##### 



Exhibit 2

HUSKY ENERGY INC.

CONSOLIDATED FINANCIAL
STATEMENTS

For the Year Ended
December 31, 2002





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##### 



MANAGEMENTS REPORT

The management of Husky Energy Inc. is responsible for the financial
information and operating data presented in this annual report.

The financial statements have been prepared by management in accordance with
generally accepted accounting principles. When alternative accounting
methods exist, management has chosen those it deems most appropriate in the
circumstances. Financial statements are not precise as they include certain
amounts based on estimates and judgements. Management has determined such
amounts on a reasonable basis in order to ensure that the financial
statements are presented fairly, in all material respects. Financial
information presented elsewhere in this annual report has been prepared on a
basis consistent with that in the financial statements.

Husky Energy Inc. maintains systems of internal accounting and administrative
controls. These systems are designed to provide reasonable assurance that
the financial information is relevant, reliable and accurate and that the
Companys assets are properly accounted for and adequately safeguarded. The
system of internal controls is further supported by an internal audit
function.

The Audit Committee of the Board of Directors, composed of non-management
Directors, meets regularly with management, as well as the external auditors,
to discuss auditing (external, internal and joint venture), internal
controls, accounting policy, financial reporting matters and reserves
determination process. The Committee reviews the annual consolidated
financial statements with both management and the independent auditors and
reports its findings to the Board of Directors before such statements are
approved by the Board.

The consolidated financial statements have been audited by KPMG, the
independent auditors, in accordance with generally accepted auditing
standards on behalf of the shareholders. KPMG have full and free access to
the Audit Committee.

|                                                  |  |                                                    
|------------------------------------------------- |  | ---------------------------------------------------
|John C.S. Lau
President &
Chief Executive Officer |  | Neil McGee
Vice President &
Chief Financial Officer
|                                                  |  |                                                    
|Calgary, Alberta, Canada                          |  |                                                    
|                                                  |  |                                                    
|February 5, 2003                                  |  |                                                    

AUDITORS REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Husky Energy Inc., as at
December 31, 2002, 2001 and 2000 and the consolidated statements of
earnings, retained earnings (deficit), and cash flows for each of the years
in the three-year period ended December 31, 2002. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December
31, 2002, 2001 and 2000 and the results of its operations and its cash flows
for each of the years in the three year period ended December 31, 2002 in
accordance with Canadian generally accepted accounting principles.



| | Calgary, Alberta, Canada
Chartered Accountants
| | ----------------------------------------------



| | February 5, 2003
| | ----------------

Page 25



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##### 



CONSOLIDATED BALANCE SHEETS

|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |       | 
|---------------------------------------------------------------------- | ----------------------------------------------- | ---- | ------ | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|As at December 31 (millions of dollars)                                |                                                 | 2002 |        | 2001  |  | 2000
|                                                                       |                                                 |      |        |       |  |     
|Assets                                                                 |                                                 |      |        |       |  |      |       |       |  |   |       |      
|Current assets                                                         |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       | Cash and cash equivalents                       |      | $      | 306   |  |      | $     |      |  |   | $     |      | 
|                                                                       | Accounts receivable                             |      |        | 572   |  |      |       | 376   |  |   |       | 715   | 
|                                                                       | Inventories (note 4)                            |      |        | 243   |  |      |       | 226   |  |   |       | 186   | 
|                                                                       | Prepaid expenses                                |      |        | 23    |  |      |       | 24    |  |   |       | 27    | 
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       |                                                 |      | 1,144  |       |  |      | 626   |       |  |   | 928   |      
|Property, plant and equipment, net (notes 1, 5)
(full cost accounting) |                                                 |      | 9,347  |       |  |      | 8,715 |       |  |   | 7,841 |      
|Other assets (note 9)                                                  |                                                 |      | 84     |       |  |      | 29    |       |  |   | 60    |      
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       |                                                 | $    | 10,575 |       |  | $    | 9,370 |       |  | $ | 8,829 |      
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|Liabilities and Shareholders Equity                                   |                                                 |      |        |       |  |      |       |       |  |   |       |      
|Current liabilities                                                    |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       | Bank operating loans (note 8)                   |      | $      |      |  |      | $     | 100   |  |   | $     | 34    | 
|                                                                       | Accounts payable and accrued liabilities        |      |        | 811   |  |      |       | 821   |  |   |       | 1,076 | 
|                                                                       | Long-term debt due within one year (note 9)     |      |        | 421   |  |      |       | 144   |  |   |       | 33    | 
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       |                                                 |      | 1,232  |       |  |      | 1,065 |       |  |   | 1,143 |      
|Long-term debt (note 9)                                                |                                                 |      | 1,964  |       |  |      | 1,948 |       |  |   | 2,311 |      
|Site restoration provision (note 5)                                    |                                                 |      | 249    |       |  |      | 212   |       |  |   | 178   |      
|Future income taxes (note 10)                                          |                                                 |      | 2,003  |       |  |      | 1,659 |       |  |   | 1,212 |      
|Shareholders equity                                                   |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       | Capital securities and accrued return (note 12) |      |        | 364   |  |      |       | 367   |  |   |       | 344   | 
|                                                                       | Common shares (note 11)                         |      |        | 3,406 |  |      |       | 3,397 |  |   |       | 3,388 | 
|                                                                       | Retained earnings                               |      |        | 1,357 |  |      |       | 722   |  |   |       | 253   | 
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|                                                                       |                                                 |      | 5,127  |       |  |      | 4,486 |       |  |   | 3,985 |      
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      
|Commitments and contingencies (note 14)                                |                                                 | $    | 10,575 |       |  | $    | 9,370 |       |  | $ | 8,829 |      
|                                                                       |                                                 |      |        |       |  |      |       |       |  |   |       |      

The accompanying notes to the consolidated financial statements are an
integral part of these statements. 2001 and 2000 amounts as restated (note
3).

On behalf of the Board:

|                       |  |                           
|---------------------- |  | --------------------------
|John C.S. Lau
Director |  | Martin J.G. Glynn
Director

Page 26



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##### 



CONSOLIDATED STATEMENTS OF EARNINGS

|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |       | 
|---------------------------------------------------------------------- | ---------------------------------------------------- | ---- | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|Year ended December 31 (millions of dollars, except per share amounts) |                                                      | 2002 |       | 2001  |  | 2000
|                                                                       |                                                      |      |       |       |  |     
|Sales and operating revenues, net of royalties                         |                                                      | $    | 6,384 |       |  | $    | 6,596 |       |  | $ | 5,066 |      
|Costs and expenses                                                     |                                                      |      |       |       |  |      |       |       |  |   |       |      
|                                                                       | Cost of sales and operating expenses                 |      |       | 4,009 |  |      |       | 4,425 |  |   |       | 3,492 | 
|                                                                       | Selling and administration expenses                  |      |       | 94    |  |      |       | 88    |  |   |       | 67    | 
|                                                                       | Depletion, depreciation and amortization (notes 1,5) |      |       | 939   |  |      |       | 807   |  |   |       | 481   | 
|                                                                       | Interest  net (note 9)                              |      |       | 104   |  |      |       | 101   |  |   |       | 101   | 
|                                                                       | Foreign exchange                                     |      |       | 13    |  |      |       | 94    |  |   |       | 39    | 
|                                                                       | Other  net                                          |      |       | 1     |  |      |       | 7     |  |   |       | 85    | 
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|                                                                       |                                                      |      | 5,160 |       |  |      | 5,522 |       |  |   | 4,265 |      
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|Earnings before income taxes                                           |                                                      |      | 1,224 |       |  |      | 1,074 |       |  |   | 801   |      
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|Income taxes (note 10)                                                 |                                                      |      |       |       |  |      |       |       |  |   |       |      
|                                                                       | Current                                              |      |       | 66    |  |      |       | 20    |  |   |       | 12    | 
|                                                                       | Future                                               |      |       | 354   |  |      |       | 400   |  |   |       | 351   | 
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|                                                                       |                                                      |      | 420   |       |  |      | 420   |       |  |   | 363   |      
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|Net earnings                                                           |                                                      | $    | 804   |       |  | $    | 654   |       |  | $ | 438   |      
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      
|Earnings per share (note 11)                                           |                                                      |      |       |       |  |      |       |       |  |   |       |      
|                                                                       | Basic                                                |      | $     | 1.88  |  |      | $     | 1.49  |  |   | $     | 1.28  | 
|                                                                       | Diluted                                              |      | $     | 1.88  |  |      | $     | 1.48  |  |   | $     | 1.28  | 
|                                                                       |                                                      |      |       |       |  |      |       |       |  |   |       |      

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)

|                                             |                                                    |      |       |      |   |      |     |      |   |   |      |     |  
|-------------------------------------------- | -------------------------------------------------- | ---- | ----- | ---- | - | ---- | --- | ---- | - | - | ---- | --- | -
|Year ended December 31 (millions of dollars) |                                                    | 2002 |       | 2001 |   | 2000
|                                             |                                                    |      |       |      |   |     
|Beginning of year                            |                                                    | $    | 722   |      |   | $    | 253 |      |   | $ | (295 | )  
|                                             | Net earnings                                       |      |       | 804  |   |      |     | 654  |   |   |      | 438 |  
|                                             | Dividends on common shares                         |      |       | (151 | ) |      |     | (150 | ) |   |      |    |  
|                                             | Return on capital securities (note 12)             |      |       | (29  | ) |      |     | (53  | ) |   |      | (43 | )
|                                             | Related future income taxes (note 10)              |      |       | 11   |   |      |     | 18   |   |   |      | 16  |  
|                                             | Reduction of stated capital                        |      |       |     |   |      |     |     |   |   |      | 160 |  
|                                             | Foreign exchange (retroactive adjustment) (note 3) |      |       |     |   |      |     |     |   |   |      | (15 | )
|                                             | Employee future benefits (note 13)                 |      |       | --   |   |      |     | --   |   |   |      | (8  | )
|                                             |                                                    |      |       |      |   |      |     |      |   |   |      |    
|End of year                                  |                                                    | $    | 1,357 |      |   | $    | 722 |      |   | $ | 253  |    
|                                             |                                                    |      |       |      |   |      |     |      |   |   |      |    

The accompanying notes to the consolidated financial statements are an
integral part of these statements. 2001 and 2000 amounts as restated (note
3).

Page 27



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##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |       |  
|---------------------------------------------------------------------- | ------------------------------------------- | ---- | ------ | ------ | - | ---- | ------ | ------ | - | - | ----- | ----- | -
|Year ended December 31 (millions of dollars, except per share amounts) |                                             | 2002 |        | 2001   |   | 2000
|                                                                       |                                             |      |        |        |   |     
|Operating activities                                                   |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       | Net earnings                                |      | $      | 804    |   |      | $      | 654    |   |   | $     | 438   |  
|                                                                       | Items not affecting cash                    |      |        |        |   |      |        |        |   |   |       |       |  
|                                                                       | Depletion, depreciation and amortization    |      |        | 939    |   |      |        | 807    |   |   |       | 481   |  
|                                                                       | Future income taxes                         |      |        | 354    |   |      |        | 400    |   |   |       | 351   |  
|                                                                       | Foreign exchange  non-cash (note 3)        |      |        |       |   |      |        | 82     |   |   |       | 44    |  
|                                                                       | Other                                       |      |        | (1     | ) |      |        | 3      |   |   |       | 85    |  
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       | Cash flow from operations                   |      |        | 2,096  |   |      |        | 1,946  |   |   |       | 1,399 |  
|                                                                       | Change in non-cash working capital (note 7) |      |        | (204   | ) |      |        | (16    | ) |   |       | (190  | )
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       |                                             |      | 1,892  |        |   |      | 1,930  |        |   |   | 1,209 |      
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Financing activities                                                   |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       | Bank operating loans financing  net        |      |        | (100   | ) |      |        | 66     |   |   |       | 3     |  
|                                                                       | Long-term debt issue                        |      |        | 972    |   |      |        |       |   |   |       | 535   |  
|                                                                       | Long-term debt repayment                    |      |        | (678   | ) |      |        | (356   | ) |   |       | (800  | )
|                                                                       | Redemption of preferred shares              |      |        |       |   |      |        |       |   |   |       | (364  | )
|                                                                       | Return on capital securities payment        |      |        | (31    | ) |      |        | (30    | ) |   |       | (30   | )
|                                                                       | Debt issue costs                            |      |        | (9     | ) |      |        |       |   |   |       |      |  
|                                                                       | Deferred credits                            |      |        |       |   |      |        | (4     | ) |   |       | (4    | )
|                                                                       | Proceeds from exercise of stock options     |      |        | 9      |   |      |        | 9      |   |   |       |      |  
|                                                                       | Dividends on common shares                  |      |        | (151   | ) |      |        | (150   | ) |   |       |      |  
|                                                                       | Change in non-cash working capital (note 7) |      |        | (9     | ) |      |        | 42     |   |   |       | 102   |  
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       |                                             |      | 3      |        |   |      | (423   | )      |   |   | (558  | )    
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Available for investing                                                |                                             |      | 1,895  |        |   |      | 1,507  |        |   |   | 651   |      
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Investing activities                                                   |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       | Capital expenditures                        |      |        | (1,692 | ) |      |        | (1,473 | ) |   |       | (803  | )
|                                                                       | Corporate acquisitions                      |      |        | (3     | ) |      |        | (125   | ) |   |       | (38   | )
|                                                                       | Asset sales                                 |      |        | 93     |   |      |        | 67     |   |   |       | 2     |  
|                                                                       | Other                                       |      |        | (20    | ) |      |        | 6      |   |   |       | 80    |  
|                                                                       | Change in non-cash working capital (note 7) |      |        | 33     |   |      |        | 18     |   |   |       | 108   |  
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       |                                             |      | (1,589 | )      |   |      | (1,507 | )      |   |   | (651  | )    
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Increase in cash and cash equivalents                                  |                                             |      | 306    |        |   |      |       |        |   |   |      |      
|Cash and cash equivalents at beginning of year                         |                                             |      |       |        |   |      |       |        |   |   |      |      
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Cash and cash equivalents at end of year                               |                                             | $    | 306    |        |   | $    |       |        |   | $ |      |      
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      
|Cash flow from operations per share (note 11)                          |                                             |      |        |        |   |      |        |        |   |   |       |      
|                                                                       | Basic                                       |      | $      | 4.94   |   |      | $      | 4.60   |   |   | $     | 4.26  |  
|                                                                       | Diluted                                     |      | $      | 4.92   |   |      | $      | 4.57   |   |   | $     | 4.26  |  
|                                                                       |                                             |      |        |        |   |      |        |        |   |   |       |      

The accompanying notes to the consolidated financial statements are an
integral part of these statements. 2001 and 2000 amounts as restated (note
3).

Page 28



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Except where indicated and per share amounts, all dollar amounts are in
millions of Canadian dollars.

Note 1
Segmented Financial Information

|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |       | 
|---------------------------------------------------- | --------------------------------------------- | - | -------- | ------ | --------- | - | ------ | ------ | ---- | - | ----- | ----- | ---- | - | --------- | --- | ---------------------------- | - | ---- | --- |  | - | ----- | --- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                                     |                                               |   | Upstream |        | Midstream
|                                                     |                                               |   |          |        |          
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   | Upgrading |     | Infrastructure and Marketing
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                             
|                                                     |                                               |   | 2002     |        | 2001      |   | 2000   |        | 2002 |   | 2001  |       | 2000 |   | 2002      |     | 2001                         |   | 2000
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |     
|Year ended December 31                               |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Sales and operating revenues, net
of royalties       |                                               | $ | 2,665    |        |           | $ | 2,165  |        |      | $ | 1,549 |       |      | $ | 909       |     |                              | $ | 886  |     |  | $ | 1,006 |     |  | $ | 4,230 |       |  | $ | 4,380 |       |  | $ | 2,309 |      
|Costs and expenses                                   |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     | Operating, cost of sales,
selling and general |   |          | 729    |           |   |        | 648    |      |   |       | 375   |      |   |           | 811 |                              |   |      | 638 |  |   |       | 848 |  |   |       | 4,038 |  |   |       | 4,193 |  |   |       | 2,193 | 
|                                                     | Depletion, depreciation and
amortization      |   |          | 851    |           |   |        | 728    |      |   |       | 407   |      |   |           | 18  |                              |   |      | 17  |  |   |       | 16  |  |   |       | 20    |  |   |       | 17    |  |   |       | 15    | 
|                                                     | Interest  net                                |   |          |       |           |   |        |       |      |   |       |      |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     | Foreign exchange                              |   |          |       |           |   |        |       |      |   |       |      |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     |                                               |   | 1,580    |        |           |   | 1,376  |        |      |   | 782   |       |      |   | 829       |     |                              |   | 655  |     |  |   | 864   |     |  |   | 4,058 |       |  |   | 4,210 |       |  |   | 2,208 |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Earnings (loss) before income taxes                  |                                               |   | 1,085    |        |           |   | 789    |        |      |   | 767   |       |      |   | 80        |     |                              |   | 231  |     |  |   | 142   |     |  |   | 172   |       |  |   | 170   |       |  |   | 101   |      
|Current income taxes                                 |                                               |   | 55       |        |           |   | 17     |        |      |   | 10    |       |      |   | 1         |     |                              |   | 1    |     |  |   | 1     |     |  |   | 6     |       |  |   | 1     |       |  |   |      |      
|Future income taxes                                  |                                               |   | 342      |        |           |   | 290    |        |      |   | 305   |       |      |   | 25        |     |                              |   | 72   |     |  |   | 53    |     |  |   | 59    |       |  |   | 71    |       |  |   | 45    |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Net earnings (loss)                                  |                                               | $ | 688      |        |           | $ | 482    |        |      | $ | 452   |       |      | $ | 54        |     |                              | $ | 158  |     |  | $ | 88    |     |  | $ | 107   |       |  | $ | 98    |       |  | $ | 56    |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Capital employed  As at December 31(2)              |                                               | $ | 6,040    |        |           | $ | 5,715  |        |      | $ | 5,398 |       |      | $ | 319       |     |                              | $ | 320  |     |  | $ | 352   |     |  | $ | 431   |       |  | $ | 395   |       |  | $ | 312   |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Property, plant and equipment 
As at December 31    |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Cost                                                 |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     | Canada                                        |   | $        | 11,525 |           |   | $      | 10,353 |      |   | $     | 9,023 |      |   | $         | 998 |                              |   | $    | 958 |  |   | $     | 912 |  |   | $     | 591   |  |   | $     | 575   |  |   | $     | 510   | 
|                                                     | International                                 |   |          | 469    |           |   |        | 394    |      |   |       | 290   |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     |                                               | $ | 11,994   |        |           | $ | 10,747 |        |      | $ | 9,313 |       |      | $ | 998       |     |                              | $ | 958  |     |  | $ | 912   |     |  | $ | 591   |       |  | $ | 575   |       |  | $ | 510   |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Accumulated depletion, depreciation
and amortization |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     | Canada                                        |   | $        | 3,894  |           |   | $      | 3,272  |      |   | $     | 2,622 |      |   | $         | 372 |                              |   | $    | 354 |  |   | $     | 337 |  |   | $     | 184   |  |   | $     | 165   |  |   | $     | 148   | 
|                                                     | International                                 |   |          | 185    |           |   |        | 147    |      |   |       | 139   |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     |                                               | $ | 4,079    |        |           | $ | 3,419  |        |      | $ | 2,761 |       |      | $ | 372       |     |                              | $ | 354  |     |  | $ | 337   |     |  | $ | 184   |       |  | $ | 165   |       |  | $ | 148   |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Net                                                  |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     | Canada                                        |   | $        | 7,631  |           |   | $      | 7,081  |      |   | $     | 6,401 |      |   | $         | 626 |                              |   | $    | 604 |  |   | $     | 575 |  |   | $     | 407   |  |   | $     | 410   |  |   | $     | 362   | 
|                                                     | International                                 |   |          | 284    |           |   |        | 247    |      |   |       | 151   |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     |                                               | $ | 7,915    |        |           | $ | 7,328  |        |      | $ | 6,552 |       |      | $ | 626       |     |                              | $ | 604  |     |  | $ | 575   |     |  | $ | 407   |       |  | $ | 410   |       |  | $ | 362   |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|Total assets  As at December 31                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     | Canada                                        |   | $        | 7,883  |           |   | $      | 7,160  |      |   | $     | 6,584 |      |   | $         | 658 |                              |   | $    | 644 |  |   | $     | 613 |  |   | $     | 850   |  |   | $     | 862   |  |   | $     | 1,000 | 
|                                                     | International                                 |   |          | 337    |           |   |        | 247    |      |   |       | 151   |      |   |           |    |                              |   |      |    |  |   |       |    |  |   |       |      |  |   |       |      |  |   |       |      | 
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      
|                                                     |                                               | $ | 8,220    |        |           | $ | 7,407  |        |      | $ | 6,735 |       |      | $ | 658       |     |                              | $ | 644  |     |  | $ | 613   |     |  | $ | 850   |       |  | $ | 862   |       |  | $ | 1,000 |      
|                                                     |                                               |   |          |        |           |   |        |        |      |   |       |       |      |   |           |     |                              |   |      |     |  |   |       |     |  |   |       |       |  |   |       |       |  |   |       |      



