##### Table of Contents



Exhibit 1


ANNUAL INFORMATION FORM

For the Year Ended December 31,
2003



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Exhibit 1

HUSKY ENERGY INC.

ANNUAL INFORMATION FORM

For the Year Ended December 31,
2003

March 18, 2004





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TABLE OF CONTENTS

|                                                                                              |                                                                                   |      |   
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ---- | --
|                                                                                              |                                                                                   | Page
|                                                                                              |                                                                                   |     
|Exchange Rate
    Information                                                                 |                                                                                   | 2   
|Abbreviations                                                                                 |                                                                                   | 3   
|Disclosure Exemption
    Under National Instrument 51-101                                     |                                                                                   | 4   
|Corporate
    Structure                                                                       |                                                                                   |     
|                                                                                              | Husky Energy Inc.                                                                 |      | 5 
|                                                                                              | Intercorporate
    Relationships                                                  |      | 5 
|General Development of
    Husky                                                              |                                                                                   |     
|                                                                                              | Three Year History of
    Husky                                                   |      | 6 
|                                                                                              | Business Environment
    Trends                                                   |      | 7 
|Description of
    Huskys Business                                                           |                                                                                   |     
|                                                                                              | General                                                                           |      | 8 
|                                                                                              | Social and Environmental
    Policy                                               |      | 9 
|                                                                                              | Risk Factors                                                                      |      | 9 
|                                                                                              | Upstream
    Operations  Disclosures for Oil and Gas Activities                  |      | 11
|                                                                                              | Supplemental Information on
    Oil and Gas Exploration and Production Activities |      | 24
|Independent
    Engineers Audit Opinion                                                      |                                                                                   | 30  
|Report on Reserves Data
    by Qualified Reserves Evaluator                                   |                                                                                   | 31  
|Report of Management and
    Directors on Reserves Data and
    Other Information             |                                                                                   | 33  
|                                                                                              | Description of Major
    Properties and Facilities                                |      | 35
|                                                                                              | Distribution of Oil and
    Gas Production                                        |      | 49
|                                                                                              | Midstream Operations                                                              |      | 50
|                                                                                              | Refined Products                                                                  |      | 52
|                                                                                              | Human Resources                                                                   |      | 56
|                                                                                              | Selected Consolidated
    Financial Information                                   |      | 56
|Dividends                                                                                     |                                                                                   | 57  
|Description of Capital
    Structure                                                          |                                                                                   | 57  
|Market for
    Securities                                                                     |                                                                                   | 57  
|Managements
    Discussion and Analysis of Financial Condition and Results
    of Operations |                                                                                   | 59  
|Directors and
    Officers                                                                    |                                                                                   | 60  
|Legal
    Proceedings                                                                         |                                                                                   | 63  
|Interest of Management
    and Others in Material Transactions                                |                                                                                   | 63  
|Transfer Agent and
    Registrars                                                             |                                                                                   | 64  
|Additional
    Information                                                                    |                                                                                   | 64  
|Special Note Regarding
    Forward-looking Statements                                         |                                                                                   | 64  
|2003 Annual Information Form                                                                 
|2003 Consolidated Audited Financial Statements                                               
|2003 Management's Discussion and Analysis                                                    
|Certification of CEO                                                                         
|Certification of CFO                                                                         
|Certification of CEO - Sarbanes Oxley Act                                                    
|Certification of CFO - Sarbanes Oxley Act                                                    
|Consent of Independent Chartered Accountants                                                 
|Consent of Independent Engineers                                                             






EXCHANGE RATE INFORMATION

Except where otherwise indicated, all dollar
amounts stated in this Annual Information Form are Canadian
dollars. The following table discloses various indicators of the
Canadian/ United States rate of exchange or the cost of a U.S.
dollar in Canadian currency for the three years indicated.

|         |  |                         |       |      |  |      |       |  |  |  |       | 
|-------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|         |  |                        
|         |  | Year Ended December 31,
|         |  |                        
|         |  | 2003                    |       | 2002 |  | 2001
|         |  |                         |       |      |  |     
|Year end |  |                         | 1.292 |      |  |      | 1.580 |  |  |  | 1.593 | 
|Low      |  |                         | 1.292 |      |  |      | 1.519 |  |  |  | 1.499 | 
|High     |  |                         | 1.575 |      |  |      | 1.605 |  |  |  | 1.593 | 
|Average  |  |                         | 1.386 |      |  |      | 1.570 |  |  |  | 1.551 | 




Notes:



|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | The exchange rates were as quoted by the Federal
    Reserve Bank of New York for the noon buying rate.       
|   
|(2) | The high, low and average rates were either
    quoted or calculated as of the last day of the relevant month.

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ABBREVIATIONS

As used in this Annual Information Form, the
following terms have the meanings indicated:

|                                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Units of Measure                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Bbl
    Bbls
    mbbls
    mmbbls
    Bbls/day
    mbbls/day
    Boe
    boe/day
    Mcf
    mmcf
    Bcf
    mmcf/day
    mcfge
    lt
    mlt
    lt/day
    mlt/day
    mmbtu
    MW |  | -barrel
    -barrels
    -thousand barrels
    -million barrels
    -barrels per calendar day
    -thousand barrels per calendar day
    -barrels of oil equivalent
    -barrels of oil equivalent per calendar day
    -thousand cubic feet
    -million cubic feet
    -billion cubic feet
    -million cubic feet per calendar day
    -thousand cubic feet of gas equivalent
    -long ton
    -thousand long tons
    -long tons per calendar day
    -thousand long tons per calendar day
    -million British thermal units
    -megawatts

|                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Acronyms                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|API
    COGE Handbook
    FASB
    FPSO
    NGL
    NYMEX
    OPEC
    PSC
    SAGD
    SEC
    SEDAR
    WTI |  | -American Petroleum Institute
    -Canadian Oil and Gas Evaluation Handbook
    -Financial Accounting Standards Board
    -floating production, storage and offloading vessel
    -natural gas liquids
    -New York Mercantile Exchange
    -Organization of Petroleum Exporting Countries
    -production sharing contract
    -steam assisted gravity drainage
    -Securities and Exchange Commission of the United States
    -System for Electronic Document Analysis and Retrieval
    -West Texas Intermediate crude oil



Unless otherwise indicated, gross reserves or
gross production are reserves or production attributable to
Huskys interest prior to deduction of royalties; net
reserves or net production are reserves or production net of
such royalties. Gross or net production reported refers to sales
volume, unless otherwise indicated. Natural gas volumes are
converted to a boe basis using the ratio of six mcf of natural
gas to one bbl of oil and natural gas liquids. Unless otherwise
indicated, oil and gas commodity prices are quoted after the
effect of hedging gains and losses. Natural gas volumes are
stated at the official temperature and pressure basis of the
area in which the reserves are located. The calculation of
barrels of oil equivalent (boe) and thousands of cubic feet
equivalent (mcfge) are based on a conversion rate of six
thousand cubic feet to one barrel of oil. Boe or mcfge may be misleading, particularly
if used in isolation. The reader is cautioned that a boe
conversion rate of six to one is based on an energy equivalence
conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the
wellhead.


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DISCLOSURE EXEMPTION UNDER NATIONAL INSTRUMENT
51-101

Husky believes that comparability of its
disclosures with those required in its major capital market, the
United States, is important to many of the investors and
prospective investors in its securities. Accordingly, Husky
applied for and was granted an exemption by the Canadian
securities regulators under the provisions of National
Instrument 51-101 Standards of Disclosures for Oil and Gas
Activities (NI 51-101). The exemption, under
Section 8.4 of the Companion Policy to NI 51-101, permits
Husky to substitute disclosures required by and consistent with
those of the Securities and Exchange Commission
(SEC) and the Financial Accounting Standards Board
(FASB) in the United States in place of much of the
disclosure expected by NI 51-101. In accordance with the
exemption, proved oil and gas reserves data and certain other
disclosures with respect to Huskys oil and gas activities
in this Annual Information Form are presented in accordance with
the following requirements:



| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The FASB Statement No. 69 Disclosure
    about Oil and Gas Producing Activities  an amendment
    of FASB Statements No.s 19, 25, 33 and 39 (FAS
    69);                     
|
| |  | FASB Current Text Section Oi5, Oil and
    Gas Producing Activities paragraph .103, .106, .107, .108,
    .112, .160 through .167 and .174 through .184 and .401 through
    .408;
|
| |  | SEC Industry Guide 2;                                                                                                                                                               
|
| |  | SEC Item 102 of regulation S-K (17 CFR
    229.102);                                                                                                                                
|
| |  | SEC Item 302(b) of Regulation S-K (17
    CFR 229.302(b)) ; and                                                                                                                     
|
| |  | The definitions and disclosures required by SEC
    Regulation S-X (CFR 210.4-10).                                                                                                  

Proved oil and gas reserves information and other
disclosures about oil and gas activities in this Annual
Information Form following SEC requirements may differ from
corresponding information otherwise required by NI 51-101.
Proved reserves disclosed in this Annual Information Form are in
accordance with the SEC definitions.

NI 51-101 specifies that proved reserves be in
accordance with the COGE Handbook definitions. There were no
material differences between the oil and gas reserves determined
and evaluated using the SEC definitions and the COGE Handbook
definitions. In addition, NI 51-101 requires the inclusion
of probable reserves and their associated future net revenue.
The SEC does not normally permit the disclosure of probable
reserves in documents filed with them.

The SEC requires the evaluation of oil and gas
reserves to be based on prices, costs, fiscal regimes and other
economic and operating conditions in effect at the time the
evaluation is made. NI 51-101 also requires the evaluation
of oil and gas reserves on this basis but also requires an
evaluation of oil and gas reserves to be based on a forecast of
economic conditions.

NI 51-101 prescribes a relatively comprehensive
set of disclosures in respect of oil and gas reserves and other
disclosures about oil and gas activities. In comparison, the SEC
prescribes a minimum set of disclosures and advises not to
approach the SEC rules and regulations as merely a blank form
but encourages registrants to provide such additional
information that is necessary to further an investors
understanding of the registrants business.

Husky believes that its reserves evaluators
are qualified and it has a well established reserves evaluation
process that is at least as rigorous as would be the case were
it to rely upon independent reserves evaluators. Husky has
adopted written evaluation practices and procedures using the
COGE Handbook modified to the extent necessary to reflect the
definitions and standards under U.S. disclosure requirements.

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CORPORATE STRUCTURE




Husky Energy Inc.

Husky Energy Inc. (Husky Energy) was
incorporated under the Business Corporations Act(Alberta) on June 21, 2000. From the date of its
incorporation until August 25, 2000, Husky Energy did not
carry on any business. On August 25, 2000, Husky Energy was
a party to a plan of arrangement under the Business
Corporations Act(Alberta) (the Arrangement)
pursuant to which Husky Oil Limited (Husky Oil),
Husky Oil Operations Limited (a subsidiary of Husky Oil)
and Renaissance Energy Ltd. (Renaissance) were
amalgamated under the Business Corporations Act(Alberta)
and continued as one corporation under the name Husky Oil
Operations Limited (HOOL) and the
securityholders of Renaissance and Husky Oil exchanged their
securities for securities of Husky Energy. Under the
Arrangement, Husky Energy acquired 100% of the common shares of
HOOL.

Husky Energy has its registered office and its
head and principal office at 707 - 8th Avenue S.W., P.O.
Box 6525, Station D, Calgary, Alberta, T2P 3G7.

In this Annual Information Form the term
Husky or the Company means Husky Energy
and its subsidiaries and partnership interests on a consolidated
basis including information with respect to predecessor
corporations.




Intercorporate Relationships

The principal subsidiaries of Husky and place of
incorporation, continuance or place of organization, as the case
may be, are as follows. All of the following companies are
directly or indirectly 100% owned.

|                                                                                                                                                                                                                                                                                   |  |                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|Name                                                                                                                                                                                                                                                                               |  | Jurisdiction                                                                      
|                                                                                                                                                                                                                                                                                   |  |                                                                                   
|                                                                                                                                                                                                                                                                                  
|Subsidiaries of Husky Energy Inc.Husky Oil Operations LimitedSubsidiaries of Husky Oil Operations LimitedHusky Oil Limited
    Husky Energy Marketing Inc.
    Husky (U.S.A.) Inc.
    HOI Resources Co.
    Husky Energy International Sulphur Corporation
    147212 Canada Ltd. |  | Alberta
    Canada
    Alberta
    Delaware
    Nova Scotia
    Alberta
    Canada

|                                                                                                                                                                                                                                                                     |  |                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------
|Name                                                                                                                                                                                                                                                                 |  | Jurisdiction                                            
|                                                                                                                                                                                                                                                                     |  |                                                         
|                                                                                                                                                                                                                                                                    
|Subsidiaries of Husky (U.S.A.) Inc.Husky Gas Marketing Inc.Subsidiaries of HOI Resources Co.Husky Energy International CorporationSubsidiaries of Husky Energy International CorporationHusky Oil China Ltd.
    Husky Oil (Madura) Ltd.
    Husky Oil Overseas Ltd. |  | Delaware
    Alberta
    Alberta
    Alberta
    Alberta

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GENERAL DEVELOPMENT OF HUSKY




Three Year History

On July 4, 2001, Husky acquired all of the
outstanding Class A Common Shares and Class B Common
Shares of Avid Oil & Gas Ltd. (Avid), which it
did not already own, pursuant to an offer to purchase dated
March 23, 2001. The acquisition of Avid was completed
pursuant to a Pre-Acquisition Agreement which provided for the
acquisition of the Class A Common Shares of Avid at a price
of $5.85 per share and the Class B Common Shares of Avid at
a price of $10.00 per share for a total consideration of
approximately $82.6 million. Husky had previously owned
approximately 38% of the Class A Common Shares of Avid as a
result of the acquisition of Renaissance in August 2000.

In December 2001, the White Rose project had
received government sanction from the Canada-Newfoundland
Offshore Petroleum Board and the Provincial and Federal
governments. In March 2002, Husky and its co-venturer announced
that they had decided to proceed with the development of the
White Rose oil field.

In January 2002, the Terra Nova development
project commenced production. This project was the first Grand
Banks field to be developed with a floating production, storage
and offloading system. In addition, the first well in the Terra
Nova Far East block was successfully drilled in 2001.

In June 2002, Husky issued U.S. $400 million
of 6.25% senior notes due June 15, 2012. The notes were
sold at a discount price of 99.545% per note to yield 6.312%.
The notes were issued under a U.S. $1 billion base shelf
prospectus dated June 6, 2002. The proceeds were used to
repay existing bank indebtedness and for general corporate
purposes.

On July 7, 2002, the Wenchang oil fields,
13-1 and 13-2, produced first oil. These oil fields produce
light crude oil similar to the benchmark Minas blend from two
production platforms into a floating production, storage and
offloading vessel stationed between the two fields.

In September 2002, Husky signed contracts with
the China National Offshore Oil Corporation (CNOOC)
for two exploration blocks in the South China Sea. The 23/15
block comprises 1,327 square kilometres and the 23/20 block
comprises 1,543 square kilometres. The contracts require one
well to be drilled on each block within three years.

In November 2002, Husky announced a significant
discovery of natural gas at Shackleton, Saskatchewan. The
Company announced that development of the Shackleton area could
add 250 bcf to proved reserves within two to three years. Husky
held more than 400 sections of land comprising 300,000 acres in
this area in 2002.

In December 2002, Husky signed a contract with
CNOOC for the 40/30 exploration block in the South China Sea.
The block comprises approximately 6,704 square kilometres and
the contract requires one well to be drilled within three years.

In December 2002, Husky swapped, with its
co-venturer, its working interest in the mining portion of its
Kearl oil sands property for its co-venturers interest in
the in-situ portion of the property. As a result Husky now holds
100% working interest in 57,600 acres of lands with in-situ
potential. Huskys property has been named
Sunrise.

Effective October 1, 2003, Husky purchased
all of the outstanding common shares of Marathon Canada Limited
(Marathon) and the Western Canadian assets of
Marathon International Petroleum Canada, Ltd. The total purchase
price was U.S.$588 million. In a separate concurrent
transaction Husky sold certain of the Marathon properties to
another unrelated company for total proceeds of
U.S.$320 million. The properties retained by Husky are
located throughout western Alberta and north-eastern British
Columbia. The acquisition added approximately 39.8 mmboe of
gross proved reserves, of which 75% was natural gas, and 729,000
acres of undeveloped lands in Alberta, British Columbia and the
Northwest Territories.

In November 2003, Husky announced that it had
signed a contract with CNOOC for the 04/35 exploration block in
the East China Sea. The block comprises 4,835 square
kilometres and requires one well to be drilled within the first
three years of the contract.

In November 2003, Husky established a
securitization program to sell, on a revolving basis, up to
$250 million of its accounts receivable to a third party.
The agreement includes a program fee based on Canadian
commercial paper rates.

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Business Environment Trends

There are a number of trends that appear to be
developing, which may have both long and short-term effects on
the oil and gas industry. The Western Canada Sedimentary Basin
continues to mature and a large number of major producing
regions have been highly developed, thereby reducing the
exploration opportunities in this area.

There is a continued trend relating to the
volatility of commodity prices. It appears that natural gas
prices have entered an era of extreme volatility. With the
supply and demand balance for natural gas being extremely tight,
the market is experiencing a great deal of elasticity in pricing
due to a number of factors, including weather, drilling
activity, declines, storage levels, fuel switching and demand.

Oil prices are clearly dependent on the world
economy and the reaction of OPEC to demand. OPECs stated
position is to maintain its average basket price between
U.S.$22.00-$28.00 per bbl and, if successful, will remove some
volatility in the WTI price. This does not, however, affect a
major oil trend developing in Canada. The trend in Canada
involves increasing production of heavy oil that is priced at a
differential to WTI. This differential is presently wide but as
the North American refineries are forced to accept more of the
heavy crude there should be a narrowing of the differential.
This may result in a trend that will see heavy crude priced at a
differential that will only include the price of diluent to move
the produce from the delivery point to the refineries.

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DESCRIPTION OF HUSKYS BUSINESS




General

Husky is a publicly held integrated energy and
energy related company headquartered in Calgary, Alberta.
Huskys operations include the exploration for and
development of crude oil and natural gas properties, as well as
the production, purchase, transportation, storage and marketing
of crude oil, natural gas, natural gas liquids, sulphur and
petroleum coke, and the upgrading and refining of crude oil and
marketing of refined petroleum products, including gasoline,
diesel, alternative fuels and asphalt products.

Upstream Operations

Huskys portfolio of assets includes
properties that produce light (30 API and lighter), medium
(between 20 and 30 API) and heavy (below 20 and above 10 API)
gravity crude oil, NGL, natural gas and sulphur. As operator of
the majority of its properties Husky exercises a high degree of
control in its upstream operations. Husky has production,
gathering and processing facilities throughout the Western
Canada Sedimentary Basin. In the Lloydminster heavy oil prone
area Husky has a well established position with concentrated
landholdings, production, gathering and processing facilities,
as well as heavy crude oil pipeline, upgrading and refining
facilities.

At December 31, 2003, Husky was the operator
of properties which accounted for approximately 87% of its total
gross production in Western Canada. Huskys undeveloped
landholdings in the Western Canada Sedimentary Basin totalled
7.3 million net acres at December 31, 2003.

In the foothills deep basin areas in Alberta,
Husky operates the Ram River gas plant and has interests in
properties that supply this plant including: Blackstone,
Ricinus, Limestone, Clearwater, Benjamin, Brown Creek and
Stolberg. Husky also has an interest in the Caroline gas plant
and field. Further north Husky has interests in the Valhalla and
Wapiti crude oil and natural gas fields near Grand Prairie and
properties in the Galloway, Ansell and Edson area. In
north-eastern British Columbia, Husky holds natural gas
interests in the Sikanni and Federal area as well as Boundary
Lake.

In the plains region of north-west Alberta, Husky
operates the Rainbow Lake Plant, miscible floods and properties
in surrounding areas. Husky has interests in the Peace River
Arch, Boyer, Sloat Creek, Marten Hills, Cherpeta and Simons Lake
areas. In the east central region of Alberta, Husky has property
holdings east of Calgary and around Red Deer and Edmonton
including major properties at Hussar and Provost.

In southern Alberta and Saskatchewan Husky has
extensive property holdings around Taber, Brooks, Jenner and
Suffield in southern Alberta and throughout south-west
Saskatchewan at Shackleton/ Lacadena, Cantaur, Fosterton and
Carnduff.

Husky has extensive experience in development,
production, transportation and upgrading of heavy crude oil.
Husky also has experience in enhanced recovery of crude oil and
horizontal drilling, as well as in natural gas exploration in
the deep basin, foothills and along the eastern slopes of the
Canadian Rocky Mountains, also known as the overthrust belt.

On the east coast of Canada Husky holds a 12.51%
working interest in the Terra Nova oil field, which began
producing light crude oil in January 2002, and a 72.5% working
interest in the White Rose oil field, which was sanctioned by
the co-venturers in March 2002 and is currently under
development. First oil from the White Rose oil field is
currently expected by the end of 2005 or early 2006. Husky also
holds interests in several exploration and significant discovery
licenses in the Jeanne dArc Basin and the South Whale
Basin.

Husky holds a 40% working interest in the
Wenchang oil fields located offshore in the South China Sea.
Production at the Wenchang oil fields began in July 2002. Husky
also holds interests in four exploration blocks in the South
China Sea with an aggregate areal extent of approximately
15,000 square kilometres and one exploration block in the
East China Sea of approximately 4,800 square kilometres.

Husky also holds an interest in a natural gas and
liquids PSC located in the Madura strait offshore Java,
Indonesia.

Midstream Operations

Huskys midstream operations include
upgrading of heavy crude oil feedstock into synthetic crude oil,
pipeline transportation and processing of heavy crude oil,
storage of crude oil, diluent and natural gas, and cogeneration
of

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electrical and thermal energy, and marketing of
Huskys and third party produced crude oil, natural gas,
natural gas liquids, sulphur and petroleum coke.


Refined Products

Huskys refined products operations include
refining of heavy and light crude oil, marketing of refined
petroleum products, including asphalt and alternate fuels, and
processing of grain primarily for ethanol production. Husky
sells and distributes transportation fuels including ethanol
blended fuels through independently operated Husky and Mohawk
branded petroleum outlets, including service stations, truck
stops and bulk distribution facilities located from the west
coast of Canada to the eastern border of Ontario, some of which
include 24 hour restaurants, convenience stores, service bays,
car washes, fast food sales, bank machines and propane sales.




Social and Environmental Policy

Huskys environmental policy requires
regular environmental audits to be conducted at its sites and
facilities. Husky has established procedures designed to
anticipate and minimize adverse effects of its operations on the
environment and for continued compliance with environmental
legislation and minimize future and current costs. Huskys
policies apply equally to employees, subsidiaries and
contractors.




Risk Factors

The following factors should be considered in
evaluating Husky:

Adequacy of crude oil and natural gas
prices

Huskys results of operations and financial
condition are dependent on the prices received for its crude oil
and natural gas production.

Prices for crude oil are based on world supply
and demand. Supply and demand can be affected by a number of
factors including, but not limited to, actions taken by the OPEC
and their adherence to agreed production quotas, non-OPEC crude
oil supply, social conditions in oil producing countries, the
occurrence of natural disasters, general and specific economic
conditions, prevailing weather patterns and the availability of
alternate sources of energy.

Huskys natural gas production is located
entirely in Western Canada and is, therefore, subject to North
American market forces. North American natural gas supply and
demand is affected by a number of factors including, but not
limited to, the amount of natural gas available to specific
market areas either from the well head or from storage
facilities, prevailing weather patterns, the price of crude oil,
the U.S. and Canadian economies, the occurrence of natural
disasters and pipeline restrictions.

Demand for Huskys other products and
services and the cost of required inputs

Huskys results of operations and financial
condition are dependent on the price of refinery feedstock, the
price of energy, the demand for refined petroleum products and
electrical power and the ability of Husky to recover the
increased cost of these inputs from the customer. Husky is also
dependent on the demand for Huskys pipeline and processing
capacity.

Huskys ability to replace
reserves

Huskys future cash flow and cost of capital
are dependent on its ability to replace its proved oil and gas
reserves in a cost effective manner. Without economic reserve
additions through exploration and development or acquisition
Huskys production and, therefore, cash flow will decline.
Without adequate proved reserves Huskys ability to fund
development and other capital expenditures with external sources
of funds is diminished.

Competition

The energy industry is highly competitive. Husky
competes with others to acquire additional prospective lands, to
retain drilling capacity and field operating and construction
services, to attract and retain experienced skilled management
and oil and gas professionals, to obtain sufficient pipeline and
other transportation capacity and to gain access to and retain
adequate markets for Huskys products and services.
Huskys competitors comprise all types of energy companies,
some of which have greater resources.

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Environmental risks

All phases of the oil and natural gas business
are subject to environmental regulation pursuant to a variety of
federal, provincial and municipal laws and regulations, as well
as international conventions (collectively, environmental
legislation).

Environmental legislation imposes, among other
things, restrictions, liabilities, and obligations in connection
with the generation, handling, storage, transportation,
treatment and disposal of hazardous substances and waste and in
connection with spills, releases and emissions of various
substances to the environment. Environmental legislation also
requires that wells, facilities and other properties associated
with Huskys operations be operated, maintained, abandoned
and reclaimed to the satisfaction of applicable regulatory
authorities. In addition, certain types of operations, including
exploration and development projects and significant changes to
certain existing projects, may require the submission and
approval of environmental impact assessments. Compliance with
environmental legislation can require significant expenditures
and failure to comply with environmental legislation may result
in the imposition of fines and penalties and liability for
clean-up costs and damages. Husky cannot be certain that the
costs of complying with environmental legislation in the future
will not have a material adverse effect on Huskys
financial condition and results of operations.

Husky anticipates that changes in environmental
legislation may require, among other things, reductions in
emissions from its operations and result in increased capital
expenditures. Further changes in environmental legislation could
occur, which may result in stricter standards and enforcement,
larger fines and liability, and increased capital expenditures
and operating costs, which could have a material adverse effect
on Huskys financial condition and results of operations.

In 1994, the United Nations Framework
Convention on Climate Change came into force and three years
later led to the Kyoto Protocol, which requires the reduction of
greenhouse gas emissions. On December 16, 2002, Canada
ratified the Kyoto Protocol. This initiative may require Husky
to significantly reduce emissions at its operations of green
house gases such as carbon dioxide, which may increase capital
expenditures, details regarding the implementation of the Kyoto
Protocol remain unclear.

Uncertainty of oil and gas proved reserves
estimates

There are numerous uncertainties inherent in
estimating quantities of oil and natural gas reserves, including
many factors beyond Huskys control. The reserves
information included in and incorporated by reference in this
Annual Information Form are Huskys estimates. In general,
estimates of economically recoverable oil and natural gas
reserves and the estimated future net cash flow therefrom are
based on a number of variables in effect as of date on which the
reserves estimates were determined, such as geological and
engineering estimates which have inherent uncertainties, the
actual effects of regulation by governmental agencies and the
actual future commodity prices and operating costs, all of which
may vary considerably from those in effect at the date the
reserves were determined. The estimated quantities of reserves
expected to be recovered are uncertain and the classification of
reserves as proved is only an attempt to define the degree of
certainty involved. For these reasons, estimates of economically
recoverable oil and natural gas attributable to a particular
group of properties, the classification of such reserves as
proved and the resultant future net cash flow therefrom,
prepared by different engineers or by the same engineers at
different times, may vary substantially. Huskys actual
production, revenues, taxes and development, abandonment, and
operating expenditures with respect to the estimated oil and
natural gas reserves will likely vary from such estimates, and
such variances could be material.

Estimates with respect to reserves that may be
developed and produced in the future (proved developed reserves)
are often based on volumetric calculations and upon analogy to
similar types of reservoirs, rather than upon actual production
history. Estimates based on these methods generally are less
reliable than those based on actual production history.
Subsequent evaluation of the same reserves based upon production
history may result in variations in the estimated reserves,
which may be material.

