      |  |     |  |                  
|                                               |  |                |  |                       |  |          |  |        |  |       |  |      |  |                   



|(i) | Based on the early redemption option exercised by the Company, the senior notes were redeemed subsequent to year end (note 33).
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(ii) | At March 31, 2010, the cross-currency and interest rate swaps remained contractually payable until December 1, 2011; however, these were subsequently extinguished on
April 8, 2010 (note 33).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

l) Capital disclosures

The Companys objectives in managing capital are to help ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic
acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders equity, which is comprised of issued capital, additional paid-in capital, accumulated other comprehensive
income (loss). The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the underlying assets and the Companys working capital requirements. In order to maintain
or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue or repay long term debt, issue shares, repurchase shares through a normal course issuer bid, pay dividends or undertake other activities as deemed
appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as
capital and operating budgets.

The Company monitors debt leverage ratios as part of the management of liquidity and
shareholders return and to sustain future development of the business. The Company is also subject to externally imposed capital requirements under its Revolving Facility and indenture agreement governing the U.S. Dollar denominated
83/4% senior notes, which contains certain restrictive
covenants including, but not limited to, incurring additional debt, transferring or selling assets, making investments including acquisitions or to pay dividends or redeem shares of capital stock. The Companys overall strategy with respect to
capital risk management remains unchanged from the year ended March 31, 2009.

In September 2009, the Company filed a base shelf prospectus
covering the public offering of common shares in each of the provinces and territories of Canada and a related registration statement with the United States Securities and Exchange Commission. These filings allow the Company to offer and issue
common shares to the public by way of one or more prospectus supplements at any time during the 25 month period following the filing of the prospectus with gross proceeds to the Company not to exceed $150.0 million. The prospectus also allows
certain shareholders of the Company to offer all or part of their common shares to the public by way of one or more prospectus supplements.

m)
Recently adopted Canadian accounting pronouncements

i) Goodwill and intangible assets

Effective April 1, 2009, the Company adopted, on a retrospective basis, CICA Handbook Section 3064, Goodwill and Intangible Assets, which
replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs and establishes standards for the recognition, measurement and disclosure of goodwill and intangible
assets. The provisions relating to the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Accounting Standard IAS 38,
Intangible Assets. The adoption of this standard resulted in the reclassification of certain qualifying assets related to software from property, plant and equipment to intangible assets for all periods presented.

ii) Business combinations

On July 1, 2009, the Company
early adopted CICA Handbook Section 1582, Business Combinations, effective April 1, 2009. This section establishes standards for the accounting of business combinations, and states that all assets and liabilities of an acquired
business will be recorded at fair value. Obligations for contingent consideration and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition related costs will be expensed as incurred,
that restructuring charges will be expensed in periods after the acquisition date and that non-controlling interests should be measured at fair value at the date of acquisition. This standard is to be applied prospectively to business combinations
with acquisition dates on or after April 1, 2009. This new standard was applied to the acquisition of DF Investments Limited and its subsidiary Drillco Foundation Co. Ltd. (note 5(a)).



North American Energy Partners
Inc.Notes to Consolidated Financial Statements53



---



iii) Consolidated financial statements

On July 1, 2009, the Company early adopted CICA Handbook Section 1601, Consolidated Financial Statements, effective
April 1, 2009. The new standard replaces Section 1600, Consolidated Financial Statements. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than guidance for
non-controlling interests. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

iv)
Non-controlling interests

On July 1, 2009, the Company early adopted CICA Handbook Section 1602, Non-Controlling Interests,
effective April 1, 2009. The new standard establishes standards for the accounting of non-controlling interests of a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. The adoption of this
standard did not have a material impact on the Companys consolidated financial statements.

v) Equity

In August 2009, the CICA amended presentation requirements of Handbook Section 3251, Equity, as a result of issuing Section 1602,
Non-Controlling Interests. The amendments apply only to entities that have adopted Section 1602. The Company early adopted this standard effective April 1, 2009. The adoption of this standard did not have a material impact on
the Companys consolidated financial statements.

vi) Financial instruments  recognition and measurement

Effective July 1, 2009, the Company adopted CICA amendments to Handbook Section 3855, Financial Instruments  Recognition and
Measurement, which add guidance concerning the assessment of embedded derivatives upon reclassification of a financial asset out of the held-for-trading category. These amendments apply to reclassifications made on or after July 1, 2009.
The adoption of these amendments did not have a material impact on the Companys consolidated financial statements.

vii) Financial instruments
 disclosure

In June 2009, the CICA amended Handbook Section 3862, Financial Instruments  Disclosures, to include
additional disclosure requirements about fair value measurements of financial instruments and to enhance liquidity risk disclosure requirements. The amendments apply to annual financial statements relating to fiscal years ending after
September 30, 2009. The adoption of these amendments did not have a material impact on the Companys consolidated financial statements.

n)
Recent Canadian accounting pronouncements not yet adopted

i) Accounting changes

In June 2009, the CICA amended Handbook Section 1506, Accounting Changes, to exclude from its scope changes in accounting policies upon the
complete replacement of an entitys primary basis of accounting. The amendment applies to interim and annual financial statements relating to fiscal years beginning on or after July 1, 2009. The Company is currently evaluating the impact
of the amendments to the standard.

ii) Financial instruments  recognition and measurement

In June 2009, the CICA amended Handbook Section 3855, Financial Instruments  Recognition and Measurement, to clarify the application of
the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments apply to interim
and annual financial statements relating to fiscal years beginning on or after May 1, 2009 for the amendments relating to the effective interest method and on or after January 1, 2011 for the amendments relating to embedded prepayment
options. The Company is currently evaluating the impact of the amendments to the standard.

iii) Comprehensive revaluation of assets and liabilities

In August 2009, the CICA amended Handbook Section 1625, Comprehensive Revaluation of Assets and Liabilities, as a result of issuing
Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements, and Section 1602, Non-Controlling Interests, in January 2009. The amendments apply prospectively to
comprehensive revaluations of assets and liabilities occurring in fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year, provided that Section 1582 is also adopted. The
Company is currently evaluating the impact of the amendments to the standard.

iv) Multiple deliverable arrangements

In December 2009, the CICA issued Emerging Issues Committee (EIC) 175, Multiple deliverable arrangements. This abstract addresses how to determine
whether an arrangement involving multiple deliverables contains more than one unit of accounting. It also addresses how arrangement consideration should be measured and allocated to the separate units of accounting in the arrangement. For the
Company, this abstract is effective on a prospective basis to all revenue arrangements with multiple deliverables entered into or materially modified in the fiscal period beginning April 1, 2011. The Company is currently evaluating the
impact of this abstract on the Companys consolidated financial statements.



54Notes to Consolidated Financial
StatementsNorth American Energy Partners Inc.