---

|(1) |  | Eliminations relate to sales and operating
revenues between segments recorded at transfer prices based on
current market prices, and to unrealized intersegment profits
in inventories.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Capital employed is defined as short- and
long-term debt and shareholders equity.                                                                                                     
|   
|    |  | Comparative figures have been restated to conform with current
years classification.                                                                                                  
|   
|    |  | Page 29                                                                                                                                                                                

|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |        | 
|---------------------------------------------------- | --------------------------------------------- | - | ---------------- | ----- | ------------------------------ | - | ----- | ----- | ---- | - | ----- | ----- | ---- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | - | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                     |                                               |   | Refined Products |       | Corporate and Eliminations (1) |   | Total
|                                                     |                                               |   |                  |       |                                |   |      
|                                                     |                                               |   | 2002             |       | 2001                           |   | 2000  |       | 2002 |   | 2001  |       | 2000 |   | 2002   |        | 2001 |   | 2000  
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |       
|Year ended December 31                               |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Sales and operating revenues, net
of royalties       |                                               | $ | 1,310            |       |                                | $ | 1,349 |       |      | $ | 1,347 |       |      | $ | (2,730 | )      |      | $ | (2,184 | )      |   | $ | (1,145 | )      |   | $ | 6,384  |        |  | $ | 6,596  |        |  | $ | 5,066  |       
|Costs and expenses                                   |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     | Operating, cost of sales,
selling and general |   |                  | 1,222 |                                |   |       | 1,206 |      |   |       | 1,288 |      |   |        | (2,696 | )    |   |        | (2,165 | ) |   |        | (1,060 | ) |   |        | 4,104  |  |   |        | 4,520  |  |   |        | 3,644  | 
|                                                     | Depletion, depreciation and
amortization      |   |                  | 34    |                                |   |       | 31    |      |   |       | 28    |      |   |        | 16     |      |   |        | 14     |   |   |        | 15     |   |   |        | 939    |  |   |        | 807    |  |   |        | 481    | 
|                                                     | Interest  net                                |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        | 104    |      |   |        | 101    |   |   |        | 101    |   |   |        | 104    |  |   |        | 101    |  |   |        | 101    | 
|                                                     | Foreign exchange                              |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        | 13     |      |   |        | 94     |   |   |        | 39     |   |   |        | 13     |  |   |        | 94     |  |   |        | 39     | 
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     |                                               |   | 1,256            |       |                                |   | 1,237 |       |      |   | 1,316 |       |      |   | (2,563 | )      |      |   | (1,956 | )      |   |   | (905   | )      |   |   | 5,160  |        |  |   | 5,522  |        |  |   | 4,265  |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Earnings (loss) before income taxes                  |                                               |   | 54               |       |                                |   | 112   |       |      |   | 31    |       |      |   | (167   | )      |      |   | (228   | )      |   |   | (240   | )      |   |   | 1,224  |        |  |   | 1,074  |        |  |   | 801    |       
|Current income taxes                                 |                                               |   | 4                |       |                                |   | 1     |       |      |   | 1     |       |      |   |       |        |      |   |       |        |   |   |       |        |   |   | 66     |        |  |   | 20     |        |  |   | 12     |       
|Future income taxes                                  |                                               |   | 18               |       |                                |   | 48    |       |      |   | 14    |       |      |   | (90    | )      |      |   | (81    | )      |   |   | (66    | )      |   |   | 354    |        |  |   | 400    |        |  |   | 351    |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Net earnings (loss)                                  |                                               | $ | 32               |       |                                | $ | 63    |       |      | $ | 16    |       |      | $ | (77    | )      |      | $ | (147   | )      |   | $ | (174   | )      |   | $ | 804    |        |  | $ | 654    |        |  | $ | 438    |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Capital employed  As at December 31(2)              |                                               | $ | 338              |       |                                | $ | 329   |       |      | $ | 351   |       |      | $ | 384    |        |      | $ | (81    | )      |   | $ | (50    | )      |   | $ | 7,512  |        |  | $ | 6,678  |        |  | $ | 6,363  |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Property, plant and equipment 
As at December 31    |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Cost                                                 |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     | Canada                                        |   | $                | 702   |                                |   | $     | 655   |      |   | $     | 628   |      |   | $      | 165    |      |   | $      | 143    |   |   | $      | 108    |   |   | $      | 13,981 |  |   | $      | 12,684 |  |   | $      | 11,181 | 
|                                                     | International                                 |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        |       |      |   |        |       |   |   |        |       |   |   |        | 469    |  |   |        | 394    |  |   |        | 290    | 
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     |                                               | $ | 702              |       |                                | $ | 655   |       |      | $ | 628   |       |      | $ | 165    |        |      | $ | 143    |        |   | $ | 108    |        |   | $ | 14,450 |        |  | $ | 13,078 |        |  | $ | 11,471 |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Accumulated depletion, depreciation
and amortization |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     | Canada                                        |   | $                | 360   |                                |   | $     | 330   |      |   | $     | 302   |      |   | $      | 108    |      |   | $      | 95     |   |   | $      | 82     |   |   | $      | 4,918  |  |   | $      | 4,216  |  |   | $      | 3,491  | 
|                                                     | International                                 |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        |       |      |   |        |       |   |   |        |       |   |   |        | 185    |  |   |        | 147    |  |   |        | 139    | 
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     |                                               | $ | 360              |       |                                | $ | 330   |       |      | $ | 302   |       |      | $ | 108    |        |      | $ | 95     |        |   | $ | 82     |        |   | $ | 5,103  |        |  | $ | 4,363  |        |  | $ | 3,630  |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Net                                                  |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     | Canada                                        |   | $                | 342   |                                |   | $     | 325   |      |   | $     | 326   |      |   | $      | 57     |      |   | $      | 48     |   |   | $      | 26     |   |   | $      | 9,063  |  |   | $      | 8,468  |  |   | $      | 7,690  | 
|                                                     | International                                 |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        |       |      |   |        |       |   |   |        |       |   |   |        | 284    |  |   |        | 247    |  |   |        | 151    | 
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     |                                               | $ | 342              |       |                                | $ | 325   |       |      | $ | 326   |       |      | $ | 57     |        |      | $ | 48     |        |   | $ | 26     |        |   | $ | 9,347  |        |  | $ | 8,715  |        |  | $ | 7,841  |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|Total assets  As at December 31                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     | Canada                                        |   | $                | 534   |                                |   | $     | 428   |      |   | $     | 487   |      |   | $      | 313    |      |   | $      | 29     |   |   | $      | (6     | ) |   | $      | 10,238 |  |   | $      | 9,123  |  |   | $      | 8,678  | 
|                                                     | International                                 |   |                  |      |                                |   |       |      |      |   |       |      |      |   |        |       |      |   |        |       |   |   |        |       |   |   |        | 337    |  |   |        | 247    |  |   |        | 151    | 
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       
|                                                     |                                               | $ | 534              |       |                                | $ | 428   |       |      | $ | 487   |       |      | $ | 313    |        |      | $ | 29     |        |   | $ | (6     | )      |   | $ | 10,575 |        |  | $ | 9,370  |        |  | $ | 8,829  |       
|                                                     |                                               |   |                  |       |                                |   |       |       |      |   |       |       |      |   |        |        |      |   |        |        |   |   |        |        |   |   |        |        |  |   |        |        |  |   |        |       

Page 30



---



##### 



Note 2
Nature of Operations and Organization

HUSKY ENERGY INC. (Husky or the Company) is a publicly
traded, integrated energy and energy-related company
headquartered in Calgary, Alberta.

Management has segmented the Companys business based on
differences in products and services and management strategy
and responsibility. The Companys business is conducted
predominantly through three major business segments -
upstream, midstream and refined products.

Upstream includes exploration for, development and production
of crude oil, natural gas and natural gas liquids. The
Companys upstream operations are located primarily in
Western Canada, offshore Eastern Canada (East Coast), South
China Sea (Wenchang), with some interests outside Canada
(International).

Midstream includes upgrading of heavy crude oil feedstock
into synthetic crude oil (Upgrading); marketing of the
Companys and other producers crude oil, natural gas,
natural gas liquids, sulphur and petroleum coke; and pipeline
transportation and processing of heavy crude oil, storage of
crude oil, diluent and natural gas and cogeneration of
electrical and thermal energy (Infrastructure and marketing).

Refined products includes refining of crude oil and marketing
of refined petroleum products including gasoline, alternative
fuels and asphalt.

Note 3
Significant Accounting Policies

These financial statements are prepared in accordance with
Canadian generally accepted accounting principles (GAAP)
which, in the case of the Company, differ in certain respects
from those in the United States. These differences are
described in note 16, Reconciliation to Accounting Principles
Generally Accepted in the United States.

The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual
results could differ from these estimates.

The consolidated financial statements include the accounts of
the Company and its subsidiaries.

A significant part of the Companys activities is conducted
jointly with third parties and accordingly the accounts
reflect the Companys proportionate interest in these
activities.

Certain prior years amounts have been reclassified to
conform with current presentation.

In 2001 and previously, the Company presented certain crown
charges as a component of operating expenses. These charges
have been reclassified as royalties for 2002 and for all
comparative periods presented in these financial statements.
There is no impact on the net earnings or cash flow of the
Company as a result of this change.



|a) |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Cash and cash equivalents consist of cash on hand and
deposits with a maturity of less than three months.                                                                                                                                                                                                                                        
|  
|b) |  | Inventory Valuation                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Crude oil, natural gas, refined petroleum products and
purchased sulphur inventories are valued at the lower of
cost, on a first-in, first-out basis, or net realizable
value. Materials and supplies are stated at average cost.
Cost consists of raw material, labour, direct overhead and
transportation. Intersegment profits are eliminated.

Page 31



---



##### 





|c) |  | Property, Plant and Equipment
|-- |  | -----------------------------



| | i)  |  | Oil and Gas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company employs the full cost
method of accounting for oil and gas interests whereby
all costs of acquisition, exploration for and
development of oil and gas reserves are capitalized
and accumulated within cost centres on a
country-by-country basis. Such costs include land
acquisition, geological and geophysical, drilling of
productive and non-productive wells, carrying costs
directly related to unproved properties and
administrative costs directly related to exploration
and development activities. Interest is capitalized
on certain major capital projects based on the
Companys long-term cost of borrowing.                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | The provision for depletion of oil and
gas properties and depreciation of associated
production facilities is calculated using the unit of
production method, based on proved oil and gas
reserves as estimated by the Companys engineers, for
each cost centre. Depreciation of gas plants and
certain other oil and gas facilities is provided using
the straight-line method based on their estimated
useful lives. In the normal course of operations,
retirements of oil and gas interests are accounted for
by charging the asset cost, net of any proceeds, to
accumulated depletion or depreciation.                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | Costs of acquiring and evaluating
significant unproved oil and gas interests are
excluded from costs subject to depletion and
depreciation until it is determined that proved oil
and gas reserves are attributable to such interests or
until impairment occurs. Costs of major development
projects are excluded from costs subject to depletion
and depreciation until the earliest of when a portion
of the property becomes capable of production, or when
development activity ceases, or when impairment
occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | The aggregate carrying values of oil
and gas interests are subject to cost recovery ceiling
tests. Net capitalized costs in each cost centre are
limited to the estimated future net revenues from
proved oil and gas reserves, at prices and costs in
effect at year-end, plus the cost of unproved
properties and major development projects, less
impairment. In addition, the net capitalized costs of
all cost centres, less related future income taxes,
are limited to the estimated future net revenues from
all cost centres plus the net cost of major
development projects and unproved properties less
future removal and site restoration costs,
administrative expenses, financing costs and income
taxes. Any amounts in excess of these limits are
charged to earnings.                                                                                                                                                                                                   
|
| | ii) |  | Other Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | Depreciation for substantially all other plant and
equipment, except upgrading assets, is provided using
the straight-line method based on estimated useful
lives of assets. Depreciation for upgrading assets is
provided using the unit of production method, based on
the plants estimated productive life. When the net
carrying amount of other plant and equipment, less
related accumulated provisions for future removal and
site restoration costs and future income taxes,
exceeds the net recoverable amount, the excess is
charged to earnings. Repairs and maintenance costs,
other than major turnaround costs, are charged to
earnings as incurred. Major turnaround costs are
deferred when incurred and amortized over the
estimated period of time to the next scheduled
turnaround. At the time of disposition of plant and
equipment, accounts are relieved of the asset values
and accumulated depreciation and any resulting gain or
loss is reflected in earnings.

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##### 





| | iii) |  | Future Removal and Site Restoration Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |      |  | Future removal and site restoration costs net of expected
recoveries, where they are probable and can be
reasonably estimated, are provided for using the
method of depletion or depreciation related to the
asset. Costs are estimated by the Companys engineers
based on current regulations, costs, technology and
industry standards. The annual charge is included in
the provision for depletion, depreciation and
amortization. Removal and site restoration
expenditures are charged to the accumulated provision
as incurred.



|d) |  | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Gains and losses related to financial
instruments designated as hedges are deferred and
recognized in the period and in the same financial
statement category in which the revenues or expenses
associated with the hedged transactions are
recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | In November 2001, the Accounting
Standards Board (AcSB) of the Canadian Institute of
Chartered Accountants (CICA) issued an Accounting
Guideline Hedging Relationships that establishes
standards for the documentation and effectiveness of
hedging activities that are substantially similar to
the corresponding requirements in Financial Accounting
Standards Board (FASB) Statement No. 133 Accounting
for Derivative Instruments and Hedging Activities
(FAS 133). The new recommendations will be
effective January 1, 2004. Note 16 discloses the
impact of FAS 133 on the financial statements for
2002.                                                                                              
|  
|e) |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Revenues from the sale of crude oil, natural gas, natural
gas liquids, synthetic crude oil, purchased
commodities and refined petroleum products are
recorded on a gross basis when title passes to an
external party. Sales between the business segments
of the Company are eliminated from sales and operating
revenues and cost of sales. Revenues associated with
the sale of transportation, processing and natural gas
storage services are recognized when the services are
provided.                                                                                                                                                                                                                               
|  
|f) |  | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | Results of foreign operations, all of which are considered
financially and operationally integrated, are
translated to Canadian dollars using average rates for
the year for revenue and expenses, except depreciation
and depletion which are translated at the rate of
exchange applicable to the related assets. Monetary
assets are translated at current exchange rates and
non-monetary assets are translated using historical
rates of exchange. Gains or losses resulting from
these translation adjustments are included in
earnings. Capital securities are adjusted to the
current rate of exchange and included in retained
earnings.                                                                           
|  
|   |  | Effective January 1, 2002, the Company retroactively
adopted the revised recommendations of the CICA on
Foreign Currency Translation. The new recommendations
eliminated the deferral and amortization of foreign
exchange gains and losses on long-term monetary items.
This change resulted in a reduction of retained
earnings at January 1, 2000 of $15 million and a
reduction of earnings after tax of $47 million and $26
million for the years ended December 31, 2001 and
2000, respectively. This change also resulted in a
reduction to other assets of $133 million, a reduction
to the future income tax liability of $36 million and
an increase to capital securities of $17 million as at
December 31, 2001.
|  
|g) |  | Stock-based Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In accordance with the Companys
stock option plan, common share options are granted to
directors, officers and certain other employees. The
Company does not recognize compensation expense on the
issuance of common share options under this plan
because the exercise price of the share options is
equal to the market value of the common shares when                                                                                                                                                                                                                                                                                                                                                                 

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##### 





|   |  | they are granted. In accordance with CICA section 3870
Stock-based Compensation and Other Stock-based Payments,
note 11 discloses the impact on the financial statements
for options granted after January 1, 2002. The standards
are substantially similar to those in FASB Statement No.
123 Accounting for Stock-based Compensation (FAS 123).
Note 16 presents the disclosures required by FAS 123 in the
financial statements.                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|h) |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | Basic common shares outstanding are the
weighted average number of common shares outstanding
for each period. Diluted common shares outstanding
are calculated using the treasury stock method, which
assumes that any proceeds received from in-the-money
options would be used to buy back common shares at the
average market price for the period. In addition,
diluted common shares also include the effect of the
potential exercise of any outstanding warrants.
|  
|i) |  | Impairment or Disposal of Long-term Assets                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In December 2002, the AcSB of the
CICA approved new standards for the impairment and
disposal of long-lived assets that are substantially
equivalent to those in FASB Statement No. 144
Accounting for the Impairment or Disposal of
Long-term Assets (FAS 144). Note 16 presents the
disclosures required by FAS 144 in the financial
statements.                                                                                                                  

Note 4
Inventories

|                                         |  |      |     |      |  |      |     |  |  |   |     | 
|---------------------------------------- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                                         |  | 2002 |     | 2001 |  | 2000
|                                         |  |      |     |      |  |     
|Crude oil and refined petroleum products |  | $    | 166 |      |  | $    | 140 |  |  | $ | 132 | 
|Natural gas                              |  |      | 50  |      |  |      | 69  |  |  |   | 41  | 
|Materials, supplies and other            |  |      | 27  |      |  |      | 17  |  |  |   | 13  | 
|                                         |  |      |     |      |  |      |     |  |  |   |     | 
|                                         |  | $    | 243 |      |  | $    | 226 |  |  | $ | 186 | 
|                                         |  |      |     |      |  |      |     |  |  |   |     | 

Note 5
Property, Plant and Equipment

Refer to note 1 Segmented Financial
Information which presents the Companys property,
plant and equipment by segment.

Costs of oil and gas properties, including
major development projects, excluded from costs subject
to depletion and depreciation at December 31 were as
follows:

|              |  |      |       |      |  |      |       |  |  |   |       | 
|------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|              |  | 2002 |       | 2001 |  | 2000
|              |  |      |       |      |  |     
|Canada        |  | $    | 1,318 |      |  | $    | 1,226 |  |  | $ | 1,073 | 
|International |  |      | 37    |      |  |      | 235   |  |  |   | 137   | 
|              |  |      |       |      |  |      |       |  |  |   |       | 
|              |  | $    | 1,355 |      |  | $    | 1,461 |  |  | $ | 1,210 | 
|              |  |      |       |      |  |      |       |  |  |   |       | 

The Company has estimated future removal
and site restoration costs of $703 million at December
31, 2002 (2001  $653 million; 2000  $619 million).
During 2002 actual removal and site restoration
expenditures amounted to $17 million (2001  $18
million; 2000  $10 million).

Note 6
Plan of Arrangement

On June 18, 2000 Husky Oil Limited and
Renaissance Energy Ltd. (Renaissance) agreed to a Plan
of Arrangement whereby Husky Oil Limited and its
principal subsidiary, Husky Oil Operations Limited
(HOOL), would merge with Renaissance and continue as
HOOL. The Plan of Arrangement also included the
incorporation of a new company, Husky Energy Inc. Husky
is the parent company of HOOL and is publicly traded.
The transaction became effective August 25, 2000 and the
results of Husky include those of Renaissance from that
date forward.

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The allocation of the aggregate purchase
price based on the estimated fair values of the
Renaissance net assets at August 25, 2000 were as
follows:

|                    |                               |   |            |        |  
|------------------- | ----------------------------- | - | ---------- | ------ | -
|                    |                               |   | Allocation
|                    |                               |   |           
|Net assets acquired |                               |   |           
|                    | Working capital               |   | $          | 84     |  
|                    | Property, plant and equipment |   |            | 3,514  |  
|                    | Marketing and transportation  |   |            | (131   | )
|                    | Other assets                  |   |            | 23     |  
|                    | Acquisition costs             |   |            | (51    | )
|                    | Site restoration provision    |   |            | (70    | )
|                    | Future income taxes           |   |            | (60    | )
|                    | Long-term debt                |   |            | (1,211 | )
|                    |                               |   |           
|                    |                               | $ | 2,098      |       
|                    |                               |   |            |       
|Consideration       |                               |   |            |       
|                    | Common shares exchanged       |   | $          | 1,734  |  
|                    | Preferred shares issued       |   |            | 364    |  
|                    |                               |   |            |       
|                    |                               | $ | 2,098      |       
|                    |                               |   |            |       

Note 7
Cash Flows  Change in Non-cash Working Capital



|a) |  | Changes in non-cash working capital
were as follows:
|-- |  | ----------------------------------------------------

|                                                |                                          |  |      |      |      |  |      |      |   |  |    |      |  
|----------------------------------------------- | ---------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | -- | ---- | -
|                                                |                                          |  | 2002 |      | 2001 |  | 2000
|                                                |                                          |  |      |      |      |  |     
|Decrease (increase) in non-cash working capital |                                          |  |      |      |      |  |      |      |   |  |    |     
|                                                | Accounts receivable                      |  | $    | (153 | )    |  | $    | 361  |   |  | $  | (254 | )
|                                                | Inventories                              |  |      | (17  | )    |  |      | (40  | ) |  |    | (38  | )
|                                                | Prepaid expenses                         |  |      | 1    |      |  |      | 3    |   |  |    | 2    |  
|                                                | Accounts payable and accrued liabilities |  |      | (11  | )    |  |      | (280 | ) |  |    | 310  |  
|                                                |                                          |  |      |      |      |  |      |      |   |  |    |     
|Change in non-cash working capital              |                                          |  | (180 | )    |      |  | 44   |      |   |  | 20 |     
|Relating to:                                    |                                          |  |      |      |      |  |      |      |   |  |    |     
|                                                | Financing activities                     |  |      | (9   | )    |  |      | 42   |   |  |    | 102  |  
|                                                | Investing activities                     |  |      | 33   |      |  |      | 18   |   |  |    | 108  |  
|                                                |                                          |  |      |      |      |  |      |      |   |  |    |     
|                                                | Operating activities                     |  | $    | (204 | )    |  | $    | (16  | ) |  | $  | (190 | )
|                                                |                                          |  |      |      |      |  |      |      |   |  |    |     



|b) |  | Other cash flow information:
|-- |  | ----------------------------

|                   |  |      |     |      |  |      |     |  |  |   |     | 
|------------------ |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                   |  | 2002 |     | 2001 |  | 2000
|                   |  |      |     |      |  |     
|Cash taxes paid    |  | $    | 20  |      |  | $    | 13  |  |  | $ | 9   | 
|                   |  |      |     |      |  |      |     |  |  |   |     | 
|Cash interest paid |  | $    | 139 |      |  | $    | 145 |  |  | $ | 138 | 
|                   |  |      |     |      |  |      |     |  |  |   |     | 

Note 8
Bank Operating Loans

At December 31, 2002 the Company had
short-term borrowing lines of credit with banks
totalling $195 million; (2001  $195 million; 2000

$234 million), of which $12 million (2001  $102
million; 2000  $84 million) had been used for bank
operating loans and letters of credit. Interest payable
is based on Bankers Acceptance, money market, or prime
rates. During 2002, the weighted average interest rate
on short-term borrowings was approximately 2.9 percent.

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Note 9
Long-term Debt

|               |                                          |  |                 |  |         |       |      |       |   |       |   |       |   |       |     |       |  
|-------------- | ---------------------------------------- |  | --------------- |  | ------- | ----- | ---- | ----- | - | ----- | - | ----- | - | ----- | --- | ----- | -
|               | Maturity                                 |  | 2002            |  | 2001    |       | 2000
|               |                                          |  |                 |  |         |       |     
|Long-term debt |                                          |  |                 |  |         |       |      |       |   |       |   |       |   |       |    
|               | Revolving syndicated credit facility     |  |                 |  |         |       |      |       |   |       |   |       |   |       |     |      
|               |                                          |  | -2001 U.S. $116 |  |         |       | $    |      |   |       | $ | 185   |   |       | $   | 174   |  
|               | Non-revolving syndicated credit facility |  |                 |  |         |       |     |       |   |       |  |       |   |       | 300 |      
|               | 6.25% notes                              |  | -U.S. $400      |  | 2012    |       |      | 632   |   |       |   |      |   |       |     |      |  
|               | 6.875% notes                             |  | -U.S. $150      |  | 2003    |       |      | 237   |   |       |   | 239   |   |       |     | 225   |  
|               | 7.125% notes                             |  | -U.S. $150      |  | 2006    |       |      | 237   |   |       |   | 239   |   |       |     | 225   |  
|               | 7.55% debentures                         |  | -U.S. $200      |  | 2016    |       |      | 316   |   |       |   | 318   |   |       |     | 300   |  
|               | 8.45% senior secured bonds               |  | -2002 U.S. $162 |  | 2003-12 |       |      | 256   |   |       |   | 276   |   |       |     | 268   |  
|               |                                          |  | -2001 U.S. $173 |  |         |       |      |       |   |       |   |       |   |       |     |       |  
|               |                                          |  | -2000 U.S. $179 |  |         |       |      |       |   |       |   |       |   |       |     |       |  
|               | Private placement notes                  |  | -2002 U.S. $68  |  | 2003-5  |       |      | 107   |   |       |   | 135   |   |       |     | 152   |  
|               |                                          |  | -2001 U.S. $85  |  |         |       |      |       |   |       |   |       |   |       |     |       |  
|               |                                          |  | -2000 U.S. $101 |  |         |       |      |       |   |       |   |       |   |       |     |       |  
|               | Medium-term notes                        |  |                 |  | 2003-9  |       |      | 600   |   |       |   | 700   |   |       |     | 700   |  
|               |                                          |  |                 |  |         |       |      |       |   |       |   |       |   |       |    
|               | Total long-term debt                     |  |                 |  |         |       |      | 2,385 |   |       |   | 2,092 |   |       |     | 2,344 |  
|               | Amount due within one year               |  |                 |  |         |       |      | (421  | ) |       |   | (144  | ) |       |     | (33   | )
|               |                                          |  |                 |  |         |       |      |       |   |       |   |       |   |       |    
|               |                                          |  |                 |  | $       | 1,964 |      |       | $ | 1,948 |   |       | $ | 2,311 |    
|               |                                          |  |                 |  |         |       |      |       |   |       |   |       |   |       |    

Interest  net for the years ended December 31 were as
follows:

|                   |  |      |     |      |  |      |     |   |  |   |     |  
|------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  | - | --- | -
|                   |  | 2002 |     | 2001 |  | 2000
|                   |  |      |     |      |  |     
|Long-term debt     |  | $    | 128 |      |  | $    | 148 |   |  | $ | 144 |  
|Short-term debt    |  |      | 3   |      |  |      | 5   |   |  |   | 4   |  
|                   |  |      |     |      |  |      |     |   |  |   |     |  
|                   |  |      | 131 |      |  |      | 153 |   |  |   | 148 |  
|Amount capitalized |  |      | (26 | )    |  |      | (51 | ) |  |   | (43 | )
|                   |  |      |     |      |  |      |     |   |  |   |     |  
|                   |  |      | 105 |      |  |      | 102 |   |  |   | 105 |  
|Interest income    |  |      | (1  | )    |  |      | (1  | ) |  |   | (4  | )
|                   |  |      |     |      |  |      |     |   |  |   |     |  
|                   |  | $    | 104 |      |  | $    | 101 |   |  | $ | 101 |  
|                   |  |      |     |      |  |      |     |   |  |   |     |  

As at December 31, 2002, other assets
included $23 million (2001  $17 million; 2000  $20
million) of deferred debt issue costs.