10



---



##### Table of Contents






Upstream Operations  Disclosures
for Oil and Gas Activities

Production

The following table shows Huskys average
gross and net daily production of crude oil and NGL and natural
gas for the periods indicated:

|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|----------------------- |  | ---------------------- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ---- | ----- |  |  | ----- |  |  |  | ---- |  |  |  | --- | 
|                        |  |                       
|                        |  | 2003                  
|                        |  |                       
|                        |  |                        |       | Western |  | East  |       |       
|                        |  | Total                  |       | Canada  |  | Coast |       | Canada |  | China |      | Libya
|                        |  |                        |       |         |  |       |       |        |  |       |      |      
|                        |  |                       
|                        |  | Crude oil  mbbls/day 
|                        |  | Natural gas  mmcf/day
|Crude Oil               |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Light crude oil and NGL |  |                        | 71.6  |         |  |       | 32.2  |        |  |       | 16.8 |       |  |  | 49.0  |  |  |  | 22.4 |  |  |  | 0.2 | 
|Medium crude oil        |  |                        | 39.2  |         |  |       | 39.2  |        |  |       |     |       |  |  | 39.2  |  |  |  |     |  |  |  |     | 
|Heavy crude oil         |  |                        | 99.9  |         |  |       | 99.9  |        |  |       |     |       |  |  | 99.9  |  |  |  |     |  |  |  |     | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Total gross             |  |                        | 210.7 |         |  |       | 171.3 |        |  |       | 16.8 |       |  |  | 188.1 |  |  |  | 22.4 |  |  |  | 0.2 | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Total net               |  |                        | 186.8 |         |  |       | 149.5 |        |  |       | 16.7 |       |  |  | 166.2 |  |  |  | 20.4 |  |  |  | 0.2 | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Natural Gas             |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Gross                   |  |                        | 610.6 |         |  |       | 610.6 |        |  |       |     |       |  |  | 610.6 |  |  |  |     |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Net                     |  |                        | 473.7 |         |  |       | 473.7 |        |  |       |     |       |  |  | 473.7 |  |  |  |     |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 

|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|----------------------- |  | ---------------------- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ---- | ----- |  |  | ----- |  |  |  | ---- |  |  |  | --- | 
|                        |  |                       
|                        |  | 2002                  
|                        |  |                       
|                        |  |                        |       | Western |  | East  |       |       
|                        |  | Total                  |       | Canada  |  | Coast |       | Canada |  | China |      | Libya
|                        |  |                        |       |         |  |       |       |        |  |       |      |      
|                        |  |                       
|                        |  | Crude oil  mbbls/day 
|                        |  | Natural gas  mmcf/day
|Crude Oil               |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Light crude oil and NGL |  |                        | 65.4  |         |  |       | 39.8  |        |  |       | 13.2 |       |  |  | 53.0  |  |  |  | 12.2 |  |  |  | 0.2 | 
|Medium crude oil        |  |                        | 44.8  |         |  |       | 44.8  |        |  |       |     |       |  |  | 44.8  |  |  |  |     |  |  |  |    | 
|Heavy crude oil         |  |                        | 95.1  |         |  |       | 95.1  |        |  |       |     |       |  |  | 95.1  |  |  |  |     |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Total gross             |  |                        | 205.3 |         |  |       | 179.7 |        |  |       | 13.2 |       |  |  | 192.9 |  |  |  | 12.2 |  |  |  | 0.2 | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Total net               |  |                        | 179.3 |         |  |       | 154.8 |        |  |       | 12.8 |       |  |  | 167.6 |  |  |  | 11.5 |  |  |  | 0.2 | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Natural Gas             |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Gross                   |  |                        | 569.2 |         |  |       | 569.2 |        |  |       |     |       |  |  | 569.2 |  |  |  |     |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 
|Net                     |  |                        | 426.6 |         |  |       | 426.6 |        |  |       |     |       |  |  | 426.6 |  |  |  |     |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |      |       |  |  |       |  |  |  |      |  |  |  |     | 

|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|----------------------- |  | ---------------------- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | - | ----- |  |  | ----- |  |  |  | - |  |  |  | --- | 
|                        |  |                       
|                        |  | 2001                  
|                        |  |                       
|                        |  |                        |       | Western |  | East  |       |       
|                        |  | Total                  |       | Canada  |  | Coast |       | Canada |  | China |   | Libya
|                        |  |                        |       |         |  |       |       |        |  |       |   |      
|                        |  |                       
|                        |  | Crude oil  mbbls/day 
|                        |  | Natural gas  mmcf/day
|Crude Oil               |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Light crude oil and NGL |  |                        | 46.4  |         |  |       | 46.1  |        |  |       |  |       |  |  | 46.1  |  |  |  |  |  |  |  | 0.3 | 
|Medium crude oil        |  |                        | 47.2  |         |  |       | 47.2  |        |  |       |  |       |  |  | 47.2  |  |  |  |  |  |  |  |    | 
|Heavy crude oil         |  |                        | 83.8  |         |  |       | 83.8  |        |  |       |  |       |  |  | 83.8  |  |  |  |  |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Total gross             |  |                        | 177.4 |         |  |       | 177.1 |        |  |       |  |       |  |  | 177.1 |  |  |  |  |  |  |  | 0.3 | 
|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Total net               |  |                        | 154.4 |         |  |       | 154.1 |        |  |       |  |       |  |  | 154.1 |  |  |  |  |  |  |  | 0.3 | 
|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Natural Gas             |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Gross                   |  |                        | 572.6 |         |  |       | 572.6 |        |  |       |  |       |  |  | 572.6 |  |  |  |  |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 
|Net                     |  |                        | 417.8 |         |  |       | 417.8 |        |  |       |  |       |  |  | 417.8 |  |  |  |  |  |  |  |    | 
|                        |  |                        |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |     | 




11



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##### Table of Contents



Notes:



|    |                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Light crude oil includes crude oil that is
    lighter than 30 API, medium crude oil is between 20 and
    30 API gravity and heavy crude oil includes crude oil that
    is lower than 20 API and lighter than 10 API gravity in the
    Lloydminster area.
|   
|(2) | Gross volumes are Huskys lessor royalty,
    overriding royalty and working interest share of production
    before deduction of royalties. Net volumes are Huskys
    gross volumes, less royalties.                                                     

Revenue

The following table shows the revenue by upstream
product group for the years indicated:

|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|----------------------- |  | ------------ | ----- | ------- |  | ----- | ----- | ------ |  | ----- | --- | ----- |  |  | ----- |  |  |  | --- |  |  |  | - | 
|                        |  |             
|                        |  | 2003        
|                        |  |             
|                        |  |              |       | Western |  | East  |       |       
|                        |  | Total        |       | Canada  |  | Coast |       | Canada |  | China |     | Libya
|                        |  |              |       |         |  |       |       |        |  |       |     |      
|                        |  |             
|                        |  | ($ millions)
|Crude Oil               |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Light crude oil and NGL |  |              | 879   |         |  |       | 300   |        |  |       | 238 |       |  |  | 538   |  |  |  | 338 |  |  |  | 3 | 
|Medium crude oil        |  |              | 556   |         |  |       | 556   |        |  |       |    |       |  |  | 556   |  |  |  |    |  |  |  |  | 
|Heavy crude oil         |  |              | 943   |         |  |       | 943   |        |  |       |    |       |  |  | 943   |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Total gross             |  |              | 2,378 |         |  |       | 1,799 |        |  |       | 238 |       |  |  | 2,037 |  |  |  | 338 |  |  |  | 3 | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Total net               |  |              | 2,082 |         |  |       | 1,539 |        |  |       | 233 |       |  |  | 1,772 |  |  |  | 307 |  |  |  | 3 | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Natural Gas             |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Gross                   |  |              | 1,346 |         |  |       | 1,346 |        |  |       |    |       |  |  | 1,346 |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Net                     |  |              | 1,058 |         |  |       | 1,058 |        |  |       |    |       |  |  | 1,058 |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Processing              |  |              | 46    |         |  |       | 46    |        |  |       |    |       |  |  | 46    |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 

|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|----------------------- |  | ------------ | ----- | ------- |  | ----- | ----- | ------ |  | ----- | --- | ----- |  |  | ----- |  |  |  | --- |  |  |  | - | 
|                        |  |             
|                        |  | 2002        
|                        |  |             
|                        |  |              |       | Western |  | East  |       |       
|                        |  | Total        |       | Canada  |  | Coast |       | Canada |  | China |     | Libya
|                        |  |              |       |         |  |       |       |        |  |       |     |      
|                        |  |             
|                        |  | ($ millions)
|Crude Oil               |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Light crude oil and NGL |  |              | 866   |         |  |       | 494   |        |  |       | 171 |       |  |  | 665   |  |  |  | 198 |  |  |  | 3 | 
|Medium crude oil        |  |              | 496   |         |  |       | 496   |        |  |       |    |       |  |  | 496   |  |  |  |    |  |  |  |  | 
|Heavy crude oil         |  |              | 924   |         |  |       | 924   |        |  |       |    |       |  |  | 924   |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Total gross             |  |              | 2,286 |         |  |       | 1,914 |        |  |       | 171 |       |  |  | 2,085 |  |  |  | 198 |  |  |  | 3 | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Total net               |  |              | 1,974 |         |  |       | 1,616 |        |  |       | 169 |       |  |  | 1,785 |  |  |  | 186 |  |  |  | 3 | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Natural Gas             |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Gross                   |  |              | 801   |         |  |       | 801   |        |  |       |    |       |  |  | 801   |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Net                     |  |              | 653   |         |  |       | 653   |        |  |       |    |       |  |  | 653   |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 
|Processing              |  |              | 38    |         |  |       | 38    |        |  |       |    |       |  |  | 38    |  |  |  |    |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |     |       |  |  |       |  |  |  |     |  |  |  |   | 

12



---



##### Table of Contents



|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|----------------------- |  | ------------ | ----- | ------- |  | ----- | ----- | ------ |  | ----- | - | ----- |  |  | ----- |  |  |  | - |  |  |  | - | 
|                        |  |             
|                        |  | 2001        
|                        |  |             
|                        |  |              |       | Western |  | East  |       |       
|                        |  | Total        |       | Canada  |  | Coast |       | Canada |  | China |   | Libya
|                        |  |              |       |         |  |       |       |        |  |       |   |      
|                        |  |             
|                        |  | ($ millions)
|Crude Oil               |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Light crude oil and NGL |  |              | 561   |         |  |       | 557   |        |  |       |  |       |  |  | 557   |  |  |  |  |  |  |  | 4 | 
|Medium crude oil        |  |              | 408   |         |  |       | 408   |        |  |       |  |       |  |  | 408   |  |  |  |  |  |  |  |  | 
|Heavy crude oil         |  |              | 521   |         |  |       | 521   |        |  |       |  |       |  |  | 521   |  |  |  |  |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Total gross             |  |              | 1,490 |         |  |       | 1,486 |        |  |       |  |       |  |  | 1,486 |  |  |  |  |  |  |  | 4 | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Total net               |  |              | 1,249 |         |  |       | 1,245 |        |  |       |  |       |  |  | 1,245 |  |  |  |  |  |  |  | 4 | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Natural Gas             |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Gross                   |  |              | 1,142 |         |  |       | 1,142 |        |  |       |  |       |  |  | 1,142 |  |  |  |  |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Net                     |  |              | 882   |         |  |       | 882   |        |  |       |  |       |  |  | 882   |  |  |  |  |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 
|Processing              |  |              | 35    |         |  |       | 35    |        |  |       |  |       |  |  | 35    |  |  |  |  |  |  |  |  | 
|                        |  |              |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |   | 




Note:



|    |                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Light crude oil includes crude oil that is
    lighter than 30 API, medium crude oil is between 20 and
    30 API gravity and heavy crude oil includes crude oil that
    is lower than 20 API and lighter than 10 API gravity in the
    Lloydminster area.

Sales Prices

The following table shows the Companys
average sales prices, before and after the effect of production
hedging, for light crude oil and NGL, medium crude oil, heavy
crude oil and natural gas for the periods indicated.

|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|---------------------------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ----- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                         |  |      
|                                         |  | 2003 
|                                         |  |      
|                                         |  |       |       | Western |  | East  |       |       
|                                         |  | Total |       | Canada  |  | Coast |       | Canada |  | China |       | Libya
|                                         |  |       |       |         |  |       |       |        |  |       |       |      
|                                         |  |      
|                                         |  | $/bbl
|                                         |  |      
|                                         |  | $/mcf
|Crude Oil                                |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Light crude oil and NGL                  |  |       | 39.53 |         |  |       | 38.28 |        |  |       | 38.91 |       |  |  | 38.49 |  |  |  | 41.45 |  |  |  | 40.44 | 
|Medium crude oil                         |  |       | 31.42 |         |  |       | 31.42 |        |  |       |      |       |  |  | 31.42 |  |  |  |      |  |  |  |      | 
|Heavy crude oil                          |  |       | 25.87 |         |  |       | 25.87 |        |  |       |      |       |  |  | 25.87 |  |  |  |      |  |  |  |      | 
|Total crude oil and NGL (before hedging) |  |       | 31.54 |         |  |       | 29.48 |        |  |       | 38.91 |       |  |  | 30.32 |  |  |  | 41.45 |  |  |  | 40.44 | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Total crude oil and NGL (after hedging)  |  |       | 30.93 |         |  |       | 28.96 |        |  |       | 36.96 |       |  |  | 29.67 |  |  |  | 41.45 |  |  |  | 40.44 | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Natural Gas                              |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Before hedging                           |  |       | 5.86  |         |  |       | 5.86  |        |  |       |      |       |  |  | 5.86  |  |  |  |      |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|After hedging                            |  |       | 5.94  |         |  |       | 5.94  |        |  |       |      |       |  |  | 5.94  |  |  |  |      |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 

|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|---------------------------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ----- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                         |  |      
|                                         |  | 2002 
|                                         |  |      
|                                         |  |       |       | Western |  | East  |       |       
|                                         |  | Total |       | Canada  |  | Coast |       | Canada |  | China |       | Libya
|                                         |  |       |       |         |  |       |       |        |  |       |       |      
|                                         |  |      
|                                         |  | $/bbl
|                                         |  |      
|                                         |  | $/mcf
|Crude Oil                                |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Light crude oil and NGL                  |  |       | 36.17 |         |  |       | 33.86 |        |  |       | 35.47 |       |  |  | 34.26 |  |  |  | 44.36 |  |  |  | 40.37 | 
|Medium crude oil                         |  |       | 30.16 |         |  |       | 30.16 |        |  |       |      |       |  |  | 30.16 |  |  |  |      |  |  |  |      | 
|Heavy crude oil                          |  |       | 26.60 |         |  |       | 26.60 |        |  |       |      |       |  |  | 26.60 |  |  |  |      |  |  |  |      | 
|Total crude oil and NGL (before hedging) |  |       | 30.47 |         |  |       | 29.14 |        |  |       | 35.47 |       |  |  | 29.57 |  |  |  | 44.36 |  |  |  | 40.37 | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Total crude oil and NGL (after hedging)  |  |       | 30.50 |         |  |       | 29.17 |        |  |       | 35.47 |       |  |  | 29.61 |  |  |  | 44.36 |  |  |  | 40.37 | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Natural Gas                              |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Before hedging                           |  |       | 3.83  |         |  |       | 3.83  |        |  |       |      |       |  |  | 3.83  |  |  |  |      |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|After hedging                            |  |       | 3.83  |         |  |       | 3.83  |        |  |       |      |       |  |  | 3.83  |  |  |  |      |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 

13



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##### Table of Contents



|                                         |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|---------------------------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | - | ----- |  |  | ----- |  |  |  | - |  |  |  | ----- | 
|                                         |  |      
|                                         |  | 2001 
|                                         |  |      
|                                         |  |       |       | Western |  | East  |       |       
|                                         |  | Total |       | Canada  |  | Coast |       | Canada |  | China |   | Libya
|                                         |  |       |       |         |  |       |       |        |  |       |   |      
|                                         |  |      
|                                         |  | $/bbl
|                                         |  |      
|                                         |  | $/mcf
|Crude Oil                                |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Light crude oil and NGL                  |  |       | 33.15 |         |  |       | 33.13 |        |  |       |  |       |  |  | 33.13 |  |  |  |  |  |  |  | 37.72 | 
|Medium crude oil                         |  |       | 23.69 |         |  |       | 23.69 |        |  |       |  |       |  |  | 23.69 |  |  |  |  |  |  |  |      | 
|Heavy crude oil                          |  |       | 17.02 |         |  |       | 17.02 |        |  |       |  |       |  |  | 17.02 |  |  |  |  |  |  |  |      | 
|Total crude oil and NGL (before hedging) |  |       | 23.01 |         |  |       | 22.99 |        |  |       |  |       |  |  | 22.99 |  |  |  |  |  |  |  | 37.72 | 
|                                         |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Total crude oil and NGL (after hedging)  |  |       | 23.01 |         |  |       | 22.99 |        |  |       |  |       |  |  | 22.99 |  |  |  |  |  |  |  | 37.72 | 
|                                         |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Natural Gas                              |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Before hedging                           |  |       | 5.47  |         |  |       | 5.47  |        |  |       |  |       |  |  | 5.47  |  |  |  |  |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|After hedging                            |  |       | 5.47  |         |  |       | 5.47  |        |  |       |  |       |  |  | 5.47  |  |  |  |  |  |  |  |      | 
|                                         |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 




Note:



|    |                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Light crude oil includes crude oil that is
    lighter than 30 API, medium crude oil is between 20 and
    30 API gravity and heavy crude oil includes crude oil that
    is lower than 20 API and lighter than 10 API gravity in the
    Lloydminster area.

Capital Expenditures

The following table shows the dollar amounts
expended by the Company on property acquisitions, exploration
and development for the periods indicated:

|                         |  |              |       |         |  |       |     |        |  |       |     |           |  |       |       |  |  |  |    |  |  |  |   |  |  |  |   | 
|------------------------ |  | ------------ | ----- | ------- |  | ----- | --- | ------ |  | ----- | --- | --------- |  | ----- | ----- |  |  |  | -- |  |  |  | - |  |  |  | - | 
|                         |  |             
|                         |  | 2003        
|                         |  |             
|                         |  |              |       | Western |  | East  |     |       
|                         |  | Total        |       | Canada  |  | Coast |     | Canada |  | China |     | Indonesia |  | Libya
|                         |  |              |       |         |  |       |     |        |  |       |     |           |  |      
|                         |  |             
|                         |  | ($ millions)
|Property acquisition (1) |  |              | 75    |         |  |       | 75  |        |  |       |    |           |  |       | 75    |  |  |  |   |  |  |  |  |  |  |  |  | 
|Exploration              |  |              | 324   |         |  |       | 274 |        |  |       | 24  |           |  |       | 298   |  |  |  | 26 |  |  |  |  |  |  |  |  | 
|Development              |  |              | 1,382 |         |  |       | 849 |        |  |       | 533 |           |  |       | 1,382 |  |  |  |   |  |  |  |  |  |  |  |  | 

|                      |  |              |       |         |  |       |     |        |  |       |     |           |  |       |       |  |  |  |    |  |  |  |   |  |  |  |   | 
|--------------------- |  | ------------ | ----- | ------- |  | ----- | --- | ------ |  | ----- | --- | --------- |  | ----- | ----- |  |  |  | -- |  |  |  | - |  |  |  | - | 
|                      |  |             
|                      |  | 2002        
|                      |  |             
|                      |  |              |       | Western |  | East  |     |       
|                      |  | Total        |       | Canada  |  | Coast |     | Canada |  | China |     | Indonesia |  | Libya
|                      |  |              |       |         |  |       |     |        |  |       |     |           |  |      
|                      |  |             
|                      |  | ($ millions)
|Property acquisitions |  |              | 108   |         |  |       | 108 |        |  |       |    |           |  |       | 108   |  |  |  |   |  |  |  |  |  |  |  |  | 
|Exploration           |  |              | 266   |         |  |       | 216 |        |  |       | 41  |           |  |       | 257   |  |  |  | 9  |  |  |  |  |  |  |  |  | 
|Development           |  |              | 1,193 |         |  |       | 710 |        |  |       | 417 |           |  |       | 1,127 |  |  |  | 66 |  |  |  |  |  |  |  |  | 

|                          |  |              |     |         |  |       |     |        |  |       |     |           |  |       |     |  |  |  |    |  |  |  |   |  |  |  |   | 
|------------------------- |  | ------------ | --- | ------- |  | ----- | --- | ------ |  | ----- | --- | --------- |  | ----- | --- |  |  |  | -- |  |  |  | - |  |  |  | - | 
|                          |  |             
|                          |  | 2001        
|                          |  |             
|                          |  |              |     | Western |  | East  |     |       
|                          |  | Total        |     | Canada  |  | Coast |     | Canada |  | China |     | Indonesia |  | Libya
|                          |  |              |     |         |  |       |     |        |  |       |     |           |  |      
|                          |  |             
|                          |  | ($ millions)
|Property acquisitions (2) |  |              | 177 |         |  |       | 177 |        |  |       |    |           |  |       | 177 |  |  |  |   |  |  |  |  |  |  |  |  | 
|Exploration               |  |              | 267 |         |  |       | 181 |        |  |       | 81  |           |  |       | 262 |  |  |  | 5  |  |  |  |  |  |  |  |  | 
|Development               |  |              | 873 |         |  |       | 664 |        |  |       | 110 |           |  |       | 774 |  |  |  | 99 |  |  |  |  |  |  |  |  | 




Notes:



|    |                                                                         
|--- | ------------------------------------------------------------------------
|(1) | Does not include the acquisition of Marathon.                           
|   
|(2) | Does not include the acquisition of Titanium Oil
    & Gas Ltd. and Avid

14



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##### Table of Contents



Oil and Gas
Netbacks(1)

The following table shows the Companys
average netback for operations classified as light, medium and
heavy crude oil operations, and natural gas operations for the
periods indicated. The classification is based on the oil/gas
ratio such that predominantly oil leases are classified with oil
operations and predominantly natural gas leases are classified
with natural gas operations.

|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|----------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ----- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                        |  |      
|                        |  | 2003 
|                        |  |      
|                        |  |       |       | Western |  | East  |       |       
|                        |  | Total |       | Canada  |  | Coast |       | Canada |  | China |       | Libya
|                        |  |       |       |         |  |       |       |        |  |       |       |      
|                        |  |      
|                        |  | $/bbl
|                        |  |      
|                        |  | $/mcf
|Crude Oil               |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Light crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 40.17 |         |  |       | 39.91 |        |  |       | 38.91 |       |  |  | 39.55 |  |  |  | 41.45 |  |  |  | 40.44 | 
|Royalties               |  |       | 4.55  |         |  |       | 7.28  |        |  |       | 0.81  |       |  |  | 4.93  |  |  |  | 3.80  |  |  |  |      | 
|Operating costs         |  |       | 5.41  |         |  |       | 9.27  |        |  |       | 3.16  |       |  |  | 7.05  |  |  |  | 1.94  |  |  |  | 15.43 | 
|Netback before hedging  |  |       | 30.21 |         |  |       | 23.36 |        |  |       | 34.94 |       |  |  | 27.57 |  |  |  | 35.71 |  |  |  | 25.01 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 29.49 |         |  |       | 22.80 |        |  |       | 32.99 |       |  |  | 26.50 |  |  |  | 35.71 |  |  |  | 25.01 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Medium crude oil        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 31.57 |         |  |       | 31.57 |        |  |       |      |       |  |  | 31.57 |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 5.28  |         |  |       | 5.28  |        |  |       |      |       |  |  | 5.28  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 9.53  |         |  |       | 9.53  |        |  |       |      |       |  |  | 9.53  |  |  |  |      |  |  |  |      | 
|Net back before hedging |  |       | 16.76 |         |  |       | 16.76 |        |  |       |      |       |  |  | 16.76 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 14.97 |         |  |       | 14.97 |        |  |       |      |       |  |  | 14.97 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Heavy crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 25.98 |         |  |       | 25.98 |        |  |       |      |       |  |  | 25.98 |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 2.76  |         |  |       | 2.76  |        |  |       |      |       |  |  | 2.76  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 9.09  |         |  |       | 9.09  |        |  |       |      |       |  |  | 9.09  |  |  |  |      |  |  |  |      | 
|Netback before hedging  |  |       | 14.13 |         |  |       | 14.13 |        |  |       |      |       |  |  | 14.13 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 14.13 |         |  |       | 14.13 |        |  |       |      |       |  |  | 14.13 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Total crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 31.70 |         |  |       | 29.52 |        |  |       | 38.91 |       |  |  | 30.53 |  |  |  | 41.45 |  |  |  | 40.44 | 
|Royalties               |  |       | 3.83  |         |  |       | 4.14  |        |  |       | 0.81  |       |  |  | 3.84  |  |  |  | 3.80  |  |  |  |      | 
|Operating costs         |  |       | 7.97  |         |  |       | 9.23  |        |  |       | 3.16  |       |  |  | 8.68  |  |  |  | 1.94  |  |  |  | 15.43 | 
|Netback before hedging  |  |       | 19.90 |         |  |       | 16.15 |        |  |       | 34.94 |       |  |  | 18.01 |  |  |  | 35.71 |  |  |  | 25.01 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 19.32 |         |  |       | 15.63 |        |  |       | 32.99 |       |  |  | 17.36 |  |  |  | 35.71 |  |  |  | 25.01 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Natural Gas             |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 5.79  |         |  |       | 5.79  |        |  |       |      |       |  |  | 5.79  |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 1.29  |         |  |       | 1.29  |        |  |       |      |       |  |  | 1.29  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 0.79  |         |  |       | 0.79  |        |  |       |      |       |  |  | 0.79  |  |  |  |      |  |  |  |      | 
|Netback before hedging  |  |       | 3.71  |         |  |       | 3.71  |        |  |       |      |       |  |  | 3.71  |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 3.79  |         |  |       | 3.79  |        |  |       |      |       |  |  | 3.79  |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 




Note:



|    |                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Netbacks reflect the results of operations for
    leases classified as oil or natural gas. Co-products, such as
    natural gas produced at an oil property or natural gas liquids
    produced at a natural gas property, have been converted to
    equivalent units of oil or natural gas depending on the lease
    classification.