The revolving syndicated credit facility
allows the Company to borrow up to $940 million in
either Canadian or U.S. currency from a group of banks
on an unsecured basis. The facility is structured as a
one-year committed revolving credit facility, extendible
annually. In the event that the lenders do not consent
to such extension, the revolving credit facility will
convert to a four-year non-revolving amortizing term
loan. Interest rates vary based on Canadian prime,
Bankers Acceptance, U.S. LIBOR or U.S. base rate,
depending on the borrowing option selected, credit
ratings assigned by certain credit rating agencies to
the Companys rated senior unsecured debt and whether
the Company borrows under the revolving or non-revolving
condition.

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##### 



The 6.25 percent notes were issued June
14, 2002 and rank on equal footing with other unsecured
indebtedness of the Company. The notes mature June 15,
2012 and are redeemable at the option of the Company at
any time. Interest is payable semi-annually. The notes
were issued under a base shelf prospectus dated June 6,
2002 filed with securities regulatory authorities in
Canada and the United States. The prospectus permits
Husky to offer for sale, from time to time, up to U.S. $1 billion of debt securities during the 25 months from
June 6, 2002.

The 6.875 percent notes, the 7.125 percent
notes and the 7.55 percent debentures represent
unsecured securities issued under a trust indenture
dated October 31, 1996. Such securities mature in 2003,
2006 and 2016, respectively. The 6.875 percent and
7.125 percent notes are not redeemable prior to
maturity. The 7.55 percent debentures are redeemable,
at the option of the Company, at any time and at a price
determinable at the time of redemption. Interest is
payable semi-annually.

The 8.45 percent senior secured bonds
represent securities issued by a subsidiary under a
trust indenture dated July 20, 1999. These securities
amortize semi-annually with final maturity in 2012 and
are redeemable prior to maturity under certain
circumstances. Such securities were issued in
connection with the financing of the Companys share of
the costs for the exploration and development of the
Terra Nova oil field located off the East Coast of
Canada. Interest is payable semi-annually. Although
the Company commenced principal payments on August 1,
2001 ($8 million) it has the option of subsequently
delaying the repayment schedule by one year. The
Company, through a wholly owned partnership, owns 12.51
percent of the oil field and associated facilities. The
repayment of the securities is contracted to be made
solely from revenue from the oil field. There is also a
charge created by the partnership on its interest in the
assets of the oil field and associated facilities in
favour of the security holders. In addition, certain
financial obligations require letters of credit or cash
equivalents as collateral.

The private placement notes are issued
under two separate note agreements dated January 31,
2001. The notes are unsecured and redeemable at any
time by the Company at a price determinable at the time
of redemption. Interest is payable semi-annually or
quarterly, depending on the particular note.

The medium-term notes Series B and C
represent unsecured securities issued under a trust
indenture dated February 3, 1997 and the Series D and E
notes represent unsecured securities issued under a
trust indenture dated May 4, 1999. The amounts, rates
and maturities are as follows:

|         |  |        |     |               |  |               |      |   |  |               |  | 
|-------- |  | ------ | --- | ------------- |  | ------------- | ---- | - |  | ------------- |  | 
|Issue    |  | Amount |     | Interest Rate |  | Maturity Date
|         |  |        |     |               |  |              
|Series B |  | $      | 100 |               |  |               | 6.85 | % |  | February 2007
|Series C |  |        | 100 |               |  |               | 5.75 | % |  | February 2003
|Series D |  |        | 200 |               |  |               | 6.30 | % |  | June 2004    
|Series E |  |        | 200 |               |  |               | 6.95 | % |  | July 2009    
|         |  |        |     |               |  |               |      |   |  |               |  | 
|         |  | $      | 600 |               |  |               |      |   |  |               |  | 
|         |  |        |     |               |  |               |      |   |  |               |  | 

Interest is payable semi-annually on all series. The Series
B and E notes are redeemable at any time at the option
of the Company, at a price determinable at the time of
redemption.

Aggregate maturities of long-term debt for the next five
years are: 2003  $421 million; 2004  $272 million;
2005  $74 million; 2006  $276 million; and 2007  $132
million.

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##### 



Note 10
Income Taxes

The combined provisions for income taxes in
the Consolidated Statements of Earnings and Retained
Earnings (Deficit) reflects an effective tax rate which
differs from the expected statutory tax rate.
Differences for the years ended December 31 were
accounted for as follows:

|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |      |  
|----------------------------------- | --------------------------------------------------------------- | - | ----- | ---- | ---- | - | ----- | ---- | - | - | ---- | ---- | -
|                                    |                                                                 |   | 2002  |      | 2001 |   | 2000 
|                                    |                                                                 |   |       |      |      |   |      
|Earnings before taxes               |                                                                 | $ | 1,224 |      |      | $ | 1,074 |      |   | $ | 801  |     
|Statutory income tax rate (percent) |                                                                 |   | 41.6  |      |      |   | 43.7  |      |   |   | 44.7 |     
|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|Expected income tax                 |                                                                 |   | 509   |      |      |   | 469   |      |   |   | 358  |     
|Effect on income tax of:            |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|                                    | Change in statutory tax rate                                    |   |       | (31  | )    |   |       | (52  | ) |   |      |     |  
|                                    | Ownership charges                                               |   |       |     |      |   |       |     |   |   |      | 15   |  
|                                    | Return on capital securities                                    |   |       | (11  | )    |   |       | (18  | ) |   |      | (16  | )
|                                    | Royalties, lease rentals and mineral taxes payable to the crown |   |       | 159  |      |   |       | 184  |   |   |      | 141  |  
|                                    | Resource allowance on Canadian production income                |   |       | (212 | )    |   |       | (219 | ) |   |      | (175 | )
|                                    | Non-deductible capital taxes                                    |   |       | 18   |      |   |       | 20   |   |   |      | 12   |  
|                                    | Gains and losses on foreign exchange                            |   |       |     |      |   |       | 20   |   |   |      | 9    |  
|                                    | Other  net                                                     |   |       | (23  | )    |   |       | (2   | ) |   |      | 3    |  
|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|                                    |                                                                 | $ | 409   |      |      | $ | 402   |      |   | $ | 347  |     
|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|Charged (credited) to:              |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|                                    | Income tax expense                                              |   | $     | 420  |      |   | $     | 420  |   |   | $    | 363  |  
|                                    | Retained earnings                                               |   |       | (11  | )    |   |       | (18  | ) |   |      | (16  | )
|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |     
|                                    |                                                                 | $ | 409   |      |      | $ | 402   |      |   | $ | 347  |     
|                                    |                                                                 |   |       |      |      |   |       |      |   |   |      |     

The future income taxes liability at
December 31 comprised the tax effect of temporary
differences as follows:

|                       |                                                   |   |       |       |      |   |       |       |  |   |       |       | 
|---------------------- | ------------------------------------------------- | - | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                       |                                                   |   | 2002  |       | 2001 |   | 2000 
|                       |                                                   |   |       |       |      |   |      
|Future tax liabilities |                                                   |   |       |       |      |   |       |       |  |   |       |      
|                       | Property, plant and equipment                     |   | $     | 2,199 |      |   | $     | 1,882 |  |   | $     | 1,467 | 
|                       | Other temporary differences                       |   |       | 30    |      |   |       | 7     |  |   |       | 2     | 
|                       |                                                   |   |       |       |      |   |       |       |  |   |       |      
|                       |                                                   |   | 2,229 |       |      |   | 1,889 |       |  |   | 1,469 |      
|Future tax assets      |                                                   |   |       |       |      |   |       |       |  |   |       |      
|                       | Loss carryforwards                                |   |       | 7     |      |   |       | 28    |  |   |       | 103   | 
|                       | Foreign exchange losses deductible on realization |   |       | 28    |      |   |       | 26    |  |   |       | 7     | 
|                       | Site restoration and other deferred credits       |   |       | 105   |      |   |       | 93    |  |   |       | 81    | 
|                       | Provincial royalty rebates                        |   |       | 48    |      |   |       | 46    |  |   |       | 45    | 
|                       | Other temporary differences                       |   |       | 38    |      |   |       | 37    |  |   |       | 21    | 
|                       |                                                   |   |       |       |      |   |       |       |  |   |       |      
|                       |                                                   |   | 226   |       |      |   | 230   |       |  |   | 257   |      
|                       |                                                   |   |       |       |      |   |       |       |  |   |       |      
|                       |                                                   | $ | 2,003 |       |      | $ | 1,659 |       |  | $ | 1,212 |      
|                       |                                                   |   |       |       |      |   |       |       |  |   |       |      

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Note 11
Share Capital

The Companys authorized share capital is as follows:

Common shares  an unlimited number of no par value.
Preferred shares  an unlimited number of no par value.

Changes to issued share capital were as follows:

Common Shares

|                                    |  |                  |             |         |  |   |       | 
|----------------------------------- |  | ---------------- | ----------- | ------- |  | - | ----- | 
|                                    |  | Number of Shares |             | Dollars
|                                    |  |                  |             |        
|January 1, 2000                     |  |                  |            |         |  | $ |      | 
|Issued for Renaissance shares       |  |                  | 145,530,429 |         |  |   | 1,734 | 
|Issued for Husky Oil Limited shares |  |                  | 270,272,654 |         |  |   | 1,654 | 
|                                    |  |                  |             |         |  |   |       | 
|December 31, 2000                   |  |                  | 415,803,083 |         |  |   | 3,388 | 
|Options and warrants exercised      |  |                  | 1,075,010   |         |  |   | 9     | 
|                                    |  |                  |             |         |  |   |       | 
|December 31, 2001                   |  |                  | 416,878,093 |         |  |   | 3,397 | 
|Options and warrants exercised      |  |                  | 995,508     |         |  |   | 9     | 
|                                    |  |                  |             |         |  |   |       | 
|December 31, 2002                   |  |                  | 417,873,601 |         |  | $ | 3,406 | 
|                                    |  |                  |             |         |  |   |       | 

Preferred Shares

In 2000, the Company issued 145.5 million preferred shares to
former shareholders of Renaissance. These shares were
subsequently redeemed for total proceeds of $364 million. At
December 31, 2002, 2001 and 2000, there were no outstanding
preferred shares.

Restructuring

As part of the restructuring that occurred in 2000, all
previously issued preferred shares of Husky Oil Limited were
exchanged, redeemed or cancelled on the capitalization of
Husky Energy Inc. All previously issued common and preferred shares were recorded at a value of $1 per share. In
addition, the previously outstanding subordinated
shareholders loans, which bore interest payable at 9.05
percent per annum, were converted to Class C preferred shares
prior to their cancellation.

In August 2000, $150 million Class A preferred shares and $190
million Class B preferred shares were exchanged for $340
million of Husky Energy Inc. common shares. In addition,
$1,306 million Class C preferred shares were cancelled on
amalgamation for $1,306 million Husky Energy Inc. common shares. Husky Energy Inc. common shares issued for Husky Oil
Limited shares as at December 31, 2000 were $1,654 million
which included $8 million of paid in capital.

Stock Options

The following options to purchase common shares have been
awarded to directors, officers and certain other employees.
At December 31, 2002, 29.2 million common shares were
reserved for issuance under the Company stock option plan.
The exercise price of the option is equal to the average
market price of the Companys common shares during the five
trading days prior to the date of the award. Under the stock
option plan the options awarded have a maximum term of five
years and vest over three years on the basis of one-third per
year.

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|                                   |  |             |        |                 |  |                  |       |             |  |  |   |  |  |  |       | 
|---------------------------------- |  | ----------- | ------ | --------------- |  | ---------------- | ----- | ----------- |  |  | - |  |  |  | ----- | 
|                                   |  | Number of   |        | Weighted        |  | Weighted Average |       | Options    
|                                   |  | Shares      |        | Average         |  | Contractual      |       | Exercisable
|                                   |  | (thousands) |        | Exercise Prices |  | Life (years)     |       | (thousands)
|                                   |  |             |        |                 |  |                  |       |            
|January 1, 2000                    |  |             |       |                 |  | $                |      |             |  |  |  |  |  |  |      | 
|Granted                            |  |             | 8,995  |                 |  | $                | 13.61 |             |  |  | 5 |  |  |  |       | 
|Assumed on Renaissance acquisition |  |             | 1,372  |                 |  | $                | 15.77 |             |  |  | 2 |  |  |  |       | 
|Forfeited                          |  |             | (606   | )               |  | $                | 13.61 |             |  |  | 5 |  |  |  |       | 
|                                   |  |             |        |                 |  |                  |       |             |  |  |   |  |  |  |       | 
|December 31, 2000                  |  |             | 9,761  |                 |  | $                | 13.91 |             |  |  | 4 |  |  |  | 1,372 | 
|Granted                            |  |             | 664    |                 |  | $                | 15.60 |             |  |  | 4 |  |  |  |       | 
|Exercised                          |  |             | (656   | )               |  | $                | 13.99 |             |  |  | 3 |  |  |  |       | 
|Forfeited                          |  |             | (1,167 | )               |  | $                | 15.81 |             |  |  | 2 |  |  |  |       | 
|                                   |  |             |        |                 |  |                  |       |             |  |  |   |  |  |  |       | 
|December 31, 2001                  |  |             | 8,602  |                 |  | $                | 13.78 |             |  |  | 4 |  |  |  | 2,853 | 
|Granted                            |  |             | 568    |                 |  | $                | 16.11 |             |  |  | 5 |  |  |  |       | 
|Exercised                          |  |             | (608   | )               |  | $                | 13.63 |             |  |  | 2 |  |  |  |       | 
|Forfeited                          |  |             | (642   | )               |  | $                | 14.37 |             |  |  | 3 |  |  |  |       | 
|                                   |  |             |        |                 |  |                  |       |             |  |  |   |  |  |  |       | 
|December 31, 2002                  |  |             | 7,920  |                 |  | $                | 13.91 |             |  |  | 3 |  |  |  | 4,822 | 
|                                   |  |             |        |                 |  |                  |       |             |  |  |   |  |  |  |       | 

At December 31, 2002, the options
outstanding had exercise prices ranging from $11.16 to
$19.76.

In 2000, the Company granted 1.4 million
Renaissance replacement options to purchase common shares of Husky in exchange for certain share purchase
options to purchase common shares of Renaissance
previously held by employees of Renaissance. The former
shareholders of Husky Oil Limited were also granted
warrants to acquire, for no additional consideration,
1.86 common shares of the Company for each common share
issued on the exercise of a Renaissance replacement
option. The warrants are exercisable only if and when
the Renaissance replacement options are exercised and
provide for the issue of a maximum of 2.5 million common shares. As at December 31, 2002, there were 815
thousand common shares remaining which could potentially
be issued as a result of the exercise of these warrants.

The fair values of all common share
options granted are estimated on the date of grant using
the Modified Black-Scholes option-pricing model. The
weighted average fair market value of options granted
during the year and the assumptions used in their
determination are as noted below:

|                                              |  |      |      |      |  |      |      |  |  |   |      | 
|--------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                              |  | 2002 |      | 2001 |  | 2000
|                                              |  |      |      |      |  |     
|Weighted average fair market value per option |  | $    | 5.19 |      |  | $    | 5.70 |  |  | $ | 5.03 | 
|Risk-free interest rate (percent)             |  |      | 3.6  |      |  |      | 3.5  |  |  |   | 5.5  | 
|Volatility (percent)                          |  |      | 43   |      |  |      | 45   |  |  |   | 30   | 
|Expected life (years)                         |  |      | 5    |      |  |      | 5    |  |  |   | 5    | 
|Expected annual dividend per share            |  | $    | 0.36 |      |  | $    | 0.36 |  |  | $ | 0.36 | 
|                                              |  |      |      |      |  |      |      |  |  |   |      | 

The Company follows the intrinsic value
method of accounting for stock-based compensation for
its fixed stock option plan, under which compensation
cost is not recognized. If the Company applied the fair
value method at the grant dates for options granted in
2002 and also to all options granted, the Companys net
earnings and earnings per share would have been as
follows:

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|                                                                |                         |   |      |       |      |   |      |       |  |   |   |       | 
|--------------------------------------------------------------- | ----------------------- | - | ---- | ----- | ---- | - | ---- | ----- |  | - | - | ----- | 
|                                                                |                         |   | 2002 |       | 2001 |   | 2000
|                                                                |                         |   |      |       |      |   |     
|Compensation cost  options granted in 2002                     |                         | $ |     |       |      | $ |     |       |  | $ |  |      
|Compensation cost  all options granted                         |                         | $ | 13   |       |      | $ | 13   |       |  | $ | 4 |      
|Net earnings available to common shareholders                   |                         |   |      |       |      |   |      |       |  |   |   |      
|                                                                | As reported             |   | $    | 787   |      |   | $    | 620   |  |   | $ | 410   | 
|                                                                | Options granted in 2002 |   | $    | 787   |      |   | $    | 620   |  |   | $ | 410   | 
|                                                                | All options granted     |   | $    | 774   |      |   | $    | 607   |  |   | $ | 406   | 
|Weighted average number of common shares outstanding (millions) |                         |   |      |       |      |   |      |       |  |   |   |      
|                                                                | Basic                   |   |      | 417.4 |      |   |      | 416.1 |  |   |   | 321.2 | 
|                                                                | Diluted                 |   |      | 419.3 |      |   |      | 418.6 |  |   |   | 321.2 | 
|Basic earnings per share                                        |                         |   |      |       |      |   |      |       |  |   |   |      
|                                                                | As reported             |   | $    | 1.88  |      |   | $    | 1.49  |  |   | $ | 1.28  | 
|                                                                | Options granted in 2002 |   | $    | 1.88  |      |   | $    | 1.49  |  |   | $ | 1.28  | 
|                                                                | All options granted     |   | $    | 1.86  |      |   | $    | 1.46  |  |   | $ | 1.26  | 
|Diluted earnings per share                                      |                         |   |      |       |      |   |      |       |  |   |   |      
|                                                                | As reported             |   | $    | 1.88  |      |   | $    | 1.48  |  |   | $ | 1.28  | 
|                                                                | Options granted in 2002 |   | $    | 1.88  |      |   | $    | 1.48  |  |   | $ | 1.28  | 
|                                                                | All options granted     |   | $    | 1.85  |      |   | $    | 1.45  |  |   | $ | 1.26  | 

Per Share Amounts

The calculation of basic net earnings and cash flow from
operations per common share is based on the net earnings and
cash flow from operations after deducting return on capital
securities, net of applicable income taxes, divided by the
weighted average number of common shares outstanding.

Diluted net earnings and cash flow from operations per common
share include the dilutive impact of options and
warrants outstanding under the employee stock option
plan calculated using the treasury stock method.
Shares potentially issuable on the settlement of the
capital securities have not been included in the
determination of diluted earnings and cash flow from
operations per common share, as the Company has neither
the obligation nor intention to settle amounts due
through the issue of shares.

The number of antidilutive options and
warrants at December 31, 2002, 2001 and 2000 were nil,
nil and 11.7 million, respectively.

During 2002 the Company declared dividends of $0.36 per
common share (2001  $0.36 per common share).

Note 12
Capital Securities

The Company issued U.S. $225 million
unsecured capital securities under an indenture dated
August 10, 1998. Such securities rank junior to all
senior debt and other financial debt of the Company.
They yield an annual return of 8.9 percent, payable
semi-annually until August 15, 2008 and mature in 2028.
The capital securities are redeemable, in whole or in
part, by the Company at any time prior to August 15,
2008 at a price determinable at the time of redemption.
They are redeemable at par, in whole but not in part, by
the Company on or after August 15, 2008. If not
redeemed in whole, commencing on August 15, 2008, the
annual return changes to a floating rate equal to U.S.
LIBOR plus 5.50 percent payable semi-annually. The
Company has the right at any time prior to maturity to
defer payment of the return on the securities. Since
the Company also has the unrestricted ability to settle
its deferred return, principal and redemption
obligations through the issuance of common or preferred shares, the principal amount of the capital securities,
net of issue costs, has been classified as equity. The
return amounts, net of

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income taxes, are classified as distributions of equity.
Return on capital securities comprises the return and foreign
exchange on the capital securities.

The amounts disclosed as capital
securities in shareholders equity at December 31 were
as follows:

|                               |  |      |     |      |  |      |     |   |  |   |     |  
|------------------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  | - | --- | -
|                               |  | 2002 |     | 2001 |  | 2000
|                               |  |      |     |      |  |     
|Capital securities  U.S. $225 |  | $    | 355 |      |  | $    | 358 |   |  | $ | 338 |  
|Unamortized costs of issue     |  |      | (3  | )    |  |      | (3  | ) |  |   | (5  | )
|Accrued return                 |  |      | 12  |      |  |      | 12  |   |  |   | 11  |  
|                               |  |      |     |      |  |      |     |   |  |   |     |  
|                               |  | $    | 364 |      |  | $    | 367 |   |  | $ | 344 |  
|                               |  |      |     |      |  |      |     |   |  |   |     |  

Note 13
Pension Plans and Other Post-retirement Benefits

The Company currently provides a defined
contribution pension plan for all qualified employees.
The Company also maintains a defined benefit pension
plan, which is closed to new entrants, and all current
participants are vested. The Company also provides
certain medical and dental coverage to its retirees
which are accrued over the working lives of the
employees.

Weighted average long-term assumptions used for the defined
benefit pension plan and other post-retirement benefits
were as follows:

|                                                            |  |      |     |      |  |      |     |  |  |  |     | 
|----------------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- |  |  |  | --- | 
|                                                            |  | 2002 |     | 2001 |  | 2000
|                                                            |  |      |     |      |  |     
|Discount rate (percent)                                     |  |      | 6.3 |      |  |      | 7.3 |  |  |  | 7.3 | 
|Long-term rate of increase in compensation levels (percent) |  |      | 5.0 |      |  |      | 5.0 |  |  |  | 5.0 | 
|Long-term rate of return on plan assets (percent)           |  |      | 8.0 |      |  |      | 8.0 |  |  |  | 8.0 | 

The status of the defined benefit plan and
accrued benefit liability at December 31 were as
follows:

|                                                                                                         |  |      |      |      |  |      |     |   |  |   |     |  
|-------------------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | --- | - |  | - | --- | -
|                                                                                                         |  | 2002 |      | 2001 |  | 2000
|                                                                                                         |  |      |      |      |  |     
|Plan assets at fair market value,
principally marketable debt and
equity securities and cash
equivalents |  | $    | 77   |      |  | $    | 85  |   |  | $ | 90  |  
|Projected benefit obligation                                                                             |  |      | (108 | )    |  |      | (95 | ) |  |   | (93 | )
|                                                                                                         |  |      |      |      |  |      |     |   |  |   |     |  
|Excess assets (excess obligation)                                                                        |  |      | (31  | )    |  |      | (10 | ) |  |   | (3  | )
|Unrecognized past service cost                                                                           |  |      | 1    |      |  |      |    |   |  |   |    |  
|Unrecognized (gains) losses                                                                              |  |      | 27   |      |  |      | 6   |   |  |   | (2  | )
|                                                                                                         |  |      |      |      |  |      |     |   |  |   |     |  
|Accrued benefit liability                                                                                |  | $    | (3   | )    |  | $    | (4  | ) |  | $ | (5  | )
|                                                                                                         |  |      |      |      |  |      |     |   |  |   |     |  

The Companys other post-retirement
benefits program is not funded and at December 31, 2002,
the obligation was $21 million, $17 million of which was
accrued. The obligation and accrual at December 31,
2001 and 2000 was $16 million and $13 million,
respectively. At December 31, 2002 the discount rate
was changed to 6.3 percent from 7.3 percent.

Note 14
Commitments and Contingencies

Certain former owners of interests in the upgrading assets
retained a 20-year upside financial interest expiring in
2014 which would require payments to them, should
certain product price conditions be met.

The Company has firm commitments for
transportation services that require the payment of
tariffs. The Company has sufficient production to
utilize these transmission services.

The Company has awarded various contracts
for the construction of the floating production, storage
and offloading vessel and several other components of
the White Rose development

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project with expected completion dates in 2005. The
Companys share of the total value of contractual
obligations at December 31, 2002 was $1.1 billion. As
at December 31, 2002 the Company had spent $322 million
on these contracts.

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 be
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 and other matters or any amount which it may be
required to pay by reason thereof would have a material
adverse impact on its financial position, results of
operations or liquidity.

The Company has income tax filings that
are subject to audit and potential reassessment. The
findings may impact the tax liability of the Company.
The final results are not reasonably determinable at
this time and management believes that it has adequately
provided for current and future income taxes.

Note 15
Financial Instruments and Risk Management

The nature of the Companys operations,
including the issuance of long-term debt, exposes the
Company to fluctuations in commodity prices, foreign
currency exchange rates and interest rates. The Company
monitors these risks and, when appropriate, utilizes
derivative financial instruments to manage its exposure
to these risks. These financial instruments are entered
into solely for hedging purposes and are not used for
trading or other speculative purposes.

Carrying Values and Estimated Fair Values of Financial Instruments

The carrying value of cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities
approximates their fair value due to the short-term maturity
of those instruments. The estimated fair values of other
financial instruments at December 31 were as follows:

Assets (Liabilities)

|                                  |  |                |        |            |  |                |        |            |  |                |        |            |  |   |        |   |  |   |        |   |  |   |        |  
|--------------------------------- |  | -------------- | ------ | ---------- |  | -------------- | ------ | ---------- |  | -------------- | ------ | ---------- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                  |  | 2002           |        | 2001       |  | 2000          
|                                  |  |                |        |            |  |               
|                                  |  | Carrying Value |        | Fair Value |  | Carrying Value |        | Fair Value |  | Carrying Value |        | Fair Value
|                                  |  |                |        |            |  |                |        |            |  |                |        |           
|Long-term debt                    |  | $              | (2,385 | )          |  | $              | (2,579 | )          |  | $              | (2,092 | )          |  | $ | (2,143 | ) |  | $ | (2,344 | ) |  | $ | (2,348 | )
|Foreign exchange contracts        |  |                |       |            |  |                | (7     | )          |  |                |       |            |  |   | (29    | ) |  |   |       |   |  |   | (5     | )
|Foreign exchange forwards         |  |                |       |            |  |                | (5     | )          |  |                |       |            |  |   |       |   |  |   |       |   |  |   |       |  
|Interest rate swaps               |  |                |       |            |  |                | 86     |            |  |                |       |            |  |   | 4      |   |  |   |       |   |  |   | 5      |  
|Natural gas contracts             |  |                |       |            |  |                | (4     | )          |  |                |       |            |  |   | 15     |   |  |   |       |   |  |   | 5      |  
|Crude oil contracts               |  |                |       |            |  |                | 6      |            |  |                |       |            |  |   |       |   |  |   |       |   |  |   |       |  
|Fixed physical sales contracts    |  |                |       |            |  |                | 111    |            |  |                |       |            |  |   | 114    |   |  |   |       |   |  |   |       |  
|Fixed physical purchase
contracts |  |                |       |            |  |                | (122   | )          |  |                |       |            |  |   | (88    | ) |  |   |       |   |  |   |       |  

Upstream Commodity Price Risk

The Company, from time to time, employs financial and
physical arrangements intended to manage its exposure to
price fluctuations. The Company may use physical fixed price
product arrangements, futures contracts, swaps, collars and
put options to hedge its commodity prices. A portion of the
upstream segment price risk may be managed through the
forward selling of oil and gas production combined with the
forward selling of U.S. dollars.

At December 31, 2002 the Company had hedged 7.5 mmcf of
natural gas per day at NYMEX for the years 2003-2005 at an
average price of U.S. $1.92 per mcf.

During 2002 the impact was insignificant (2001 
insignificant; 2000  loss of $150 million) from upstream
hedges.

Commodity Marketing Activities

The Company also uses commodity derivatives to manage price
risk associated with marketing activities. Derivative
instruments provide methods to meet customer pricing
requirements while achieving a price structure consistent with the Companys
overall pricing strategy. Under this

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brokering strategy
substantially all derivative transactions are concurrently
offset by a physical purchase or sale arrangement that
matches the volume, duration and sales point at which the
transactions are priced. In this manner the Company is able
either to fix a spread between the price paid to the third
party producer and the price received from the financial
counterparty or convert a fixed price to floating.

During 2002, the Company entered into variable price physical
forward sales with respect to crude oil of 20,000 bbls per
day for October and November 2002. The physical sales were
hedged by a number of financial transactions in which Husky
pays the same variable pricing but receives fixed pricing.
The average fixed price that Husky received under financial
transactions for October and November production was U.S.
$30.51 per bbl and U.S. $30.18 per bbl, respectively. A gain
of $5 million was recognized in 2002.

In December 2002 and January 2003 the Company entered into
variable price physical forward sales with respect to crude
oil of 20,000 bbls per day for January 2003, 30,000 bbls per
day for February to May 2003 and 20,000 bbls per day for June
2003. The average fixed price Husky receives under the
financial transactions for January is U.S. $30.41 per bbl,
February and March U.S. $30.45 per bbl, April and May U.S.
$30.38 per bbl and for June U.S. $30.30 per bbl. Also, the
Company hedged 30 mmcf per day of natural gas for April to
October 2003 at an average price of U.S. $5.04.

In addition, the Company has a portfolio of fixed price
offsetting physical forward purchase and sale natural gas
contracts. The objective of these contracts is to lock in
a positive spread between the physical purchase and sales
contract prices. At December 31, 2002 the Company had
entered into offsetting fixed price physical arrangements to
concurrently sell and purchase natural gas for 12 mmcf per
day for 2003 through October 2004 to receive an average fixed
margin of $0.24 per mcf. In addition, the Company had
entered into fixed price physical forward sales with respect
to natural gas inventory held in storage for 26 mmcf per day
through April 2004 to receive an average fixed margin of
$0.92 per mcf.

At December 31, 2002 the Company had also entered into a
number of arrangements, consistent with the strategies
described above, the impact of which is insignificant to the
Companys operations.

Foreign Currency Rate Risk

The Company manages its exposure to exchange rate
fluctuations by balancing the U.S. denominated cash flows
from operations with U.S. denominated borrowings and other
financial instruments. Husky utilizes spot and forward sales
to convert cash flows to or from U.S. or Canadian currency.
In addition, Husky has hedged a percentage of its exposure to
fluctuations in the U.S. dollar with collar arrangements.

At December 31, 2002 the Company had hedged the exchange rate
on U.S. dollars through currency collars up to U.S. $20
million per month at an average floor exchange rate of $1.49
and an average ceiling exchange rate of $1.54 for varying
periods up to 2004.

During 2002 the Company realized a loss of $11 million (2001
  loss of $4 million; 2000  loss of $5 million) from foreign
currency risk management activities.

In January 2003, the Company used a currency swap to convert
the 6.875 percent notes of U.S. $150 million due November 15,
2003 to Canadian $229 million. The exchange rate of the swap
was $1.525 and will result in a foreign exchange gain of $8
million (before tax). The interest rate on the swap is 8.50
percent.

Foreign Exchange Forwards

The Company hedged U.S. dollar revenues for various amounts
and maturities to 2005 through the use of foreign exchange
forwards. The total amount hedged is U.S. $104 million at an
average forward rate of $1.5576.

Interest Rate Risk

The majority of the Companys long-term debt has fixed
interest rates and various maturities. The Company
periodically uses interest rate swaps to manage its financing
costs. At December 31, 2002 the Company had entered into
interest rate swap arrangements whereby the fixed interest
rate coupon on certain debt was swapped to floating rates
with the following terms:

Page 44



---



##### 



|                        |  |        |      |               |  |                     |     |  |  |                   |  |                      |  |  |  | 
|----------------------- |  | ------ | ---- | ------------- |  | ------------------- | --- |  |  | ----------------- |  | -------------------- |  |  |  | 
|Debt                    |  | Amount |      | Swap Maturity |  | Swap Rate (percent)
|                        |  |        |      |               |  |                    
|6.875% notes            |  |        | U.S. |               |  | $                   | 35  |  |  | November 15, 2003 |  | U.S. LIBOR - 13 bps 
|6.95% medium-term notes |  |        |      |               |  | $                   | 200 |  |  | July 14, 2009     |  | CDOR + 175 bps      
|7.125% notes            |  |        | U.S. |               |  | $                   | 150 |  |  | November 15, 2006 |  | U.S. LIBOR + 235 bps
|7.55% debentures        |  |        | U.S. |               |  | $                   | 200 |  |  | November 15, 2011 |  | U.S. LIBOR + 194 bps
|6.25% senior notes      |  |        | U.S. |               |  | $                   | 150 |  |  | June 15, 2012     |  | U.S. LIBOR + 88 bps 

During 2002 the Company realized a gain of $29 million (2001
  gain of $2 million; 2000  gain of $1 million) from
interest rate risk management activities.

In January 2003, the Company unwound the interest rate swap
on the 6.875 percent notes due November 15, 2003. The
proceeds were U.S. $2 million and will be deferred and
amortized into income during 2003.

Credit Risk

Accounts receivable are predominantly with customers in the
energy industry and are subject to normal industry credit
risks. In addition, the Company is exposed to credit related
losses in the event of non-performance by counterparties to
its financial instruments. The Company primarily deals with
major financial institutions and investment grade rated
entities to mitigate these risks.

Sale of Accounts Receivable

The Company has an agreement to sell net trade receivables up
to $200 million on a continual basis. The agreement calls
for purchase discounts, based on Canadian commercial paper
rates to be paid on an ongoing basis. The average effective
rate for 2002 was approximately 2.8 percent (2001  4.7
percent; 2000  6.0 percent). The Company has potential
exposure to an immaterial amount of credit loss under this
agreement.

Note 16
Reconciliation to Accounting Principles Generally Accepted in the United States

The Companys consolidated financial statements have been
prepared in accordance with GAAP in Canada, which differ in
some respects to those in the United States. Any differences
in accounting principles as they pertain to the accompanying
consolidated financial statements were insignificant except
as described below:

Consolidated Statements of Earnings

|                                                                                |                      |           |     |      |       |      |      |      |       |   |     |      |       | 
|------------------------------------------------------------------------------- | -------------------- | --------- | --- | ---- | ----- | ---- | ---- | ---- | ----- | - | --- | ---- | ----- | 
|                                                                                |                      |           |     | 2002 |       | 2001 |      | 2000
|                                                                                |                      |           |     |      |       |      |      |     
|Net earnings                                                                    |                      | $         | 804 |      |       | $    | 654  |      |       | $ | 438 |     
|Adjustments                                                                     |                      |           |     |      |       |      |      |      |       |   |     |     
|Full cost accounting (a)                                                        |                      |           | 88  |      |       |      | (544 | )    |       |   | 26  |     
|                                                                                | Related income taxes |           |     | (37  | )     |      |      | 235  |       |   |     | (12  | )    
|Foreign currency translation on capital securities (b)                          |                      |           | 3   |      |       |      | (20  | )    |       |   | (13 | )   
|                                                                                | Related income taxes |           |     | (1   | )     |      |      | 5    |       |   |     | 4    |      
|Post-retirement benefits (c)                                                    |                      |           |    |      |       |      |     |      |       |   | (4  | )   
|                                                                                | Related income taxes |           |     |     |       |      |      |     |       |   |     | 2    |      
|Return on capital securities (d)                                                |                      |           | (32 | )    |       |      | (33  | )    |       |   | (30 | )   
|                                                                                | Related income taxes |           |     | 11   |       |      |      | 14   |       |   |     | 13   |      
|Gain (loss) on energy trading contracts (e)                                     |                      |           | (2  | )    |       |      | 20   |      |       |   |    |     
|                                                                                | Related income taxes |           |     | 1    |       |      |      | (8   | )     |   |     |     |      
|Derivatives and hedging (e)                                                     |                      |           | 22  |      |       |      | (20  | )    |       |   |    |     
|                                                                                | Related income taxes |           |     | (9   | )     |      |      | 8    |       |   |     |     |      
|Accounting for income taxes (f)                                                 |                      |           | (37 | )    |       |      | (14  | )    |       |   | 23  |     
|                                                                                |                      |           |     |      |       |      |      |      |       |   |     |     
|Net earnings under U.S. GAAP                                                    |                      | $         | 811 |      |       | $    | 297  |      |       | $ | 447 |     
|                                                                                |                      |           |     |      |       |      |      |      |       |   |     |     
|Weighted average number of common shares outstanding under
U.S. GAAP (millions) |                      |           |     |      |       |      |      |      |       |   |     |     
|                                                                                |                      |  Basic   |     |      | 417.4 |      |      |      | 416.1 |   |     |      | 321.2 | 
|                                                                                |                      |  Diluted |     |      | 419.3 |      |      |      | 418.6 |   |     |      | 321.2 | 
|Net earnings per share under U.S. GAAP                                          |  Basic              |           | $   | 1.94 |       |      | $    | 0.71 |       |   | $   | 1.39 |      
|                                                                                |                      |  Diluted |     | $    | 1.93  |      |      | $    | 0.71  |   |     | $    | 1.39  | 



---

| |  | 2001 and 2000 amounts as restated (notes 3 and 16 (b)).
| |  | -------------------------------------------------------

Page 45



---



##### 



Condensed Consolidated Balance Sheets

|                                              |  |               |        |           |  |               |        |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       |  
|--------------------------------------------- |  | ------------- | ------ | --------- |  | ------------- | ------ | --------- |  | ------------- | ----- | --------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | -
|                                              |  | 2002          |        | 2001      |  | 2000         
|                                              |  |               |        |           |  |              
|                                              |  | Canadian GAAP |        | U.S. GAAP |  | Canadian GAAP |        | U.S. GAAP |  | Canadian GAAP |       | U.S. GAAP
|                                              |  |               |        |           |  |               |        |           |  |               |       |          
|Current assets (e)                            |  | $             | 1,144  |           |  | $             | 1,292  |           |  | $             | 626   |           |  | $ | 756   |  |  | $ | 928   |  |  | $ | 939   |  
|Property, plant and equipment, net (a)        |  |               | 9,347  |           |  |               | 8,670  |           |  |               | 8,715 |           |  |   | 7,950 |  |  |   | 7,841 |  |  |   | 7,620 |  
|Other assets (b)(d)(j)                        |  |               | 84     |           |  |               | 89     |           |  |               | 29    |           |  |   | 33    |  |  |   | 60    |  |  |   | 65    |  
|                                              |  |               |        |           |  |               |        |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       |  
|                                              |  | $             | 10,575 |           |  | $             | 10,051 |           |  | $             | 9,370 |           |  | $ | 8,739 |  |  | $ | 8,829 |  |  | $ | 8,624 |  
|                                              |  |               |        |           |  |               |        |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       |  
|Current liabilities (c)(d)(e)(j)              |  | $             | 1,232  |           |  | $             | 1,318  |           |  | $             | 1,065 |           |  | $ | 1,203 |  |  | $ | 1,143 |  |  | $ | 1,165 |  
|Long-term debt (d)(e)                         |  |               | 1,964  |           |  |               | 2,406  |           |  |               | 1,948 |           |  |   | 2,306 |  |  |   | 2,311 |  |  |   | 2,648 |  
|Site restoration provision                    |  |               | 249    |           |  |               | 249    |           |  |               | 212   |           |  |   | 212   |  |  |   | 178   |  |  |   | 178   |  
|Future income taxes (a)(b)(c)(d)(e)(f)(j)     |  |               | 2,003  |           |  |               | 1,772  |           |  |               | 1,659 |           |  |   | 1,361 |  |  |   | 1,212 |  |  |   | 1,135 |  
|Capital securities and accrued return (d)     |  |               | 364    |           |  |               |       |           |  |               | 367   |           |  |   |      |  |  |   | 344   |  |  |   |      |  
|Share capital and contributed surplus (g)(h)  |  |               | 3,406  |           |  |               | 3,640  |           |  |               | 3,397 |           |  |   | 3,631 |  |  |   | 3,388 |  |  |   | 3,622 |  
|Accumulated other comprehensive income (e)(j) |  |               |       |           |  |               | (17    | )         |  |               |      |           |  |   | 3     |  |  |   |      |  |  |   |      |  
|Retained earnings (deficit)                   |  |               | 1,357  |           |  |               | 683    |           |  |               | 722   |           |  |   | 23    |  |  |   | 253   |  |  |   | (124  | )
|                                              |  |               |        |           |  |               |        |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       |  
|                                              |  | $             | 10,575 |           |  | $             | 10,051 |           |  | $             | 9,370 |           |  | $ | 8,739 |  |  | $ | 8,829 |  |  | $ | 8,624 |  
|                                              |  |               |        |           |  |               |        |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       |  



---

| |  | 2001 and 2000 amounts as restated (notes 3 and 16 (b)).
| |  | -------------------------------------------------------

Condensed Consolidated Statements of Retained Earnings (Deficit) and Comprehensive Income

|                                                          |  |               |       |           |  |               |      |           |  |               |      |           |  |   |      |   |  |   |      |   |  |   |      |  
|--------------------------------------------------------- |  | ------------- | ----- | --------- |  | ------------- | ---- | --------- |  | ------------- | ---- | --------- |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|                                                          |  | 2002          |       | 2001      |  | 2000         
|                                                          |  |               |       |           |  |              
|                                                          |  | Canadian GAAP |       | U.S. GAAP |  | Canadian GAAP |      | U.S. GAAP |  | Canadian GAAP |      | U.S. GAAP
|                                                          |  |               |       |           |  |               |      |           |  |               |      |          
|Retained earnings (deficit), beginning of
year            |  | $             | 722   |           |  | $             | 23   |           |  | $             | 253  |           |  | $ | (124 | ) |  | $ | (295 | ) |  | $ | (571 | )
|Net earnings                                              |  |               | 804   |           |  |               | 811  |           |  |               | 654  |           |  |   | 297  |   |  |   | 438  |   |  |   | 447  |  
|Dividends on common shares and other                      |  |               | (151  | )         |  |               | (151 | )         |  |               | (150 | )         |  |   | (150 | ) |  |   | 152  |   |  |   |     |  
|Capital securities, net of tax and
foreign exchange (d)   |  |               | (18   | )         |  |               |     |           |  |               | (35  | )         |  |   |     |   |  |   | (27  | ) |  |   |     |  
|Foreign exchange (b)                                      |  |               |      |           |  |               |     |           |  |               |     |           |  |   |     |   |  |   | (15  | ) |  |   |     |  
|                                                          |  |               |       |           |  |               |      |           |  |               |      |           |  |   |      |   |  |   |      |   |  |   |      |  
|Retained earnings (deficit), end of year                  |  | $             | 1,357 |           |  | $             | 683  |           |  | $             | 722  |           |  | $ | 23   |   |  | $ | 253  |   |  | $ | (124 | )
|                                                          |  |               |       |           |  |               |      |           |  |               |      |           |  |   |      |   |  |   |      |   |  |   |      |  
|Other comprehensive income, beginning of
year             |  | $             |      |           |  | $             | 3    |           |  | $             |     |           |  | $ |     |   |  | $ |     |   |  | $ |     |  
|Cumulative effect of change in accounting,
net of tax (e) |  |               |      |           |  |               |     |           |  |               |     |           |  |   | (10  | ) |  |   |     |   |  |   |     |  
|Cash flow hedges, net of tax (e)                          |  |               |      |           |  |               | (10  | )         |  |               |     |           |  |   | 13   |   |  |   |     |   |  |   |     |  
|Minimum pension liability, net of tax (j)                 |  |               |      |           |  |               | (10  | )         |  |               |     |           |  |   |     |   |  |   |     |   |  |   |     |  
|                                                          |  |               |       |           |  |               |      |           |  |               |      |           |  |   |      |   |  |   |      |   |  |   |      |  
|Other comprehensive income, end of year                   |  | $             |      |           |  | $             | (17  | )         |  | $             |     |           |  | $ | 3    |   |  | $ |     |   |  | $ |     |  
|                                                          |  |               |       |           |  |               |      |           |  |               |      |           |  |   |      |   |  |   |      |   |  |   |      |  



---

| |  | 2001 and 2000 amounts as restated (notes 3 and 16 (b)).
| |  | -------------------------------------------------------

Page 46



---



##### 



Condensed Consolidated Statements of Earnings

|                                                               |  |               |       |           |  |               |       |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       | 
|-------------------------------------------------------------- |  | ------------- | ----- | --------- |  | ------------- | ----- | --------- |  | ------------- | ----- | --------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                                               |  | 2002          |       | 2001      |  | 2000         
|                                                               |  |               |       |           |  |              
|                                                               |  | Canadian GAAP |       | U.S. GAAP |  | Canadian GAAP |       | U.S. GAAP |  | Canadian GAAP |       | U.S. GAAP
|                                                               |  |               |       |           |  |               |       |           |  |               |       |          
|Sales and operating revenues (e)(i)                            |  | $             | 6,384 |           |  | $             | 5,778 |           |  | $             | 6,596 |           |  | $ | 5,606 |  |  | $ | 5,066 |  |  | $ | 4,628 | 
|Costs and expenses (b)(d)(e)(i)                                |  |               | 4,117 |           |  |               | 3,488 |           |  |               | 4,614 |           |  |   | 3,654 |  |  |   | 3,683 |  |  |   | 3,263 | 
|Depletion, depreciation and
amortization (a)                   |  |               | 939   |           |  |               | 851   |           |  |               | 807   |           |  |   | 1,351 |  |  |   | 481   |  |  |   | 455   | 
|Interest, net (d)                                              |  |               | 104   |           |  |               | 136   |           |  |               | 101   |           |  |   | 134   |  |  |   | 101   |  |  |   | 131   | 
|                                                               |  |               |       |           |  |               |       |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       | 
|Earnings before income taxes                                   |  |               | 1,224 |           |  |               | 1,303 |           |  |               | 1,074 |           |  |   | 467   |  |  |   | 801   |  |  |   | 779   | 
|Income taxes (a)(b)(c)(d)(e)(f)                                |  |               | 420   |           |  |               | 492   |           |  |               | 420   |           |  |   | 176   |  |  |   | 363   |  |  |   | 332   | 
|                                                               |  |               |       |           |  |               |       |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       | 
|Net earnings, before cumulative effect of
change in accounting |  |               | 804   |           |  |               | 811   |           |  |               | 654   |           |  |   | 291   |  |  |   | 438   |  |  |   | 447   | 
|Change in accounting, net of tax (e)                           |  |               |      |           |  |               |      |           |  |               |      |           |  |   | 6     |  |  |   |      |  |  |   |      | 
|                                                               |  |               |       |           |  |               |       |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       | 
|Net earnings                                                   |  | $             | 804   |           |  | $             | 811   |           |  | $             | 654   |           |  | $ | 297   |  |  | $ | 438   |  |  | $ | 447   | 
|                                                               |  |               |       |           |  |               |       |           |  |               |       |           |  |   |       |  |  |   |       |  |  |   |       | 