15



---



##### Table of Contents



|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|----------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | ----- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                        |  |      
|                        |  | 2002 
|                        |  |      
|                        |  |       |       | Western |  | East  |       |       
|                        |  | Total |       | Canada  |  | Coast |       | Canada |  | China |       | Libya
|                        |  |       |       |         |  |       |       |        |  |       |       |      
|                        |  |      
|                        |  | $/bbl
|                        |  |      
|                        |  | $/mcf
|Crude Oil               |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Light crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 36.22 |         |  |       | 33.66 |        |  |       | 35.47 |       |  |  | 34.15 |  |  |  | 44.36 |  |  |  | 40.37 | 
|Royalties               |  |       | 3.25  |         |  |       | 4.55  |        |  |       | 0.36  |       |  |  | 3.41  |  |  |  | 2.65  |  |  |  |      | 
|Operating costs         |  |       | 7.33  |         |  |       | 10.46 |        |  |       | 3.62  |       |  |  | 8.60  |  |  |  | 2.15  |  |  |  | 13.13 | 
|Netback before hedging  |  |       | 25.64 |         |  |       | 18.65 |        |  |       | 31.49 |       |  |  | 22.14 |  |  |  | 39.56 |  |  |  | 27.24 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 25.74 |         |  |       | 18.82 |        |  |       | 31.49 |       |  |  | 22.26 |  |  |  | 39.56 |  |  |  | 27.24 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Medium crude oil        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 29.92 |         |  |       | 29.92 |        |  |       |      |       |  |  | 29.92 |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 5.59  |         |  |       | 5.59  |        |  |       |      |       |  |  | 5.59  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 7.19  |         |  |       | 7.19  |        |  |       |      |       |  |  | 7.19  |  |  |  |      |  |  |  |      | 
|Netback before hedging  |  |       | 17.14 |         |  |       | 17.14 |        |  |       |      |       |  |  | 17.14 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 17.33 |         |  |       | 17.33 |        |  |       |      |       |  |  | 17.33 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Heavy crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 26.48 |         |  |       | 26.48 |        |  |       |      |       |  |  | 26.48 |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 3.45  |         |  |       | 3.45  |        |  |       |      |       |  |  | 3.45  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 7.18  |         |  |       | 7.18  |        |  |       |      |       |  |  | 7.18  |  |  |  |      |  |  |  |      | 
|Net back before hedging |  |       | 15.85 |         |  |       | 15.85 |        |  |       |      |       |  |  | 15.85 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 15.85 |         |  |       | 15.85 |        |  |       |      |       |  |  | 15.85 |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Total crude oil         |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 30.19 |         |  |       | 28.81 |        |  |       | 35.47 |       |  |  | 29.26 |  |  |  | 44.36 |  |  |  | 40.37 | 
|Royalties               |  |       | 3.87  |         |  |       | 4.22  |        |  |       | 0.36  |       |  |  | 3.96  |  |  |  | 2.65  |  |  |  |      | 
|Operating costs         |  |       | 7.23  |         |  |       | 7.84  |        |  |       | 3.62  |       |  |  | 7.54  |  |  |  | 2.15  |  |  |  | 13.13 | 
|Netback before hedging  |  |       | 19.09 |         |  |       | 16.75 |        |  |       | 31.49 |       |  |  | 17.76 |  |  |  | 39.56 |  |  |  | 27.24 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 19.16 |         |  |       | 16.83 |        |  |       | 31.49 |       |  |  | 17.84 |  |  |  | 39.56 |  |  |  | 27.24 | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Natural Gas             |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Sales revenue           |  |       | 3.97  |         |  |       | 3.97  |        |  |       |      |       |  |  | 3.97  |  |  |  |      |  |  |  |      | 
|Royalties               |  |       | 0.81  |         |  |       | 0.81  |        |  |       |      |       |  |  | 0.81  |  |  |  |      |  |  |  |      | 
|Operating costs         |  |       | 0.70  |         |  |       | 0.70  |        |  |       |      |       |  |  | 0.70  |  |  |  |      |  |  |  |      | 
|Netback before hedging  |  |       | 2.46  |         |  |       | 2.46  |        |  |       |      |       |  |  | 2.46  |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 
|Netback after hedging   |  |       | 2.46  |         |  |       | 2.46  |        |  |       |      |       |  |  | 2.46  |  |  |  |      |  |  |  |      | 
|                        |  |       |       |         |  |       |       |        |  |       |       |       |  |  |       |  |  |  |       |  |  |  |       | 




Note:



|    |                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Netbacks reflect the results of operations for
    leases classified as oil or natural gas. Co-products, such as
    natural gas produced at an oil property or natural gas liquids
    produced at a natural gas property, have been converted to
    equivalent units of oil or natural gas depending on the lease
    classification.

16



---



##### Table of Contents



|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|---------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ------ |  | ----- | - | ----- |  |  | ----- |  |  |  | - |  |  |  | ----- | 
|                       |  |      
|                       |  | 2001 
|                       |  |      
|                       |  |       |       | Western |  | East  |       |       
|                       |  | Total |       | Canada  |  | Coast |       | Canada |  | China |   | Libya
|                       |  |       |       |         |  |       |       |        |  |       |   |      
|                       |  |      
|                       |  | $/bbl
|                       |  |      
|                       |  | $/mcf
|Crude Oil              |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Light crude oil        |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Sales revenue          |  |       | 34.28 |         |  |       | 34.25 |        |  |       |  |       |  |  | 34.25 |  |  |  |  |  |  |  | 37.72 | 
|Royalties              |  |       | 5.72  |         |  |       | 5.76  |        |  |       |  |       |  |  | 5.76  |  |  |  |  |  |  |  |      | 
|Operating costs        |  |       | 8.19  |         |  |       | 8.15  |        |  |       |  |       |  |  | 8.15  |  |  |  |  |  |  |  | 14.56 | 
|Netback before hedging |  |       | 20.37 |         |  |       | 20.34 |        |  |       |  |       |  |  | 20.34 |  |  |  |  |  |  |  | 23.16 | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Netback after hedging  |  |       | 20.37 |         |  |       | 20.34 |        |  |       |  |       |  |  | 20.34 |  |  |  |  |  |  |  | 23.16 | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Medium crude oil       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Sales revenue          |  |       | 23.86 |         |  |       | 23.86 |        |  |       |  |       |  |  | 23.86 |  |  |  |  |  |  |  |      | 
|Royalties              |  |       | 4.39  |         |  |       | 4.39  |        |  |       |  |       |  |  | 4.39  |  |  |  |  |  |  |  |      | 
|Operating costs        |  |       | 7.18  |         |  |       | 7.18  |        |  |       |  |       |  |  | 7.18  |  |  |  |  |  |  |  |      | 
|Netback before hedging |  |       | 12.29 |         |  |       | 12.29 |        |  |       |  |       |  |  | 12.29 |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Netback after hedging  |  |       | 12.29 |         |  |       | 12.29 |        |  |       |  |       |  |  | 12.29 |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Heavy crude oil        |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Sales revenue          |  |       | 17.20 |         |  |       | 17.20 |        |  |       |  |       |  |  | 17.20 |  |  |  |  |  |  |  |      | 
|Royalties              |  |       | 1.93  |         |  |       | 1.93  |        |  |       |  |       |  |  | 1.93  |  |  |  |  |  |  |  |      | 
|Operating costs        |  |       | 7.40  |         |  |       | 7.40  |        |  |       |  |       |  |  | 7.40  |  |  |  |  |  |  |  |      | 
|Netback before hedging |  |       | 7.87  |         |  |       | 7.87  |        |  |       |  |       |  |  | 7.87  |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Netback after hedging  |  |       | 7.87  |         |  |       | 7.87  |        |  |       |  |       |  |  | 7.87  |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Total crude oil        |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Sales revenue          |  |       | 23.13 |         |  |       | 23.09 |        |  |       |  |       |  |  | 23.09 |  |  |  |  |  |  |  | 37.72 | 
|Royalties              |  |       | 3.52  |         |  |       | 3.52  |        |  |       |  |       |  |  | 3.52  |  |  |  |  |  |  |  |      | 
|Operating costs        |  |       | 7.53  |         |  |       | 7.51  |        |  |       |  |       |  |  | 7.51  |  |  |  |  |  |  |  | 14.56 | 
|Netback before hedging |  |       | 12.08 |         |  |       | 12.06 |        |  |       |  |       |  |  | 12.06 |  |  |  |  |  |  |  | 23.16 | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Netback after hedging  |  |       | 12.08 |         |  |       | 12.06 |        |  |       |  |       |  |  | 12.06 |  |  |  |  |  |  |  | 23.16 | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Natural Gas            |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Sales revenue          |  |       | 5.39  |         |  |       | 5.39  |        |  |       |  |       |  |  | 5.39  |  |  |  |  |  |  |  |      | 
|Royalties              |  |       | 1.30  |         |  |       | 1.30  |        |  |       |  |       |  |  | 1.30  |  |  |  |  |  |  |  |      | 
|Operating costs        |  |       | 0.58  |         |  |       | 0.58  |        |  |       |  |       |  |  | 0.58  |  |  |  |  |  |  |  |      | 
|Netback before hedging |  |       | 3.51  |         |  |       | 3.51  |        |  |       |  |       |  |  | 3.51  |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 
|Netback after hedging  |  |       | 3.51  |         |  |       | 3.51  |        |  |       |  |       |  |  | 3.51  |  |  |  |  |  |  |  |      | 
|                       |  |       |       |         |  |       |       |        |  |       |   |       |  |  |       |  |  |  |   |  |  |  |       | 




Note:



|    |                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Netbacks reflect the results of operations for
    leases classified as oil or natural gas. Co-products, such as
    natural gas produced at an oil property or natural gas liquids
    produced at a natural gas property, have been converted to
    equivalent units of oil or natural gas depending on the lease
    classification.

17



---



##### Table of Contents



Producing Wells

The following table presents the number of wells
that were producing or capable of producing at December 31,
2003 and 2002 in which Husky held a working interest:

|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |       | 
|----------------------- | ---------------- | ----------- | ------ | ----------------- |  | ----------- | ----- | ------ |  | ----------- | ----- | ------ |  |  | ----- | ----- |  |  | ------ | ------ |  |  | ------ | ----- | 
|                        |                  |             |        |                   |  |            
|                        |                  | Oil Wells   |        | Natural Gas Wells |  | Total      
|                        |                  |             |        |                   |  |            
|                        |                  | Gross(1)(2) |        | Net(1)            |  | Gross(1)(2) |       | Net(1) |  | Gross(1)(2) |       | Net(1)
|                        |                  |             |        |                   |  |             |       |        |  |             |       |       
|Canada                  |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        | Alberta          |             |        | 5,098             |  |             |       | 3,410  |  |             |       | 5,660  |  |  |       | 2,877 |  |  |        | 10,758 |  |  |        | 6,287 | 
|                        | Saskatchewan     |             |        | 4,835             |  |             |       | 3,596  |  |             |       | 675    |  |  |       | 422   |  |  |        | 5,510  |  |  |        | 4,018 | 
|                        | British Columbia |             |        | 211               |  |             |       | 63     |  |             |       | 111    |  |  |       | 48    |  |  |        | 322    |  |  |        | 111   | 
|                        | Manitoba         |             |        | 2                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 2      |  |  |        | 1     | 
|                        | Newfoundland     |             |        | 8                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 8      |  |  |        | 1     | 
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        |                  |             | 10,154 |                   |  |             | 7,071 |        |  |             | 6,446 |        |  |  | 3,347 |       |  |  | 16,600 |        |  |  | 10,418 |      
|International           |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        | China            |             |        | 21                |  |             |       | 8      |  |             |       |       |  |  |       |      |  |  |        | 21     |  |  |        | 8     | 
|                        | Libya            |             |        | 2                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 2      |  |  |        | 1     | 
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        |                  |             | 23     |                   |  |             | 9     |        |  |             |      |        |  |  |      |       |  |  | 23     |        |  |  | 9      |      
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|As at December 31, 2003 |                  |             | 10,177 |                   |  |             | 7,080 |        |  |             | 6,446 |        |  |  | 3,347 |       |  |  | 16,623 |        |  |  | 10,427 |      
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|Canada                  |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        | Alberta          |             |        | 5,129             |  |             |       | 3,491  |  |             |       | 4,382  |  |  |       | 2,128 |  |  |        | 9,511  |  |  |        | 5,619 | 
|                        | Saskatchewan     |             |        | 4,568             |  |             |       | 3,276  |  |             |       | 479    |  |  |       | 261   |  |  |        | 5,047  |  |  |        | 3,537 | 
|                        | British Columbia |             |        | 200               |  |             |       | 56     |  |             |       | 27     |  |  |       | 11    |  |  |        | 227    |  |  |        | 67    | 
|                        | Manitoba         |             |        | 3                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 3      |  |  |        | 1     | 
|                        | Newfoundland     |             |        | 6                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 6      |  |  |        | 1     | 
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        |                  |             | 9,906  |                   |  |             | 6,825 |        |  |             | 4,888 |        |  |  | 2,400 |       |  |  | 14,794 |        |  |  | 9,225  |      
|International           |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        | China            |             |        | 21                |  |             |       | 8      |  |             |       |       |  |  |       |      |  |  |        | 21     |  |  |        | 8     | 
|                        | Libya            |             |        | 2                 |  |             |       | 1      |  |             |       |       |  |  |       |      |  |  |        | 2      |  |  |        | 1     | 
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|                        |                  |             | 23     |                   |  |             | 9     |        |  |             |      |        |  |  |      |       |  |  | 23     |        |  |  | 9      |      
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      
|As at December 31, 2002 |                  |             | 9,929  |                   |  |             | 6,834 |        |  |             | 4,888 |        |  |  | 2,400 |       |  |  | 14,817 |        |  |  | 9,234  |      
|                        |                  |             |        |                   |  |             |       |        |  |             |       |        |  |  |       |       |  |  |        |        |  |  |        |      




Notes:



|    |                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The number of gross wells is the total number of
    wells in which Husky owns a working interest. The number of net
    wells is the sum of the fractional interests owned in the gross
    wells.                                                                                                                                                                                                    
|   
|(2) | 2003 includes 271 gross, 241 net oil wells and
    424 gross, 207 net natural gas wells which were completed in two
    or more formations and from which the production is not
    commingled. For the purposes of this table, multiple completions
    are counted as single wells. Where one of the completions in a
    given well is an oil completion, the well is classified as an
    oil well.



| |                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2002 includes 197 gross oil wells and 278 gross
    natural gas wells which were completed in two or more formations
    and from which the production is not commingled. For the
    purposes of this table, multiple completions are counted as
    single wells. Where one of the completions in a given well is an
    oil completion, the well is classified as an oil well.

18



---



##### Table of Contents



Landholdings

The following table presents Huskys
developed acreage as at December 31, 2003 and 2002:

|                        |                  |                      |       |       |  |  |       |       | 
|----------------------- | ---------------- | -------------------- | ----- | ----- |  |  | ----- | ----- | 
|                        |                  |                     
|                        |                  | Developed Acreage   
|                        |                  |                     
|                        |                  | Gross                |       | Net  
|                        |                  |                      |       |      
|                        |                  |                     
|                        |                  | (thousands of acres)
|As at December 31, 2003 |                  |                      |       |       |  |  |       |      
|Western Canada          |                  |                      |       |       |  |  |       |      
|                        | Alberta          |                      |       | 3,208 |  |  |       | 2,684 | 
|                        | Saskatchewan     |                      |       | 550   |  |  |       | 485   | 
|                        | British Columbia |                      |       | 161   |  |  |       | 92    | 
|                        | Manitoba         |                      |       | 1     |  |  |       | 1     | 
|                        |                  |                      |       |       |  |  |       |      
|                        |                  |                      | 3,920 |       |  |  | 3,262 |      
|Eastern Canada          |                  |                      | 35    |       |  |  | 4     |      
|                        |                  |                      |       |       |  |  |       |      
|Total Canada            |                  |                      | 3,955 |       |  |  | 3,266 |      
|                        |                  |                      |       |       |  |  |       |      
|China                   |                  |                      | 17    |       |  |  | 7     |      
|Libya                   |                  |                      | 7     |       |  |  | 2     |      
|                        |                  |                      |       |       |  |  |       |      
|                        |                  |                      | 3,979 |       |  |  | 3,275 |      
|                        |                  |                      |       |       |  |  |       |      
|As at December 31, 2002 |                  |                      |       |       |  |  |       |      
|Western Canada          |                  |                      |       |       |  |  |       |      
|                        | Alberta          |                      |       | 2,863 |  |  |       | 2,443 | 
|                        | Saskatchewan     |                      |       | 523   |  |  |       | 465   | 
|                        | British Columbia |                      |       | 101   |  |  |       | 63    | 
|                        | Manitoba         |                      |       | 1     |  |  |       | 1     | 
|                        |                  |                      |       |       |  |  |       |      
|                        |                  |                      | 3,488 |       |  |  | 2,972 |      
|Eastern Canada          |                  |                      | 35    |       |  |  | 4     |      
|                        |                  |                      |       |       |  |  |       |      
|Total Canada            |                  |                      | 3,523 |       |  |  | 2,976 |      
|                        |                  |                      |       |       |  |  |       |      
|China                   |                  |                      | 17    |       |  |  | 7     |      
|Libya                   |                  |                      | 7     |       |  |  | 2     |      
|                        |                  |                      | 3,547 |       |  |  | 2,985 |      
|                        |                  |                      |       |       |  |  |       |      

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The following table presents Huskys
undeveloped acreage as at December 31, 2003 and 2002:

|                                 |                  |                      |        |       |  |  |        |       | 
|-------------------------------- | ---------------- | -------------------- | ------ | ----- |  |  | ------ | ----- | 
|                                 |                  |                     
|                                 |                  | Undeveloped Acreage 
|                                 |                  |                     
|                                 |                  | Gross                |        | Net  
|                                 |                  |                      |        |      
|                                 |                  |                     
|                                 |                  | (thousands of acres)
|As at December 31, 2003          |                  |                      |        |       |  |  |        |      
|Western Canada                   |                  |                      |        |       |  |  |        |      
|                                 | Alberta          |                      |        | 5,508 |  |  |        | 4,852 | 
|                                 | Saskatchewan     |                      |        | 2,057 |  |  |        | 1,911 | 
|                                 | British Columbia |                      |        | 713   |  |  |        | 491   | 
|                                 | Manitoba         |                      |        | 9     |  |  |        | 8     | 
|                                 |                  |                      |        |       |  |  |        |      
|                                 |                  |                      | 8,287  |       |  |  | 7,262  |      
|Northwest Territories and Arctic |                  |                      | 527    |       |  |  | 184    |      
|Eastern Canada                   |                  |                      | 2,414  |       |  |  | 2,104  |      
|                                 |                  |                      |        |       |  |  |        |      
|Total Canada                     |                  |                      | 11,228 |       |  |  | 9,550  |      
|International                    |                  |                      | 4,464  |       |  |  | 2,066  |      
|                                 |                  |                      |        |       |  |  |        |      
|                                 |                  |                      | 15,692 |       |  |  | 11,616 |      
|                                 |                  |                      |        |       |  |  |        |      
|As at December 31, 2002          |                  |                      |        |       |  |  |        |      
|Western Canada                   |                  |                      |        |       |  |  |        |      
|                                 | Alberta          |                      |        | 5,416 |  |  |        | 4,907 | 
|                                 | Saskatchewan     |                      |        | 2,098 |  |  |        | 1,986 | 
|                                 | British Columbia |                      |        | 314   |  |  |        | 273   | 
|                                 | Manitoba         |                      |        | 13    |  |  |        | 13    | 
|                                 |                  |                      |        |       |  |  |        |      
|                                 |                  |                      | 7,841  |       |  |  | 7,179  |      
|Northwest Territories and Arctic |                  |                      | 463    |       |  |  | 175    |      
|Eastern Canada                   |                  |                      | 2,414  |       |  |  | 2,104  |      
|                                 |                  |                      |        |       |  |  |        |      
|Total Canada                     |                  |                      | 10,718 |       |  |  | 9,458  |      
|International                    |                  |                      | 4,464  |       |  |  | 2,066  |      
|                                 |                  |                      |        |       |  |  |        |      
|                                 |                  |                      | 15,182 |       |  |  | 11,524 |      
|                                 |                  |                      |        |       |  |  |        |      

Drilling Activity

Huskys gross and net exploratory and
development drilling activities in Western Canada for the years
ended December 31, 2003, 2002 and 2001 are set forth below:

|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |     | 
|----------------------- | --- | ---------------------- | ----- | ---- |  | ----- | ----- | --- |  | ----- | ----- | --- |  |  | ----- | --- |  |  | ----- | --- |  |  | ----- | --- | 
|                        |     |                       
|                        |     | Year ended December 31
|                        |     |                       
|                        |     |                        |       |      |  |      
|                        |     | 2003                   |       | 2002 |  | 2001 
|                        |     |                        |       |      |  |      
|                        |     | Gross                  |       | Net  |  | Gross |       | Net |  | Gross |       | Net
|                        |     |                        |       |      |  |       |       |     |  |       |       |    
|Western Canada Drilling |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|Exploration             |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|                        | Oil |                        |       | 12   |  |       |       | 11  |  |       |       | 21  |  |  |       | 20  |  |  |       | 78  |  |  |       | 76  | 
|                        | Gas |                        |       | 147  |  |       |       | 124 |  |       |       | 139 |  |  |       | 131 |  |  |       | 102 |  |  |       | 90  | 
|                        | Dry |                        |       | 22   |  |       |       | 21  |  |       |       | 15  |  |  |       | 14  |  |  |       | 36  |  |  |       | 34  | 
|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|                        |     |                        | 181   |      |  |       | 156   |     |  |       | 175   |     |  |  | 165   |     |  |  | 216   |     |  |  | 200   |    
|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|Development             |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|                        | Oil |                        |       | 520  |  |       |       | 490 |  |       |       | 497 |  |  |       | 453 |  |  |       | 594 |  |  |       | 542 | 
|                        | Gas |                        |       | 540  |  |       |       | 518 |  |       |       | 485 |  |  |       | 453 |  |  |       | 251 |  |  |       | 221 | 
|                        | Dry |                        |       | 60   |  |       |       | 57  |  |       |       | 58  |  |  |       | 55  |  |  |       | 68  |  |  |       | 63  | 
|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|                        |     |                        | 1,120 |      |  |       | 1,065 |     |  |       | 1,040 |     |  |  | 961   |     |  |  | 913   |     |  |  | 826   |    
|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    
|                        |     |                        | 1,301 |      |  |       | 1,221 |     |  |       | 1,215 |     |  |  | 1,126 |     |  |  | 1,129 |     |  |  | 1,026 |    
|                        |     |                        |       |      |  |       |       |     |  |       |       |     |  |  |       |     |  |  |       |     |  |  |       |    

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The following table presents the number of gross
and net exploratory and development wells that were drilling at
December 31, 2003:

Present Activities

|               |  |             |   |             |  |       |  |     |    |  |  |       
|-------------- |  | ----------- | - | ----------- |  | ----- |  | --- | -- |  |  | ------
|               |  |             |   |            
|               |  | Exploratory |   | Development
|               |  |             |   |            
|Wells Drilling |  | Gross       |   | Net         |  | Gross |  | Net
|               |  |             |   |             |  |       |  |    
|Western Canada |  |             | 8 |             |  | 6.750 |  |     | 17 |  |  | 15.150
|East Coast     |  |             |  |             |  |      |  |     | 1  |  |  | 0.175 
|China          |  |             |  |             |  |      |  |     |   |  |  |      
|               |  |             |   |             |  |       |  |     |    |  |  |       
|               |  |             | 8 |             |  | 6.750 |  |     | 18 |  |  | 15.325
|               |  |             |   |             |  |       |  |     |    |  |  |       

Reserves Data and Other
Information

Huskys oil and gas reserves as of
December 31, 2003 are based on constant prices and costs as
prepared internally by Huskys engineers. Husky uses a
formalized process for determining, approving and booking
reserves. This process provides for all reserves evaluation to
be done on a consistent basis using established definitions and
guidelines. Approval of any significant reserve additions and
changes requires review by an internal panel of qualified
technical experts.

Reserves Reported to Other Agencies

There have been no reserves reported to any U.S.
federal authority or agency since the beginning of the last
fiscal year.

Audit of Oil and Gas Reserves

McDaniel & Associates Consultants Ltd., an
independent firm of oil and gas reserves evaluation engineers,
was engaged to conduct an audit of Huskys crude oil,
natural gas and natural gas products reserves. McDaniel &
Associates Consultants Ltd. issued an audit opinion stating that
Huskys internally generated proved and probable reserves
and net present values are, in aggregate, reasonable, and have
been prepared in accordance with generally accepted oil and gas
engineering and evaluation practices in the United States and as
set out in the COGE Handbook.

Oil and Gas Reserves Data

The following table presents in summary
Huskys proved developed reserves, proved undeveloped
reserves and associated future net cash flows as at
December 31, 2003. Future revenues, based on constant
prices and costs, are presented net of royalties. Estimated
future net revenues based on constant prices and costs assume
continuation of year end economic conditions including market
demand and government policy, which are subject to uncertainty
and may differ materially in the future. It should not be
assumed that the discounted value of estimated future net
reserves is representative of the fair market value of the
reserves.

|                          |  |                 |       |             |  |                  |       |        |  |            |         |     |  |  |         |  |  |  |        |  |  |  |       | 
|------------------------- |  | --------------- | ----- | ----------- |  | ---------------- | ----- | ------ |  | ---------- | ------- | --- |  |  | ------- |  |  |  | ------ |  |  |  | ----- | 
|                          |  |                 |       |             |  |                  |       |        |  |           
|                          |  |                 |       |             |  |                  |       |        |  | Future Net
|                          |  |                 |       |             |  | Cash Flows      
|                          |  | Crude oil & NGL |       | Natural Gas |  | Before Tax(3)(4)
|                          |  |                 |       |             |  |                 
|                          |  | Gross(1)        |       | Net(1)      |  | Gross(1)         |       | Net(1) |  | 0%         |         | 10%
|                          |  |                 |       |             |  |                  |       |        |  |            |         |    
|                          |  |                 |       |             |  |                 
|                          |  | (mmbbls)        |       | (bcf)       |  | ($ millions)    
|Proved
    developed(2)   |  |                 | 442.1 |             |  |                  | 394.5 |        |  |            | 1,712.4 |     |  |  | 1,422.9 |  |  |  | 13,930 |  |  |  | 8,232 | 
|Proved
    undeveloped(2) |  |                 | 102.2 |             |  |                  | 91.0  |        |  |            | 346.5   |     |  |  | 293.7   |  |  |  | 2,209  |  |  |  | 1,144 | 
|                          |  |                 |       |             |  |                  |       |        |  |            |         |     |  |  |         |  |  |  |        |  |  |  |       | 
|Proved total(2)           |  |                 | 544.3 |             |  |                  | 485.5 |        |  |            | 2,058.9 |     |  |  | 1,716.6 |  |  |  | 16,139 |  |  |  | 9,376 | 
|                          |  |                 |       |             |  |                  |       |        |  |            |         |     |  |  |         |  |  |  |        |  |  |  |       | 




Notes:



|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Gross reserves are Huskys lessor royalty,
    overriding royalty and working interest share of reserves,
    before deduction of royalties. Net reserves are gross reserves,
    less royalties.      
|   
|(2) | These reserve categories have the same meanings
    as those set out in SEC Regulation S-X.                                                                                                            
|   
|(3) | The discounted future net cash flows at
    December 31, 2003 were based on the year-end spot NYMEX
    natural gas price of U.S. $5.96/mmbtu and on a spot WTI crude
    oil price of U.S. $32.51/bbl.

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|    |                         
|--- | ------------------------
|(4) | Future Development Costs

|               |  |                           |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     | 
|-------------- |  | ------------------------- | ----- | ---- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---------- | --- |  |  |  | -- |  |  |  | -- |  |  |  | --- | 
|               |  |                          
|               |  | As at December 31, 2003  
|               |  |                          
|               |  | Total                     |       | 2004 |  | 2005 |     | 2006 |  | 2007 |     | 2008 |  | Thereafter
|               |  |                           |       |      |  |      |     |      |  |      |     |      |  |           
|               |  |                          
|               |  | ($ millions undiscounted)
|Western Canada |  |                           | 1,229 |      |  |      | 366 |      |  |      | 241 |      |  |            | 108 |  |  |  | 68 |  |  |  | 49 |  |  |  | 397 | 
|Eastern Canada |  |                           | 39    |      |  |      | 28  |      |  |      | 4   |      |  |            | 3   |  |  |  | 1  |  |  |  |   |  |  |  | 3   | 
|China          |  |                           |      |      |  |      |    |      |  |      |    |      |  |            |    |  |  |  |   |  |  |  |   |  |  |  |    | 
|Indonesia      |  |                           |      |      |  |      |    |      |  |      |    |      |  |            |    |  |  |  |   |  |  |  |   |  |  |  |    | 
|               |  |                           |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     | 
|               |  |                           | 1,265 |      |  |      | 338 |      |  |      | 245 |      |  |            | 111 |  |  |  | 69 |  |  |  | 49 |  |  |  | 400 | 
|               |  |                           |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     | 

|               |  |                         |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |     |  |  |  |    |  |  |  |     | 
|-------------- |  | ----------------------- | ----- | ---- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---------- | --- |  |  |  | --- |  |  |  | -- |  |  |  | --- | 
|               |  |                        
|               |  | As at December 31, 2002
|               |  |                        
|               |  | Total                   |       | 2003 |  | 2004 |     | 2005 |  | 2006 |     | 2007 |  | Thereafter
|               |  |                         |       |      |  |      |     |      |  |      |     |      |  |           
|Western Canada |  |                         | 1,100 |      |  |      | 325 |      |  |      | 160 |      |  |            | 116 |  |  |  | 63  |  |  |  | 56 |  |  |  | 380 | 
|Eastern Canada |  |                         | 41    |      |  |      | 32  |      |  |      | 2   |      |  |            | 2   |  |  |  | 1   |  |  |  | 2  |  |  |  | 2   | 
|China          |  |                         |      |      |  |      |    |      |  |      |    |      |  |            |    |  |  |  |    |  |  |  |   |  |  |  |    | 
|Indonesia      |  |                         | 154   |      |  |      |    |      |  |      | 41  |      |  |            | 73  |  |  |  | 40  |  |  |  |   |  |  |  |    | 
|               |  |                         |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |     |  |  |  |    |  |  |  |     | 
|               |  |                         | 1,295 |      |  |      | 357 |      |  |      | 203 |      |  |            | 191 |  |  |  | 104 |  |  |  | 58 |  |  |  | 382 | 
|               |  |                         |       |      |  |      |     |      |  |      |     |      |  |            |     |  |  |  |     |  |  |  |    |  |  |  |     | 

Future development costs include estimated
development capital expenditures necessary to gain access to
proved undeveloped reserves.

Reserves and Production by Principal
Area

Huskys estimate of its proved reserves by
area as of December 31, 2003 and daily average production
of crude oil, NGL and natural gas by area are as follows:

|                  |                                   |                            |       |             |       |  |       |      |      | 
|----------------- | --------------------------------- | -------------------------- | ----- | ----------- | ----- |  | ----- | ---- | ---- | 
|Crude Oil and NGL |                                   | Proved Reserves            |       | Production 
|                  |                                   |                            |       |            
|                  |                                   | (mmbbls)                   |       | (mbbls/day)
|Western Canada    |                                   |                            |       |             |       |  |       |     
|                  | British Columbia and Foothills    |                            |       |             |       |  |       |      |     
|                  |                                   | Alberta and BC Plains area |       |             | 31.8  |  |       |      | 6.4  | 
|                  |                                   | Foothills Deep Gas area    |       |             | 24.0  |  |       |      | 7.1  | 
|                  |                                   | Ram River and Kaybob areas |       |             | 6.5   |  |       |      | 2.0  | 
|                  | Northwest Alberta Plains          |                            |       |             |       |  |       |      |     
|                  |                                   | Rainbow Lake area          |       |             | 85.0  |  |       |      | 7.8  | 
|                  |                                   | Peace River Arch area      |       |             | 11.2  |  |       |      | 3.4  | 
|                  | East Central Alberta              |                            |       |             |       |  |       |      |     
|                  |                                   | Provost area               |       |             | 33.8  |  |       |      | 20.8 | 
|                  |                                   | North area                 |       |             | 2.0   |  |       |      | 0.7  | 
|                  |                                   | South area                 |       |             | 6.4   |  |       |      | 2.7  | 
|                  | Southern Alberta and Saskatchewan |                            |       |             |       |  |       |      |     
|                  |                                   | South Alberta area         |       |             | 21.8  |  |       |      | 11.7 | 
|                  |                                   | South Saskatchewan area    |       |             | 76.1  |  |       |      | 18.4 | 
|                  | Lloydminster Area                 |                            |       |             |       |  |       |      |     
|                  |                                   | Primary production         |       |             | 132.3 |  |       |      | 75.0 | 
|                  |                                   | Thermal production         |       |             | 62.6  |  |       |      | 14.8 | 
|                  | Other                             |                            |       | 0.7         |       |  |       | 0.6  |     
|                  |                                   |                            |       |             |       |  |       |     
|                  |                                   |                            | 494.2 |             |       |  | 171.4 |     
|                  |                                   |                            |       |             |       |  |       |     
|East Coast Canada |                                   |                            |       |             |       |  |       |     
|                  | Terra Nova                        |                            |       | 25.7        |       |  |       | 16.8 |     
|China             |                                   |                            |       |             |       |  |       |     
|                  | Wenchang                          |                            |       | 23.9        |       |  |       | 22.4 |     
|Libya             |                                   |                            |       |             |       |  |       |     
|                  | Shatirah                          |                            |       | 0.5         |       |  |       | 0.1  |     
|                  |                                   |                            |       |             |       |  |       |     
|                  |                                   |                            | 544.3 |             |       |  | 210.7 |     
|                  |                                   |                            |       |             |       |  |       |     

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|               |                                   |                            |         |            |       |  |       |      |       | 
|-------------- | --------------------------------- | -------------------------- | ------- | ---------- | ----- |  | ----- | ---- | ----- | 
|Natural Gas    |                                   | Proved Reserves            |         | Production
|               |                                   |                            |         |           
|               |                                   | (bcf)                      |         | (mmcf/day)
|Western Canada |                                   |                            |         |            |       |  |       |     
|               | British Columbia and Foothills    |                            |         |            |       |  |       |      |      
|               |                                   | Alberta and BC Plains area |         |            | 153.1 |  |       |      | 34.9  | 
|               |                                   | Foothills Deep Gas area    |         |            | 262.0 |  |       |      | 101.5 | 
|               |                                   | Ram River and Kaybob areas |         |            | 275.2 |  |       |      | 67.2  | 
|               | Northwest Alberta Plains          |                            |         |            |       |  |       |      |      
|               |                                   | Rainbow Lake area          |         |            | 295.4 |  |       |      | 35.9  | 
|               |                                   | Peace River Arch           |         |            | 68.6  |  |       |      | 22.0  | 
|               |                                   | Northern Alberta area      |         |            | 313.9 |  |       |      | 101.1 | 
|               | East Central Alberta              |                            |         |            |       |  |       |      |      
|               |                                   | Provost area               |         |            | 57.8  |  |       |      | 12.2  | 
|               |                                   | North area                 |         |            | 142.8 |  |       |      | 52.8  | 
|               |                                   | South area                 |         |            | 164.8 |  |       |      | 53.6  | 
|               | Southern Alberta and Saskatchewan |                            |         |            |       |  |       |      |      
|               |                                   | South Alberta area         |         |            | 61.5  |  |       |      | 19.6  | 
|               |                                   | South Saskatchewan area    |         |            | 173.2 |  |       |      | 53.8  | 
|               | Lloydminster Area                 |                            |         | 80.8       |       |  |       | 51.2 |      
|               | Other                             |                            |         | 9.8        |       |  |       | 4.8  |      
|               |                                   |                            |         |            |       |  |       |     
|               |                                   |                            | 2,058.9 |            |       |  | 610.6 |     
|               |                                   |                            |         |            |       |  |       |     

The following tables present Huskys finding
and development costs for Western Canada and for the total
Company for each of the three years ended December 31, 2003
and the aggregate average finding and development costs for the
three year period:

Finding and Development Costs

|                                              |  |                         |         |      |  |      |         |      |  |  |       |  |  |  |       | 
|--------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | ---- |  |  | ----- |  |  |  | ----- | 
|                                              |  |                        
|                                              |  | Year ended December 31,
|                                              |  |                        
|Western Canada(1)                             |  | 2003 - 2001             |         | 2003 |  | 2002 |         | 2001
|                                              |  |                         |         |      |  |      |         |     
|Total capitalized costs($ millions)           |  |                         | 3,019.1 |      |  |      | 1,132.7 |      |  |  | 994.2 |  |  |  | 892.2 | 
|Proved reserve additions and revisions(mmboe) |  |                         | 284.3   |      |  |      | 76.6    |      |  |  | 94.8  |  |  |  | 112.9 | 
|                                              |  |                         |         |      |  |      |         |      |  |  |       |  |  |  |       | 
|Average costs per boe                         |  |                         | 10.62   |      |  |      | 14.79   |      |  |  | 10.49 |  |  |  | 7.90  | 
|                                              |  |                         |         |      |  |      |         |      |  |  |       |  |  |  |       | 




Note:



|    |                                                  
|--- | -------------------------------------------------
|(1) | Excludes oil sands and acquisitions/divestitures.

|                                              |  |                         |         |      |  |      |         |      |  |  |         |  |  |  |         | 
|--------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                              |  |                        
|                                              |  | Year ended December 31,
|                                              |  |                        
|Total Company                                 |  | 2003 - 2001             |         | 2003 |  | 2002 |         | 2001
|                                              |  |                         |         |      |  |      |         |     
|Total capitalized costs($ millions)           |  |                         | 4.370.5 |      |  |      | 1.705.6 |      |  |  | 1,520.8 |  |  |  | 1,144.1 | 
|Proved reserve additions and revisions(mmboe) |  |                         | 284.0   |      |  |      | 49.1    |      |  |  | 114.5   |  |  |  | 120.4   | 
|                                              |  |                         |         |      |  |      |         |      |  |  |         |  |  |  |         | 
|Average costs per boe                         |  |                         | 15.39   |      |  |      | 34.74   |      |  |  | 13.28   |  |  |  | 9.50    | 
|                                              |  |                         |         |      |  |      |         |      |  |  |         |  |  |  |         | 

The following table presents Huskys total
crude oil, NGL and natural gas probable reserves for each of the
three years ended December 31, 2003, 2002 and 2001:

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Probable Oil and Gas
Reserves(1)

|         |  |                 |       |             |  |               |       |       |  |                |     |               |  |       |       |  |  |  |       |  |  |  |      |  |  |  |       | 
|-------- |  | --------------- | ----- | ----------- |  | ------------- | ----- | ----- |  | -------------- | --- | ------------- |  | ----- | ----- |  |  |  | ----- |  |  |  | ---- |  |  |  | ----- | 
|         |  |                 |       |            
|         |  | Crude Oil & NGL |       | Natural Gas
|         |  |                 |       |            
|Probable |  | Western Canada  |       | East coast  |  | International |       | Total |  | Western Canada |     | International |  | Total
|         |  |                 |       |             |  |               |       |       |  |                |     |               |  |      
|         |  |                 |       |            
|         |  | (mmbbls)        |       | (bcf)      
|2003     |  |                 | 246.1 |             |  |               | 182.2 |       |  |                | 7.0 |               |  |       | 435.3 |  |  |  | 381.3 |  |  |  | 66.5 |  |  |  | 447.8 | 
|2002     |  |                 | 246.4 |             |  |               | 201.6 |       |  |                | 4.2 |               |  |       | 452.2 |  |  |  | 383.9 |  |  |  | 18.9 |  |  |  | 402.8 | 
|2001     |  |                 | 213.0 |             |  |               | 213.3 |       |  |                | 4.2 |               |  |       | 430.5 |  |  |  | 405.6 |  |  |  | 18.9 |  |  |  | 424.5 | 




Notes:



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The probable reserves presented have been
    prepared, using constant prices and costs, in accordance with NI
    51-101.                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(2) | The SEC generally permits oil and gas registrants
    to disclose only reserves that meet the standards for proved
    reserves. Due to the higher uncertainty associated with probable
    reserves, disclosure or reference to probable reserves does not
    meet the standards for the inclusion in a document filed with
    the SEC. The disclosure of probable reserves is included herein
    in accordance with certain undertakings made pursuant to an
    exemption order granted with respect to Part 8 of NI 51-101.
|   
|(3) | Bitumen probable reserves are included under the
    caption Western Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                      




Supplemental Information on Oil and Gas
Exploration and Production Activities

The following disclosures have been prepared in
accordance with FASB Statement No. 69 Disclosures
about Oil and Gas Producing Activities (FAS
69):

Oil and Gas Reserves

Users of this information should be aware that
the process of estimating quantities of proved and
proved developed crude oil and natural gas reserves
is very complex, requiring significant subjective decisions in
the evaluation of all available geological, engineering and
economic data for each reservoir. The data for a given reservoir
may also change substantially over time as a result of numerous
factors including, but not limited to, additional development
activity, evolving production history, and continual
reassessment of the viability of production under varying
economic conditions. Consequently, material revisions to
existing reserve estimates occur from time to time. Although
every reasonable effort is made to ensure that reserve estimates
reported represent the most accurate assessments possible, the
significance of the subjective decisions required and variances
in available data for various reservoirs make these estimates
generally less precise than other estimates presented in
connection with financial statement disclosures.

Proved oil and gas reserves are the estimated
quantities of crude oil, natural gas and natural gas liquids
which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating
conditions.

Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods.

Proved undeveloped reserves are reserves that are
expected to be recovered from known accumulations where a
significant expenditure is required.

Canadian provincial royalties are determined
based on a graduated percentage scale, which varies with prices
and production volumes. Canadian reserves, as presented on a net
basis, assume prices and royalty rates in existence at the time
the estimates were made, and the Companys estimate of
future production volumes. Future fluctuations in prices,
production rates, or changes in political or regulatory
environments could cause the Companys share of future
production from Canadian reserves to be materially different
from that presented.

Subsequent to December 31, 2003, no major
discovery or other favourable or adverse event is believed to
have caused a material change in the estimates of proved or
proved developed reserves as of that date.

24



---



##### Table of Contents



Results of Operations for Producing
Activities

The following table sets forth revenue and direct
cost information relating to the Companys oil and gas
producing activities for the years ended December 31:

|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |       | 
|------------------------------------------ | ---------------------------------------- | ----------------------------------- | ----- | ---------------- |  | -------- | ----- | ----- |  | ---- | ----- | ----- |  | ---- | ---- | ---- |  | ---- | ---- | --- |  |  | ----- | -- | - |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                                           |                                          |                                     |       |                  |  |         
|                                           |                                          | Canada(1)                           |       | International(1) |  | Total(1)
|                                           |                                          |                                     |       |                  |  |         
|Results of operations                      |                                          | 2003                                |       | 2002             |  | 2001     |       | 2003  |  | 2002 |       | 2001  |  | 2003 |      | 2002 |  | 2001
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |     
|                                           |                                          |                                    
|                                           |                                          | ($ millions except per boe amounts)
|Revenue                                    |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|                                           | Sales                                    |                                     |       | 2,090            |  |          |       | 1,738 |  |      |       | 1,771 |  |      |      | 310  |  |      |      | 190 |  |  |       | 4  |   |  |       | 2,400 |  |  |       | 1,928 |  |  |       | 1,775 | 
|                                           | Transfers                                |                                     |       | 786              |  |          |       | 737   |  |      |       | 390   |  |      |      |     |  |      |      |    |  |  |       |   |   |  |       | 786   |  |  |       | 737   |  |  |       | 390   | 
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|                                           |                                          |                                     | 2,876 |                  |  |          | 2,475 |       |  |      | 2,161 |       |  |      | 310  |      |  |      | 190  |     |  |  | 4     |    |   |  | 3,186 |       |  |  | 2,665 |       |  |  | 2,165 |      
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|Operating expenses                         |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|                                           | Productions costs                        |                                     |       | 794              |  |          |       | 676   |  |      |       | 617   |  |      |      | 17   |  |      |      | 10  |  |  |       |   |   |  |       | 811   |  |  |       | 686   |  |  |       | 617   | 
|                                           | Depletion, depreciation and amortization |                                     |       | 892              |  |          |       | 813   |  |      |       | 721   |  |      |      | 66   |  |      |      | 38  |  |  |       | 7  |   |  |       | 958   |  |  |       | 851   |  |  |       | 728   | 
|                                           | Income taxes                             |                                     |       | 527              |  |          |       | 387   |  |      |       | 334   |  |      |      | 102  |  |      |      | 64  |  |  |       | (1 | ) |  |       | 629   |  |  |       | 451   |  |  |       | 333   | 
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|Total                                      |                                          |                                     | 2,213 |                  |  |          | 1,876 |       |  |      | 1,672 |       |  |      | 185  |      |  |      | 112  |     |  |  | 6     |    |   |  | 2,398 |       |  |  | 1,988 |       |  |  | 1,678 |      
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|                                           |                                          |                                     | 663   |                  |  |          | 599   |       |  |      | 489   |       |  |      | 125  |      |  |      | 78   |     |  |  | (2    | )  |   |  | 788   |       |  |  | 677   |       |  |  | 487   |      
|                                           |                                          |                                     |       |                  |  |          |       |       |  |      |       |       |  |      |      |      |  |      |      |     |  |  |       |    |   |  |       |       |  |  |       |       |  |  |       |      
|Amortization rate in dollars per gross boe |                                          |                                     | 8.43  |                  |  |          | 7.74  |       |  |      | 7.24  |       |  |      | 8.00 |      |  |      | 8.33 |     |  |  | 80.61 |    |   |  | 8.40  |       |  |  | 7.76  |       |  |  | 7.31  |      




Note:



|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The costs in this schedule exclude corporate
    overhead, interest expense and other operating costs, which are
    not directly related to producing activities.

Costs Incurred in Oil and Gas Property
Acquisition, Exploration and Development Activities

Capitalized costs incurred in oil and gas
producing activities for the years ended December 31 were
as follows:

|                     |                      |              |       |      |  |      |       |     |  |  |       |     | 
|-------------------- | -------------------- | ------------ | ----- | ---- |  | ---- | ----- | --- |  |  | ----- | --- | 
|Costs Incurred       |                      | 2003         |       | 2002 |  | 2001
|                     |                      |              |       |      |  |     
|                     |                      |             
|                     |                      | ($ millions)
|Property acquisition |                      |              |       |      |  |      |       |     |  |  |       |    
|                     | Proved (1)  Canada  |              |       | 541  |  |      |       | 20  |  |  |       | 366 | 
|                     | Unproved  Canada    |              |       | 106  |  |      |       | 88  |  |  |       | 55  | 
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|                     |                      |              | 647   |      |  |      | 108   |     |  |  | 421   |    
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|                     | Exploration  Canada |              |       | 298  |  |      |       | 257 |  |  |       | 262 | 
|                     |  Other              |              |       | 26   |  |      |       | 9   |  |  |       | 5   | 
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|                     |                      |              | 324   |      |  |      | 266   |     |  |  | 267   |    
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|Development  Canada |                      |              | 1,381 |      |  |      | 1,127 |     |  |  | 774   |    
|                     |  China              |              |       |     |  |      |       | 66  |  |  |       | 99  | 
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|                     |                      |              | 1,381 |      |  |      | 1,193 |     |  |  | 873   |    
|                     |                      |              |       |      |  |      |       |     |  |  |       |    
|                     |                      |              | 2,352 |      |  |      | 1,567 |     |  |  | 1,561 |    
|                     |                      |              |       |      |  |      |       |     |  |  |       |    




Note:



|    |                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Property acquisition costs related to corporate
    acquisitions for proved properties in 2003 included
    $517 million; 2002  nil; 2001 included $244
    million.

Acquisition costs include costs incurred to
purchase, lease, or otherwise acquire oil and gas properties.

Exploration costs include the costs of geological
and geophysical activity, retaining undeveloped properties and
drilling and equipping exploration wells.

Development costs include the costs of drilling
and equipping development wells and facilities to extract, treat
and gather and store oil and gas.

Exploration and development costs include
administrative costs and depreciation of support equipment
directly associated with these activities.

25



---



##### Table of Contents



The following table sets forth a summary of oil
and gas property costs not being amortized at December 31,
2003, by the year in which the costs were incurred:

|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |     | 
|--------------------- | ------------- | ------------ | ----- | ---- |  | ---- | --- | ---- |  | -------- | --- | --- |  |  | --- | -- |  |  | --- | --- | 
|                      |               |              |       |      |  |      |     |      |  | Prior to
|Withheld Costs        |               | Total        |       | 2003 |  | 2002 |     | 2001 |  | 2001    
|                      |               |              |       |      |  |      |     |      |  |         
|                      |               |             
|                      |               | ($ millions)
|Property acquisitions |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      | Canada        |              |       | 406  |  |      |     | 56   |  |          |     | 37  |  |  |     | 17 |  |  |     | 296 | 
|                      | International |              |       | 14   |  |      |     |     |  |          |     |    |  |  |     |   |  |  |     | 14  | 
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      |               |              | 420   |      |  |      | 56  |      |  |          | 37  |     |  |  | 17  |    |  |  | 310 |    
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|Exploration           |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      | Canada        |              |       | 324  |  |      |     | 131  |  |          |     | 40  |  |  |     | 57 |  |  |     | 96  | 
|                      | International |              |       | 22   |  |      |     | 16   |  |          |     | 6   |  |  |     |   |  |  |     |    | 
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      |               |              | 346   |      |  |      | 147 |      |  |          | 46  |     |  |  | 57  |    |  |  | 96  |    
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|Development           |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      | Canada        |              |       | 886  |  |      |     | 477  |  |          |     | 392 |  |  |     | 17 |  |  |     |    | 
|                      | International |              |       | 18   |  |      |     | 1    |  |          |     |    |  |  |     |   |  |  |     | 17  | 
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      |               |              | 904   |      |  |      | 478 |      |  |          | 392 |     |  |  | 17  |    |  |  | 17  |    
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|Capitalized interest  |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      | Canada        |              |       | 198  |  |      |     | 52   |  |          |     | 26  |  |  |     | 51 |  |  |     | 69  | 
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    
|                      |               |              | 1,868 |      |  |      | 733 |      |  |          | 501 |     |  |  | 142 |    |  |  | 492 |    
|                      |               |              |       |      |  |      |     |      |  |          |     |     |  |  |     |    |  |  |     |    

Capitalized Costs Relating to Oil and Gas
Producing Activities

The capitalized costs and related accumulated
depletion, depreciation and amortization, including impairments,
relating to the Companys oil and gas exploration,
development and producing activities at December 31
consisted of:

|                                                              |               |              |        |        |  |         |        |        |  |  |        |       | 
|------------------------------------------------------------- | ------------- | ------------ | ------ | ------ |  | ------- | ------ | ------ |  |  | ------ | ----- | 
|Capitalized Costs                                             |               | 2003         |        | 2002   |  | 2001(1)
|                                                              |               |              |        |        |  |        
|                                                              |               |             
|                                                              |               | ($ millions)
|Unproved oil and gas properties                               |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              | Canada        |              |        | 1,814  |  |         |        | 1,318  |  |  |        | 1,052 | 
|                                                              | International |              |        | 54     |  |         |        | 37     |  |  |        | 235   | 
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 1,868  |        |  |         | 1,355  |        |  |  | 1,287  |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|Proved oil and gas properties                                 |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              | Canada        |              |        | 11,787 |  |         |        | 10,207 |  |  |        | 9,301 | 
|                                                              | International |              |        | 442    |  |         |        | 432    |  |  |        | 159   | 
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 12,229 |        |  |         | 10,639 |        |  |  | 9,460  |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 14,097 |        |  |         | 11,994 |        |  |  | 10,747 |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|Less accumulated depletion, depreciation and
    amortization |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              | Canada        |              |        | 4,633  |  |         |        | 3,894  |  |  |        | 3,272 | 
|                                                              | International |              |        | 250    |  |         |        | 185    |  |  |        | 147   | 
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 4,883  |        |  |         | 4,079  |        |  |  | 3,419  |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 9,214  |        |  |         | 7,915  |        |  |  | 7,328  |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|Net capitalized costs                                         |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              | Canada        |              |        | 8,968  |  |         |        | 7,631  |  |  |        | 7081  | 
|                                                              | International |              |        | 246    |  |         |        | 284    |  |  |        | 247   | 
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      
|                                                              |               |              | 9,214  |        |  |         | 7,915  |        |  |  | 7,328  |      
|                                                              |               |              |        |        |  |         |        |        |  |  |        |      




Note:



|    |                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Capital related to 17 mmbbls of proved reserves
    at Terra Nova transferred to proved oil and gas properties. In
    2001, Terra Nova was a major development project off the East
    Coast of Canada.

26



---



##### Table of Contents



Oil and Gas Reserve Information

In Canada, the Companys proved crude oil,
natural gas liquids, natural gas and sulphur reserves are
located in the provinces of Alberta, Saskatchewan and British
Columbia, and offshore the East Coast. The Companys
international proved reserves are located in China and Libya.
The Companys proved developed and undeveloped reserves
after deductions of royalties are summarized below:

|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |      |  
|------------------------------------------------------------------------------- | -------------------------- | --------- | ----- | ------------- | - | ------- | ------- | --------- | - | ------- | --- | --------- | - | ------- | ---- | ------- | - |  | ----- | ------ | - |  | ----- | ----- | - |  | ------- | ------- | - |  | --- | ---- | -
|                                                                                |                            |           |       |               |   |        
|                                                                                |                            | Canada    |       | International |   | Total  
|                                                                                |                            |           |       |               |   |        
|                                                                                |                            | Crude     |       | Natural       |   |         |         | Crude     |   | Natural |     | Crude     |   | Natural |      |        
|Reserves                                                                        |                            | Oil & NGL |       | Gas           |   | Sulphur |         | Oil & NGL |   | Gas     |     | Oil & NGL |   | Gas     |      | Sulphur
|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |        
|                                                                                |                            | (mmbbls)  |       | (bcf)         |   | (mmlt)  |         | (mmbbls)  |   | (bcf)   |     | (mmbbls)  |   | (bcf)   |      | (mmlt) 
|Net proved developed and undeveloped reserves,
    after royalties (1)(2)(3)(4) |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|End of year 2000                                                                |                            |           | 445.5 |               |   |         | 1,434.6 |           |   |         | 4.7 |           |   |         | 35.1 |         |   |  | 110.1 |        |   |  | 480.6 |       |   |  | 1,544.7 |         |   |  | 4.7 |     
|                                                                                | Revisions                  |           |       | 37.0          |   |         |         | 74.0      |   |         |     | 0.1       |   |         |      | 0.7     |   |  |       | 5.1    |   |  |       | 37.7  |   |  |         | 79.1    |   |  |     | 0.1  |  
|                                                                                | Purchases                  |           |       | 33.6          |   |         |         | 20.4      |   |         |     |          |   |         |      |        |   |  |       |       |   |  |       | 33.6  |   |  |         | 20.4    |   |  |     |     |  
|                                                                                | Sales                      |           |       | (1.6          | ) |         |         | (18.4     | ) |         |     |          |   |         |      |        |   |  |       |       |   |  |       | (1.6  | ) |  |         | (18.4   | ) |  |     |     |  
|                                                                                | Discoveries and extensions |           |       | 44.8          |   |         |         | 200.1     |   |         |     | 0.1       |   |         |      | 1.1     |   |  |       |       |   |  |       | 45.9  |   |  |         | 200.1   |   |  |     | 0.1  |  
|                                                                                | Production                 |           |       | (56.3         | ) |         |         | (152.1    | ) |         |     | (0.2      | ) |         |      | (0.1    | ) |  |       |       |   |  |       | (56.4 | ) |  |         | (152.1  | ) |  |     | (0.2 | )
|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|End of year 2001                                                                |                            |           | 503.0 |               |   |         | 1,558.6 |           |   |         | 4.7 |           |   |         | 36.8 |         |   |  | 115.2 |        |   |  | 539.8 |       |   |  | 1,673.8 |         |   |  | 4.7 |     
|                                                                                | Revisions                  |           |       |              |   |         |         | 14.7      |   |         |     | 0.3       |   |         |      | (0.8    | ) |  |       | (14.3  | ) |  |       | (0.8  | ) |  |         | 0.4     |   |  |     | 0.3  |  
|                                                                                | Purchases                  |           |       | 4.2           |   |         |         | 5.4       |   |         |     |          |   |         |      |        |   |  |       |       |   |  |       | 4.2   |   |  |         | 5.4     |   |  |     |     |  
|                                                                                | Sales                      |           |       | (14.5         | ) |         |         | (16.6     | ) |         |     |          |   |         |      |        |   |  |       |       |   |  |       | (14.5 | ) |  |         | (16.6   | ) |  |     |     |  
|                                                                                | Discoveries and extensions |           |       | 37.2          |   |         |         | 205.4     |   |         |     |          |   |         |      | 1.1     |   |  |       |       |   |  |       | 38.3  |   |  |         | 205.4   |   |  |     |     |  
|                                                                                | Production                 |           |       | (61.8         | ) |         |         | (155.7    | ) |         |     | (0.4      | ) |         |      | (4.3    | ) |  |       |       |   |  |       | (66.1 | ) |  |         | (155.7  | ) |  |     | (0.4 | )
|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|End of year 2002                                                                |                            |           | 468.1 |               |   |         | 1,611.8 |           |   |         | 4.6 |           |   |         | 32.8 |         |   |  | 100.9 |        |   |  | 500.9 |       |   |  | 1,712.7 |         |   |  | 4.6 |     
|                                                                                | Revisions                  |           |       | 18.4          |   |         |         | (88.9     | ) |         |     | 0.1       |   |         |      | (2.8    | ) |  |       | (100.9 | ) |  |       | 15.6  |   |  |         | (189.8  | ) |  |     | 0.1  |  
|                                                                                | Purchases                  |           |       | 9.2           |   |         |         | 146.2     |   |         |     |          |   |         |      |        |   |  |       |       |   |  |       | 9.2   |   |  |         | 146.2   |   |  |     |     |  
|                                                                                | Sales                      |           |       | (4.2          | ) |         |         | (15.9     | ) |         |     | (0.1      | ) |         |      |        |   |  |       |       |   |  |       | (4.2  | ) |  |         | (15.9   | ) |  |     | (0.1 | )
|                                                                                | Discoveries and extensions |           |       | 32.6          |   |         |         | 245.6     |   |         |     | 0.1       |   |         |      |        |   |  |       |       |   |  |       | 32.6  |   |  |         | 245.6   |   |  |     | 0.1  |  
|                                                                                | Production                 |           |       | (61.1         | ) |         |         | (182.2    | ) |         |     | (0.5      | ) |         |      | (7.5    | ) |  |       |       |   |  |       | (68.6 | ) |  |         | (182.2  | ) |  |     | (0.5 | )
|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|End of year 2003                                                                |                            |           | 463.0 |               |   |         | 1,716.6 |           |   |         | 4.2 |           |   |         | 22.5 |         |   |  |      |        |   |  | 485.5 |       |   |  | 1,716.6 |         |   |  | 4.2 |     
|                                                                                |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|Net proved developed reserves, after
    royalties (1)(2)(3)(4)                 |                            |           |       |               |   |         |         |           |   |         |     |           |   |         |      |         |   |  |       |        |   |  |       |       |   |  |         |         |   |  |     |     
|                                                                                | End of year 2000           |           |       | 345.2         |   |         |         | 1,275.5   |   |         |     | 4.5       |   |         |      | 0.5     |   |  |       |       |   |  |       | 345.7 |   |  |         | 1,275.5 |   |  |     | 4.5  |  
|                                                                                | End of year 2001           |           |       | 378.1         |   |         |         | 1,342.2   |   |         |     | 4.6       |   |         |      | 0.6     |   |  |       |       |   |  |       | 378.7 |   |  |         | 1,342.2 |   |  |     | 4.6  |  
|                                                                                | End of year 2002           |           |       | 360.9         |   |         |         | 1,272.8   |   |         |     | 3.7       |   |         |      | 28.2    |   |  |       |       |   |  |       | 389.1 |   |  |         | 1,272.8 |   |  |     | 3.7  |  
|                                                                                | End of year 2003           |           |       | 372.0         |   |         |         | 1,422.9   |   |         |     | 3.8       |   |         |      | 22.5    |   |  |       |       |   |  |       | 394.5 |   |  |         | 1,422.9 |   |  |     | 3.8  |  