---

| |  | 2001 and 2000 amounts as restated (notes 3 and 16 (b)).
| |  | -------------------------------------------------------

The increases or decreases noted above refer to the following
differences between U.S. GAAP and Canadian GAAP:



|(a) |  | The Company performs a cost recovery
ceiling test for each cost centre which limits net
capitalized costs to the undiscounted estimated future
net revenue from proved oil and gas reserves plus the
cost of unproved properties less impairment, using
year-end prices or average prices in that year if
appropriate. In addition, the aggregate value of all
cost centres is further limited by including financing
costs, administration expenses, future removal and site
restoration costs and income taxes. Under U.S. GAAP,
companies using the full cost method of accounting for
oil and gas producing activities perform a ceiling test
on each cost centre using discounted estimated future net
revenue from proved oil and gas reserves using a discount
factor of 10 percent. Prices used in the U.S. GAAP
ceiling tests performed for this reconciliation were
those in effect at the applicable year-end. Financing
and administration costs are excluded from the
calculation under U.S. GAAP. At December 31, 2001 the
Company recognized a U.S. GAAP ceiling test write down of
$334 million after tax.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Effective January 1, 2002, the Company
retroactively adopted the revised recommendations of the
CICA on Foreign Currency Translation (note 3). The new
recommendations eliminated the deferral and amortization
of foreign exchange gains and losses on long-term
monetary items. The Company records the gain or loss on
the capital securities as a charge to retained earnings.
Under U.S. GAAP, gains or losses on translation of
foreign denominated long-term monetary items, including
those on capital securities, are credited or charged to
earnings immediately.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(c) |  | Prior to 2000 the Company expensed costs
related to medical and dental post-retirement benefits as
incurred. Effective January 1, 2000 the Company
retroactively adopted, without restatement, the new
recommendations issued by the CICA on accounting for
employee future benefits which are consistent with those
under U.S. GAAP, which requires use of the projected
benefit method prorated based on service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(d) |  | The Company records the capital
securities as a component of equity and the return
thereon as a charge to retained earnings. Under U.S.
GAAP, the capital securities, the accrued return thereon
and costs of issue would be classified outside of
shareholders equity and the related return would be
charged to earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(e) |  | Effective January 1, 2001, the Company
adopted the provisions of FAS 133, Accounting for
Derivative Instruments and Hedging Activities. On
initial adoption of FAS 133, the Company recorded
additional assets and liabilities of $20.3 million and
$10.0 million, respectively, and a resulting cumulative
catch-up adjustment to increase earnings by $5.7 million,
net of tax, for the fair value of derivatives which did
not qualify as hedges on January 1, 2001. The Company
also recorded assets and liabilities of $3.8 million and
$23.0 million, respectively, and a resulting reduction of
other comprehensive income within shareholders equity of
$10.6 million, net of tax, for the fair value of
derivatives designated as hedges against variability in
future cash flows from the sale of natural gas. An
additional asset of $7.4 million for the fair value of
derivatives designated as hedges against changes in the
fair value of certain firm commitments and an offsetting
liability for the difference                                                                                       

Page 47



---



##### 





|    |  | between carrying and fair values of the hedged items was
also recorded. The effect of the cumulative catch-up
adjustment was to increase net earnings per share under
U.S. GAAP by $0.01 (basic and diluted).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | At December 31, 2002 the Company recorded additional assets
and liabilities for U.S. GAAP purposes of $110.6 million
and $122.1 million, respectively, for the fair values of
derivative financial instruments. During 2002, a gain of
$11.0 million, net of tax, was included in income for U.S.
GAAP purposes for unrealized gains on foreign currency
derivatives and natural gas basis swaps that did not
qualify for hedge accounting under FAS 133. The Company
also recorded a gain of $1.3 million, net of tax, in
revenue for U.S. GAAP purposes with respect to derivatives
designated as hedges of change in the fair value of certain
fixed price commodity contracts and offsetting changes in
the fair value of those contracts. In addition, the amount
included in other comprehensive income was adjusted by a
$10.1 million gain, net of tax, for changes in the fair
values of the derivatives designated as hedges of cash
flows relating to commodity price risk, foreign exchange
derivatives and the transfer to income of amounts
applicable to cash flows occurring in 2002.
|   
|    |  | Under U.S. GAAP, energy trading contracts entered into and
physical energy trading inventories purchased on or before
October 26, 2002 have been recorded at fair value. These
contracts include derivatives as well as energy trading
contracts that do not meet the definition of derivatives.
Effective October 26, 2002, non-derivative energy trading
contracts and inventories purchased after the effective
date are no longer recorded at fair value in accordance
with Emerging Issues Task Force (EITF) 02-03 Issues
Involved in Accounting for Derivative Contracts held for
Trading Purposes and Contracts Involved in Energy Trading
and Risk Management Activities. Under Canadian GAAP, the
impact of energy trading contracts is recorded as they
settle. Under U.S. GAAP, the Company recorded additional
assets and liabilities of $37.0 million and $19.3 million,
respectively, at December 31, 2002 and included the
resulting unrealized gain in earnings for the year.                                                                                                    
|   
|    |  | Under U.S. GAAP, gains and losses on energy trading
contracts have been netted against sales and operating
revenues. All prior periods have been reclassified to
conform with this change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(f) |  | The Canadian GAAP liability method of
accounting for income taxes requires the measurement of
future income tax liabilities and assets using income tax
rates that reflect enacted income tax rate reductions,
provided it is more likely than not that the Company will
be eligible for such rate reductions in the period of
reversal. U.S. GAAP allows recording of such rate
reductions only when claimed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(g) |  | As a result of the reorganization of the
capital structure which occurred on August 25, 2000, the
deficit of Husky Oil Limited was eliminated. Elimination
of the deficit would not be permitted under U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(h) |  | The Company recorded interest waived on
subordinated shareholders loans and dividends waived on
Class C shares as a reduction of ownership charges.
Under U.S. GAAP, waived interest and dividends in those
years would be recorded as interest on subordinated
shareholders loans and dividends on Class C shares and
as capital contributions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(i) |  | Under U.S. GAAP, transportation costs
are included in cost of sales rather than netted against
sales and operating revenues. Transportation costs for
2002 were $256 million (2001  $272 million; 2000  $159
million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(j) |  | The Company amortizes the portion of the
unrecognized gains or losses that exceed 10 percent of
the greater of the projected benefit obligation or the
market-related value of pension plan assets. The
market-related value of the pension plan assets is either
the fair value or a calculated value that recognizes
changes in fair value over not more than five years.
Under U.S. GAAP, an additional minimum liability is
recognized if the unfunded accumulated benefit obligation
exceeds the unfunded pension cost already recognized. If
an additional minimum liability is recognized, an amount
equal to the unrecognized prior service cost is
recognized as an intangible asset and any excess is
reported in other comprehensive income.                                                                                                                                                                                                                                                                                                                                              

Additional U.S. GAAP Disclosures

FAS 133

Effective January 1, 2001, the Company adopted the provisions
of FAS 133, which require that all derivatives be recognized
as assets and liabilities on the balance sheet and measured at
fair value. Gains or losses, including unrealized amounts, on
derivatives that have not been designated as hedges, or were
not effective as hedges, are included in earnings as they
arise.

Page 48



---



##### 



For derivatives designated as fair value hedges, changes in
the fair value are recognized in earnings together with equal
or lesser amounts of changes in the fair value of the hedged
item. During 2002, no amount of the gains or losses on these
derivatives was excluded from the assessment of hedge
effectiveness in these hedging relationships.

For derivatives designated as cash flow hedges, changes in the
fair value of the derivatives are recognized in other
comprehensive income until the hedged items are recognized in
earnings. Any portion of the change in the fair value of the
derivatives that is not effective in hedging the changes in
future cash flows is included in earnings. The amount related
to the hedge of commodity price risk was included in other
comprehensive income at December 31, 2002. During 2002, no
amounts were excluded from the assessment of effectiveness of
the cash flow hedges.

Stock Option Plan

FAS 123, Accounting for Stock-based Compensation,
establishes financial accounting and reporting standards for
stock-based employee compensation plans as well as
transactions in which an entity issues its equity instruments
to acquire goods or services from non-employees. As permitted
by FAS 123, Husky has elected to follow the intrinsic value
method of accounting for stock-based compensation
arrangements, as provided for in Accounting Principles Board
Opinion 25. Since all options were granted with exercise
prices equal to the market price when the options were
granted, no compensation expense has been charged to income at
the time of the option grants. Had compensation cost for
Huskys stock options been determined based on the fair market
value at the grant dates of the awards, and amortized on a
straight-line basis, consistent with methodology prescribed by
FAS 123, Huskys net earnings and net earnings per share for
the years ended December 31, 2002, 2001 and 2000 would have
been the pro forma amounts indicated below:

|                       |           |   |             |      |          |   |            |      |          |   |            |      |          |   |     |      |  |   |     |      |  |   |     |      | 
|---------------------- | --------- | - | ----------- | ---- | -------- | - | ---------- | ---- | -------- | - | ---------- | ---- | -------- | - | --- | ---- |  | - | --- | ---- |  | - | --- | ---- | 
|                       |           |   | 2002        |      | 2001     |   | 2000      
|                       |           |   |             |      |          |   |           
|                       |           |   | As
Reported |      | ProForma |   | AsReported |      | ProForma |   | AsReported |      | ProForma
|                       |           |   |             |      |          |   |            |      |          |   |            |      |         
|Net earnings           |           | $ | 811         |      |          | $ | 798        |      |          | $ | 297        |      |          | $ | 284 |      |  | $ | 447 |      |  | $ | 443 |     
|Net earnings per share |  Basic   |   | $           | 1.94 |          |   | $          | 1.91 |          |   | $          | 0.71 |          |   | $   | 0.68 |  |   | $   | 1.39 |  |   | $   | 1.38 | 
|                       |  Diluted |   | $           | 1.93 |          |   | $          | 1.90 |          |   | $          | 0.71 |          |   | $   | 0.68 |  |   | $   | 1.39 |  |   | $   | 1.38 | 

The fair values of all common share options granted are
estimated on the date of grant using the Modified
Black-Scholes option-pricing model. The weighted average fair
market value of options granted during the year and the
assumptions used in their determination are the same as note
11.

Depletion, Depreciation and Amortization

Upstream depletion, depreciation and amortization, per gross
equivalent barrel is calculated by converting natural gas
volumes to a barrel of oil equivalent (boe) using the ratio
of 6 mcf of natural gas to 1 barrel of crude oil (sulphur
volumes have been excluded from the calculation). Depletion,
depreciation and amortization per boe for the years ended
December 31 were as follows:

|                                                     |  |      |      |      |  |      |      |  |  |   |      | 
|---------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                     |  | 2002 |      | 2001 |  | 2000
|                                                     |  |      |      |      |  |     
|Depletion, depreciation and amortization per boe (1) |  | $    | 6.96 |      |  | $    | 6.88 |  |  | $ | 5.88 | 



---

|(1) |  | Excludes the 2001 ceiling test write down.
|--- |  | ------------------------------------------

Impairment or Disposal of Long-term Assets

In August 2001, the FASB issued FAS 144 Accounting for the
Impairment or Disposal of Long-term Assets, which addresses
the financial accounting and reporting for the impairment or
disposal of long-lived assets. FAS 144 supersedes but retains
the basic principles of FASB Statement No. 121 for the
impairment of assets to be held and used. A two-step process
is used to determine the impairment of the Companys long-term
assets, other than assets covered by the full cost accounting
policy, with the first step determining when impairment is
recognized and the second step measuring the amount of the
impairment. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds the sum of the
undiscounted cash flows expected to result from its use and
eventual disposition. An impairment loss is measured as the
amount by which the long-lived assets carrying value exceeds
its fair value. To test for and measure impairment,
long-lived assets are grouped at the lowest level for which
identifiable cash flows are largely independent.

A long-lived asset that meets the conditions as held for sale
is measured at the lower of its carrying amount or fair value
less costs to sell. Such assets are not amortized while they
are classified as held for sale. The

Page 49



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##### 



results of operations of a component of an entity that has
been disposed of, or is classified as held for sale, is
reported in discontinued operations if:



|(a) |  | The operations and cash flows of the
component have been or will be eliminated as a result of
the disposal transaction, and;    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The entity will not have a significant
continuing involvement in the operations of the component
after the disposal transaction.

A component of an entity comprises operations and cash flows
that can be clearly distinguished, operationally and for
financial reporting purposes, from the rest of the enterprise.
A component may be a reportable segment or an operating
segment, a reporting unit, a subsidiary or an asset group.

This standard was adopted prospectively on January 1, 2002.
It did not result in any differences between Canadian and U.S.
GAAP in 2002.

Accounting for Guarantees

In November 2002, the FASB issued Financial Interpretation 45
Accounting for Guarantees (FIN 45) that will require the
recognition of a liability for the fair value of certain
guarantees that require payments contingent on specified types
of future events. The measurement standards of FIN 45 are
applicable to guarantees entered into after January 1, 2003.
For guarantees that existed as at December 31, 2002, FIN 45
requires additional disclosures which have been included in
these financial statements to the extent applicable to the
Company.

Accounting for Variable Interest Entities

In January 2003, the FASB issued Financial Interpretation 46
Accounting for Variable Interest Entities (FIN 46) that
will require the consolidation of certain entities that are
controlled through financial interests that indicate control
(referred to as variable interests). Variable interests are
the rights or obligations that convey economic gains or losses
from changes in the values of the entitys assets or
liabilities. The holder of the majority of an entitys
variable interests will be required to consolidate the
variable interest entity. The Company does not believe FIN 46
will result in the consolidation of any additional entities
that existed at December 31, 2002.

Future Removal and Site Restoration

In June 2001, the FASB issued Statement No. 143 Accounting
for Asset Retirement Obligations (FAS 143), which addresses
financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the
related asset retirement costs. The standard applies to legal
obligations associated with the retirement of long-lived
assets that result from the acquisition, construction,
development and use of the asset. FAS 143 requires that the
fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value
is added to the carrying amount of the associated asset. The
liability is accreted at the end of each period through
charges to operating expenses. The Company is required and
plans to adopt the provisions of FAS 143 for the quarter
ending March 31, 2003. The change will result in an increase
to net property, plant and equipment of $56 million, an
increase in future removal and site restoration liability of
$58 million, a decrease to the future tax liability of $1
million and a decrease to retained earnings of $1 million.

Page 50



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##### 



SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION

Oil and Gas Producing Activities (unaudited)

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.

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, 2002 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.

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:

Results of Operations

|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |       |  |  |  |  | 
|-------------------------------------------------------------------------- | ---------------------------------------- | ---- | --------- | ----- | ----------------- | ---- | -------- | ----- |  | ---- | ----- | ----- |  | ---- | ---- | ---- |  | ---- | ----- | -- | - | - | ----- | -- | - | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  |  |  |  | 
|                                                                           |                                          |      | Canada(1) |       | International (1) |      | Total(1)
|                                                                           |                                          |      |           |       |                   |      |         
|($ millions)                                                               |                                          | 2002 |           | 2001  |                   | 2000 |          | 2002  |  | 2001 |       | 2000  |  | 2002 |      | 2001 |  | 2000
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |     
|Revenue                                                                    |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|                                                                           | Sales                                    |      | $         | 1,738 |                   |      | $        | 1,771 |  |      | $     | 1,158 |  |      | $    | 190  |  |      | $     | 4  |   |   | $     | 4  |   |   | $     | 1,928 |  |   | $     | 1,775 |  |   | $     | 1,162 | 
|                                                                           | Transfers                                |      |           | 737   |                   |      |          | 390   |  |      |       | 387   |  |      |      |     |  |      |       |   |   |   |       |   |   |   |       | 737   |  |   |       | 390   |  |   |       | 387   | 
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|                                                                           |                                          |      | 2,475     |       |                   |      | 2,161    |       |  |      | 1,545 |       |  |      | 190  |      |  |      | 4     |    |   |   | 4     |    |   |   | 2,665 |       |  |   | 2,165 |       |  |   | 1,549 |      
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|Deduct                                                                     |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|                                                                           | Production costs                         |      |           | 676   |                   |      |          | 617   |  |      |       | 345   |  |      |      | 10   |  |      |       |   |   |   |       | 1  |   |   |       | 686   |  |   |       | 617   |  |   |       | 346   | 
|                                                                           | Depletion, depreciation
and amortization |      |           | 813   |                   |      |          | 721   |  |      |       | 398   |  |      |      | 38   |  |      |       | 7  |   |   |       | 9  |   |   |       | 851   |  |   |       | 728   |  |   |       | 407   | 
|                                                                           | Income taxes                             |      |           | 387   |                   |      |          | 334   |  |      |       | 326   |  |      |      | 64   |  |      |       | (1 | ) |   |       | (3 | ) |   |       | 451   |  |   |       | 333   |  |   |       | 323   | 
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|                                                                           |                                          |      | 1,876     |       |                   |      | 1,672    |       |  |      | 1,069 |       |  |      | 112  |      |  |      | 6     |    |   |   | 7     |    |   |   | 1,988 |       |  |   | 1,678 |       |  |   | 1,076 |      
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|Results of operations from
producing activities                            |                                          | $    | 599       |       |                   | $    | 489      |       |  | $    | 476   |       |  | $    | 78   |      |  | $    | (2    | )  |   | $ | (3    | )  |   | $ | 677   |       |  | $ | 487   |       |  | $ | 473   |      
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      
|Depletion, depreciation and
amortization rates per gross
equivalent barrel |                                          | $    | 7.74      |       |                   | $    | 7.24     |       |  | $    | 6.15  |       |  | $    | 8.33 |      |  | $    | 80.61 |    |   | $ | 90.39 |    |   | $ | 7.76  |       |  | $ | 7.31  |       |  | $ | 6.28  |      
|                                                                           |                                          |      |           |       |                   |      |          |       |  |      |       |       |  |      |      |      |  |      |       |    |   |   |       |    |   |   |       |       |  |   |       |       |  |   |       |      



---

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

Page 51



---



##### 



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

|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |       | 
|----------------------------------- | -------- | -------- | -------- | ---- | ----- | ---- |  | - | ----- | --- |  | - | ----- | ----- | 
|($ millions)                        |          | 2002     |          | 2001 |       | 2000
|                                    |          |          |          |      |       |     
|Property acquisition
costs(1)(2)(3) |          |          |          |      |       |      |  |   |       |     |  |  
|                                    | Proved   |          |  Canada |      | $     | 20   |  |   | $     | 366 |  |   | $     | 3,200 | 
|                                    | Unproved |          |  Canada |      |       | 88   |  |   |       | 55  |  |   |       | 355   | 
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|                                    |          |          |          |      | 108   |      |  |   | 421   |     |  |   | 3,555 |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|Exploration costs                   |          |  Canada |          |      | 257   |      |  |   | 262   |     |  |   | 159   |      
|                                    |          |  Other  |          |      | 9     |      |  |   | 5     |     |  |   | 3     |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|                                    |          |          |          |      | 266   |      |  |   | 267   |     |  |   | 162   |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|Development costs                   |          |  Canada |          |      | 1,127 |      |  |   | 774   |     |  |   | 412   |      
|                                    |          |  China  |          |      | 66    |      |  |   | 99    |     |  |   | 85    |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|                                    |          |          |          |      | 1,193 |      |  |   | 873   |     |  |   | 497   |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      
|                                    |          |          |          | $    | 1,567 |      |  | $ | 1,561 |     |  | $ | 4,214 |      
|                                    |          |          |          |      |       |      |  |   |       |     |  |   |       |      



---

|(1) |  | Property acquisition costs related to
corporate acquisitions for proved properties in 2002
were nil; 2001 included $244 million.                                    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Property acquisition costs in 2000
included $3,181 million for proved properties and $333
million for unproved properties related to the
acquisition of Renaissance.
|   
|(3) |  | Property acquisition costs in 2000
excluded $135 million for proved properties and $19
million for unproved properties related to property
exchanges.               

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.