Notes:



|    |                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net reserves are the Companys lessor
    royalty, overriding royalty and working interest share of the
    gross remaining reserves, after deduction of any crown, freehold
    and overriding royalties. Such royalties are subject to change
    by legislation or regulation and can also vary depending on
    production rates, selling prices and timing of initial
    production.
|   
|(2) | Reserves are the estimated quantities of crude
    oil, natural gas and related substances anticipated from
    geological and engineering data to be recoverable from known
    accumulations from a given date forward, by known technology,
    under existing operating conditions and prices in effect at year
    end.                                                              
|   
|(3) | Proved oil and gas reserves are the estimated
    quantities of crude oil, natural gas and natural gas liquids
    which geological and engineering data demonstrate with
    reasonable certainty to be recoverable in future years from
    known reservoirs under existing economic and operating
    conditions.                                                                      
|   
|(4) | Proved developed oil and gas reserves are
    reserves that can be expected to be recovered through existing
    wells with existing equipment and operating methods. Proved
    undeveloped reserves are reserves that are expected to be
    recovered from known accumulations where a significant
    expenditure is required.                                                        

27



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##### Table of Contents



Standardized Measure of Discounted Future Net
Cash Flows Relating to Proved

Oil and Gas Reserves


The following information has been developed
utilizing procedures prescribed by FAS 69 and based on crude oil
and natural gas reserve and production volumes estimated by the
engineering staff of the Company. It may be useful for certain
comparison purposes, but should not be solely relied upon in
evaluating the Company or its performance. Further, information
contained in the following table should not be considered as
representative of realistic assessments of future cash flows,
nor should the standardized measure of discounted future net
cash flows be viewed as representative of the current value of
the Companys reserves.

The future cash flows presented below are based
on sales prices, cost rates, and statutory income tax rates in
existence as of the date of the projections. It is expected that
material revisions to some estimates of crude oil and natural
gas reserves may occur in the future, development and production
of the reserves may occur in periods other than those assumed,
and actual prices realized and costs incurred may vary
significantly from those used.

Management does not rely upon the following
information in making investment and operating decisions. Such
decisions are based upon a wide range of factors, including
estimates of probable as well as proved reserves, and varying
price and cost assumptions considered more representative of a
range of possible economic conditions that may be anticipated.

The computation of the standardized measure of
discounted future net cash flows relating to proved oil and gas
reserves at December 31, 2003 was based on the NYMEX
year-end natural gas spot price of U.S. $5.96/mmbtu
(2002  U.S. $4.60/mmbtu; 2001  U.S.
$2.75/mmbtu) and on crude oil prices computed with reference to
the year-end WTI price of U.S. $32.51/bbl (2002  U.S.
$31.21/bbl; 2001  U.S. $19.96/bbl). The price of WTI
in Canadian dollars was lower December 31, 2003 than at
December 31, 2002 as a result of the Cdn./ U.S. dollar
exchange rate, which was $1.29 at December 31, 2003
compared with $1.58 at December 31, 2002.

The following table sets forth the standardized
measure of discounted future net cash flows from projected
production of the Companys proved crude oil and natural
gas reserves at December 31, for the years presented:

|                                                             |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |      |       |     |  |  |       |     |  |  |        |       |  |  |        |       |  |  |        |       | 
|------------------------------------------------------------ | --------------------------------------- | ------------ | ------ | ---------------- |  | -------- | ------ | ----- |  | ---- | ------ | ----- |  | ---- | --- | ---- |  | ---- | ----- | --- |  |  | ----- | --- |  |  | ------ | ----- |  |  | ------ | ----- |  |  | ------ | ----- | 
|                                                             |                                         |              |        |                  |  |         
|                                                             |                                         | Canada(1)    |        | International(1) |  | Total(1)
|                                                             |                                         |              |        |                  |  |         
|Standardized Measure                                         |                                         | 2003         |        | 2002             |  | 2001     |        | 2003  |  | 2002 |        | 2001  |  | 2003 |     | 2002 |  | 2001
|                                                             |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |     
|                                                             |                                         |             
|                                                             |                                         | ($ millions)
|Future cash inflows                                          |                                         |              | 24,003 |                  |  |          | 25,830 |       |  |      | 14,102 |       |  |      | 928 |      |  |      | 2,719 |     |  |  | 1,600 |     |  |  | 24,931 |       |  |  | 28,549 |       |  |  | 15,702 |      
|Future costs                                                 |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |      |       |     |  |  |       |     |  |  |        |       |  |  |        |       |  |  |        |      
|                                                             | Future production and development costs |              |        | 8,645            |  |          |        | 7,239 |  |      |        | 7,541 |  |      |     | 146  |  |      |       | 502 |  |  |       | 523 |  |  |        | 8,791 |  |  |        | 7,741 |  |  |        | 8,064 | 
|                                                             | Future income taxes                     |              |        | 5,696            |  |          |        | 7,278 |  |      |        | 2,540 |  |      |     | 247  |  |      |       | 860 |  |  |       | 310 |  |  |        | 5,943 |  |  |        | 8,138 |  |  |        | 2,850 | 
|                                                             |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |      |       |     |  |  |       |     |  |  |        |       |  |  |        |       |  |  |        |      
|Future net cash flows                                        |                                         |              | 9,662  |                  |  |          | 11,313 |       |  |      | 4,021  |       |  |      | 535 |      |  |      | 1,357 |     |  |  | 767   |     |  |  | 10,197 |       |  |  | 12,670 |       |  |  | 4,788  |      
|Deduct 10% annual discount factor                            |                                         |              | 4,242  |                  |  |          | 4,966  |       |  |      | 1,667  |       |  |      | 117 |      |  |      | 518   |     |  |  | 329   |     |  |  | 4,359  |       |  |  | 5,484  |       |  |  | 1,996  |      
|                                                             |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |      |       |     |  |  |       |     |  |  |        |       |  |  |        |       |  |  |        |      
|Standardized measure of discounted Future net
    cash flows |                                         |              | 5,420  |                  |  |          | 6,347  |       |  |      | 2,354  |       |  |      | 418 |      |  |      | 839   |     |  |  | 438   |     |  |  | 5,838  |       |  |  | 7,186  |       |  |  | 2,792  |      
|                                                             |                                         |              |        |                  |  |          |        |       |  |      |        |       |  |      |     |      |  |      |       |     |  |  |       |     |  |  |        |       |  |  |        |       |  |  |        |      




Note:



|    |                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The schedules above are calculated using year-end
    prices, costs, statutory income tax rates and existing proved
    oil and gas reserves. The value of exploration properties and
    probable reserves, future exploration costs, future changes in
    oil and gas prices and in production and development costs are
    excluded.

28



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##### Table of Contents



Changes in Standardized Measure of Discounted
Future Net Cash Flows Relating

to Proved Oil and Gas Reserves


The following table sets forth the changes in the
standardized measure of discounted future net cash flows at
December 31, for the years presented.

|                                                                                     |  |              |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |      |   |  |  |     |   |  |  |        |   |  |  |        |   |  |  |        |  
|------------------------------------------------------------------------------------ |  | ------------ | ------ | ---------------- |  | -------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | --- | - |  |  | ------ | - |  |  | ------ | - |  |  | ------ | -
|                                                                                     |  |              |        |                  |  |         
|                                                                                     |  | Canada(1)    |        | International(1) |  | Total(1)
|                                                                                     |  |              |        |                  |  |         
|Changes in Standardized Measure                                                      |  | 2003         |        | 2002             |  | 2001     |        | 2003 |  | 2002 |        | 2001 |  | 2003 |      | 2002 |  | 2001
|                                                                                     |  |              |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |     
|                                                                                     |  |             
|                                                                                     |  | ($ millions)
|Present value at January 1                                                           |  |              | 6,347  |                  |  |          | 2,354  |      |  |      | 5,462  |      |  |      | 839  |      |  |      | 438  |   |  |  | 372 |   |  |  | 7,186  |   |  |  | 2,792  |   |  |  | 5,834  |  
|Sales and transfers, net of production costs                                         |  |              | (2,097 | )                |  |          | (1,802 | )    |  |      | (1,556 | )    |  |      | (293 | )    |  |      | (179 | ) |  |  | (2  | ) |  |  | (2,390 | ) |  |  | (1,981 | ) |  |  | (1,558 | )
|Net change in sales and transfer prices, net of
    development and production costs |  |              | (1,379 | )                |  |          | 7,752  |      |  |      | (5,843 | )    |  |      | (376 | )    |  |      | 732  |   |  |  | (48 | ) |  |  | (1,755 | ) |  |  | 8,484  |   |  |  | (5,891 | )
|Extensions, discoveries and improved recovery,
    net of related costs              |  |              | 541    |                  |  |          | 676    |      |  |      | 356    |      |  |      |     |      |  |      | 40   |   |  |  | 17  |   |  |  | 541    |   |  |  | 716    |   |  |  | 373    |  
|Revisions of quantity estimates                                                      |  |              | 76     |                  |  |          | (30    | )    |  |      | 237    |      |  |      | (97  | )    |  |      | (28  | ) |  |  | 10  |   |  |  | (21    | ) |  |  | (58    | ) |  |  | 247    |  
|Accretion of discount                                                                |  |              | 1,055  |                  |  |          | 390    |      |  |      | 949    |      |  |      | 130  |      |  |      | 59   |   |  |  | 55  |   |  |  | 1,185  |   |  |  | 449    |   |  |  | 1,004  |  
|Sale of reserves in place                                                            |  |              | (47    | )                |  |          | (189   | )    |  |      | (6     | )    |  |      |     |      |  |      |     |   |  |  |    |   |  |  | (47    | ) |  |  | (189   | ) |  |  | (6     | )
|Purchase of reserves in place                                                        |  |              | 304    |                  |  |          | 45     |      |  |      | 174    |      |  |      |     |      |  |      |     |   |  |  |    |   |  |  | 304    |   |  |  | 45     |   |  |  | 174    |  
|Changes in timing of future net cash flows and
    other                             |  |              | (237   | )                |  |          | (191   | )    |  |      | 95     |      |  |      | (49  | )    |  |      | 80   |   |  |  | 10  |   |  |  | (286   | ) |  |  | (111   | ) |  |  | 105    |  
|Net change in income taxes                                                           |  |              | 857    |                  |  |          | (2,658 | )    |  |      | 2,486  |      |  |      | 264  |      |  |      | (303 | ) |  |  | 24  |   |  |  | 1,121  |   |  |  | (2,961 | ) |  |  | 2,510  |  
|                                                                                     |  |              |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |      |   |  |  |     |   |  |  |        |   |  |  |        |   |  |  |        |  
|Present value at December 31                                                         |  |              | 5,420  |                  |  |          | 6,347  |      |  |      | 2,354  |      |  |      | 418  |      |  |      | 839  |   |  |  | 438 |   |  |  | 5,838  |   |  |  | 7,186  |   |  |  | 2,792  |  
|                                                                                     |  |              |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |      |   |  |  |     |   |  |  |        |   |  |  |        |   |  |  |        |  




Note:



|    |                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The schedules above are calculated using year-end
    prices, costs, statutory income tax rates and existing proved
    oil and gas reserves. The value of exploration properties and
    probable reserves, future exploration costs, future changes in
    oil and gas prices and in production and development costs are
    excluded.

29



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##### Table of Contents






INDEPENDENT ENGINEERS AUDIT
OPINION

February 2, 2004

Husky Energy Inc.

707  8th Avenue S.W.


Calgary, Alberta


T2P 3G7


Gentlemen:

Pursuant to your request we have conducted an
audit of the reserves estimates and the respective present worth
value of these reserves of Husky Energy Inc., as at
December 31, 2003. The Companys detailed reserves
information was provided to us for this audit. Our
responsibility is to express an independent opinion on the
reserves and respective present worth value estimates, in
aggregate, based on our audit tests and procedures.

We conducted our audit in accordance with
Canadian generally accepted standards as described in the
Canadian Oil and Gas Evaluation Handbook (COGEH) and
auditing standards generally accepted in the United States of
America. Those standards require that we review and assess the
policies, procedures, documentation and guidelines of the
Company with respect to the estimation, review and approval of
Huskys reserves information. An audit includes examining,
on a test basis, to confirm that there is adherence on the part
of Huskys internal reserve evaluators and other employees
to the reserves management and administration policies and
procedures established by the Company. An audit also includes
conducting reserves evaluation on sufficient number of Company
properties as considered necessary to express an opinion.

Based on the results of our audit, it is our
opinion that Huskys internally generated proved and
probable reserves and net present values are, in aggregate,
reasonable and have been prepared in accordance with generally
accepted oil and gas engineering and evaluation practices in the
United States and as set out in the Canadian Oil and Gas
Evaluation Handbook.



| |                                       
| | --------------------------------------
| | Sincerely,                            
|
| | MCDANIEL & ASSOCIATES CONSULTANTS LTD.
|
| | /s/ B. H. EMSLIE                      
| |                                       
| | B. H. Emslie, P. Eng.                 
| | Senior Vice President                 

30



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REPORT ON RESERVES DATA BY QUALIFIED RESERVES
EVALUATOR

To the Board of Directors of

HUSKY ENERGY INC. (the
Company):




|   |                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------
|1. | Our staff has evaluated the Companys oil
    and gas reserves data as at December 31, 2003. The reserves
    data consist of the following:



| |     |                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------
| | (a) | proved oil and gas reserve quantities estimated
    as at December 31, 2003 using constant prices and costs; and
|
| | (b) | the related standardized measure of discounted
    future net cash flows.                                       



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | The oil and gas reserves data are the
    responsibility of the Companys management. As the
    Corporate Representatives our responsibility is to certify that
    the reserves data has been properly calculated in accordance
    with generally accepted procedures for the estimation of
    reserves data.                                                                                                                                                                                                                                                                                                                                                       
|  
|3. | We carried out our evaluation in accordance with
    generally accepted procedures for the estimation of oil and gas
    reserves data and standards set out in the Canadian Oil and Gas
    Evaluation Handbook (the COGEH) with the necessary
    modifications to reflect definitions and standards under the
    applicable U.S. Financial Accounting Standards Board standards
    (the FASB Standards and the legal requirements of
    the U.S. Securities and Exchange Commission (SEC
    Requirements). Our internal reserves evaluators are not
    independent of the Company, within the meaning of the term
    independent under those standards.
|  
|4. | Those standards require that we plan and perform
    an evaluation to obtain reasonable assurance as to whether the
    oil and gas reserves data are free of material misstatement. An
    evaluation also includes assessing whether the reserves data are
    in accordance with principles and definitions presented in the
    COGEH as modified or replaced by the FASB Standards and SEC
    Requirements.                                                                                                                                                                                                                                                       
|  
|5. | The following sets forth the estimated
    standardized measure of discounted future net cash flows (before
    deducting income taxes) attributed to proved oil and gas reserve
    quantities, estimated using constant prices and costs and
    calculated using a discount rate of 10 percent, included in
    the reserves data of the Company evaluated for the year ended
    December 31, 2003:                                                                                                                                                                                                                                                                 

|                     |  |                                          |       | 
|-------------------- |  | ---------------------------------------- | ----- | 
|                     |  | Discounted Future Net Cash Flows        
|Location of Reserves |  | (before income taxes, 10% discount rate)
|                     |  |                                         
|Canada               |  |                                          | 5,420 | 
|China                |  |                                          | 411   | 
|Libya                |  |                                          | 7     | 
|                     |  |                                          |       | 
|                     |  |                                          | 5,838 | 
|                     |  |                                          |       | 

We have filed the Companys disclosures in
accordance with Financial Accounting Standards Board Statement
No. 69 reserve disclosure concurrently with this form.



|   |                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | In our opinion, the oil and gas reserves data
    evaluated by us have, in all material respects, been determined
    in accordance with principles and definitions presented in the
    COGEH as modified or replaced by the FASB Standards and SEC
    Requirements.
|  
|7. | We have no responsibility to update our
    evaluation for events and circumstances occurring after the date
    of this report.                                                                                                                                      

31



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##### Table of Contents





|   |                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. | Oil and gas reserves are estimates only, and not
    exact quantities. In addition, the oil and gas reserves data are
    based on judgements regarding future events, actual results will
    vary and the variations may be material.

|                                 |  |                                                      
|-------------------------------- |  | -----------------------------------------------------
|/s/ PRESTON KRAFT                |  | /s/ LARRY BELL                                       
|                                 |  |                                                      
|Preston Kraft P.Eng              |  | Larry Bell                                           
|Manager of Reservoir Engineering |  | Vice President, Exploration & Production
    Services
|Calgary, Alberta                 |  | Calgary, Alberta                                     
|February 2, 2004                 |  | February 2, 2004                                     

32



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##### Table of Contents






REPORT OF MANAGEMENT AND DIRECTORS ON RESERVES
DATA AND OTHER INFORMATION

Management of Husky Energy Inc. (the
Company) are responsible for the preparation and
disclosure of information with respect to the Companys oil
and gas activities in accordance with securities regulatory
requirements. This information includes oil and gas reserves
data, which consist of the following:



| |     |                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------
| | (1) | proved oil and gas reserve quantities estimated
    as at December 31, 2003 using constant prices and costs; and
|
| | (2) | the related standardized measure of discounted
    future net cash flows.                                       

Our oil and gas reserves evaluation process
involves applying generally accepted procedures for the
estimation of oil and gas reserves data for the purposes of
complying with the legal requirements of the
U.S. Securities and Exchange Commission (SEC)
and the applicable provisions of the U.S. Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 69 (collectively, the Oil and Gas
Reserves Data Process). Our Manager of Reservoir
Engineering, who is an employee of the Company, has evaluated
the Companys oil and gas reserves data and certified that
the Reserves Data Process has been followed. The Report on
Reserves Data of the Manager of Reservoir Engineering and Vice
President, Exploration and Production Services will be filed
with securities regulatory authorities concurrently with this
report.

The Audit Committee of the Board of Directors has:



| |     |                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | reviewed the Companys procedures for
    providing information to the internal and external qualified oil
    and gas reserves evaluators;                                                                                                                                 
|
| | (b) | met with the internal and, if applicable,
    external qualified oil and gas reserves evaluator(s) to
    determine whether any restrictions placed by management affect
    the ability of the internal qualified reserves evaluator to
    report without reservation; and
|
| | (c) | reviewed the reserves data with management and
    the internal qualified oil and gas reserves evaluators.                                                                                                                                                                  

The Audit Committee of the Board of Directors has
reviewed the Companys procedures for assembling and
reporting other information associated with oil and gas
activities and has reviewed that information with management.
The Board of Directors has, on the recommendation of the Audit
Committee, approved:



| |     |                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------
| | (a) | the content and filing with securities regulatory
    authorities of the reserves data and other oil and gas
    information;
|
| | (b) | the filing of the Report on Reserves Data of the
    Manager of Reservoir Engineering; and                                   
|
| | (c) | the content and filing of this report.                                                                                       

The Company has sought and was granted by
securities regulatory authorities an exemption from the
requirement under securities legislation to involve independent
qualified oil and gas reserves evaluators or auditors.
Notwithstanding this exemption, we involve independent qualified
reserve auditors as part of our corporate governance practices.
Such independent auditors audited over 75% of reserves data and
reviewed the remaining proved and probable oil and gas reserves
based on value. Their involvement helps assure that our internal
oil and gas reserves estimates are materially correct.

In our view, the reliability of the internally
generated oil and gas reserves data is not materially different
than would be afforded by our involving independent qualified
reserves evaluators to evaluate and review the reserves data. A
portion of our oil and gas reserves data is international in
nature. Husky is an SEC registrant and therefore our reserves
data is developed in accordance with standards set out in the
Canadian Oil and Gas Evaluation Handbook as modified or replaced
by the applicable U.S. Financial Accounting Standards Board
standards and the legal requirements of the SEC. Our procedures,
records and controls relating to the accumulation of source data
and preparation of reserves data by our internal reserves
evaluation staff have been established, refined and documented
over many years. Our internal reserves evaluation staff includes
106 individuals, including support staff, of whom 65 individuals
are qualified reserves evaluators as defined in the Canadian Oil
and Gas Evaluation Handbook, with an average of 15 years of
relevant experience in evaluating reserves. Our internal
reserves evaluation management personnel includes 25 individuals
with an average of 14 years of relevant experience in
evaluating oil and gas and managing the evaluation process.

33



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Reserves data are estimates only, and are not
exact quantities. Because the reserves data are based on
judgements regarding future events, actual results will vary and
the variations may be material.

|                                                                       |  |                |  | 
|---------------------------------------------------------------------- |  | -------------- |  | 
|/s/ JOHN C. S. LAUJohn C. S. LauPresident & Chief Executive Officer    |  | March 18, 2004
|                                                                      
|/s/ NEIL D. MCGEENeil D. McGeeVice President & Chief Financial Officer |  | March 18, 2004
|                                                                      
|/s/ MARTIN J. G. GLYNNMartin J. G. GlynnDirector                       |  | March 18, 2004
|                                                                      
|/s/ R. DONALD FULLERTONR. Donald FullertonDirector                     |  | March 18, 2004

34



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##### Table of Contents






Description of Major Properties and
Facilities

Huskys portfolio of assets includes
properties that produce light (30 API and lighter), medium
(between 20 and 30 API and heavy (below 20 and above 10 API)
gravity crude oil, NGL, natural gas and sulphur. Production
figures include daily production from Marathon properties based
on the period October 1, 2003 to December 31, 2003.

At December 31, 2003, Husky had gross proved
crude oil and NGL reserves totalling 544.3 mmbbls (485.5 mmbbls
net) and gross proved natural gas reserves totalling 2,058.9 bcf
(1,716.6 bcf net).

Lloydminster Heavy Oil and Gas

Huskys heavy oil assets are concentrated in
a large producing area covering more than 14,800 square
kilometres in the Lloydminster area in the provinces of
Saskatchewan and Alberta. Approximately 85% of Huskys
proved reserves in the region are contained in the heavy crude
oil producing fields of Pikes Peak, Edam, Tangleflags, Celtic,
Bolney, Westhazel, Big Gully, Hillmond, Mervin, Marwayne,
Lashburn, Baldwinton and Rush Lake, and in the medium gravity
crude oil producing fields of Wildmere and Wainwright. These
fields contain accumulations of heavy crude oil at relatively
shallow depths. Husky maintains a land position of approximately
1.5 million net acres in the Lloydminster area, of which
approximately two-thirds is undeveloped.

Husky currently produces from oil and gas wells
ranging in depth from 450 to 650 metres and holds a 100% working
interest in the majority of these wells. Husky produces heavy
oil from the Lloydminster area using a variety of techniques,
including standard primary production methods, as well as steam
injection and horizontal well technology. Husky has increased
primary production from the area through cold production
techniques which utilize progressive cavity pumps capable of
simultaneous production of sand and heavy oil from
unconsolidated formations. Huskys gross heavy and medium
crude oil production from the area totalled 89.8 mbbls/day in
2003. Approximately 70.9 mbbls/day of that total was primary
production of heavy crude oil, approximately 14.8 mbbls/day was
production from Huskys thermal operations at Pikes Peak
(cyclic steam) and Bolney/ Celtic (SAGD) and approximately
4.1 mbbls/day was from the medium gravity waterflooded fields in
the Wainwright and Wildmere areas. Husky believes that the
future growth from this area will be driven by primary heavy oil
production and new thermal projects.

In the Lloydminster area Husky owns and operates
16 oil treating facilities, all of which are tied into
Huskys heavy oil pipeline systems. These pipeline systems
transport heavy crude oil from the field locations to
Huskys Lloydminster asphalt refinery, to the Husky
Lloydminster Upgrader and to the Enbridge Pipeline and Express
Pipeline systems at Hardisty, Alberta.

Husky is focused on increasing its heavy oil
production and believes that its undeveloped land position in
the Lloydminster area, coupled with the application of improved
technologies, a reduced cost structure and increased upgrading
capacity, will provide strong growth opportunities for heavy oil
production.

Husky also produces natural gas from numerous
small shallow natural gas pools in the Lloydminster area
(approximately 1 to 2 bcf of proved reserves). Huskys
total gross natural gas production from the area during 2003 was
51.2 mmcf/day.

35



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##### Table of Contents



Lloydminster Area

(LLOYDMINSTER AREA MAP)

Northwest Alberta Plains

Rainbow Lake Area

Rainbow Lake, located approximately 700
kilometres north-west of Edmonton, Alberta, is the site of
Huskys largest light oil production operation in Western
Canada. Husky operates a number of crude oil pools in the
Rainbow basin, with an average working interest of 54%.
Huskys production in this area is derived from more than
50 oil and gas pools extending over 1,300 square kilometres.

Husky uses secondary and tertiary oil recovery
methods extensively in the Rainbow Lake area. These methods
include injecting water, natural gas and NGL into the oil
reservoirs to enhance crude oil recovery. The use of tertiary
recovery programs, such as miscible floods, has increased the
estimated amount of recoverable crude oil-in-place from 50% to
70% of the original crude oil-in-place in certain pools. As a
consequence of implementing these natural gas and NGL
re-injection programs, historically only small volumes of gas
and NGL have been marketed from the Rainbow Lake area prior to
2002. In 2003, Husky initiated the recovery of natural gas from
several pools. NGL recovery is forecast to begin in the
2008-2010 timeframe and is expected to generate revenues as the
crude oil production from the pools is completed. Husky uses
horizontal drilling techniques, including the re-entry of
existing wellbores, to maintain the level of crude oil
production and to increase recovery rates. Husky plans to
continue exploration efforts to supplement its development
initiatives in the Rainbow Lake area. Huskys gross
production from this area averaged 7.7 mbbls/day of light
crude oil and NGL and 33.6 mmcf/day of natural gas during 2003.

36



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##### Table of Contents



Husky holds a 50% interest in, and operates, the
Rainbow Lake processing plant. The processing design rate
capacity of the plant is 69 mbbls/day of crude oil and water and
230 mmcf/day of raw gas. The extraction design capacity is 17
mbbls/day of NGL. During 2003, a 20 mmcf/day sales gas
compressor and a sales gas coalescer were added to the plant,
increasing sales gas capacity from 17 mmcf/day to 34 mmcf/day.
The area serviced by the Rainbow plant was expanded in 2003 with
the construction of a 16.5 centimetre diameter gathering system
into the Bivouac area in north-eastern British Columbia, where
Husky operates gas wells and a compressor station.

Husky acquired two significant non-operated
properties in the Rainbow area through the acquisition of
Marathon. They included the Ekwan/ Sierra property in
north-eastern British Columbia and the Bistcho/ Cameron Hills
property straddling the Alberta and Northwest Territories
border. Huskys gross production from these properties
currently averages 9 mmcf/day of natural gas and 68 bbls/day of
liquid hydrocarbons. Husky also acquired a working interest in
the Encana Sierra gas plant and the Paramount Bistcho gas plant.
Husky is active in both these areas with development and
exploration drilling. These two areas have growth potential with
95,000 net undeveloped acres at Ekwan/ Sierra and 110,000 net
undeveloped acres at Bistcho/ Cameron Hills.

Peace River Arch Area

The Peace River Arch area of northern Alberta,
which includes the Slave Lake, Sawn Lake, Red Earth, Lubicon,
Nipisi, Utikuma and other properties, has been a major light oil
producing area located approximately 370 kilometres north-west
of Edmonton. Husky operates and holds an average 80% working
interest in several properties in this area. Over the last three
years, Husky has maintained net production from properties in
this area, at approximately 3.8 mbbls/day of crude oil,
through acquisitions, step-out drilling and waterflood
optimization. With Huskys acquisition of Marathon in 2003,
the Slave Lake and Red Earth properties were added to the asset
base, increasing 2003 gross liquid production by approximately
1,160 bbls/day and natural gas production by 10.3 mmcf/day. The
average working interest in these lands is 80%, for a net
166,200 acres. Infrastructure includes a 100% working interest
in a 30 mmcf/day sour gas plant and three oil batteries.Husky plans to continue development drilling and waterflood
optimization for both crude oil and natural gas targets in this
area.

Boyer Area

The Boyer area of Alberta is approximately 600
kilometres north-west of Edmonton, Alberta. Husky is the
operator and holds close to 100% working interest in
approximately 623,000 net acres. The area holds a shallow,
Bluesky gas reservoir that is characterized as low
deliverability and low decline that is being developed with a
drilling density of three wells per section. Husky intends to
continue to develop this area by drilling undeveloped sections,
infill drilling, land acquisitions and step out exploration.
Gross production from this area in 2003 averaged 32 mmcf/day of
natural gas.

Sloat Creek Area

The Sloat Creek or Chinchaga area of Alberta is
located close to the British Columbia border approximately 570
kilometres north-west of Edmonton, Alberta. Husky is the
operator and holds an approximate 95% working interest in
230,000 acres of gas prone land. The Bluesky, DeBolt, Elkton and
Shunda zones that lie an average of approximately 1,030 metres
deep and the Slave Point zone at an average depth of 1,800
metres characterize the area. Husky intends to continue to
develop this area with infill, step-out and exploratory drilling
so that existing pools can be optimized and new pools can be
placed on production.

Husky owns a 30 mmcf/day high pressure booster
compression plant that feeds a third party operated sour gas
plant and is 50% owner in a 12 mmcf/day low pressure
booster that feeds a 40% owned sweet gas processing facility
operated by a third party. Gross production from this area
averaged 8.9 mmcf/day of natural gas in 2003.

Marten Hills/ Muskwa Area

The Marten Hills and Muskwa areas of Alberta are
located 212 kilometres north-west of Edmonton, Alberta. Husky is
the operator and holds 578,000 net acres of gas prone land. The
Clearwater, Colony, McMurray and Wabiskaw zones that lie at an
average depth of 600 metres characterize the area. Husky intends
to continue to develop this area with infill, step-out and
exploratory drilling so that existing pools can be optimized and
new pools can be placed on production.

Husky owns a 100% interest in a series of nine
sales gas compressor stations (compressors at sales points) and
a number of field booster stations, a 95% interest in a
compressor station at Rock Island, a 37.5% interest in a third
party

37



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operated facility at Peerless and a 3% interest
in the third party operated Marten Hills unit. Gross production
from this area averaged 35.9 mmcf/day of natural gas in 2003.


Cherpeta and Saleski Areas

The Cherpeta area of Alberta is located 230
kilometres north of Edmonton, Alberta and the Saleski area is
located approximately 140 kilometres further north from
Cherpeta. Husky is the operator and holds an interest in 580,000
net acres of gas prone land. The Nisku, Clearwater, Colony,
McMurray and Wabiskaw zones that lie at an average depth of 600
metres characterize the area. The Grosmont zone that lies
between 450 and 500 metres characterizes the Saleski area. Husky
intends to continue to develop this area with infill, step-out
and exploratory drilling so that existing pools can be optimized
and new pools can be placed on production.

Husky holds working interests ranging from 60-95%
in the Cherpeta area and 49% of the Saleski area and operates a
series of sales compressor stations, gas plants and sales
pipeline. Gross production from these areas averaged 37.8
mmcf/day of natural gas in 2003.

Simons Lake Area

The Simons Lake area of Alberta is located 386
kilometres north-west of Edmonton, Alberta. Husky is the
operator and holds 275,000 net acres of gas prone land. The
Bluesky, DeBolt, Elkton and Shunda zones that lie at an average
depth of 600 metres characterize the area.

Husky holds 100% working interest in a
10 mmcf/day sour gas processing facility and 34% working
interest in a high pressure booster station operated by a third
party that feeds a separate third party owned sour gas
processing facility. Gross production from this area averaged
4.5 mmcf/day of natural gas in 2003.

Northeast British Columbia and Alberta
Foothills

Ram River Area

The Ram River area is located in west central
Alberta and includes the large Blackstone, Ricinus and
Clearwater/ Limestone natural gas fields.

The Blackstone field is the most prolific of
these fields and contains four high deliverability natural gas
wells, capable of combined raw gas production of
105 mmcf/day. Husky holds a 34% interest in two unitized
wells, a 24% and a 50% interest in two non-unit wells, and acts
as the contract operator of the Blackstone wells. Production
from these wells is processed at the Husky operated Ram River
gas plant.

Husky holds an average 72% interest in, and is
the operator of, the Ram River sour gas plant and related
processing facilities. The Ram River plant has the capacity to
process 622 mmcf/day of sour gas, resulting in sales gas
capacity of 525 mmcf/day. The plant also has the capacity to
produce in excess of 2.8 mlt/day of sulphur from raw gas.
During 2003, the plant operated at approximately 86% of its
design rate capacity. The Ram River plant processes in excess of
10% of Huskys total gross natural gas production, which
includes an average of 48 mmcf/day of Husky gross sales gas from
the Blackstone, Brown Creek, Cordel and Stolberg fields and an
average of 22 mmcf/day of Husky production from Ricinus and
Clearwater/ Limestone and Benjamin fields, in addition to
processing third-party volumes. In addition, gross production
from the Ferrier area, which is processed at another gas plant,
averaged 5.7 mmcf/day of natural gas bringing the total
Husky interest production of natural gas from the Ram River area
to 64 mmcf/day in 2003.

Huskys sour gas pipeline network supports
the Ram River plant. Husky operates a network of 845 kilometres
of sour gas pipelines in the Ram River area and holds a 30%
interest in 684 kilometres of this pipeline system. The sour gas
processed at the Ram River plant is produced from 18 sour gas
fields located as far as 145 kilometres from the Ram River plant.

Husky believes that the Ram River plant and the
extensive infrastructure of gathering pipelines, transmission
systems and rail lines, which support the plant, represents a
strategic base for the natural gas exploration and development
planned by Husky in this part of the foothills region. In
addition, this region is an active exploration and production
area for other producers and provides additional opportunities
for generating revenue by processing third party natural gas.

38



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Kaybob

The Kaybob area was acquired through Huskys
acquisition of Marathon on October 1, 2003. The Kaybob area
consists of lands located in the Fox Creek area of Alberta. The
Kaybob area consists of four main areas. These are:



| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | Kaybob South Beaverhill Lake Unit 1 (35.6%
    working interest)                    
|
| |  | Kaybob South Triassic Unit 1 (40.5% working
    interest)                           
|
| |  | Kaybob South Triassic Unit 2 (26.8% working
    interest)                           
|
| |  | Non-unit lands (various, from gross overriding
    royalty to 100% working interest)

The majority of the gas is gathered and processed
through the Kaybob South Amalgamated Gas Plants 1 and 2. Husky
has an approximate 17.8% working interest in the sour portion
and an approximate 20.4% working interest in the sweet gas
portion of the plant. Husky also has various working interests
in sweet gas gathering and compression facilities in the area.
Huskys gross production from the area is 525 bbls/day
of oil, 650 bbls/day of NGL and 13 mmcf/day of natural
gas during 2003.

Boundary Lake Area

Husky holds a 50% working interest in the
Boundary Lake Gas Unit and 34% and 19% interest in the Boundary
Lake oil unit 1 and 2, respectively, in north-east British
Columbia. Huskys natural gas production from this area is
derived from five Belloy sour gas pools, which is processed at
the nearby Boundary Lake processing plant. Huskys gross
production from this area was 14.5 mmcf/day of natural gas
and 1.9 mbbls/day crude oil and NGL from the Boundary Lake
units during 2003.

Valhalla and Wapiti Area

Husky holds a 30% interest in three Valhalla oil
units, a 100% interest in 350 Valhalla non-unit waterflood wells
and a 100% interest in the Wapiti property. Production is
primarily from the Doe Creek and Cardium zones and consists of
light crude oil, NGL and natural gas. Huskys gross
production from these properties averaged 4.4 mbbls/day of crude
oil and NGL and 6.1 mmcf/day of natural gas in 2003.

Kakwa Area

Husky acquired, through the acquisition of
Marathon, an average 60% working interest in oil and gas
processing facilities and associated oil and gas gathering
systems in the Kakwa area. Husky operated lands in the Kakwa
area total approximately 47,700 gross acres. Husky has an
interest in approximately 65 Cardium wells in this area with
average gross production of 11.1 mmcf/day of natural gas,
508 bbls/day NGL and 485 bbls/day of oil in 2003.

Caroline Area

Husky holds an 11% working interest in the 32,000
acre Caroline natural gas field located approximately
97 kilometres north-west of Calgary. The field has a high
proportion of NGL and as a result the economics of this field
are enhanced.

Husky also holds an 11% interest in the Caroline
sour gas processing facility. The plant is presently running at
a license limit of 113% of design capacity and is processing
approximately 124 mmcf/day of total plant sales gas and
39 mbbls/day of NGL. The plant and liquid acceleration gas
recycle plant were at 87% capacity in 2003 which resulted in
Husky gross production of 4.4 mbbls/day NGL and
13.6 mmcf/day natural gas in 2003.

Edson Area

Husky holds an average 85% working interest in
two gas processing facilities and associated gas gathering
systems in the Edson area. Husky operated lands in the Edson
area total approximately 56,000 gross acres. Husky has an
interest in approximately 160 Cardium wells in this area that
averaged gross production of 35.1 mmcf/day of natural gas
and 1.7 mbbls/day of NGL in 2003.

Sikanni Area

Husky holds approximately 32,000 net acres in the
Sikanni and Federal area of north-east British Columbia, which
averaged gross production of 23.3 mmcf/day of natural gas
from four wells in 2003. The production flows through Husky
owned gathering systems for processing at third party plants at
Sikanni and McMahon.

39



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Graham Area

Husky acquired, through the acquisition of
Marathon, a 40% working interest in approximately 71,000 gross
acres of developed and undeveloped lands in the Graham area of
north-eastern British Columbia. The property produced at an
average of 10.4 mmcf/day gross natural gas sales in 2003
from a total of 22 wells. Production from the property is
from one Halfway and seven Baldonnel pools. Husky also acquired
interests in two 1,500 horsepower compressor stations and the
non-operated Cypress gas plant. Plant capacity is
45 mmcf/day and the plant is currently operating at full
capacity. Husky holds a 33.2% interest in the gas treating unit,
28.2% interest in the amine unit and 28% interest in the sulphur
unit.

East Central Alberta

Athabasca Area

The Athabasca area extends approximately 175
kilometres north of Edmonton and from the Alberta-Saskatchewan
border in the east to the Alberta foothills in the west. The
area target is predominantly shallow gas, ranging from 455 to
910 metres, in the multi-zone Palaeozoic Mannville. The
main producing areas are Athabasca, Craigend and Cold Lake.
Husky operates 31 facilities with an pipeline system and an
average working interest of 90% in the producing wells. Husky
holds approximately 539,000 net acres of undeveloped land and
409,000 net acres of developed land in this area. Husky intends
to continue to develop this area with infill, stepout and
exploratory wells to optimize recovery and develop new pools in
order to keep the facilities operating at capacity. Huskys
gross production from this area averaged 52.8 mmcf/day of
natural gas and 682 bbls/day of crude oil in 2003.

Red Deer and Hussar Area

The core of the Red Deer and Hussar area is
between Calgary, Drumheller and Sylvan Lake. Husky operates
18 facilities with gas gathering systems in this area.
Gross production from this area averaged 53.7 mmcf/day of
natural gas and crude oil and NGL of 2.7 mbbls/day in 2003.
Husky intends to continue to develop the natural gas potential
of this area with infill, stepout and exploratory wells to
optimize gas recovery and develop new pools in order to operate
the facilities at capacity. In 2003 Husky participated in a coal
bed methane pilot project. In 2004, Husky will develop a
commercial coal bed methane project, based on the successful
results of the pilot project.

Provost Area

The centre of the Provost area is approximately
240 kilometres south-east of Edmonton. It is predominantly a
medium crude oil area that averaged gross production of
20.8 mbbls/day of crude oil and 12.2 mmcf/day of
natural gas in 2003. Husky intends to selectively drill lower
risk oil locations and focus on managing operating costs and
improving oil recovery. In 2004 Husky intends to develop several
of its 2003 natural gas discoveries. There is significant
competition in the area for land as well as infrastructure.
Husky has a large land position and maintains close to 100%
working interest in most of its facilities.

Southern Alberta and Southern
Saskatchewan

As of December 31, 2003, the Company held
250,000 net developed acres and 1.1 million undeveloped
acres in Southern Saskatchewan and 280,000 net developed acres
and 240,000 net undeveloped acres in Southern Alberta. The
Company also has a small landholding in Manitoba.

Southern Saskatchewan Area

Husky is a prominent operator in southern
Saskatchewan primarily producing medium gravity crude oil, with
some natural gas and light crude oil. Gross production from this
area averaged 18.4 mbbls/day of crude oil and of
53.8 mmcf/day of natural gas during 2003.

Husky operates 31 oil batteries and six gas
facilities in the Southern Saskatchewan area. The oil pools in
this area are exploited using pressure maintenance and
waterflood recovery operations.

At the Shackleton/ Lacadena Milk River shallow
gas project, 128 wells were drilled and one new gas
facility was built in 2003. The project was producing at a rate
of 52 mmcf/day at December 31, 2003 from a total of
225 wells. In 2004, Husky plans to drill 100 additional
wells and construct one natural gas processing facility.

40



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##### Table of Contents



Southern Alberta Area

Taber, Brooks and Jenner/ Suffield are
Huskys three core areas in southern Alberta. Husky
operates 28 oil facilities and three natural gas facilities with
an average working interest of 95%. Oil production is mainly
medium gravity crude with the majority of reserves being
supported by waterfloods or active aquifers. Natural gas
production is from a mixture of deep and shallow formations. At
Taber, Husky is operating an alkaline-polymer flood to increase
recovery from the Cretaceous Mannville reservoir. Gross
production from this area averaged 11.7 mbbls/day of crude
oil and 14.6 mmcf/day of natural gas during 2003.

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The acquisition of Marathon on October 1,
2003 added a new core area at Queenstown that includes five
natural gas facilities producing over 20 mmcf/day. Husky
intends to drill 40 wells in this area in 2004.

Western Canada

(OIL SANDS MAP)

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Athabasca, Cold Lake and Peace River

Oil Sands

Husky currently holds interests in 433,610 acres
in the bitumen prone areas of Athabasca, Cold Lake and Peace
River. Husky is currently conducting evaluation drilling and
production feasibility studies in the Cold Lake and Athabasca
areas. Recent improvements in fiscal regimes for these types of
projects, together with advances in technology which have
reduced costs for in situ projects, have enhanced the commercial
viability of these projects. In situ projects are currently
being designed for the Tucker and Sunrise (formerly Kearl) areas.

In addition to interests in the 353,930 net acres
in the Cold Lake and Athabasca regions in north-eastern Alberta,
Husky holds an interest in 79,680 net acres in the Peace River
region of northern Alberta.

|                                          |  |           |             |       |  |       |         |          |  |  |         |  |  |  |     | 
|----------------------------------------- |  | --------- | ----------- | ----- |  | ----- | ------- | -------- |  |  | ------- |  |  |  | --- | 
|                                          |  | Oil Sands |             | Gross |  | Net   |         | Husky   
|General Location Name                     |  | Area      |             | Acres |  | Acres |         | Operator
|                                          |  |           |             |       |  |       |         |         
|South Athabasca  overriding royalty      |  |           | Athabasca   |       |  |       | 35,601  |          |  |  |        |  |  |  | No  | 
|South Athabasca                           |  |           | Athabasca   |       |  |       | 22,032  |          |  |  | 11,016  |  |  |  | Yes | 
|Sunrise  In situ (1)                     |  |           | Athabasca   |       |  |       | 64,034  |          |  |  | 64,034  |  |  |  | Yes | 
|Misthae (Drowned, Martin Hills W. & Spur) |  |           | Athabasca   |       |  |       | 28,160  |          |  |  | 28,160  |  |  |  | Yes | 
|Saleski                                   |  |           | Athabasca   |       |  |       | 154,880 |          |  |  | 154,880 |  |  |  | Yes | 
|Hoole  overriding royalty                |  |           | Athabasca   |       |  |       | 47,040  |          |  |  |        |  |  |  | No  | 
|Beaverdam                                 |  |           | Cold Lake   |       |  |       | 11,520  |          |  |  | 11,520  |  |  |  | Yes | 
|Caribou (2)                               |  |           | Cold Lake   |       |  |       | 35,840  |          |  |  | 35,840  |  |  |  | Yes | 
|Lobstick                                  |  |           | Cold Lake   |       |  |       | 37,120  |          |  |  | 37,120  |  |  |  | Yes | 
|Tucker (3)                                |  |           | Cold Lake   |       |  |       | 11,360  |          |  |  | 11,360  |  |  |  | Yes | 
|Panny (Senex & Welstead)                  |  |           | Peace River |       |  |       | 47,360  |          |  |  | 47,360  |  |  |  | Yes | 
|Peace River (Cadotte Lake)                |  |           | Peace River |       |  |       | 11,840  |          |  |  | 11,840  |  |  |  | Yes | 
|Sawn Lake (Loon)                          |  |           | Peace River |       |  |       | 20,480  |          |  |  | 20,480  |  |  |  | Yes | 
|                                          |  |           |             |       |  |       |         |          |  |  |         |  |  |  |     | 
|                                          |  |           |             |       |  |       | 527,267 |          |  |  | 433,610 |  |  |  |     | 
|                                          |  |           |             |       |  |       |         |          |  |  |         |  |  |  |     | 




Notes:



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in the gross and net amounts are an
    additional 6,400 acres of petroleum and natural gas rights held
    as protection acreage for gas over bitumen issues. In 2003, the
    Alberta regulatory authority issued General Bulletin GB 2003-28
    that required natural gas wells within certain bitumen prone
    areas to be shut-in. The production of natural gas where natural
    gas reservoirs were believed to be in pressure contact with
    bitumen reserves was deemed to present an unacceptable risk to
    future in-situ bitumen production. Sunrise was formerly named
    Kearl.
|   
|(2) | Husky also has the exclusive right to acquire an
    additional 65,280 acres in the Caribou area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Included in the gross and net amounts are an
    additional 1,280 acres of petroleum and natural gas rights held
    as protection acreage for gas over bitumen issues.                                                                                                                                                                                                                                                                                                                                                                                                                                       

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Oil Sands

(MAP WESTERN CANADA)

44



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##### Table of Contents



Offshore East Coast 
Canada

Huskys offshore East Coast exploration and
development program is focused primarily in the Jeanne
dArc Basin on the Grand Banks offshore the coast of
Newfoundland and Labrador, which contains the Hibernia, Terra
Nova and White Rose oil fields. Husky has ownership interests in
the Terra Nova and White Rose oil fields as well as in a number
of smaller fields in the central part of the basin. Husky
presently holds working interests ranging from 5.33% to 90% in
14 Significant Discovery License areas in the Jeanne dArc
Basin. Husky is also the operator of seven Exploration Licenses
(EL) on the Grand Banks and two in the South Whale
Basin. Husky believes that its geotechnical expertise, drilling
experience and extensive database with respect to offshore the
East Coast of Canada provide a strong foundation for future
exploration and development. Husky believes that there is
exploration potential in the area, and that its position off the
East Coast of Canada will provide growth opportunities for light
crude oil production in the medium to long-term.

Husky will continue technical evaluation of its
East Coast exploration acreage. Depending on drilling rig
availability, Husky plans to drill one exploration type
stratigraphic test well in 2004 on the EL1059 block in the South
Whale Basin.

Terra Nova Oil Field

The Terra Nova oil field is located approximately
350 kilometres east south-east of St. Johns, Newfoundland,
35 kilometres south-east of the Hibernia oil field, in 91 to 100
metres of water. The Terra Nova oil field is divided into three
distinct areas, known as the Graben, the East Flank and the Far
East.

As at December 31, 2003, there were eight
development wells drilled in the Graben area, five producing
wells and three injection wells. In the East Flank area there
were seven development wells including four production wells and
three injection wells. Drilling operations are expected to
continue based on an updated 36 well depletion plan for the
Graben and East Flank areas. A 2001 delineation well in the Far
East area encountered 82 metres of net pay confirming the
reservoir sands extend to this area in 2003. A second well, that
was intended to be a water injection well, was drilled in the
Far East area. This well encountered poor porosity in the target
horizon and was plugged back. The well may be re-drilled to a
different location in the future. During 2003, a third
delineation well was drilled to assess the northern fault
blocks. The well encountered water suggesting a common oil-water
contact throughout the Far East reservoir. Additional
delineation wells in the Far East area are currently being
considered as part of the 2004 drilling program. At
December 31, 2003, Husky had booked 17.2 mmbbls of gross
light crude oil to the proved developed category and 8.5 mmbbls
proved undeveloped. These reserves are estimated to be capable
of being produced using primary and secondary (waterflood and
gasflood) production techniques.

Huskys initial pooled interest in the Terra
Nova field is 12.51%. This interest is subject to change,
pending redetermination once the field has been further
delineated. Production at Terra Nova commenced in January 2002.
Huskys gross production from Terra Nova averaged
approximately 17.8 mbbls/day in the fourth quarter of 2003.
Huskys gross share of production from Terra Nova was 6.1
mmbbls in 2003.

White Rose Oil Field

The White Rose oil field, which is operated by
Husky, is located 354 kilometres off the coast of Newfoundland,
approximately 48 kilometres east of the Hibernia oil field on
the eastern section of the Jeanne dArc basin.

During 2003, progress was achieved in several
areas of the White Rose development project. All of the glory
holes were excavated in the seabed to the required nine metre
depth. The glory holes will protect the subsea wellhead
equipment and associated production facilities from scouring
icebergs. With the glory hole completion, development drilling
has commenced for the White Rose oil field and will consist of
nine wells prior to first oil  four producing wells,
four water injection wells and one gas injection well, to be
completed over the next two years.

The hull of the FPSO was launched in South Korea
in July 2003. The turret, which was fabricated in Abu Dhabi, was
successfully transported to South Korea in mid-August and now
has been installed in the FPSO. The FPSO is expected to arrive
in Marystown, Newfoundland and Labrador in the second quarter of
2004 where the installation of the topsides, hook up and
commissioning will take place. The FPSO topsides are being
engineered and fabricated in St. Johns and Marystown,
Newfoundland and Labrador. Fabrication of the subsea production
systems, including risers, flowlines and umbilicals, manifolds
and wellheads are well under way. The first subsea well head
assembly was completed in 2003.

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Current plans provide for a total of 19 to 21
development wells to be drilled to recover crude oil over a 10
to 15 year period. Peak production is expected to be
approximately 92,000 barrels of oil per day sustained for
approximately four years before declining.

Also in 2003, a delineation well, White Rose
F-04, was drilled on a separate geological structure at the
southern end of the White Rose oil field. The initial F-04 well
encountered approximately 180 metres of hydrocarbon bearing
sandstone, comprising 140 metres of gas and 40 metres of oil.
Husky and its co-venturer drilled a successful sidetrack
location (F-04Z) to delineate the structure. In 2004, planning
and design work will begin to determine the optimum method of
producing the oil reserves from the F-04 structure through the
White Rose FPSO.

East Coast

Grand Banks  Jeanne dArc
Basin

(GRAND BANKS - JEANNE D'ARC BASIN)

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International

South China Sea

Wenchang

The Wenchang oil field is located in the western
Pearl River Mouth Basin, approximately 300 kilometres south of
Hong Kong and 135 kilometres east of Hainan Island. The Company
holds a 40% working interest in the project and spent
approximately $253 million, including acquisition costs, to
first oil. Production commenced in July 2002. The Wenchang 13-1
and 13-2 oil fields are producing from 21 wells in 100 metres of
water into a floating production, storage and offloading vessel
stationed between fixed platforms located in the fields. The
blended crude oil from the two fields averages approximately 35
API, similar to the benchmark Minas blend. At December 31,
2003, Huskys proved reserves at Wenchang were calculated
to be 23.9 mmbbls of crude oil. Huskys gross production
averaged 22.4 mbbls/day during 2003.

Block 39/05

Husky executed a production sharing contract with
China National Offshore Oil Corporation (CNOOC) for
the 5,700 square kilometres 39-05 Exploration Block surrounding
the Wenchang 13 1/2 fields with a commencement date of
October 1, 2001. CNOOC has the right to participate in
development of any discoveries up to a 51% working interest. In
January 2003, the Qionghai 18-1-3 exploration type stratigraphic
well was plugged and abandoned without testing and in February
2003, the Wenchang 8-1-1 exploration type stratigraphic well was
plugged and abandoned without testing. Husky is evaluating the
geological information for this block and expects to complete
this assessment by the end of 2004.

Blocks 23/15 and 23/20

Husky executed production sharing contracts with
CNOOC for the 23-15 and 23-20 exploration blocks with a
commencement date of December 1, 2002. Both contract areas
are located in the South China Sea north of Hainan, within 80
kilometres of the Weizhan oil fields. The 23-15 block is 1,327
square kilometres and the 23-20 block is 1,543 square
kilometres. The work program requires Husky to drill a single
exploration well on each block within three years. CNOOC has the
right to participate in development of any discoveries up to a
51% working interest. In 2003, Husky completed a 1,000 square
kilometre 3-D seismic survey shot over a portion of block 23-15.
This survey has been processed and is now being interpreted.
Technical evaluations are currently underway to determine a
possible seismic survey on block 23-20 in 2004.

Block 40/30

Husky executed a production sharing contract with
CNOOC for the 40-30 exploration block with a commencement date
of February 1, 2003. The block is located in the South
China Sea approximately 100 kilometres south of the 13-1 and
13-2 oil fields. The block covers an area of 6,704 square
kilometres. The production sharing contract requires the
drilling of one exploration well within three years and has a
minimum work commitment of U.S. $10 million. CNOOC has the
right to participate in development of any discoveries up to a
51% working interest. A deep-water drilling rig has been
contracted for one well, the ChangChang 12-1-1, which will
commence drilling in the first half of 2004.