The following table sets forth a summary of oil and gas
property costs not being amortized at
December 31:

Withheld Costs

|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|-------------------- |  | --------------- |  | ---- | --- | ---- | ----- | ---- | --- | ------------- | --- | - | -- | - | --- | - | --- | - | --- | - | --- | - | --- | 
|($ millions)         |  | Total           |  | 2002 |     | 2001 |       | 2000 |     | Prior to 2000
|                     |  |                 |  |      |     |      |       |      |     |              
|Property acquisition |  |  Canada        |  | $    | 414 |      |       | $    | 37  |               |     | $ | 17 |   |     | $ | 251 |   |     | $ | 109 |  
|                     |  |  International |  |      | 14  |      |       |      |    |               |     |   |   |   |     |   |    |   |     |   | 14  |  
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                 |  |      |     |      | 428   |      |     |               | 37  |   |    |   | 17  |   |     |   | 251 |   |     |   | 123 | 
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|Exploration          |  |  Canada        |  |      | 271 |      |       |      | 79  |               |     |   | 57 |   |     |   | 48  |   |     |   | 87  |  
|                     |  |  International |  |      | 6   |      |       |      | 6   |               |     |   |   |   |     |   |    |   |     |   |    |  
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                 |  |      |     |      | 277   |      |     |               | 85  |   |    |   | 57  |   |     |   | 48  |   |     |   | 135 | 
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|Development          |  |  Canada        |  |      | 487 |      |       |      | 392 |               |     |   | 83 |   |     |   | 12  |   |     |   |    |  
|                     |  |  International |  |      | 17  |      |       |      | 1   |               |     |   |   |   |     |   |    |   |     |   | 16  |  
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                 |  |      |     |      | 504   |      |     |               | 393 |   |    |   | 83  |   |     |   | 12  |   |     |   | 16  | 
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|Capitalized interest |  |  Canada        |  |      | 146 |      |       |      | 26  |               |     |   | 51 |   |     |   | 43  |   |     |   | 26  |  
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                 |  |      |     | $    | 1,355 |      |     | $             | 541 |   |    | $ | 208 |   |     | $ | 354 |   |     | $ | 252 | 
|                     |  |                 |  |      |     |      |       |      |     |               |     |   |    |   |     |   |     |   |     |   |     |   |     | 

Page 52



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##### 



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

|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|--------------------------------------------------------- |  | --------------- |  | ------- | ------ | ------- | ------ | - | ----- | - | ------ | - | ----- | - | ----- | 
|($ millions)                                              |  | 2002            |  | 2001(1) |        | 2000(1)
|                                                          |  |                 |  |         |        |        
|Unproved oil and gas properties                           |  |  Canada        |  | $       | 1,318  |         |        | $ | 1,052 |   |        | $ | 951   |  
|                                                          |  |  International |  |         | 37     |         |        |   | 235   |   |        |   | 137   |  
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        |         | 1,355  |   |       |   | 1,287  |   |       |   | 1,088 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|Proved oil and gas properties                             |  |  Canada        |  |         | 10,207 |         |        |   | 9,301 |   |        |   | 8,072 |  
|                                                          |  |  International |  |         | 432    |         |        |   | 159   |   |        |   | 153   |  
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        |         | 10,639 |   |       |   | 9,460  |   |       |   | 8,225 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        |         | 11,994 |   |       |   | 10,747 |   |       |   | 9,313 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|Less accumulated depletion,
depreciation and amortization |  |  Canada        |  |         | 3,894  |         |        |   | 3,272 |   |        |   | 2,622 |  
|                                                          |  |  International |  |         | 185    |         |        |   | 147   |   |        |   | 139   |  
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        |         | 4,079  |   |       |   | 3,419  |   |       |   | 2,761 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        | $       | 7,915  |   |       | $ | 7,328  |   |       | $ | 6,552 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|Net capitalized costs                                     |  |  Canada        |  | $       | 7,631  |         |        | $ | 7,081 |   |        | $ | 6,401 |  
|                                                          |  |  International |  |         | 284    |         |        |   | 247   |   |        |   | 151   |  
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 
|                                                          |  |                 |  |         |        | $       | 7,915  |   |       | $ | 7,328  |   |       | $ | 6,552 | 
|                                                          |  |                 |  |         |        |         |        |   |       |   |        |   |       |   |       | 



---

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

Page 53



---



##### 



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
Indonesia, China and Libya. The Companys proved developed and
undeveloped reserves after deductions of royalties are summarized
below:

Reserves

|                                                                          |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |         |  |       |       |   |  |       |       |   |  |         |         |   |  |     |      |  
|------------------------------------------------------------------------- | -------------------------- | -------- | --------- | ----- | ------------- | ------ | ------- | -------- | --------- | ----- | ----------- | -------- | --------- | ----- | ----------- | ------ | ------- |  | ----- | ----- | - |  | ----- | ----- | - |  | ------- | ------- | - |  | --- | ---- | -
|                                                                          |                            |          | Canada    |       | International |        | Total  
|                                                                          |                            |          |           |       |               |        |        
|                                                                          |                            |          | Crude     |       |               |        |         |          |           |       |             |          | Crude     |       |             |        |         |  | Crude |       |   |  |       |       |   |  |        
|                                                                          |                            |          | Oil & NGL |       | Natural Gas   |        | Sulphur |          | Oil & NGL |       | Natural Gas |          | Oil & NGL |       | Natural Gas |        | Sulphur
|                                                                          |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |        
|Net
proved developed and undevelopedreserves, after royalties(1)(2)(3)(4) |                            | (mmbbls) |           | (bcf) |               | (mmlt) |         | (mmbbls) |           | (bcf) |             | (mmbbls) |           | (bcf) |             | (mmlt)
|                                                                         
|End of year 1999                                                          |                            |          | 212.1     |       |               |        | 771.7   |          |           |       | 5.0         |          |           |       | 5.9         |        |         |  | 110.5 |       |   |  | 218.0 |       |   |  | 882.2   |         |   |  | 5.0 |     
|                                                                          | Revisions                  |          |           | 12.9  |               |        |         | (59.1    | )         |       |             |         |           |       |             | (0.1   | )       |  |       | (0.4  | ) |  |       | 12.8  |   |  |         | (59.5   | ) |  |     |     |  
|                                                                          | Purchases                  |          |           | 215.6 |               |        |         | 789.0    |           |       |             |         |           |       |             |       |         |  |       |      |   |  |       | 215.6 |   |  |         | 789.0   |   |  |     |     |  
|                                                                          | Discoveries and extensions |          |           | 41.5  |               |        |         | 35.4     |           |       |             |         |           |       |             | 29.4   |         |  |       |      |   |  |       | 70.9  |   |  |         | 35.4    |   |  |     |     |  
|                                                                          | Production                 |          |           | (36.6 | )             |        |         | (102.4   | )         |       |             | (0.3     | )         |       |             | (0.1   | )       |  |       |      |   |  |       | (36.7 | ) |  |         | (102.4  | ) |  |     | (0.3 | )
|                                                                          |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |         |  |       |       |   |  |       |       |   |  |         |         |   |  |     |     
|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 |     
|                                                                          |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |         |  |       |       |   |  |       |       |   |  |         |         |   |  |     |     
|Net proved developed reserves,
after royalties(1)(2)(3)(4)                |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |         |  |       |       |   |  |       |       |   |  |         |         |   |  |     |     
|                                                                          | End of year 1999           |          |           | 161.8 |               |        |         | 669.3    |           |       |             | 4.8      |           |       |             | 0.6    |         |  |       |      |   |  |       | 162.4 |   |  |         | 669.3   |   |  |     | 4.8  |  
|                                                                          | 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  |  
|                                                                          |                            |          |           |       |               |        |         |          |           |       |             |          |           |       |             |        |         |  |       |       |   |  |       |       |   |  |         |         |   |  |     |     



---

|(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.                                                    

Page 54



---



##### 



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,
2002 was based on the NYMEX year-end natural gas spot price of U.S.
$4.60/mmbtu (2001  U.S. $2.75/mmbtu; 2000  U.S. $10.53/mmbtu) and
on crude oil prices computed with reference to the year-end West
Texas Intermediate price of U.S. $31.21/bbl (2001  U.S. $19.96/bbl;
2000  U.S. $26.72/bbl).

Page 55



---



##### 



Standardized Measure of Discounted Future Net
Cash Flows Relating to Proved Oil and Gas Reserves (continued)

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

Standardized Measure

|                                                         |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |      |       |     |  |   |       |     |  |   |        |       |  |   |        |       |  |   |        |       | 
|-------------------------------------------------------- | --------------------------------------- | ---- | --------- | ----- | ---------------- | ---- | -------- | ----- |  | ---- | ------ | ----- |  | ---- | ----- | ---- |  | ---- | ----- | --- |  | - | ----- | --- |  | - | ------ | ----- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                                         |                                         |      | Canada(1) |       | International(1) |      | Total(1)
|                                                         |                                         |      |           |       |                  |      |         
|($ millions)                                             |                                         | 2002 |           | 2001  |                  | 2000 |          | 2002  |  | 2001 |        | 2000  |  | 2002 |       | 2001 |  | 2000
|                                                         |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |     
|Future cash inflows                                      |                                         | $    | 25,830    |       |                  | $    | 14,102   |       |  | $    | 23,701 |       |  | $    | 2,719 |      |  | $    | 1,600 |     |  | $ | 1,787 |     |  | $ | 28,549 |       |  | $ | 15,702 |       |  | $ | 25,488 |      
|Future costs                                             |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |      |       |     |  |   |       |     |  |   |        |       |  |   |        |       |  |   |        |      
|                                                         | Future production and
development costs |      |           | 7,239 |                  |      |          | 7,541 |  |      |        | 5,996 |  |      |       | 502  |  |      |       | 523 |  |   |       | 609 |  |   |        | 7,741 |  |   |        | 8,064 |  |   |        | 6,605 | 
|                                                         | Future income taxes                     |      |           | 7,278 |                  |      |          | 2,540 |  |      |        | 7,384 |  |      |       | 860  |  |      |       | 310 |  |   |       | 402 |  |   |        | 8,138 |  |   |        | 2,850 |  |   |        | 7,786 | 
|                                                         |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |      |       |     |  |   |       |     |  |   |        |       |  |   |        |       |  |   |        |      
|Future net cash flows                                    |                                         |      | 11,313    |       |                  |      | 4,021    |       |  |      | 10,321 |       |  |      | 1,357 |      |  |      | 767   |     |  |   | 776   |     |  |   | 12,670 |       |  |   | 4,788  |       |  |   | 11,097 |      
|Deduct 10% annual discount factor                        |                                         |      | 4,966     |       |                  |      | 1,667    |       |  |      | 4,859  |       |  |      | 518   |      |  |      | 329   |     |  |   | 404   |     |  |   | 5,484  |       |  |   | 1,996  |       |  |   | 5,263  |      
|                                                         |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |      |       |     |  |   |       |     |  |   |        |       |  |   |        |       |  |   |        |      
|Standardized measure of discounted
future net cash flows |                                         | $    | 6,347     |       |                  | $    | 2,354    |       |  | $    | 5,462  |       |  | $    | 839   |      |  | $    | 438   |     |  | $ | 372   |     |  | $ | 7,186  |       |  | $ | 2,792  |       |  | $ | 5,834  |      
|                                                         |                                         |      |           |       |                  |      |          |       |  |      |        |       |  |      |       |      |  |      |       |     |  |   |       |     |  |   |        |       |  |   |        |       |  |   |        |      

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.

Changes in Standardized Measure

|                                                                                 |  |           |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |     |   |  |   |      |   |  |   |        |   |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------------- |  | --------- | ------ | ---------------- |  | -------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ---- | ---- |  | ---- | --- | - |  | - | ---- | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                                 |  | Canada(1) |        | International(1) |  | Total(1)
|                                                                                 |  |           |        |                  |  |         
|($ millions)                                                                     |  | 2002      |        | 2001             |  | 2000     |        | 2002 |  | 2001 |        | 2000 |  | 2002 |      | 2001 |  | 2000
|                                                                                 |  |           |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |     
|Present value at January 1                                                       |  | $         | 2,354  |                  |  | $        | 5,462  |      |  | $    | 1,612  |      |  | $    | 438  |      |  | $    | 372 |   |  | $ | 72   |   |  | $ | 2,792  |   |  | $ | 5,834  |   |  | $ | 1,684  |  
|Sales and transfers, net of
production costs                                     |  |           | (1,802 | )                |  |          | (1,556 | )    |  |      | (1,204 | )    |  |      | (179 | )    |  |      | (2  | ) |  |   | (3   | ) |  |   | (1,981 | ) |  |   | (1,558 | ) |  |   | (1,207 | )
|Net change in sales and transfer
prices, net of development and
production costs |  |           | 7,752  |                  |  |          | (5,843 | )    |  |      | 2,159  |      |  |      | 732  |      |  |      | (48 | ) |  |   | 18   |   |  |   | 8,484  |   |  |   | (5,891 | ) |  |   | 2,177  |  
|Extensions, discoveries and improved
recovery, net of related costs              |  |           | 676    |                  |  |          | 356    |      |  |      | 460    |      |  |      | 40   |      |  |      | 17  |   |  |   | 410  |   |  |   | 716    |   |  |   | 373    |   |  |   | 870    |  
|Revisions of quantity estimates                                                  |  |           | (30    | )                |  |          | 237    |      |  |      | 46     |      |  |      | (28  | )    |  |      | 10  |   |  |   | (2   | ) |  |   | (58    | ) |  |   | 247    |   |  |   | 44     |  
|Accretion of discount                                                            |  |           | 390    |                  |  |          | 949    |      |  |      | 279    |      |  |      | 59   |      |  |      | 55  |   |  |   | 13   |   |  |   | 449    |   |  |   | 1,004  |   |  |   | 292    |  
|Sale of reserves in place                                                        |  |           | (189   | )                |  |          | (6     | )    |  |      | (3     | )    |  |      |     |      |  |      |    |   |  |   |     |   |  |   | (189   | ) |  |   | (6     | ) |  |   | (3     | )
|Purchase of reserves in place                                                    |  |           | 45     |                  |  |          | 174    |      |  |      | 5,681  |      |  |      |     |      |  |      |    |   |  |   |     |   |  |   | 45     |   |  |   | 174    |   |  |   | 5,681  |  
|Changes in timing of future net cash
flows and other                             |  |           | (191   | )                |  |          | 95     |      |  |      | (717   | )    |  |      | 80   |      |  |      | 10  |   |  |   | 3    |   |  |   | (111   | ) |  |   | 105    |   |  |   | (714   | )
|Net change in income taxes                                                       |  |           | (2,658 | )                |  |          | 2,486  |      |  |      | (2,851 | )    |  |      | (303 | )    |  |      | 24  |   |  |   | (139 | ) |  |   | (2,961 | ) |  |   | 2,510  |   |  |   | (2,990 | )
|                                                                                 |  |           |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |     |   |  |   |      |   |  |   |        |   |  |   |        |   |  |   |        |  
|Present value at December 31                                                     |  | $         | 6,347  |                  |  | $        | 2,354  |      |  | $    | 5,462  |      |  | $    | 839  |      |  | $    | 438 |   |  | $ | 372  |   |  | $ | 7,186  |   |  | $ | 2,792  |   |  | $ | 5,834  |  
|                                                                                 |  |           |        |                  |  |          |        |      |  |      |        |      |  |      |      |      |  |      |     |   |  |   |      |   |  |   |        |   |  |   |        |   |  |   |        |  



---

|(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.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Page 56



---



##### 



Reserve Information

Reserve Reconciliation

|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |         |  
|---------------------------------------------- | --------------------------------------------- | -------- | -------------- | -------- | ------------- | ----- | ------- | -------- | --------- | -------- | --------- | ------- | ------- | -------- | --------- | ----- | ------- |  | ---- | ---- | - |  | ------ | ---- |  |  | ----- | ----- | - |  | ------- | ------- | -
|                                               |                                               |          | Canada         |          | International |       |         |          |           |          |           |         |        
|                                               |                                               |          |                |          |               |       |        
|                                               |                                               |          | Western Canada |          | East Coast    |       |         |          | Total    
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |         
|                                               |                                               |          | Light/Med.     |          | Lloydminster  |       |         |          |           |          |           |         |         |          | Light     |       |         |  |      |      |   |  |        |      |  |  |      
|                                               |                                               |          | Crude Oil      |          | Heavy
Crude   |       | Natural |          | Light     |          | Crude Oil |         | Natural |          | Crude Oil |       | Natural
|                                               |                                               |          | & NGL          |          | Oil           |       | Gas     |          | Crude Oil |          | & NGL     |         | Gas     |          | & NGL     |       | Gas    
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |        
|Proved
reserves, before royalties(1)           |                                               | (mmbbls) |                | (mmbbls) |               | (bcf) |         | (mmbbls) |           | (mmbbls) |           | (bcf)   |         | (mmbbls) |           | (bcf)
|                                              
|Proved reserves at December 31, 1999           |                                               |          | 138.3          |          |               |       | 105.0   |          |           |          | 933.9     |         |         |          |          |       |         |  | 7.0  |      |   |  | 142..9 |      |  |  | 250.3 |       |   |  | 1,076.8 |        
|                                               | Revisions                                     |          |                | 3.6      |               |       |         | 6.6      |           |          |           | (17.2   | )       |          |           |      |         |  |      |     |   |  |        |     |  |  |       | 10.2  |   |  |         | (17.2   | )
|                                               | Purchases (includes Renaissance)              |          |                | 258.5    |               |       |         | 0.3      |           |          |           | 933.4   |         |          |           |      |         |  |      |     |   |  |        |     |  |  |       | 258.8 |   |  |         | 933.4   |  
|                                               | Discoveries, extensions and
improved recovery |          |                | 12.7     |               |       |         | 21.4     |           |          |           | 47.0    |         |          |           | 11.3  |         |  |      | 32.2 |   |  |        |     |  |  |       | 77.6  |   |  |         | 47.0    |  
|                                               | Production                                    |          |                | (23.2    | )             |       |         | (19.6    | )         |          |           | (131.0  | )       |          |           |      |         |  |      | (0.1 | ) |  |        |     |  |  |       | (42.9 | ) |  |         | (131.0  | )
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|Proved reserves at December 31, 2000           |                                               |          | 389.9          |          |               |       | 113.7   |          |           |          | 1,766.1   |         |         |          | 11.3      |       |         |  | 39.1 |      |   |  | 142.9  |      |  |  | 554.0 |       |   |  | 1,909.0 |        
|                                               | Revisions                                     |          |                | 0.8      |               |       |         | 24.9     |           |          |           | 22.5    |         |          |           | 1.2   |         |  |      | 0.2  |   |  |        |     |  |  |       | 27.1  |   |  |         | 22.5    |  
|                                               | Purchases                                     |          |                | 11.9     |               |       |         | 23.7     |           |          |           | 23.7    |         |          |           |      |         |  |      |     |   |  |        |     |  |  |       | 35.6  |   |  |         | 23.7    |  
|                                               | Sales                                         |          |                | (1.8     | )             |       |         |         |           |          |           | (21.1   | )       |          |           |      |         |  |      |     |   |  |        |     |  |  |       | (1.8  | ) |  |         | (21.1   | )
|                                               | Discoveries, extensions and
improved recovery |          |                | 13.3     |               |       |         | 30.0     |           |          |           | 240.7   |         |          |           | 4.8   |         |  |      | 1.2  |   |  |        |     |  |  |       | 49.3  |   |  |         | 240.7   |  
|                                               | Production                                    |          |                | (41.5    | )             |       |         | (23.2    | )         |          |           | (209.0  | )       |          |           |      |         |  |      | (0.1 | ) |  |        |     |  |  |       | (64.8 | ) |  |         | (209.0  | )
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|Proved reserves at December 31, 2001           |                                               |          | 372.6          |          |               |       | 169.1   |          |           |          | 1,822.9   |         |         |          | 17.3      |       |         |  | 40.4 |      |   |  | 142.9  |      |  |  | 599.4 |       |   |  | 1,965.8 |        
|                                               | Revisions                                     |          |                | (6.5     | )             |       |         | 18.4     |           |          |           | (37.2   | )       |          |           |      |         |  |      |     |   |  |        |     |  |  |       | 11.9  |   |  |         | (37.2   | )
|                                               | Purchases                                     |          |                | 0.5      |               |       |         | 4.4      |           |          |           | 6.2     |         |          |           |      |         |  |      |     |   |  |        |     |  |  |       | 4.9   |   |  |         | 6.2     |  
|                                               | Sales                                         |          |                | (16.4    | )             |       |         |         |           |          |           | (19.0   | )       |          |           |      |         |  |      |     |   |  |        |     |  |  |       | (16.4 | ) |  |         | (19.0   | )
|                                               | Discoveries, extensions and
improved recovery |          |                | 6.9      |               |       |         | 17.8     |           |          |           | 386.5   |         |          |           | 18.5  |         |  |      | 1.2  |   |  |        |     |  |  |       | 44.4  |   |  |         | 386.5   |  
|                                               | Production                                    |          |                | (36.7    | )             |       |         | (29.0    | )         |          |           | (207.8  | )       |          |           | (4.8  | )       |  |      | (4.5 | ) |  |        |     |  |  |       | (75.0 | ) |  |         | (207.8  | )
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|Proved reserves at December 31, 2002           |                                               |          | 320.4          |          |               |       | 180.7   |          |           |          | 1,951.6   |         |         |          | 31.0      |       |         |  | 37.1 |      |   |  | 142.9  |      |  |  | 569.2 |       |   |  | 2,094.5 |        
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|Proved developed reserves,
before royalties(2) |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|                                               | December 31, 1999                             |          |                | 132.2    |               |       |         | 56.4     |           |          |           | 817.6   |         |          |           |      |         |  |      | 0.6  |   |  |        |     |  |  |       | 189.2 |   |  |         | 817.6   |  
|                                               | December 31, 2000                             |          |                | 337.8    |               |       |         | 64.8     |           |          |           | 1,579.9 |         |          |           |      |         |  |      | 0.5  |   |  |        |     |  |  |       | 403.1 |   |  |         | 1,579.9 |  
|                                               | December 31, 2001                             |          |                | 322.5    |               |       |         | 95.8     |           |          |           | 1,576.5 |         |          |           | 6.2   |         |  |      | 0.6  |   |  |        |     |  |  |       | 425.1 |   |  |         | 1,576.5 |  
|                                               | December 31, 2002                             |          |                | 284.5    |               |       |         | 116.3    |           |          |           | 1,546.5 |         |          |           | 7.4   |         |  |      | 30.7 |   |  |        |     |  |  |       | 438.9 |   |  |         | 1,546.5 |  
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|Probable reserves, before royalties(3)         |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        
|                                               | December 31, 1999                             |          |                | 64.6     |               |       |         | 78.0     |           |          |           | 235.9   |         |          |           | 256.3 |         |  |      | 0.9  |   |  |        | 18.9 |  |  |       | 399.8 |   |  |         | 254.8   |  
|                                               | December 31, 2000                             |          |                | 135.2    |               |       |         | 78.1     |           |          |           | 434.1   |         |          |           | 202.3 |         |  |      | 5.3  |   |  |        | 18.9 |  |  |       | 420.9 |   |  |         | 453.0   |  
|                                               | December 31, 2001                             |          |                | 131.8    |               |       |         | 81.2     |           |          |           | 405.6   |         |          |           | 213.3 |         |  |      | 4.2  |   |  |        | 18.9 |  |  |       | 430.5 |   |  |         | 424.5   |  
|                                               | December 31, 2002                             |          |                | 161.0    |               |       |         | 85.5     |           |          |           | 383.9   |         |          |           | 201.6 |         |  |      | 4.1  |   |  |        | 18.9 |  |  |       | 452.2 |   |  |         | 402.8   |  
|                                               |                                               |          |                |          |               |       |         |          |           |          |           |         |         |          |           |       |         |  |      |      |   |  |        |      |  |  |       |       |   |  |         |        



---

|(1) |  | Proved 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.                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Proved developed oil and gas reserves are
reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) |  | Probable reserves are considered to be those
reserves which may be recoverable as a result of the
beneficial effects which may be derived from the future
institution of some form of pressure maintenance or other
secondary recovery method, or as a result of a more
favourable performance of the existing recovery mechanism
than that which may reasonably be deemed proven at the
present time, or those reserves which may reasonably be
assumed to exist because of geophysical or geological
indications and drilling done in regions which contain proved
reserves. The risk associated with those reserves generally
ranges from 40 to 80 percent.