East China Sea

Block 04/35

Husky executed a production sharing contract with
CNOOC for the 04-35 exploration block with a commencement date
of December 1, 2003. The block is located in the East China
Sea approximately 350 kilometres east of the city of Shanghai
and covers an area of 4,835 square kilometres. The production
sharing contract requires the drilling of a single exploration
well to a depth of 2,500 metres within three years and a minimum
work commitment of U.S. $3 million. Technical evaluations
of the hydrocarbon potential have commenced. CNOOC has the right
to participate in development of any discoveries up to a 51%
working interest.

47



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##### Table of Contents



China

(CHINA MAP)

Madura Strait, Indonesia

Husky is party to a production sharing contract
(PSC), which provides for various cost and
production sharing arrangements, relating to a 2,794 square
kilometre block in the Madura Strait offshore Java, Indonesia.
Ten exploration and appraisal wells have been drilled in the
block, resulting in discoveries of two natural gas fields. The
Indonesian state oil company granted commercial status and
approved a plan of development for one of these fields in order
to supply natural gas to a proposed independent power plant near
Pasuruan, East Java. Construction of the power plant did not
proceed due to economic issues that occurred in Indonesia
shortly after the natural gas sales contract was signed. In 2003
the natural gas sales contract was cancelled with the approval
of the Indonesian authorities. In January 2003, Husky signed a
memorandum of understanding to begin discussions intended to
finalize another natural gas sales agreement for the Madura
production. Negotiations progressed during 2003. Assuming
successful negotiation of the gas sales agreement, a revised
Plan of Development will be submitted to the Indonesian
regulatory authority for approval. At December 31, 2003,
the calculated proved undeveloped reserves at Madura, which
totalled 142.9 bcf of natural gas and 6.4 mmbbls of natural gas
liquids, were removed from the proved category pending the
completion of a new gas sales contract and negotiation with the
Indonesian regulatory authority for an extension to the PSC.

Shatirah, Libya

Husky has an interest in a small crude oil
production operation in the Shatirah field, onshore Libya.

48



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Distribution of Oil and Gas
Production

Crude Oil and NGL

Husky provides heavy crude oil feedstock to its
upgrader and its asphalt refinery, which are located at
Lloydminster. The combined dry crude feedstock requirements of
the upgrader and asphalt refinery are equal to approximately 85%
of Huskys heavy crude oil production from the Lloydminster
area. Husky also markets heavy crude oil production directly to
refiners located in the U.S. mid-west and eastern U.S. and
Canada. Husky markets its light and synthetic crude oil
production to third party refiners in both Canada and the United
States. Natural gas liquids are sold to local petrochemical end
users and refiners in North America.

Husky markets third party volumes of light crude
oil, heavy crude oil and NGL in addition to its own production.

Natural Gas

The following table shows the distribution of
Huskys gross average daily natural gas production for the
years indicated:

|                     |               |                          |     |      |  |      |     |     |  |  |     |     | 
|-------------------- | ------------- | ------------------------ | --- | ---- |  | ---- | --- | --- |  |  | --- | --- | 
|                     |               |                         
|                     |               | Years ended December 31,
|                     |               |                         
|                     |               | 2003                     |     | 2002 |  | 2001
|                     |               |                          |     |      |  |     
|                     |               |                         
|                     |               | (mmcf/day)              
|Sales to end users   |               |                          |     |      |  |      |     |     |  |  |     |    
|                     | United States |                          |     | 382  |  |      |     | 375 |  |  |     | 413 | 
|                     | Canada        |                          |     | 156  |  |      |     | 115 |  |  |     | 106 | 
|                     |               |                          | 538 |      |  |      | 490 |     |  |  | 519 |    
|Sales to aggregators |               |                          | 43  |      |  |      | 49  |     |  |  | 40  |    
|Internal use (1)     |               |                          | 30  |      |  |      | 30  |     |  |  | 14  |    
|                     |               |                          |     |      |  |      |     |     |  |  |     |    
|                     |               |                          | 611 |      |  |      | 569 |     |  |  | 573 |    
|                     |               |                          |     |      |  |      |     |     |  |  |     |    




Note:



|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | Husky consumes natural gas for fuel at several of
    its facilities.

Husky also markets third party natural gas
production in addition to its own production.

Delivery Commitments

The following table shows the future commitments
to deliver natural gas from Huskys reserves in Western
Canada. Huskys proved developed reserves of natural gas in
Western Canada are more than adequate to meet future delivery
commitments.

|     |  |             |       |              |  |     |      |  |  |  |       | 
|---- |  | ----------- | ----- | ------------ |  | --- | ---- |  |  |  | ----- | 
|     |  |             |       |             
|     |  | Fixed Price |       | Market Price
|     |  |             |       |             
|     |  | Bcf         |       | $/mmbtu      |  | Bcf
|     |  |             |       |              |  |    
|2004 |  |             | 25.5  |              |  |     | 3.26 |  |  |  | 51.1  | 
|2005 |  |             | 25.5  |              |  |     | 3.60 |  |  |  | 26.3  | 
|2006 |  |             | 25.5  |              |  |     | 3.76 |  |  |  | 23.6  | 
|2007 |  |             | 20.0  |              |  |     | 4.36 |  |  |  | 16.9  | 
|2008 |  |             | 20.0  |              |  |     | 4.60 |  |  |  | 4.9   | 
|2009 |  |             | 20.0  |              |  |     | 4.85 |  |  |  | 0.5   | 
|2010 |  |             | 20.0  |              |  |     | 5.12 |  |  |  |      | 
|2011 |  |             | 20.0  |              |  |     | 5.41 |  |  |  |      | 
|2012 |  |             | 20.0  |              |  |     | 5.73 |  |  |  |      | 
|2013 |  |             | 20.0  |              |  |     | 6.06 |  |  |  |      | 
|2014 |  |             | 6.2   |              |  |     | 3.72 |  |  |  |      | 
|     |  |             |       |              |  |     |      |  |  |  |       | 
|     |  |             | 222.7 |              |  |     |      |  |  |  | 123.3 | 
|     |  |             |       |              |  |     |      |  |  |  |       | 

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Midstream Operations

Overview

The midstream operations of Husky include:



| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Upgrading  the upgrading of heavy
    crude oil feedstock into synthetic crude oil;                                                                                                                                         
|
| |  | Infrastructure  pipeline
    transportation and processing of heavy crude oil, storage of
    crude oil, diluent and natural gas, extraction of NGL from
    natural gas, cogeneration of electrical and thermal energy; and
|
| |  | Marketing  the purchase and marketing
    of Huskys and other producers crude oil, natural
    gas, NGL, sulphur, petroleum coke and electrical power.                                                                    

Upgrading Operations

Husky owns and operates the Husky Lloydminster
Upgrader, which is a heavy oil upgrading facility located in
Lloydminster, Saskatchewan.

The Husky Lloydminster Upgrader is designed to
process blended heavy crude oil feedstock into high quality, low
sulphur synthetic crude oil. Synthetic crude oil is used as
feedstock for the refining of premium transportation fuels in
Canada and the United States. In addition, the Husky
Lloydminster Upgrader recovers the diluent, which facilitates
pipeline transportation of heavy crude oil.

The Husky Lloydminster Upgrader provides heavy
crude oil access to a new market, which Husky believes has
facilitated, and will continue to stimulate, heavy oil
production in the area. The market for heavy crude oil
previously was either as feedstock for asphalt production or it
was sold as blended heavy crude oil for feedstock for specific
refineries designed to process or upgrade heavier crude oils.
The Husky Lloydminster Upgrader was commissioned in 1992 with an
original design capacity of 46 mbbls/day of synthetic crude oil.
Actual production has ranged considerably higher than the
original design rate capacity as a result of throughput
modifications and improved reliability. The upgraders
current rated capacity exceeds 61 mbbls/day of synthetic crude
oil. Production at the upgrader averaged 61.4 mbbls/day of
synthetic crude oil and 10.9 mbbls/day of diluent in 2003
compared with 55.7 mbbls/day of synthetic crude oil and 9.7
mbbls/day of diluent in 2002. Throughput at the upgrader in 2003
was higher than 2002 due to a scheduled maintenance turnaround
during 2002. In addition to synthetic crude oil and diluent, the
Husky Lloydminster Upgrader also produced, as by-products of its
upgrading operations, approximately 340 lt/day of sulphur and
760 lt/day of petroleum coke during 2003. These products are
sold in local and international markets. The profitability of
Huskys upgrading operations is primarily dependent upon
the differential between the price of synthetic crude oil and
the price of heavy crude oil.

Infrastructure and Marketing

Heavy Oil Pipeline Systems and Processing
Facilities

Husky has been involved in the gathering,
transporting and storage of heavy crude oil in the Lloydminster
area since the early 1960s. Huskys crude oil pipeline
systems include approximately 2,050 kilometres of pipeline and
are capable of transporting in excess of 575 mbbls/day of
blended heavy crude oil, diluent and synthetic crude oil. The
pipeline systems transport blended heavy crude oil to
Lloydminster, accessing markets through the Husky Lloydminster
Upgrader and Huskys asphalt refinery in Lloydminster.
Blended heavy crude oil from the field and synthetic crude oil
from the upgrading operations are moved south to Hardisty,
Alberta to a connection to the Enbridge Pipeline system and the
Express Pipeline system. The crude oil is transported to eastern
and southern markets on these pipelines. Huskys crude oil
pipeline systems also have feeder pipeline interconnections with
the Cold Lake Partnership Pipeline, the Enbridge Athabasca
Pipeline and the Talisman Chauvin Pipeline.

The following table shows the average daily
pipeline throughput for the periods indicated:

|                             |  |                          |     |      |  |      |     |  |  |  |     | 
|---------------------------- |  | ------------------------ | --- | ---- |  | ---- | --- |  |  |  | --- | 
|                             |  |                         
|                             |  | Years ended December 31,
|                             |  |                         
|                             |  | 2003                     |     | 2002 |  | 2001
|                             |  |                          |     |      |  |     
|                             |  |                         
|                             |  | (mbbls/day)             
|Combined pipeline throughput |  |                          | 484 |      |  |      | 457 |  |  |  | 537 | 

In recent years Husky has expanded and expects to
further expand its heavy crude pipeline systems to capitalize on
anticipated increases in heavy oil production from the
Lloydminster and Cold Lake areas.

Husky considers the expansion and optimization of
its pipeline systems in the Lloydminster area to be necessary to
further its own development objectives in the area. As a result
of recent expansion of mainline pipeline systems in the area,
competition for throughput volumes has increased.

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##### Table of Contents



Husky operates 16 heavy crude oil processing
facilities located throughout the Lloydminster area. These
facilities process Huskys and other producers raw
heavy crude oil from the field by removing sand, water and other
impurities to produce clean dry heavy crude oil. The heavy crude
oil is then blended with a diluent to meet pipeline
specifications for transportation.

Heavy Oil Pipeline Systems

(Heavy Oil Pipeline Systems Map)

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##### Table of Contents



Cogeneration

Husky has a 50% interest in a 215 MW natural gas
fired cogeneration facility at the site of the Husky
Lloydminster Upgrader. The plant was commissioned in December
1999. Electricity produced at the facility is being sold to
Saskatchewan Power Corporation under a 25 year power
purchase agreement effective in 1999. Thermal energy
(steam) is sold to the Husky Lloydminster Upgrader.

Husky has a 50% interest in a 90 MW natural gas
fired cogeneration facility adjacent to Huskys Rainbow
Lake processing plant. The cogeneration plant produces
electricity for the Alberta Power Pool and thermal energy
(steam) for the Rainbow Lake processing plant. It provides
power directly to the Alberta Power Pool under an agreement with
the Alberta Transmission Administrator to provide additional
electricity generating capacity and system stability for
north-western Alberta. The power plant has the capability of
being expanded to approximately 110 MW in total. Husky is the
operator of the facility.

Natural Gas Storage Facilities

Husky has been operating a natural gas storage
facility at Hussar, Alberta since April 2000. The facility has a
working storage capacity of 17 bcf of natural gas. Husky is
continuing to evaluate additional storage opportunities within
Western Canada.

Commodity Marketing

Husky is a marketer of both its own and third
party production of crude oil, synthetic crude oil, NGL, natural
gas and sulphur. Husky also markets petroleum coke, a by-product
from the Lloydminster upgrader. Husky supplies feedstock to its
upgrader and asphalt refinery from its own and third party heavy
oil production sourced from the Lloydminster and Cold Lake
areas. Husky also sells blended heavy crude oil directly to
refiners based in the United States and Canada. Huskys
extensive infrastructure in the Lloydminster area supports its
heavy crude oil refining and marketing operations.

Husky markets light and medium crude oil and NGL
sourced from its own production and third party production.
Light crude oil is acquired for processing by third party
refiners at Edmonton, Alberta and by the Companys refinery
at Prince George, British Columbia. Husky markets the synthetic
crude oil produced at its upgrader in Lloydminster to refiners
in Canada and the United States.

Husky markets natural gas sourced from its own
production and third party production. Husky is currently
committed to gas sales contracts with third parties, which in
aggregate do not exceed amounts forecast to be deliverable from
Huskys reserves. Huskys contracts are with customers
located in eastern Canada/north-eastern United States (30%),
mid-west United States (37%), Western Canada (29%) and west
coast United States (4%). The natural gas volumes sales
contracted are primarily at market price (90%). The terms of the
contracts remaining at December 31, 2003 are up to one year
(74%), one year to five years (16%) and over five years (10%).
Husky has acquired rights to firm pipeline capacity to transport
the natural gas to most of these markets.

Husky has developed its commodity marketing
operations to include the acquisition of third party volumes in
order to increase volumes and enhance the value of its midstream
assets. Husky plans to expand its marketing operations by
continuing to increase marketing activities. Husky believes that
this increase will generate synergies with the marketing of its
own production volumes and the optimization of its assets.




Refined Products

Overview

Huskys refined products operations include
refining and retail, commercial and wholesale marketing of
refined petroleum products. This network provides a platform for
substantial non-fuel related businesses.

Light oil refined products are produced at
Huskys refinery at Prince George, British Columbia and are
also acquired from other third party refiners and marketed
through Husky and Mohawk branded retail and commercial petroleum
outlets and through direct marketing to third party dealers and
end users. Asphalt and residual products are produced at
Huskys asphalt refinery at Lloydminster and marketed
directly or through Huskys 10 terminals located throughout
Western Canada.

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Branded Petroleum Outlets and Commercial
Distribution

Distribution

As of December 31, 2003, there were 550
independently operated Husky and Mohawk branded petroleum
outlets and two independent restaurants. These petroleum outlets
include service stations, travel centres and bulk distribution
facilities located from Vancouver Island on the West Coast of
Canada to the eastern border of Ontario. The travel centre
network is strategically located on major highways and serves
the retail market and commercial transporters 24 hours per day,
365 days per year with quality products and full service
Husky House restaurants. At most locations, the travel centre
network also features the proprietary Route
Commander cardlock system that enables commercial users to
purchase products using a card system that will electronically
process transactions and provide detailed billing, sales tax and
other information. A variety of full and self serve retail
locations under the Mohawk and Husky brand names serve urban and
rural markets, while Husky and Mohawk bulk distributors offer
direct sales to commercial and farm markets in Western Canada.

Retail Marketing System

Branded Petroleum Outlets

(Branded Petroleum Outlets)

Independent retailers or agents operate all Husky
and Mohawk branded outlets. Branded outlets feature varying
services such as 24 hour service, convenience stores, service
bays, car washes, Husky House full service family style
restaurants, proprietary and co-branded quick serve restaurants,
bank machines and alternate fuels such as propane and compressed
natural gas. In addition to conventional gasolines, ethanol
blended fuels branded as Mother Natures Fuel
and additive enhanced Diesel Max are offered in all
markets together with Chevron lubricants. Husky supplies refined
petroleum products to its branded independent retailers on an
exclusive basis and provides financial and other assistance for
location improvements, marketing support and related services.
Huskys brands are promoted through the Husky Snowstars
Program, various national and university athletic sponsorships
as well as advertising designed to reach both national and
regional audiences.

53



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##### Table of Contents



The following table shows the number of Husky and
Mohawk branded petroleum outlets by class of trade and by
province as of December 31, 2003:

|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |     | 
|---------------------- | ---------------- | ---------- | --- | ------- |  | ----- | --- | -------- |  | ------- | -- | ----- |  | ----- | -- | -- |  |  | -- | -- |  |  | --- | --- |  |  | --- | --- | 
|                       |                  | British    |     |         |  |       |     |          |  |         |    |       |  |      
|                       |                  | Columbia & |     |         |  |       |     |          |  |         |    |       |  | 2002 
|Retail Outlets         |                  | Yukon      |     | Alberta |  | Sask. |     | Manitoba |  | Ontario |    | Total |  | Total
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |      
|                       | Travel Centres   |            |     | 9       |  |       |     | 8        |  |         |    | 5     |  |       |    | 2  |  |  |    | 13 |  |  |     | 37  |  |  |     | 37  | 
|                       | Full Serve       |            |     | 15      |  |       |     | 18       |  |         |    | 3     |  |       |    | 8  |  |  |    | 2  |  |  |     | 46  |  |  |     | 50  | 
|                       | Full/ Self Serve |            |     | 12      |  |       |     | 23       |  |         |    | 5     |  |       |    | 6  |  |  |    | 2  |  |  |     | 48  |  |  |     | 51  | 
|                       | Self Serve       |            |     | 20      |  |       |     | 11       |  |         |    | 1     |  |       |    | 1  |  |  |    | 2  |  |  |     | 35  |  |  |     | 35  | 
|                       | Bulk Distributor |            |     | 1       |  |       |     | 7        |  |         |    | 4     |  |       |    | 1  |  |  |    | 1  |  |  |     | 14  |  |  |     | 15  | 
|                       | Card/ Key Locks  |            |     | 1       |  |       |     | 4        |  |         |    |      |  |       |    |   |  |  |    | 2  |  |  |     | 7   |  |  |     | 6   | 
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       |                  |            | 58  |         |  |       | 71  |          |  |         | 18 |       |  |       | 18 |    |  |  | 22 |    |  |  | 187 |     |  |  | 194 |    
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|Leased                 |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       | Travel Centre    |            |     | 1       |  |       |     |         |  |         |    |      |  |       |    |   |  |  |    |   |  |  |     | 1   |  |  |     | 1   | 
|                       | Full Serve       |            |     | 5       |  |       |     | 12       |  |         |    | 6     |  |       |    | 7  |  |  |    |   |  |  |     | 30  |  |  |     | 32  | 
|                       | Full/ Self Serve |            |     | 13      |  |       |     | 23       |  |         |    | 4     |  |       |    | 4  |  |  |    |   |  |  |     | 44  |  |  |     | 47  | 
|                       | Self Serve       |            |     | 29      |  |       |     | 17       |  |         |    |      |  |       |    | 1  |  |  |    |   |  |  |     | 47  |  |  |     | 47  | 
|                       | Bulk Distributor |            |     | 3       |  |       |     |         |  |         |    |      |  |       |    |   |  |  |    |   |  |  |     | 3   |  |  |     | 3   | 
|                       | Card/ Key Locks  |            |     | 3       |  |       |     | 1        |  |         |    |      |  |       |    | 3  |  |  |    | 1  |  |  |     | 8   |  |  |     | 8   | 
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       |                  |            | 54  |         |  |       | 53  |          |  |         | 10 |       |  |       | 15 |    |  |  | 1  |    |  |  | 133 |     |  |  | 138 |    
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|Independent Retailers  |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       | Travel Centre    |            |     | 1       |  |       |     | 1        |  |         |    |      |  |       |    |   |  |  |    | 4  |  |  |     | 6   |  |  |     | 4   | 
|                       | Full Serve       |            |     | 24      |  |       |     | 26       |  |         |    | 10    |  |       |    | 16 |  |  |    | 8  |  |  |     | 84  |  |  |     | 89  | 
|                       | Full/ Self Serve |            |     | 28      |  |       |     | 5        |  |         |    | 5     |  |       |    | 1  |  |  |    | 1  |  |  |     | 40  |  |  |     | 40  | 
|                       | Self Serve       |            |     | 29      |  |       |     | 52       |  |         |    | 3     |  |       |    | 3  |  |  |    | 2  |  |  |     | 89  |  |  |     | 94  | 
|                       | Bulk Distributor |            |     | 2       |  |       |     | 4        |  |         |    | 1     |  |       |    |   |  |  |    |   |  |  |     | 7   |  |  |     | 7   | 
|                       | Card/ Key Locks  |            |     | 1       |  |       |     | 1        |  |         |    |      |  |       |    |   |  |  |    | 2  |  |  |     | 4   |  |  |     | 3   | 
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       |                  |            | 85  |         |  |       | 89  |          |  |         | 19 |       |  |       | 20 |    |  |  | 17 |    |  |  | 230 |     |  |  | 237 |    
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|Total                  |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       | Travel Centres   |            |     | 11      |  |       |     | 9        |  |         |    | 5     |  |       |    | 2  |  |  |    | 17 |  |  |     | 44  |  |  |     | 42  | 
|                       | Full Serve       |            |     | 44      |  |       |     | 56       |  |         |    | 19    |  |       |    | 31 |  |  |    | 10 |  |  |     | 160 |  |  |     | 171 | 
|                       | Full/ Self Serve |            |     | 53      |  |       |     | 51       |  |         |    | 14    |  |       |    | 11 |  |  |    | 3  |  |  |     | 132 |  |  |     | 138 | 
|                       | Self Serve       |            |     | 78      |  |       |     | 80       |  |         |    | 4     |  |       |    | 5  |  |  |    | 4  |  |  |     | 171 |  |  |     | 176 | 
|                       | Bulk Distributor |            |     | 6       |  |       |     | 11       |  |         |    | 5     |  |       |    | 1  |  |  |    | 1  |  |  |     | 24  |  |  |     | 25  | 
|                       | Card/ Key Locks  |            |     | 5       |  |       |     | 6        |  |         |    |      |  |       |    | 3  |  |  |    | 5  |  |  |     | 19  |  |  |     | 17  | 
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|                       |                  |            | 197 |         |  |       | 213 |          |  |         | 47 |       |  |       | 53 |    |  |  | 40 |    |  |  | 550 |     |  |  | 569 |    
|                       |                  |            |     |         |  |       |     |          |  |         |    |       |  |       |    |    |  |  |    |    |  |  |     |     |  |  |     |    
|Cardlocks (1)          |                  |            | 22  |         |  |       | 17  |          |  |         | 5  |       |  |       | 6  |    |  |  | 22 |    |  |  | 72  |     |  |  | 60  |    
|Convenience Stores (1) |                  |            | 186 |         |  |       | 196 |          |  |         | 42 |       |  |       | 49 |    |  |  | 34 |    |  |  | 507 |     |  |  | 524 |    
|Restaurants (2)        |                  |            | 9   |         |  |       | 11  |          |  |         | 5  |       |  |       | 2  |    |  |  | 14 |    |  |  | 41  |     |  |  | 42  |    




Notes:



|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(1) | All of these are located at a branded petroleum
    outlet.                                                          
|   
|(2) | At December 31, 2003 and 2002, two Husky
    House restaurants in Alberta were not located at a petroleum
    outlet.

Husky also markets refined petroleum products
directly to various commercial markets, including independent
dealers, national rail companies and major industrial and
commercial customers in Western Canada and the north-western
United States.

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The following table shows Huskys average
daily sales volumes of light refined petroleum products for the
periods indicated:

|                        |  |                          |      |      |  |      |      |  |  |  |      | 
|----------------------- |  | ------------------------ | ---- | ---- |  | ---- | ---- |  |  |  | ---- | 
|                        |  |                         
|                        |  | Years ended December 31,
|                        |  |                         
|                        |  | 2003                     |      | 2002 |  | 2001
|                        |  |                          |      |      |  |     
|                        |  |                         
|                        |  | (mbbls/day)             
|Gasoline                |  |                          | 28.5 |      |  |      | 26.3 |  |  |  | 25.4 | 
|Diesel fuel             |  |                          | 22.1 |      |  |      | 20.7 |  |  |  | 21.1 | 
|Liquefied petroleum gas |  |                          | 1.2  |      |  |      | 1.3  |  |  |  | 1.3  | 
|                        |  |                          |      |      |  |      |      |  |  |  |      | 
|                        |  |                          | 51.8 |      |  |      | 48.3 |  |  |  | 47.8 | 
|                        |  |                          |      |      |  |      |      |  |  |  |      | 

Huskys current strategy in respect of its
petroleum product outlets includes continuing to increase
profits and sales through the strategic location of new outlets,
the enhancement of ancillary non-fuel income streams, the
modernization, automation and upgrading of existing petroleum
product outlets, expanding customer loyalty programs and the
sale of non-core locations. Husky also plans to continue to
enter into strategic alliances with third parties to sell
various consumer products at Husky and Mohawk branded petroleum
outlets in order to generate revenue and increase demand for
other products and services provided at those outlets. Husky is
pursuing acquisitions and joint venture opportunities to further
enhance its existing distribution network.

Supply

Prince George Refinery.Husky owns and operates a refinery at
Prince George, British Columbia, which has capacity to refine
more than 10,000 bbls/day of light crude oil into a full range
of refined petroleum products. The crude oil feedstock for the
Prince George refinery is produced primarily in north-eastern
British Columbia by other producers and delivered to
Huskys refinery by pipeline. Husky is pursuing
acquisitions and trading opportunities to further enhance its
existing refining capacity. Husky is currently assessing plans
to upgrade the refinery to meet Federal regulations governing
sulphur content in fuel.

Other Supply Arrangements.In addition to the refined petroleum
products supplied by the Prince George refinery, Husky has
established processing arrangements with major refiners.
Processing arrangements allow Husky to participate in industry
refining margins. Primarily Husky crude oil production and some
third party purchased crude oil is delivered to major refiners,
who process the crude oil into refined products, which are then
marketed by Husky through its retail networks and to its
wholesale customers. During 2003, these refiners processed an
average of approximately 36.2 mbbls/day of crude oil for Husky,
yielding approximately 32.7 mbbls/day of refined petroleum
products. During 2003, Husky also purchased approximately 7.8
mbbls/day of refined petroleum products from refiners and
acquired approximately 6.6 mbbls/day of refined petroleum
products pursuant to exchange agreements with third party
refiners.

Minnedosa, Manitoba  Ethanol Plant.Husky owns an ethanol plant at
Minnedosa, Manitoba that produces nine million litres per year
of fuel ethanol and one million litres per year of industrial
alcohol. Ethanol is produced primarily from wheat and other
grains. It is an oxygenate, which when added to gasoline,
promotes fuel combustion, raises octane levels and inhibits
water from freezing in fuel lines. The ethanol blended gasoline
(Mother Natures Fuel) has received federal government
recognition for its low combustion emissions. Husky is actively
planning to expand its ethanol production to meet provincial
government mandates and internal demands. Ethanol-blended
gasoline is now available at all Husky and Mohawk retail
outlets. Husky also supplies E85 (85% ethanol content blended
gasoline) to some Federal Government fleet vehicles across
Western Canada.

Asphalt Products

Husky has been in the paving and specialty
asphalt business for over 50 years. Husky supplies asphalt
products to customers across Western Canada and the
north-western and midwestern United States. Husky has a
significant market share for paving asphalt, emulsified asphalt
and asphalt products sold in Western Canada. Most of the asphalt
sold is used for paving and other industrial purposes.
Huskys Pounder Emulsions division manufactures modified
and conventional road application emulsion products. Additional
non-asphalt based road maintenance products are marketed and
distributed through the Western Road Management division of
Husky. Demand for higher quality asphalt products has allowed
Husky to increase sales into the United States and Eastern
Canada, with products occasionally being shipped as far away as
Texas, Florida and New Brunswick. In 2003, 45 percent of
Huskys asphalt production was exported to the United
States. Husky plans to continue its efforts to improve its
asphalt business by increasing its

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modified asphalt production capacity to produce
better products at a lower cost. Husky is also studying the
feasibility of expanding its production and distribution
capacity.


Huskys asphalt distribution network
consists of nine emulsion plants and terminals located at
Kamloops and Prince George, British Columbia; Watson Lake,
Yukon; Edmonton and Lethbridge, Alberta; Lloydminster, Saskatoon
and Yorkton, Saskatchewan; and Winnipeg, Manitoba. Husky also
utilizes an independent terminal at Langley, British Columbia.

All of Huskys asphalt requirements are
supplied by its Lloydminster, Alberta asphalt refinery. The
refinery was commissioned in 1983, replacing a Husky facility
that had been operating since 1947. The refinery was designed
specifically to produce asphalt from heavy crude oil at a rate
of 25 mbbls/day. The crude oil feedstock for the Lloydminster
refinery is supplied through Huskys pipeline systems from
the supply of heavy crude oil in the region, including
Huskys heavy crude oil.

The following table shows the average daily sales
volumes of products produced at the Lloydminster refinery, for
the years indicated:

|                   |  |                          |      |      |  |      |      |  |  |  |      | 
|------------------ |  | ------------------------ | ---- | ---- |  | ---- | ---- |  |  |  | ---- | 
|                   |  |                         
|                   |  | Years ended December 31,
|                   |  |                         
|                   |  | 2003                     |      | 2002 |  | 2001
|                   |  |                          |      |      |  |     
|                   |  |                         
|                   |  | (mbbls/day)             
|Asphalt            |  |                          | 12.9 |      |  |      | 12.7 |  |  |  | 12.6 | 
|Residual and other |  |                          | 9.1  |      |  |      | 8.1  |  |  |  | 8.8  | 
|                   |  |                          |      |      |  |      |      |  |  |  |      | 
|                   |  |                          | 22.0 |      |  |      | 20.8 |  |  |  | 21.4 | 
|                   |  |                          |      |      |  |      |      |  |  |  |      | 

Refinery throughput averaged 25.7 mbbls/day of
blended heavy crude oil feedstock during 2003. Due to the
seasonal demand for asphalt products the refinery historically
has operated at full capacity only during the normal paving
season in Canada and the northern United States. Husky has
implemented various plans to increase refinery throughput during
the other months of the year, such as producing low sulphur
diesel, entering into custom processing arrangements and
developing other U.S. and international markets for asphalt
products.




Human Resources

The number of employees in each business segment
was as follows:

|                               |  |              |       |      |  |  |       | 
|------------------------------ |  | ------------ | ----- | ---- |  |  | ----- | 
|                               |  |             
|                               |  | December 31,
|                               |  |             
|                               |  | 2003         |       | 2002
|                               |  |              |       |     
|Upstream                       |  |              | 1,753 |      |  |  | 1,560 | 
|Midstream                      |  |              | 326   |      |  |  | 344   | 
|Refined Products               |  |              | 349   |      |  |  | 329   | 
|Corporate and business support |  |              | 471   |      |  |  | 520   | 
|                               |  |              |       |      |  |  |       | 
|                               |  |              | 2,899 |      |  |  | 2,753 | 
|                               |  |              |       |      |  |  |       | 




Selected Consolidated Financial
Information

|                           |                                |                          |  |        |  |      |  |        |  |  |  |       | 
|-------------------------- | ------------------------------ | ------------------------ |  | ------ |  | ---- |  | ------ |  |  |  | ----- | 
|                           |                                |                         
|                           |                                | Years Ended December 31,
|                           |                                |                         
|                           |                                | 2003                     |  | 2002   |  | 2001
|                           |                                |                          |  |        |  |     
|                           |                                |                         
|                           |                                | ($ millions except      
|                           |                                | per share amounts)      
|Statement of earnings data |                                |                          |  |        |  |      |  |        |  |  |  |      
|                           | Sales and operating revenue    |                          |  | 7,658  |  |      |  | 6,384  |  |  |  | 6,596 | 
|                           | Cash from operating activities |                          |  | 2,572  |  |      |  | 1,892  |  |  |  | 1,930 | 
|                           | Net earnings                   |                          |  | 1,321  |  |      |  | 804    |  |  |  | 654   | 
|                           | Per share  basic              |                          |  | 3.23   |  |      |  | 1.88   |  |  |  | 1.49  | 
|                           | Per share  diluted            |                          |  | 3.22   |  |      |  | 1.88   |  |  |  | 1.48  | 
|Balance sheet data         |                                |                          |  |        |  |      |  |        |  |  |  |      
|                           | Total assets                   |                          |  | 11,782 |  |      |  | 10,575 |  |  |  | 9,370 | 
|                           | Shareholders equity           |                          |  | 5,889  |  |      |  | 5,127  |  |  |  | 4,486 | 
|                           | Total long-term debt           |                          |  | 1,439  |  |      |  | 1,964  |  |  |  | 1,948 | 

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DIVIDENDS

The following table shows the aggregate amount of
the cash dividends declared per common share of the Company and
accrued in each of its last three years ended December 31:

|                                         |  |      |      |      |  |      |      |  |  |   |      | 
|---------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                         |  | 2003 |      | 2002 |  | 2001
|                                         |  |      |      |      |  |     
|Cash Dividends Declared per Common Share |  | $    | 1.38 |      |  | $    | 0.36 |  |  | $ | 0.36 | 

Dividend Policy and Restrictions

The Board of Directors of Husky have established
a dividend policy that pays quarterly dividends. From August
2000 to July 2003, Husky has paid a quarterly dividend of $0.09
($0.36 annually) per common share. This policy was reviewed by
the Board in July 2003 and the quarterly dividend was increased
to $0.10 ($0.40 annually) per common share. The Board, also
declared a special cash dividend of $1.00 per common share in
July, 2003. The special dividend was paid on October 1,
2003. Huskys dividend policy will continue to be reviewed
and there can be no assurance that further dividends will be
declared. The declaration and payment of dividends will be at
the discretion of the Board, which will consider earnings,
capital requirements and financial condition of Husky, the
satisfaction of the applicable solvency test in Huskys
governing corporate statute, the Business Corporations
Act, (Alberta), and other relevant factors.




DESCRIPTION OF CAPITAL STRUCTURE

Common Shares

Husky is authorized to issue an unlimited number
of common shares. Holders of common shares are entitled to one
vote per share at meetings of shareholders of Husky, to receive
such dividends as declared by the Board of Directors on the
common shares and to receive pro-rata the remaining property and
assets of Husky upon its dissolution or winding up, subject to
any rights having priority over the common shares.

Preferred Shares

Husky is authorized to issue an unlimited number
of preferred shares. Holders of preferred shares shall not be
entitled to vote at meetings of Husky, are entitled to receive
such dividends as and when declared by the Board of Directors in
priority to common shares and shall be entitled to receive
pro-rata in priority to holders of common shares the remaining
property and assets of Husky upon its dissolution or winding up.
There are no preferred shares currently outstanding.

Credit Ratings

Disclosure with respect to the credit ratings
Husky has received for its senior unsecured debt, Capital
Securities and 8.45% senior secured bonds is set forth in
Huskys 2003 Managements Discussion and Analysis and
is incorporated herein by reference.




MARKET FOR SECURITIES

Huskys common shares are listed and posted
for trading on the Toronto Stock Exchange under the trading
symbol HSE.

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The following table discloses the trading price
range and volume of Huskys common shares traded on the
Toronto Stock Exchange during Huskys financial year ended
December 31, 2003:

|          |  |      |       |     |  |         |       |  |  |  |        | 
|--------- |  | ---- | ----- | --- |  | ------- | ----- |  |  |  | ------ | 
|          |  |      |       |     |  | Volume 
|          |  | High |       | Low |  | (000s)
|          |  |      |       |     |  |        
|January   |  |      | 17.15 |     |  |         | 16.03 |  |  |  | 5,800  | 
|February  |  |      | 17.49 |     |  |         | 16.07 |  |  |  | 5,547  | 
|March     |  |      | 17.35 |     |  |         | 16.36 |  |  |  | 7,024  | 
|April     |  |      | 17.20 |     |  |         | 16.15 |  |  |  | 6,819  | 
|May       |  |      | 16.81 |     |  |         | 16.31 |  |  |  | 8,397  | 
|June      |  |      | 18.14 |     |  |         | 16.60 |  |  |  | 9,641  | 
|July      |  |      | 19.58 |     |  |         | 17.35 |  |  |  | 10,656 | 
|August    |  |      | 20.95 |     |  |         | 18.43 |  |  |  | 13,795 | 
|September |  |      | 20.85 |     |  |         | 19.30 |  |  |  | 11,001 | 
|October   |  |      | 23.30 |     |  |         | 20.40 |  |  |  | 9,822  | 
|November  |  |      | 22.75 |     |  |         | 21.48 |  |  |  | 5,821  | 
|December  |  |      | 23.95 |     |  |         | 21.35 |  |  |  | 6,528  | 

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MANAGEMENTS DISCUSSION AND
ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


Huskys Managements Discussion and
Analysis for the fiscal years ended December 31, 2003 and
December 31, 2002 is incorporated herein by reference and
is available on SEDAR at www.sedar.com.

Comparability of Annual Data

Changes in accounting policies, major
acquisitions and divestitures, or major changes in the nature of
Huskys business that affect the comparability of the
annual data in this Annual Information Form, are listed below:



| |     |                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) | the adoption of the recommendations of the
    Canadian Institute of Chartered Accountants with respect to
    accounting for foreign exchange effective January 1, 2002,



| |      |                                                
| | ---- | -----------------------------------------------
| | (ii) | the acquisition of Marathon Canada Limited; and



| |       |                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) | the adoption of the recommendations of the
    Canadian Institute of Chartered Accountants in respect of the
    calculation and presentation of earnings per share.

Description of these changes are contained in
Notes 3(j) and (k), 7 and 16 respectively, to the Consolidated
Financial Statements of Husky for the year ended
December 31, 2003 and are incorporated herein by reference.
The Consolidated Financial Statements are available on SEDAR at
www.sedar.com.

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DIRECTORS AND OFFICERS

The following are the names and municipalities of
residence of the directors and officers of Husky, their
positions and offices with Husky and their principal occupations
during the past five years. The directors shall hold office
until the next annual meeting of Husky shareholders or until
their respective successors have been duly elected or appointed.

|                          |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------- |  | ------------------ |  | --------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and                  |  |                    |  | Director        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Municipality of Residence |  | Office or Position |  | Since           |  | Principal Occupation During Past 5 Years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                          |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Li, Victor T.K.           |  | Co-Chairman        |  | August 25, 2000 |  | Managing Director of Cheung Kong                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Hong Kong                 |  | and Director       |  |                 |  | (Holdings) Limited (an investment holding
    company) since 1999 and Deputy Chairman since 1994. Mr. Li
    has also been Deputy Chairman of Hutchison Whampoa Limited (an
    investment holding company) since 1999 and Executive Director
    since 1995, as well as Chairman of Cheung Kong Infrastructure
    Holdings Limited (an infrastructure development company) since
    1996 and of CK Life Sciences Intl., (Holdings) Inc. (a
    biotechnology company) since 2002. Mr. Li is also an
    Executive Director of Hongkong Electric Holdings Limited (a
    holding company) and a Director of The Hong Kong and Shanghai
    Banking Corporation Limited. Mr. Li is a member of the
    Chinese Peoples Political Consultative Conference of the
    Peoples Republic of China and he is also a member of the
    Commission on Strategic Development and the Business Advisory
    Group of the Hong Kong Special Administrative Region.
    Mr. Li holds a Bachelor of Science degree in Civil
    Engineering and a Master of Science degree in Structural
    Engineering.
|Fok, Canning K.N.         |  | Co-Chairman        |  | August 25, 2000 |  | Group Managing Director of Hutchison                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Hong Kong                 |  | and Director       |  |                 |  | Whampoa Limited since 1993 and Executive Director
    since 1984. Mr. Fok has been the Chairman of Hutchison
    Harbour Ring Limited (an investment holding company) since 2002,
    Hutchison Telecommunications (Australia) Limited (a
    telecommunications company) since 1999, Partner Communications
    Company Ltd. (a telecommunications company) since 1998 and Vanda
    Systems & Communications Holdings Limited (an investment
    holdings company) since 2003. Mr. Fok is also the Deputy
    Chairman of Cheung Kong Infrastructure Holdings Limited and
    Hongkong Electric Holdings Limited. Mr. Fok is also a director
    of Cheung Kong (Holdings) Limited and Hutchison Whampoa Finance
    (CI) Limited (a finance company). Mr. Fok holds a Bachelor
    of Arts degree and is a member of the Australian Institute of
    Chartered Accountants.                                                                                                                                                                                                                   
|Fullerton, R. Donald      |  | Director           |  | May 1, 2003     |  | Corporate Director. From 1992 until 1999                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Toronto, Ontario          |  |                    |  |                 |  | he chaired the Executive Committee of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Canada                    |  |                    |  |                 |  | CIBCs Board and retired as a director in
    February 2004. He currently serves on the Boards of George
    Weston Limited (a holding company) since 1991, Asia Satellite
    Telecommunications Holdings Ltd. since 1996 and Partner
    Communications Ltd. since 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|                            |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------- |  | ------------------ |  | --------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and                    |  |                    |  | Director        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Municipality of Residence   |  | Office or Position |  | Since           |  | Principal Occupation During Past 5 Years                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                            |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Glynn, Martin J.G.          |  | Director           |  | August 25, 2000 |  | President and Chief Executive Officer of                                                                                                                                                                                                                                                                                                                                                                                                                                               
|New York, New York          |  |                    |  |                 |  | HSBC Bank USA since 2003 and a                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|U.S.A.                      |  |                    |  |                 |  | director since 2000. Mr. Glynn has been a
    director of HSBC Bank Canada since 1999 and was President and
    Chief Executive Officer from 1999 to 2003. From 1982
    Mr. Glynn held various senior executive positions with HSBC
    Bank Canada (formerly Hongkong Bank of Canada). Mr. Glynn
    has been a Director of HSBC North America Inc. since 2002, and a
    Director of HSBC USA Inc. Mr. Glynn is also a director of
    Wells Fargo HSBC Trade Bank N.A.             
|Hui, Terence C.Y.           |  | Director           |  | August 25, 2000 |  | Director, President & Chief Executive                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Vancouver, British Columbia |  |                    |  |                 |  | Officer, Concord Pacific Group Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Canada                      |  |                    |  |                 |  | (a real estate development company) since 1997,
    Director and President of Adex Securities Inc. (a financial
    services company) since 1992 and Director and Chairman of
    Maximizer Software Inc. (formerly Multiactive Software Inc.) and
    Multiactive Technologies Inc. (computer software companies)
    since 1995. Mr. Hui was President and Chief Executive Officer of
    Pacific Place Developments Corp. (a real estate development
    company) from 1992 to 2001.
|Kinney, Brent D.            |  | Director           |  | August 25, 2000 |  | Independent businessman. Mr. Kinney is a                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Dubai, United Arab Emirates |  |                    |  |                 |  | director of Dragon Oil plc in the United Arab
    Emirates and Aurado Energy Inc. since 2003.                                                                                                                                                                                                                                                                                                                                                                                          
|Kluge, Holger               |  | Director           |  | August 25, 2000 |  | Corporate Director. Mr. Kluge was                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Toronto, Ontario            |  |                    |  |                 |  | President, Personal and Commercial Bank,                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Canada                      |  |                    |  |                 |  | CIBC from 1990 to 1999 and a director from 1992
    to 1999. Mr. Kluge is a director of Hongkong Electric
    Holdings Limited, Hutchison Telecommunications (Australia)
    Limited, Loring Ward International Limited (a financial planning
    company) since 2004 and TOM.COM LIMITED. Mr. Kluge holds a
    Bachelor of Commerce degree and a Masters degree in
    Business Administration.                                                                                     
|Koh, Poh Chan               |  | Director           |  | August 25, 2000 |  | Finance Director, Harbour Plaza Hotel                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Hong Kong                   |  |                    |  |                 |  | Management (International) Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Kwok, Eva L.                |  | Director           |  | August 25, 2000 |  | Chairman, a director and Chief Executive                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Vancouver, British Columbia |  |                    |  |                 |  | Officer, Amara International Investment                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Canada                      |  |                    |  |                 |  | Corp. (an investment holding company) since 1992
    and President from 1992 to 1996. Mrs. Kwok is a director of
    Bank of Montreal Group of Companies and since 2002 of CK Life
    Sciences Intl., (Holdings) Inc.                                                                                                                                                                                                                                                                
|Kwok, Stanley T.L.          |  | Director           |  | August 25, 2000 |  | President, Stanley Kwok Consultants (an                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Vancouver, British Columbia |  |                    |  |                 |  | architecture, planning and development                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Canada                      |  |                    |  |                 |  | company) since 1993. Mr. Kwok has been a
    director since 1997, and was Chairman from 1996 to 1998 of Amara
    International Investment Corp. Mr. Kwok is a director of
    Cheung Kong (Holdings) Limited and CTC Bank of Canada.                                                                                                                                                                                                                                                  
|Lau, John C.S.              |  | President &        |  | August 25, 2000 |  | President & Chief Executive Officer of                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Calgary, Alberta            |  | Chief Executive    |  |                 |  | Husky Energy Inc. since August 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Canada                      |  | Officer and        |  |                 |  | Prior thereto, Mr. Lau was Chief                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                            |  | Director           |  |                 |  | Executive Officer of Husky Oil Limited since 1993.                                                                                                                                                                                                                                                                                                                                                                                                                                     

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|                          |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------- |  | ------------------ |  | --------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and                  |  |                    |  | Director        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Municipality of Residence |  | Office or Position |  | Since           |  | Principal Occupation During Past 5 Years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                          |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Shaw, Wayne E.            |  | Director           |  | August 25, 2000 |  | Senior Partner, Stikeman Elliott LLP,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Toronto, Ontario          |  |                    |  |                 |  | Barristers and Solicitors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Canada                    |  |                    |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Shurniak, William         |  | Deputy Chairman    |  | August 25, 2000 |  | Director and Chairman of ETSA Utilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Australia                 |  | and Director       |  |                 |  | (a utility company) since 2000, Powercor
    Australia Limited (a utility company) since 2000 and CitiPower
    Pty Ltd. (a utility company) since 2001. Mr. Shurniak has
    been a director of Hutchison Whampoa Limited since 1984,
    Envestra Limited (a natural gas distributor) since 2000 and
    CrossCity Motorways Pty Ltd. (an infrastructure and
    transportation company) since 2003. Mr. Shurniak was a
    director and Deputy Chairman of Asia Satellite
    Telecommunications Holdings Ltd. from 1996 to 1999.
    Mr. Shurniak holds an Honorary Doctor of Laws degree from
    the University of Saskatchewan and from The University of
    Western Ontario.                                                                                                    
|Sixt, Frank J.            |  | Director           |  | August 25, 2000 |  | Group Finance Director of Hutchison                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Hong Kong                 |  |                    |  |                 |  | Whampoa Limited since 1998 and Executive Director
    since 1991. Mr. Sixt is the Chairman of TOM.COM LIMITED
    since 1999. Mr. Sixt is also an Executive Director of
    Cheung Kong Infrastructure Holdings Limited and Hongkong
    Electric Holdings Limited and a Director of Cheung Kong
    (Holdings) Limited, Hutchison Whampoa Finance (CI) Limited,
    Hutchison Telecommunications (Australia) Limited and Partner
    Communications Company Ltd. Mr. Sixt was also a director of
    Orange plc. from 1998 to 2000 and of Voice Stream Wireless Corp.
    from 2000 to 2001. Mr. Sixt holds a Masters degree in
    Arts and a Bachelors degree in Civil Law and is a member
    of the Bar and of the Law Society of the Provinces of Quebec and
    Ontario, Canada.

|                                    |  |                                                         |  |                                                                                                                                                                                                                                                                     
|----------------------------------- |  | ------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and                            |  |                                                         |  |                                                                                                                                                                                                                                                                     
|Municipality of Residence           |  | Office or Position                                      |  | Principal Occupation During Past 5 Years                                                                                                                                                                                                                            
|                                    |  |                                                         |  |                                                                                                                                                                                                                                                                     
|McGee, Neil D. Calgary, Alberta     |  | Vice President & Chief Financial Officer                |  | Vice President & Chief Financial Officer of
    Husky since August 2000. Prior thereto Mr. McGee was Vice
    President & Chief Financial Officer of Husky Oil Limited
    since 1998.                                                                              
|Ingram, Donald R. Calgary, Alberta  |  | Senior Vice President, Midstream & Refined
    Products |  | Senior Vice President, Midstream and Refined
    Products of Husky since August 2000. Prior thereto
    Mr. Ingram was Vice President, Downstream of Husky Oil
    Limited from 1994 until 1999 when he became Vice President of
    Midstream of Husky Oil Limited.
|Girgulis, James D. Calgary, Alberta |  | Vice President, Legal & Corporate Secretary             |  | Vice President, Legal & Corporate Secretary
    of Husky since August 2000. Mr. Girgulis joined Husky Oil
    Limited in 1994 as part of the legal group and became General
    Counsel and Corporate Secretary in 1999.                                            

The Board of Directors has an Audit Committee (as
required by the Business Corporations Act(Alberta))
currently consisting of M.J.G. Glynn (Chair), T.
C.Y. Hui, R.D. Fullerton and W.E. Shaw, a
Compensation Committee currently consisting of C.K.N. Fok
(Chair), H. Kluge, E.L. Kwok and F.J. Sixt, a
Health, Safety and Environment Committee currently consisting of
H. Kluge, (Chair), B. D. Kinney, and S.T.L. Kwok
and a Corporate Governance Committee currently consisting of
H. Kluge (Chair), E.L. Kwok and W.E. Shaw. Husky
does not have an Executive Committee.

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As at February 17, 2004, the directors and
officers of Husky, as a group, owned beneficially, directly or
indirectly, or exercised control or direction over 386,011
common shares of Husky representing less than 1% of the issued
and outstanding common shares.

Conflicts of Interest

Certain officers and directors of Husky are also
officers and/or directors of other companies engaged in the oil
and gas business generally and which, in certain cases, own
interests in oil and gas properties in which Husky holds or may
in future hold an interest. As a result, situations arise where
the interests of such directors and officers conflict with their
interests as directors and officers of other companies. In the
case of the directors the resolution of such conflicts is
governed by applicable corporate laws which require that
directors act honestly, in good faith and with a view to the
best interests of Husky and, in respect of the Business
Corporations Act(Alberta), Huskys governing statute,
that directors declare, and refrain from voting on, any matter
in which a director may have a conflict of interest.

Corporate Cease Trade Order or
Bankruptcies

None of those persons who are directors, officers
or promoters of the Company is, or has been within the past ten
years, a director, officer or promoter of any other corporation
that, while such person was acting in that capacity, was the
subject of a cease trade or similar order or an order that
denied the access to any statutory exemptions for a period of
more than 30 consecutive days, or was declared bankrupt or made
a voluntary assignment in bankruptcy, made a proposal under any
legislation relating to bankruptcy or insolvency or been subject
to or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of that person, other than Eva Kwok
who was a director of Air Canada in 2003 at the time it became
subject to creditor protection under the Companies
Creditors Arrangement Act (Canada).

Penalties or Sanctions

None of the persons who are directors, officers
or promoters of the Company have, within the ten years prior to
the date of this Annual Information Form, been subject to any
penalties or sanctions imposed by a court or securities
regulatory authority relating to trading in securities,
promotion or management of a publicly traded corporation, or
theft or fraud.




LEGAL PROCEEDINGS

The Company is involved in various claims and
litigation arising in the normal course of business. While the
outcome of these matters is uncertain and there can be no
assurance that such matters will resolved in the Companys
favour, the Company does not currently believe that the outcome
of adverse decisions in any pending or threatened proceedings
related to these or other matters or amount which may be
required to pay by reason thereof would have a material adverse
impact on its financial position, results of operations or
liquidity.




INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

None of the Companys directors, executive
officers or persons or companies that beneficially own directly
or indirectly, or exercise control or direction over, more than
10 percent of Huskys common shares, or their
associates and affiliates, had any material interest, direct or
indirect, in any transaction with the Company within the three
most recently completed financial years or during the current
financial year that has materially affected or would materially
affect the Company except as follows.

The Company leases its head office space located
in Western Canadian Place in Calgary, Alberta from Western
Canadian Place Ltd., which is indirectly controlled by the
Companys principal shareholders. The Companys
President & Chief Executive Officer and Vice President &
Chief Financial Officer are also a directors and officers of
Western Canadian Place Ltd. The Vice President, Corporate
Administration of the Companys subsidiary, Husky Oil
Operations Limited, is also a director and officer of Western
Canadian Place Ltd. The Company entered into a lease for an
eight year term effective September 1, 2000, with Western
Canadian Place Ltd. on commercial terms consistent with those
for leases of comparable space in Class A office buildings
in Calgary.

The Company has also entered into a management
agreement with Western Canadian Place Ltd. for general
management of the building. The Company was paid fees of $36,663
in 2003 (down from $238,017 in 2002 due to credits in favour of
Western Canadian Place Ltd.) for providing such management
services.

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TRANSFER AGENTS AND REGISTRARS

Huskys transfer agent and registrar is
Computershare Trust Company of Canada. In the United States, the
transfer agent and registrar is Computershare Trust
Company, Inc. The registers for transfers of the
Companys common shares are maintained by Computershare
Trust Company of Canada at its principal offices in the cities
of Calgary and Toronto. Queries should be directed to
Computershare Trust Company at 1-888-267-6555 (toll free in
North America).




ADDITIONAL INFORMATION

Additional information, including directors
and officers remuneration, principal shareholders of
Huskys common shares and options to purchase common shares
and interests of insiders in material transactions is contained
in Huskys Management Information Circular dated
March 18, 2004 (the Information Circular),
prepared in connection with the annual meeting of shareholders
to be held on April 22, 2004.

Additional financial information is provided in
Huskys Consolidated Financial Statements and
Managements Discussion and Analysis for the most recently
completed fiscal year ended December 31, 2003, contained in
Huskys 2003 Annual Report.

Copies of the Information Circular, the financial
statements, including any interim financial statements,
additional copies of this Annual Information Form, including one
copy of any document, or the pertinent pages of any document,
incorporated by reference in the Annual Information Form, and if
Husky is in the course of a distribution pursuant to a
preliminary short form prospectus or a short form prospectus,
any other documents incorporated therein by reference may be
obtained upon request from the Vice President, Legal &
Corporate Secretary of Husky, 40th Floor, 707 8th Avenue
S.W., Calgary, Alberta T2P 1H5, Telephone:
(403) 298-7333; Facsimile: (403) 298-7323.

Additional information relating to Husky
Energy Inc. is available on SEDAR atwww.sedar.com.




SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS

Certain statements in this Annual Information
Form are forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995,
Section 21E of the United States Securities Exchange Act of
1934, as amended, and Section 27A of the United States
Securities Act of 1933, as amended. The Company is hereby
providing cautionary statements identifying important factors
that could cause the Companys actual results to differ
materially from those projected in forward-looking statements
made in this Annual Information Form. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases such
as will likely result, are expected to,
will continue, is anticipated,
estimated, intends, plans,
projection and outlook) are not
historical facts and may be forward-looking and may involve
estimates, assumptions and uncertainties which could cause
actual results or outcomes to differ materially from those
expressed in the forward looking statements. Accordingly, any
such statements are qualified in their entirety by reference to,
and are accompanied by, the factors discussed throughout this
Annual Information Form. Among the key factors that have a
direct bearing on the Companys results of operation are
the nature of the Companys involvement in the business of
exploration, development and production of oil and natural gas
reserves and the fluctuation of the exchange rate between the
Canadian dollar and the United States dollar. These and other
factors are discussed herein under Managements
Discussion and Analysis of Financial Condition and Results of
Operations, incorporated by reference in this Annual
Information Form. and available on SEDAR at www.sedar.com.

Because actual results or outcomes could differ
materially from those expressed in any forward-looking
statements of the Company made by or on behalf of the Company,
investors should not place undue reliance on any such
forward-looking statements. Further, any forward-looking
statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or
to reflect the occurrence of unanticipated events, except as
required by applicable securities laws. New factors emerge from
time to time, and it is not possible for management to predict
all of such factors and to assess in advance the impact of each
such factor on the Companys business or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements.

64