Page 57



---



##### 



Quarterly Financial and Operating Information

SEGMENTED OPERATIONAL INFORMATION

Upstream

|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |       |     |    | 
|---------------------------------- | ---------------------------------------- | --- | ----- | ----- | ---- | --- | ----- | ----- | --- | -- | ----- | ----- | --- | -- | ----- | ----- | -- | --- | ----- | ----- | --- | -- | ----- | ----- | --- | -- | ----- | ----- | --- | -- | ----- | ----- | --- | -- | 
|                                   |                                          |     |       |       | 2002 |     | 2001 
|                                   |                                          |     |       |       |      |     |      
|                                   |                                          |     |       |       | Q4   |     | Q3    |       | Q2  |    | Q1    |       | Q4  |    | Q3    |       | Q2 |     | Q1   
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |      
|Daily production, before royalties |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   | Light/medium crude oil & NGL
(mbbls/day) |     |       | 137.8 |      |     |       | 131.4 |     |    |       | 116.6 |     |    |       | 117.5 |    |     |       | 111.3 |     |    |       | 112.7 |     |    |       | 108.6 |     |    |       | 115.5 |    
|                                   | Lloydminster heavy crude oil
(mbbls/day) |     |       | 83.9  |      |     |       | 80.0  |     |    |       | 76.9  |     |    |       | 76.9  |    |     |       | 75.0  |     |    |       | 69.1  |     |    |       | 60.3  |     |    |       | 56.9  |    
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   |                                          |     | 221.7 |       |      |     | 211.4 |       |     |    | 193.5 |       |     |    | 194.4 |       |    |     | 186.3 |       |     |    | 181.8 |       |     |    | 168.9 |       |     |    | 172.4 |      
|                                   | Natural gas (mmcf/day)                   |     |       | 577.4 |      |     |       | 561.6 |     |    |       | 571.8 |     |    |       | 566.0 |    |     |       | 568.7 |     |    |       | 567.1 |     |    |       | 570.8 |     |    |       | 584.0 |    
|                                   | Total production (mboe/day)              |     |       | 317.9 |      |     |       | 305.1 |     |    |       | 288.9 |     |    |       | 288.7 |    |     |       | 281.1 |     |    |       | 276.3 |     |    |       | 264.0 |     |    |       | 269.7 |    
|Average realized sales prices      |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   | Light/medium crude oil & NGL
($/bbl)     |     | $     | 36.64 |      |     | $     | 36.72 |     |    | $     | 32.42 |     |    | $     | 26.17 |    |     | $     | 19.44 |     |    | $     | 31.74 |     |    | $     | 28.86 |     |    | $     | 28.72 |    
|                                   | Lloydminster heavy crude oil
($/bbl)     |     | $     | 25.47 |      |     | $     | 30.94 |     |    | $     | 27.02 |     |    | $     | 20.68 |    |     | $     | 10.44 |     |    | $     | 23.65 |     |    | $     | 15.52 |     |    | $     | 13.81 |    
|                                   | Natural gas ($/mcf)                      |     | $     | 4.76  |      |     | $     | 3.42  |     |    | $     | 3.98  |     |    | $     | 3.10  |    |     | $     | 3.01  |     |    | $     | 3.25  |     |    | $     | 6.57  |     |    | $     | 9.05  |    
|Operating costs ($/boe)            |                                          | $   | 6.66  |       |      | $   | 6.19  |       |     | $  | 6.19  |       |     | $  | 5.88  |       |    | $   | 6.54  |       |     | $  | 6.24  |       |     | $  | 6.19  |       |     | $  | 5.31  |      
|Operating netbacks(1)              |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   | Light/medium crude oil & NGL
($/boe)     |     | $     | 24.29 |      |     | $     | 23.74 |     |    | $     | 20.40 |     |    | $     | 15.19 |    |     | $     | 7.43  |     |    | $     | 18.03 |     |    | $     | 17.01 |     |    | $     | 18.09 |    
|                                   | Lloydminster heavy crude oil
($/boe)     |     | $     | 13.22 |      |     | $     | 20.63 |     |    | $     | 17.81 |     |    | $     | 12.46 |    |     | $     | 3.29  |     |    | $     | 14.04 |     |    | $     | 6.08  |     |    | $     | 4.87  |    
|                                   | Natural gas ($/mcfge)                    |     | $     | 3.18  |      |     | $     | 2.19  |     |    | $     | 2.39  |     |    | $     | 2.03  |    |     | $     | 1.74  |     |    | $     | 1.99  |     |    | $     | 4.28  |     |    | $     | 6.05  |    
|                                   | Total ($/boe)                            |     | $     | 19.71 |      |     | $     | 19.67 |     |    | $     | 17.67 |     |    | $     | 13.47 |    |     | $     | 7.34  |     |    | $     | 14.88 |     |    | $     | 17.62 |     |    | $     | 21.97 |    
|Net wells drilled(2)               |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   | Exploration                              | Oil |       |       | 3    |     |       |       | 6   |    |       |       | 6   |    |       |       | 5  |     |       |       | 8   |    |       |       | 8   |    |       |       | 15  |    |       |       | 45  |   
|                                   |                                          |     | Gas   |       |      | 14  |       |       |     | 16 |       |       |     | 18 |       |       |    | 83  |       |       |     | 6  |       |       |     | 11 |       |       |     | 5  |       |       |     | 68 | 
|                                   |                                          |     | Dry   |       |      | 2   |       |       |     | 2  |       |       |     | 1  |       |       |    | 9   |       |       |     | 4  |       |       |     | 2  |       |       |     | 3  |       |       |     | 25 | 
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   |                                          |     | 19    |       |      |     | 24    |       |     |    | 25    |       |     |    | 97    |       |    |     | 18    |       |     |    | 21    |       |     |    | 23    |       |     |    | 138   |      
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   | Development                              | Oil |       |       | 107  |     |       |       | 190 |    |       |       | 112 |    |       |       | 44 |     |       |       | 116 |    |       |       | 195 |    |       |       | 129 |    |       |       | 102 |   
|                                   |                                          |     | Gas   |       |      | 160 |       |       |     | 67 |       |       |     | 10 |       |       |    | 216 |       |       |     | 53 |       |       |     | 57 |       |       |     | 17 |       |       |     | 94 | 
|                                   |                                          |     | Dry   |       |      | 17  |       |       |     | 14 |       |       |     | 6  |       |       |    | 18  |       |       |     | 11 |       |       |     | 23 |       |       |     | 7  |       |       |     | 22 | 
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   |                                          |     | 284   |       |      |     | 271   |       |     |    | 128   |       |     |    | 278   |       |    |     | 180   |       |     |    | 275   |       |     |    | 153   |       |     |    | 218   |      
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|                                   |                                          |     | 303   |       |      |     | 295   |       |     |    | 153   |       |     |    | 375   |       |    |     | 198   |       |     |    | 296   |       |     |    | 176   |       |     |    | 356   |      
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      
|Success ratio (percent)            |                                          |     | 94    |       |      |     | 95    |       |     |    | 95    |       |     |    | 93    |       |    |     | 92    |       |     |    | 92    |       |     |    | 95    |       |     |    | 87    |      
|                                   |                                          |     |       |       |      |     |       |       |     |    |       |       |     |    |       |       |    |     |       |       |     |    |       |       |     |    |       |       |     |    |       |      

Midstream

|                                      |  |      |       |      |  |    |      |    |  |    |       |    |  |    |      |    |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|------------------------------------- |  | ---- | ----- | ---- |  | -- | ---- | -- |  | -- | ----- | -- |  | -- | ---- | -- |  | - | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                      |  | 2002 |       | 2001
|                                      |  |      |       |     
|                                      |  | Q4   |       | Q3   |  | Q2 |      | Q1 |  | Q4 |       | Q3 |  | Q2 |      | Q1
|                                      |  |      |       |      |  |    |      |    |  |    |       |    |  |    |      |   
|Synthetic crude oil sales (mbbls/day) |  |      | 67.5  |      |  |    | 47.3 |    |  |    | 51.3  |    |  |    | 71.2 |    |  |   | 49.7  |  |  |   | 66.5  |  |  |   | 65.6  |  |  |   | 56.2  | 
|Upgrading differential ($/bbl)        |  | $    | 13.06 |      |  | $  | 9.92 |    |  | $  | 10.43 |    |  | $  | 9.85 |    |  | $ | 16.85 |  |  | $ | 13.18 |  |  | $ | 19.56 |  |  | $ | 21.61 | 
|Pipeline throughput (mbbls/day)       |  |      | 476   |      |  |    | 436  |    |  |    | 448   |    |  |    | 469  |    |  |   | 518   |  |  |   | 498   |  |  |   | 583   |  |  |   | 550   | 

Refined Products

|                               |                                         |  |      |      |      |  |     |      |    |  |    |      |    |  |     |      |    |  |     |      |  |  |     |      |  |  |    |      |  |  |    |      | 
|------------------------------ | --------------------------------------- |  | ---- | ---- | ---- |  | --- | ---- | -- |  | -- | ---- | -- |  | --- | ---- | -- |  | --- | ---- |  |  | --- | ---- |  |  | -- | ---- |  |  | -- | ---- | 
|                               |                                         |  | 2002 |      | 2001
|                               |                                         |  |      |      |     
|                               |                                         |  | Q4   |      | Q3   |  | Q2  |      | Q1 |  | Q4 |      | Q3 |  | Q2  |      | Q1
|                               |                                         |  |      |      |      |  |     |      |    |  |    |      |    |  |     |      |   
|Refined product sales volumes  |                                         |  |      |      |      |  |     |      |    |  |    |      |    |  |     |      |    |  |     |      |  |  |     |      |  |  |    |      |  |  |    |      | 
|                               | Light oil products (million
litres/day) |  |      | 7.9  |      |  |     | 8.2  |    |  |    | 7.4  |    |  |     | 7.2  |    |  |     | 7.5  |  |  |     | 8.2  |  |  |    | 7.3  |  |  |    | 7.4  | 
|                               | Asphalt products (mbbls/day)            |  |      | 14.2 |      |  |     | 30.6 |    |  |    | 20.5 |    |  |     | 17.7 |    |  |     | 19.9 |  |  |     | 29.9 |  |  |    | 20.6 |  |  |    | 15.0 | 
|Refinery throughput            |                                         |  |      |      |      |  |     |      |    |  |    |      |    |  |     |      |    |  |     |      |  |  |     |      |  |  |    |      |  |  |    |      | 
|                               | Lloydminster refinery (mbbls/day)       |  |      | 17.8 |      |  |     | 25.2 |    |  |    | 19.9 |    |  |     | 25.2 |    |  |     | 25.8 |  |  |     | 26.1 |  |  |    | 20.5 |  |  |    | 22.2 | 
|                               | Prince George refinery (mbbls/day)      |  |      | 10.9 |      |  |     | 11.0 |    |  |    | 7.7  |    |  |     | 10.9 |    |  |     | 10.2 |  |  |     | 8.8  |  |  |    | 10.7 |  |  |    | 10.9 | 
|Refinery utilization (percent) |                                         |  | 82   |      |      |  | 103 |      |    |  | 79 |      |    |  | 103 |      |    |  | 103 |      |  |  | 100 |      |  |  | 89 |      |  |  | 95 |     



---

|(1) |  | Operating netbacks are Huskys average realized prices
less royalties, hedging (gains)/losses and operating costs on a
per unit basis.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Western Canada.                                                                                                                       

Page 58



---



##### 



Segmented Financial Information($ millions)

|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |     | 
|---------------------------------------------- | --------------------------------------------- | -- | -------- | --- | --------- | -- | ----- | --- |  | -- | ----- | --- |  | -- | ----- | --- |  | -- | --------- | --- | ---------------------------- | -- | --- | --- |  | - | --- | --- |  | - | --- | --- |  | - | ----- | ----- |  | - | --- | --- |  | - | --- | --- |  | - | --- | --- | 
|                                               |                                               |    | Upstream |     | Midstream
|                                               |                                               |    |          |     |          
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    | Upgrading |     | Infrastructure and Marketing
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                             
|2002                                           |                                               | Q4 |          | Q3  |           | Q2 |       | Q1  |  | Q4 |       | Q3  |  | Q2 |       | Q1  |  | Q4 |           | Q3  |                              | Q2 |     | Q1 
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |    
|Sales and operating revenues,
net of royalties |                                               | $  | 781      |     |           | $  | 738   |     |  | $  | 635   |     |  | $  | 511   |     |  | $  | 301       |     |                              | $  | 192 |     |  | $ | 195 |     |  | $ | 221 |     |  | $ | 1,367 |       |  | $ | 953 |     |  | $ | 958 |     |  | $ | 952 |    
|Costs and expenses                             |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    
|                                               | Operating, cost of sales,
selling and general |    |          | 206 |           |    |       | 189 |  |    |       | 171 |  |    |       | 163 |  |    |           | 265 |                              |    |     | 183 |  |   |     | 182 |  |   |     | 181 |  |   |       | 1,321 |  |   |     | 905 |  |   |     | 916 |  |   |     | 896 | 
|                                               | Depletion, depreciation
and amortization      |    |          | 231 |           |    |       | 218 |  |    |       | 202 |  |    |       | 200 |  |    |           | 5   |                              |    |     | 4   |  |   |     | 4   |  |   |     | 5   |  |   |       | 6     |  |   |     | 5   |  |   |     | 5   |  |   |     | 4   | 
|                                               | Interest  net                                |    |          |    |           |    |       |    |  |    |       |    |  |    |       |    |  |    |           |    |                              |    |     |    |  |   |     |    |  |   |     |    |  |   |       |      |  |   |     |    |  |   |     |    |  |   |     |    | 
|                                               | Foreign exchange                              |    |          |    |           |    |       |    |  |    |       |    |  |    |       |    |  |    |           |    |                              |    |     |    |  |   |     |    |  |   |     |    |  |   |       |      |  |   |     |    |  |   |     |    |  |   |     |    | 
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    
|                                               |                                               |    | 437      |     |           |    | 407   |     |  |    | 373   |     |  |    | 363   |     |  |    | 270       |     |                              |    | 187 |     |  |   | 186 |     |  |   | 186 |     |  |   | 1,327 |       |  |   | 910 |     |  |   | 921 |     |  |   | 900 |    
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    
|Earnings (loss) before
income taxes            |                                               |    | 344      |     |           |    | 331   |     |  |    | 262   |     |  |    | 148   |     |  |    | 31        |     |                              |    | 5   |     |  |   | 9   |     |  |   | 35  |     |  |   | 40    |       |  |   | 43  |     |  |   | 37  |     |  |   | 52  |    
|Current income taxes                           |                                               |    | 26       |     |           |    | 8     |     |  |    | 1     |     |  |    | 20    |     |  |    |          |     |                              |    | 1   |     |  |   |    |     |  |   |    |     |  |   | (19   | )     |  |   | 13  |     |  |   | 4   |     |  |   | 8   |    
|Future income taxes                            |                                               |    | 108      |     |           |    | 117   |     |  |    | 83    |     |  |    | 34    |     |  |    | 11        |     |                              |    | 2   |     |  |   | 2   |     |  |   | 10  |     |  |   | 31    |       |  |   | 5   |     |  |   | 10  |     |  |   | 13  |    
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    
|Net earnings (loss)                            |                                               | $  | 210      |     |           | $  | 206   |     |  | $  | 178   |     |  | $  | 94    |     |  | $  | 20        |     |                              | $  | 2   |     |  | $ | 7   |     |  | $ | 25  |     |  | $ | 28    |       |  | $ | 25  |     |  | $ | 23  |     |  | $ | 31  |    
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    
|Capital employed (2)                           |                                               | $  | 6,040    |     |           | $  | 6,027 |     |  | $  | 6,001 |     |  | $  | 5,919 |     |  | $  | 319       |     |                              | $  | 343 |     |  | $ | 324 |     |  | $ | 306 |     |  | $ | 431   |       |  | $ | 428 |     |  | $ | 194 |     |  | $ | 268 |    
|Total assets                                   |                                               | $  | 8,220    |     |           | $  | 8,105 |     |  | $  | 7,860 |     |  | $  | 7,723 |     |  | $  | 658       |     |                              | $  | 665 |     |  | $ | 657 |     |  | $ | 640 |     |  | $ | 850   |       |  | $ | 871 |     |  | $ | 736 |     |  | $ | 845 |    
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |     |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |     |    

|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |       | 
|---------------------------------------------- | --------------------------------------------- | -- | -------- | --- | --------- | -- | ----- | --- |  | -- | ----- | --- |  | -- | ----- | --- |  | -- | --------- | -- | ---------------------------- | -- | --- | --- |  | - | --- | --- |  | - | --- | --- |  | - | ----- | ----- |  | - | --- | --- |  | - | --- | --- |  | - | ----- | ----- | 
|                                               |                                               |    | Upstream |     | Midstream
|                                               |                                               |    |          |     |          
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    | Upgrading |    | Infrastructure and Marketing
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                             
|2001                                           |                                               | Q4 |          | Q3  |           | Q2 |       | Q1  |  | Q4 |       | Q3  |  | Q2 |       | Q1  |  | Q4 |           | Q3 |                              | Q2 |     | Q1 
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |    
|Sales and operating revenues,
net of royalties |                                               | $  | 367      |     |           | $  | 549   |     |  | $  | 578   |     |  | $  | 671   |     |  | $  | 147       |    |                              | $  | 255 |     |  | $ | 259 |     |  | $ | 225 |     |  | $ | 1,153 |       |  | $ | 796 |     |  | $ | 839 |     |  | $ | 1,592 |      
|Costs and expenses                             |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      
|                                               | Operating, cost of sales,
selling and general |    |          | 182 |           |    |       | 171 |  |    |       | 160 |  |    |       | 135 |  |    |           | 81 |                              |    |     | 215 |  |   |     | 176 |  |   |     | 166 |  |   |       | 1,111 |  |   |     | 758 |  |   |     | 785 |  |   |       | 1,539 | 
|                                               | Depletion, depreciation
and amortization      |    |          | 193 |           |    |       | 185 |  |    |       | 176 |  |    |       | 174 |  |    |           | 4  |                              |    |     | 5   |  |   |     | 5   |  |   |     | 3   |  |   |       | 4     |  |   |     | 5   |  |   |     | 4   |  |   |       | 4     | 
|                                               | Interest  net                                |    |          |    |           |    |       |    |  |    |       |    |  |    |       |    |  |    |           |   |                              |    |     |    |  |   |     |    |  |   |     |    |  |   |       |      |  |   |     |    |  |   |     |    |  |   |       |      | 
|                                               | Foreign exchange                              |    |          |    |           |    |       |    |  |    |       |    |  |    |       |    |  |    |           |   |                              |    |     |    |  |   |     |    |  |   |     |    |  |   |       |      |  |   |     |    |  |   |     |    |  |   |       |      | 
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      
|                                               |                                               |    | 375      |     |           |    | 356   |     |  |    | 336   |     |  |    | 309   |     |  |    | 85        |    |                              |    | 220 |     |  |   | 181 |     |  |   | 169 |     |  |   | 1,115 |       |  |   | 763 |     |  |   | 789 |     |  |   | 1,543 |      
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      
|Earnings (loss) before
income taxes            |                                               |    | (8       | )   |           |    | 193   |     |  |    | 242   |     |  |    | 362   |     |  |    | 62        |    |                              |    | 35  |     |  |   | 78  |     |  |   | 56  |     |  |   | 38    |       |  |   | 33  |     |  |   | 50  |     |  |   | 49    |      
|Current income taxes                           |                                               |    | 3        |     |           |    | 5     |     |  |    | 5     |     |  |    | 4     |     |  |    | 1         |    |                              |    |    |     |  |   |    |     |  |   |    |     |  |   |      |       |  |   | 1   |     |  |   |    |     |  |   |      |      
|Future income taxes                            |                                               |    | 3        |     |           |    | 79    |     |  |    | 60    |     |  |    | 148   |     |  |    | 21        |    |                              |    | 13  |     |  |   | 18  |     |  |   | 20  |     |  |   | 16    |       |  |   | 14  |     |  |   | 20  |     |  |   | 21    |      
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      
|Net earnings (loss)                            |                                               | $  | (14      | )   |           | $  | 109   |     |  | $  | 177   |     |  | $  | 210   |     |  | $  | 40        |    |                              | $  | 22  |     |  | $ | 60  |     |  | $ | 36  |     |  | $ | 22    |       |  | $ | 18  |     |  | $ | 30  |     |  | $ | 28    |      
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      
|Capital employed (2)                           |                                               | $  | 5,715    |     |           | $  | 5,685 |     |  | $  | 5,633 |     |  | $  | 5,444 |     |  | $  | 320       |    |                              | $  | 303 |     |  | $ | 313 |     |  | $ | 337 |     |  | $ | 395   |       |  | $ | 373 |     |  | $ | 275 |     |  | $ | 254   |      
|Total assets                                   |                                               | $  | 7,407    |     |           | $  | 7,298 |     |  | $  | 7,104 |     |  | $  | 7,051 |     |  | $  | 644       |    |                              | $  | 610 |     |  | $ | 610 |     |  | $ | 620 |     |  | $ | 862   |       |  | $ | 853 |     |  | $ | 835 |     |  | $ | 822   |      
|                                               |                                               |    |          |     |           |    |       |     |  |    |       |     |  |    |       |     |  |    |           |    |                              |    |     |     |  |   |     |     |  |   |     |     |  |   |       |       |  |   |     |     |  |   |     |     |  |   |       |      



---

|(1) |  | Eliminations relate to sales and operating revenues
between segments recorded at transfer prices based on current
market prices, and to unrealized intersegment profits in
inventories.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Capital employed is defined as short- and long-term debt
and shareholders equity.                                                                                                     

Page 59



---



##### 



Segmented Financial Information($ millions)

|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |     | 
|---------------------------------------------- | --------------------------------------------- | -- | ---------------- | --- | ----------------------------- | -- | ----- | --- |  | -- | --- | --- |  | -- | --- | --- |  | -- | ------ | ------ | - | -- | ---- | ---- | - | - | ---- | ---- | - | - | ---- | ---- | - | - | ------ | ----- | - | - | ------ | ----- |  | - | ----- | ----- | - | - | ----- | --- | 
|                                               |                                               |    | Refined Products |     | Corporate
and Eliminations(1) |    | Total
|                                               |                                               |    |                  |     |                               |    |      
|2002                                           |                                               | Q4 |                  | Q3  |                               | Q2 |       | Q1  |  | Q4 |     | Q3  |  | Q2 |     | Q1  |  | Q4 |        | Q3     |   | Q2 |      | Q1  
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |     
|Sales and operating revenues,
net of royalties |                                               | $  | 326              |     |                               | $  | 431   |     |  | $  | 322 |     |  | $  | 231 |     |  | $  | (1,078 | )      |   | $  | (645 | )    |   | $ | (451 | )    |   | $ | (556 | )    |   | $ | 1,697  |       |   | $ | 1,669  |       |  | $ | 1,659 |       |   | $ | 1,359 |    
|Costs and expenses                             |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    
|                                               | Operating, cost of sales,
selling and general |    |                  | 318 |                               |    |       | 395 |  |    |     | 292 |  |    |     | 217 |  |    |        | (1,081 | ) |    |      | (642 | ) |   |      | (436 | ) |   |      | (537 | ) |   |        | 1,029 |   |   |        | 1,030 |  |   |       | 1,125 |   |   |       | 920 | 
|                                               | Depletion, depreciation
and amortization      |    |                  | 9   |                               |    |       | 9   |  |    |     | 8   |  |    |     | 8   |  |    |        | 5      |   |    |      | 3    |   |   |      | 4    |   |   |      | 4    |   |   |        | 256   |   |   |        | 239   |  |   |       | 223   |   |   |       | 221 | 
|                                               | Interest  net                                |    |                  |    |                               |    |       |    |  |    |     |    |  |    |     |    |  |    |        | 25     |   |    |      | 28   |   |   |      | 24   |   |   |      | 27   |   |   |        | 25    |   |   |        | 28    |  |   |       | 24    |   |   |       | 27  | 
|                                               | Foreign exchange                              |    |                  |    |                               |    |       |    |  |    |     |    |  |    |     |    |  |    |        | (5     | ) |    |      | 75   |   |   |      | (65  | ) |   |      | 8    |   |   |        | (5    | ) |   |        | 75    |  |   |       | (65   | ) |   |       | 8   | 
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    
|                                               |                                               |    | 327              |     |                               |    | 404   |     |  |    | 300 |     |  |    | 225 |     |  |    | (1,056 | )      |   |    | (536 | )    |   |   | (473 | )    |   |   | (498 | )    |   |   | 1,305  |       |   |   | 1,372  |       |  |   | 1,307 |       |   |   | 1,176 |    
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    
|Earnings (loss) before
income taxes            |                                               |    | (1               | )   |                               |    | 27    |     |  |    | 22  |     |  |    | 6   |     |  |    | (22    | )      |   |    | (109 | )    |   |   | 22   |      |   |   | (58  | )    |   |   | 392    |       |   |   | 297    |       |  |   | 352   |       |   |   | 183   |    
|Current income taxes                           |                                               |    | (1               | )   |                               |    | 4     |     |  |    | 1   |     |  |    |    |     |  |    |       |        |   |    |     |      |   |   |     |      |   |   |     |      |   |   | 6      |       |   |   | 26     |       |  |   | 6     |       |   |   | 28    |    
|Future income taxes                            |                                               |    | 1                |     |                               |    | 7     |     |  |    | 8   |     |  |    | 2   |     |  |    | (7     | )      |   |    | (33  | )    |   |   | (20  | )    |   |   | (30  | )    |   |   | 144    |       |   |   | 98     |       |  |   | 83    |       |   |   | 29    |    
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    
|Net earnings (loss)                            |                                               | $  | (1               | )   |                               | $  | 16    |     |  | $  | 13  |     |  | $  | 4   |     |  | $  | (15    | )      |   | $  | (76  | )    |   | $ | 42   |      |   | $ | (28  | )    |   | $ | 242    |       |   | $ | 173    |       |  | $ | 263   |       |   | $ | 126   |    
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    
|Capital employed(2)                            |                                               | $  | 338              |     |                               | $  | 360   |     |  | $  | 383 |     |  | $  | 375 |     |  | $  | 384    |        |   | $  | 176  |      |   | $ | 233  |      |   | $ | (2   | )    |   | $ | 7,512  |       |   | $ | 7,334  |       |  | $ | 7,135 |       |   | $ | 6,866 |    
|Total assets                                   |                                               | $  | 534              |     |                               | $  | 554   |     |  | $  | 523 |     |  | $  | 516 |     |  | $  | 313    |        |   | $  | 153  |      |   | $ | 189  |      |   | $ | 6    |      |   | $ | 10,575 |       |   | $ | 10,348 |       |  | $ | 9,965 |       |   | $ | 9,730 |    
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |        |        |   |    |      |      |   |   |      |      |   |   |      |      |   |   |        |       |   |   |        |       |  |   |       |       |   |   |       |    

|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |       | 
|---------------------------------------------- | --------------------------------------------- | -- | ---------------- | --- | ----------------------------- | -- | ----- | --- |  | -- | --- | --- |  | -- | --- | --- |  | -- | ---- | ---- | - | -- | ---- | ---- | - | - | ---- | ---- | - | - | ------ | ------ | - | - | ----- | ----- |  | - | ----- | --- |  | - | ----- | ----- | - | - | ----- | ----- | 
|                                               |                                               |    | Refined Products |     | Corporate
and Eliminations(1) |    | Total
|                                               |                                               |    |                  |     |                               |    |      
|2001                                           |                                               | Q4 |                  | Q3  |                               | Q2 |       | Q1  |  | Q4 |     | Q3  |  | Q2 |     | Q1  |  | Q4 |      | Q3   |   | Q2 |      | Q1  
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |     
|Sales and operating revenues,
net of royalties |                                               | $  | 274              |     |                               | $  | 429   |     |  | $  | 345 |     |  | $  | 301 |     |  | $  | (326 | )    |   | $  | (559 | )    |   | $ | (290 | )    |   | $ | (1,009 | )      |   | $ | 1,615 |       |  | $ | 1,470 |     |  | $ | 1,731 |       |   | $ | 1,780 |      
|Costs and expenses                             |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      
|                                               | Operating, cost of sales,
selling and general |    |                  | 254 |                               |    |       | 371 |  |    |     | 296 |  |    |     | 285 |  |    |      | (330 | ) |    |      | (552 | ) |   |      | (283 | ) |   |        | (1,000 | ) |   |       | 1,298 |  |   |       | 963 |  |   |       | 1,134 |   |   |       | 1,125 | 
|                                               | Depletion, depreciation
and amortization      |    |                  | 9   |                               |    |       | 7   |  |    |     | 7   |  |    |     | 8   |  |    |      | 4    |   |    |      | 3    |   |   |      | 4    |   |   |        | 3      |   |   |       | 214   |  |   |       | 205 |  |   |       | 196   |   |   |       | 192   | 
|                                               | Interest  net                                |    |                  |    |                               |    |       |    |  |    |     |    |  |    |     |    |  |    |      | 23   |   |    |      | 24   |   |   |      | 26   |   |   |        | 28     |   |   |       | 23    |  |   |       | 24  |  |   |       | 26    |   |   |       | 28    | 
|                                               | Foreign exchange                              |    |                  |    |                               |    |       |    |  |    |     |    |  |    |     |    |  |    |      | 15   |   |    |      | 56   |   |   |      | (50  | ) |   |        | 73     |   |   |       | 15    |  |   |       | 56  |  |   |       | (50   | ) |   |       | 73    | 
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      
|                                               |                                               |    | 263              |     |                               |    | 378   |     |  |    | 303 |     |  |    | 293 |     |  |    | (288 | )    |   |    | (469 | )    |   |   | (303 | )    |   |   | (896   | )      |   |   | 1,550 |       |  |   | 1,248 |     |  |   | 1,306 |       |   |   | 1,418 |      
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      
|Earnings (loss) before
income taxes            |                                               |    | 11               |     |                               |    | 51    |     |  |    | 42  |     |  |    | 8   |     |  |    | (38  | )    |   |    | (90  | )    |   |   | 13   |      |   |   | (113   | )      |   |   | 65    |       |  |   | 222   |     |  |   | 425   |       |   |   | 362   |      
|Current income taxes                           |                                               |    | 1                |     |                               |    |      |     |  |    |    |     |  |    |    |     |  |    |     |      |   |    | (1   | )    |   |   |     |      |   |   | 1      |        |   |   | 5     |       |  |   | 5     |     |  |   | 5     |       |   |   | 5     |      
|Future income taxes                            |                                               |    | 7                |     |                               |    | 21    |     |  |    | 16  |     |  |    | 4   |     |  |    | (32  | )    |   |    | (28  | )    |   |   | 7    |      |   |   | (28    | )      |   |   | 15    |       |  |   | 99    |     |  |   | 121   |       |   |   | 165   |      
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      
|Net earnings (loss)                            |                                               | $  | 3                |     |                               | $  | 30    |     |  | $  | 26  |     |  | $  | 4   |     |  | $  | (6   | )    |   | $  | (61  | )    |   | $ | 6    |      |   | $ | (86    | )      |   | $ | 45    |       |  | $ | 118   |     |  | $ | 299   |       |   | $ | 192   |      
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      
|Capital employed(2)                            |                                               | $  | 329              |     |                               | $  | 304   |     |  | $  | 342 |     |  | $  | 364 |     |  | $  | (81  | )    |   | $  | (78  | )    |   | $ | (103 | )    |   | $ | (96    | )      |   | $ | 6,678 |       |  | $ | 6,587 |     |  | $ | 6,460 |       |   | $ | 6,303 |      
|Total assets                                   |                                               | $  | 428              |     |                               | $  | 491   |     |  | $  | 499 |     |  | $  | 498 |     |  | $  | 29   |      |   | $  | 10   |      |   | $ | (4   | )    |   | $ |       |        |   | $ | 9,370 |       |  | $ | 9,262 |     |  | $ | 9,044 |       |   | $ | 8,991 |      
|                                               |                                               |    |                  |     |                               |    |       |     |  |    |     |     |  |    |     |     |  |    |      |      |   |    |      |      |   |   |      |      |   |   |        |        |   |   |       |       |  |   |       |     |  |   |       |       |   |   |       |      

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##### 



Segmented Financial Information($ millions)

|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |   |     |    | 
|-------------------- | ---------------- | ---------------- | ------------------------------ | -- | ---- | -- | ---- | - | --- | --- | --- | - | --- | --- | --- | - | --- | -- | --- | -- | --- | -- | --- | - | --- | -- | --- | - | --- | -- | --- | - | --- | -- | 
|                     |                  |                  |                                |    | 2002 |    | 2001
|                     |                  |                  |                                |    |      |    |     
|                     |                  |                  |                                |    | Q4   |    | Q3   |   | Q2  |     | Q1  |   | Q4  |     | Q3  |   | Q2  |    | Q1 
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |    
|Capital expenditures |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  
|                     | Upstream         |  Western Canada |                                | $  | 326  |    |      | $ | 207 |     |     | $ | 156 |     |     | $ | 345 |    |     | $  | 264 |    |     | $ | 323 |    |     | $ | 186 |    |     | $ | 249 |   
|                     |                  |                  |  East Coast Canada            |    |      | 97 |      |   |     | 169 |     |   |     | 154 |     |   |     | 38 |     |    |     | 54 |     |   |     | 43 |     |   |     | 54 |     |   |     | 40 | 
|                     |                  |                  |  International                |    |      | 8  |      |   |     | 25  |     |   |     | 22  |     |   |     | 20 |     |    |     | 35 |     |   |     | 21 |     |   |     | 18 |     |   |     | 30 | 
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  
|                     |                  |                  | 431                            |    |      |    | 401  |   |     |     | 332 |   |     |     | 403 |   |     |    | 353 |    |     |    | 387 |   |     |    | 258 |   |     |    | 319 |  
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  
|                     | Midstream        | 
Upgrader       |                                |    | 11   |    |      |   | 9   |     |     |   | 12  |     |     |   | 9   |    |     |    | 37  |    |     |   | 5   |    |     |   | 3   |    |     |   | 2   |   
|                     |                  |                  |  Infrastructure and marketing |    |      | 5  |      |   |     | 2   |     |   |     | 3   |     |   |     | 7  |     |    |     | 22 |     |   |     | 6  |     |   |     | 5  |     |   |     | 25 | 
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  
|                     |                  |                  | 16                             |    |      |    | 11   |   |     |     | 15  |   |     |     | 16  |   |     |    | 59  |    |     |    | 11  |   |     |    | 8   |   |     |    | 27  |  
|                     | Refined products |                  |                                | 22 |      |    |      | 9 |     |     |     | 9 |     |     |     | 4 |     |    |     | 12 |     |    |     | 7 |     |    |     | 5 |     |    |     | 5 |    
|                     | Corporate        |                  |                                | 10 |      |    |      | 5 |     |     |     | 5 |     |     |     | 3 |     |    |     | 11 |     |    |     | 9 |     |    |     | 2 |     |    |     |  |    
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  
|                     |                  | $                | 479                            |    |      | $  | 426  |   |     | $   | 361 |   |     | $   | 426 |   |     | $  | 435 |    |     | $  | 414 |   |     | $  | 273 |   |     | $  | 351 |  
|                     |                  |                  |                                |    |      |    |      |   |     |     |     |   |     |     |     |   |     |    |     |    |     |    |     |   |     |    |     |   |     |    |     |  

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##### 



Five-Year Financial and Operating Summary

Segmented Financial Information($ millions)



|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |     | 
|---------------------------------------------- | --------------------------------------------- | - | -------- | --- | ---- | - | ----- | --- | ---- | - | ----- | --- |  | - | ----- | --- |  | - | ----- | --- | 
|                                               |                                               |   | Upstream
|                                               |                                               |   |         
|                                               |                                               |   | 2002     |     | 2001 |   | 2000  |     | 1999 |   | 1998 
|                                               |                                               |   |          |     |      |   |       |     |      |   |      
|Year ended December 31                         |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|Sales and operating revenues,
net of royalties |                                               | $ | 2,665    |     |      | $ | 2,165 |     |      | $ | 1,549 |     |  | $ | 595   |     |  | $ | 440   |    
|Costs and expenses                             |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|                                               | Operating, cost of sales,
selling and general |   |          | 729 |      |   |       | 648 |      |   |       | 375 |  |   |       | 214 |  |   |       | 200 | 
|                                               | Depletion, depreciation and
amortization      |   |          | 851 |      |   |       | 728 |      |   |       | 407 |  |   |       | 223 |  |   |       | 214 | 
|                                               | Interest  net                                |   |          |    |      |   |       |    |      |   |       |    |  |   |       |    |  |   |       |    | 
|                                               | Foreign exchange                              |   |          |    |      |   |       |    |      |   |       |    |  |   |       |    |  |   |       |    | 
|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|                                               |                                               |   | 1,580    |     |      |   | 1,376 |     |      |   | 782   |     |  |   | 437   |     |  |   | 414   |    
|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|Earnings (loss) before income
taxes            |                                               |   | 1,085    |     |      |   | 789   |     |      |   | 767   |     |  |   | 158   |     |  |   | 26    |    
|Current income taxes                           |                                               |   | 55       |     |      |   | 17    |     |      |   | 10    |     |  |   | 3     |     |  |   | 3     |    
|Future income taxes                            |                                               |   | 342      |     |      |   | 290   |     |      |   | 305   |     |  |   | 50    |     |  |   | 20    |    
|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|Net earnings (loss)                            |                                               | $ | 688      |     |      | $ | 482   |     |      | $ | 452   |     |  | $ | 105   |     |  | $ | 3     |    
|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    
|Capital employed  As at
December 31(2)        |                                               | $ | 6,040    |     |      | $ | 5,715 |     |      | $ | 5,398 |     |  | $ | 2,077 |     |  | $ | 1,653 |    
|Total assets  As at December 31               |                                               | $ | 8,220    |     |      | $ | 7,407 |     |      | $ | 6,735 |     |  | $ | 2,839 |     |  | $ | 2,375 |    
|                                               |                                               |   |          |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |    

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |     | 
|---------------------------------------------- | --------------------------------------------- | - | --------- | --- | ---------------------------- | - | ---- | --- | ---- | - | ----- | --- | ---- | - | ---- | --- | ---- | - | ---- | --- | ---- | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | --- | --- | 
|                                               |                                               |   | Midstream
|                                               |                                               |   |          
|                                               |                                               |   | Upgrading |     | Infrastructure and Marketing
|                                               |                                               |   |           |     |                             
|                                               |                                               |   | 2002      |     | 2001                         |   | 2000 |     | 1999 |   | 1998  |     | 2002 |   | 2001 |     | 2000 |   | 1999 |     | 1998
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |     
|Year ended December 31                         |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|Sales and operating revenues,
net of royalties |                                               | $ | 909       |     |                              | $ | 886  |     |      | $ | 1,006 |     |      | $ | 641  |     |      | $ | 412  |     |      | $ | 4,230 |       |  | $ | 4,380 |       |  | $ | 2,309 |       |  | $ | 1,284 |       |  | $ | 999 |    
|Costs and expenses                             |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|                                               | Operating, cost of sales,
selling and general |   |           | 811 |                              |   |      | 638 |      |   |       | 848 |      |   |      | 581 |      |   |      | 346 |      |   |       | 4,038 |  |   |       | 4,193 |  |   |       | 2,193 |  |   |       | 1,190 |  |   |     | 909 | 
|                                               | Depletion, depreciation and
amortization      |   |           | 18  |                              |   |      | 17  |      |   |       | 16  |      |   |      | 16  |      |   |      | 14  |      |   |       | 20    |  |   |       | 17    |  |   |       | 15    |  |   |       | 13    |  |   |     | 12  | 
|                                               | Interest  net                                |   |           |    |                              |   |      |    |      |   |       |    |      |   |      |    |      |   |      |    |      |   |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |   |     |    | 
|                                               | Foreign exchange                              |   |           |    |                              |   |      |    |      |   |       |    |      |   |      |    |      |   |      |    |      |   |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |   |     |    | 
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|                                               |                                               |   | 829       |     |                              |   | 655  |     |      |   | 864   |     |      |   | 597  |     |      |   | 360  |     |      |   | 4,058 |       |  |   | 4,210 |       |  |   | 2,208 |       |  |   | 1,203 |       |  |   | 921 |    
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|Earnings (loss) before income
taxes            |                                               |   | 80        |     |                              |   | 231  |     |      |   | 142   |     |      |   | 44   |     |      |   | 52   |     |      |   | 172   |       |  |   | 170   |       |  |   | 101   |       |  |   | 81    |       |  |   | 78  |    
|Current income taxes                           |                                               |   | 1         |     |                              |   | 1    |     |      |   | 1     |     |      |   | 1    |     |      |   | 1    |     |      |   | 6     |       |  |   | 1     |       |  |   |      |       |  |   |      |       |  |   |    |    
|Future income taxes                            |                                               |   | 25        |     |                              |   | 72   |     |      |   | 53    |     |      |   | 21   |     |      |   | 22   |     |      |   | 59    |       |  |   | 71    |       |  |   | 45    |       |  |   | 36    |       |  |   | 35  |    
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|Net earnings (loss)                            |                                               | $ | 54        |     |                              | $ | 158  |     |      | $ | 88    |     |      | $ | 22   |     |      | $ | 29   |     |      | $ | 107   |       |  | $ | 98    |       |  | $ | 56    |       |  | $ | 45    |       |  | $ | 43  |    
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    
|Capital employed  As at
December 31(2)        |                                               | $ | 319       |     |                              | $ | 320  |     |      | $ | 352   |     |      | $ | 392  |     |      | $ | 418  |     |      | $ | 431   |       |  | $ | 395   |       |  | $ | 312   |       |  | $ | 353   |       |  | $ | 319 |    
|Total assets  As at December 31               |                                               | $ | 658       |     |                              | $ | 644  |     |      | $ | 613   |     |      | $ | 606  |     |      | $ | 605  |     |      | $ | 850   |       |  | $ | 862   |       |  | $ | 1,000 |       |  | $ | 652   |       |  | $ | 441 |    
|                                               |                                               |   |           |     |                              |   |      |     |      |   |       |     |      |   |      |     |      |   |      |     |      |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |     |    



---

|(1) |  | Eliminations relate to sales and operating revenues between segments
recorded at transfer prices based on current market prices, and to
unrealized intersegment profits in inventories.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Capital employed is defined as short- and long-term debt and
shareholders equity.                                                                                                     
|   
|    |  | Certain prior years amounts have been reclassified to conform with current
presentation.                                                                                              

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##### 



Segmented Financial Information($ millions)



|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |     | 
|---------------------------------------------- | --------------------------------------------- | - | ---------------- | ----- | ---- | - | ----- | ----- | ---- | - | ----- | ----- |  | - | --- | --- |  | - | --- | --- | 
|                                               |                                               |   | Refined Products
|                                               |                                               |   |                 
|                                               |                                               |   | 2002             |       | 2001 |   | 2000  |       | 1999 |   | 1998 
|                                               |                                               |   |                  |       |      |   |       |       |      |   |      
|Year ended December 31                         |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|Sales and operating revenues,
net of royalties |                                               | $ | 1,310            |       |      | $ | 1,349 |       |      | $ | 1,347 |       |  | $ | 904 |     |  | $ | 664 |    
|Costs and expenses                             |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|                                               | Operating, cost of sales,
selling and general |   |                  | 1,222 |      |   |       | 1,206 |      |   |       | 1,288 |  |   |     | 842 |  |   |     | 591 | 
|                                               | Depletion, depreciation and
amortization      |   |                  | 34    |      |   |       | 31    |      |   |       | 28    |  |   |     | 26  |  |   |     | 20  | 
|                                               | Interest  net                                |   |                  |      |      |   |       |      |      |   |       |      |  |   |     |    |  |   |     |    | 
|                                               | Foreign exchange                              |   |                  |      |      |   |       |      |      |   |       |      |  |   |     |    |  |   |     |    | 
|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|                                               |                                               |   | 1,256            |       |      |   | 1,237 |       |      |   | 1,316 |       |  |   | 868 |     |  |   | 611 |    
|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|Earnings (loss) before income
taxes            |                                               |   | 54               |       |      |   | 112   |       |      |   | 31    |       |  |   | 36  |     |  |   | 53  |    
|Current income taxes                           |                                               |   | 4                |       |      |   | 1     |       |      |   | 1     |       |  |   | 1   |     |  |   | 1   |    
|Future income taxes                            |                                               |   | 18               |       |      |   | 48    |       |      |   | 14    |       |  |   | 16  |     |  |   | 23  |    
|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|Net earnings (loss)                            |                                               | $ | 32               |       |      | $ | 63    |       |      | $ | 16    |       |  | $ | 19  |     |  | $ | 29  |    
|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    
|Capital employed  As at
December 31(2)        |                                               | $ | 338              |       |      | $ | 329   |       |      | $ | 351   |       |  | $ | 366 |     |  | $ | 381 |    
|Total assets  As at December 31               |                                               | $ | 534              |       |      | $ | 428   |       |      | $ | 487   |       |  | $ | 476 |     |  | $ | 421 |    
|                                               |                                               |   |                  |       |      |   |       |       |      |   |       |       |  |   |     |     |  |   |     |    

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |      |  
|---------------------------------------------- | --------------------------------------------- | - | ----------------------------- | ------ | ---- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                               |                                               |   | Corporate
and Eliminations(1)
|                                               |                                               |   |                              
|                                               |                                               |   | 2002                          |        | 2001 |   | 2000   |        | 1999 |   | 1998  
|                                               |                                               |   |                               |        |      |   |        |        |      |   |       
|Year ended December 31                         |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|Sales and operating revenues,
net of royalties |                                               | $ | (2,730                        | )      |      | $ | (2,184 | )      |      | $ | (1,145 | )      |   | $ | (637 | )    |   | $ | (492 | )   
|Costs and expenses                             |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|                                               | Operating, cost of sales,
selling and general |   |                               | (2,696 | )    |   |        | (2,165 | )    |   |        | (1,060 | ) |   |      | (514 | ) |   |      | (437 | )
|                                               | Depletion, depreciation and
amortization      |   |                               | 16     |      |   |        | 14     |      |   |        | 15     |   |   |      | 15   |   |   |      | 13   |  
|                                               | Interest  net                                |   |                               | 104    |      |   |        | 101    |      |   |        | 101    |   |   |      | 62   |   |   |      | 70   |  
|                                               | Foreign exchange                              |   |                               | 13     |      |   |        | 94     |      |   |        | 39     |   |   |      | (55  | ) |   |      | 63   |  
|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|                                               |                                               |   | (2,563                        | )      |      |   | (1,956 | )      |      |   | (905   | )      |   |   | (492 | )    |   |   | (291 | )   
|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|Earnings (loss) before income
taxes            |                                               |   | (167                          | )      |      |   | (228   | )      |      |   | (240   | )      |   |   | (145 | )    |   |   | (201 | )   
|Current income taxes                           |                                               |   |                              |        |      |   |       |        |      |   |       |        |   |   |     |      |   |   |     |     
|Future income taxes                            |                                               |   | (90                           | )      |      |   | (81    | )      |      |   | (66    | )      |   |   | (50  | )    |   |   | (92  | )   
|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|Net earnings (loss)                            |                                               | $ | (77                           | )      |      | $ | (147   | )      |      | $ | (174   | )      |   | $ | (95  | )    |   | $ | (109 | )   
|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     
|Capital employed  As at
December 31(2)        |                                               | $ | 384                           |        |      | $ | (81    | )      |      | $ | (50    | )      |   | $ | 158  |      |   | $ | 134  |     
|Total assets  As at December 31               |                                               | $ | 313                           |        |      | $ | 29     |        |      | $ | (6     | )      |   | $ | 203  |      |   | $ | 233  |     
|                                               |                                               |   |                               |        |      |   |        |        |      |   |        |        |   |   |      |      |   |   |      |     

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |       | 
|---------------------------------------------- | --------------------------------------------- | - | ------ | ----- | ---- | - | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | - | - | ----- | ----- | 
|                                               |                                               |   | Total 
|                                               |                                               |   |       
|                                               |                                               |   | 2002   |       | 2001 |   | 2000  |       | 1999 |   | 1998 
|                                               |                                               |   |        |       |      |   |       |       |      |   |      
|Year ended December 31                         |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|Sales and operating revenues,
net of royalties |                                               | $ | 6,384  |       |      | $ | 6,596 |       |      | $ | 5,066 |       |  | $ | 2,787 |       |   | $ | 2,023 |      
|Costs and expenses                             |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|                                               | Operating, cost of sales,
selling and general |   |        | 4,104 |      |   |       | 4,520 |      |   |       | 3,644 |  |   |       | 2,313 |   |   |       | 1,609 | 
|                                               | Depletion, depreciation and
amortization      |   |        | 939   |      |   |       | 807   |      |   |       | 481   |  |   |       | 293   |   |   |       | 273   | 
|                                               | Interest  net                                |   |        | 104   |      |   |       | 101   |      |   |       | 101   |  |   |       | 62    |   |   |       | 70    | 
|                                               | Foreign exchange                              |   |        | 13    |      |   |       | 94    |      |   |       | 39    |  |   |       | (55   | ) |   |       | 63    | 
|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|                                               |                                               |   | 5,160  |       |      |   | 5,522 |       |      |   | 4,265 |       |  |   | 2,613 |       |   |   | 2,015 |      
|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|Earnings (loss) before income
taxes            |                                               |   | 1,224  |       |      |   | 1,074 |       |      |   | 801   |       |  |   | 174   |       |   |   | 8     |      
|Current income taxes                           |                                               |   | 66     |       |      |   | 20    |       |      |   | 12    |       |  |   | 5     |       |   |   | 5     |      
|Future income taxes                            |                                               |   | 354    |       |      |   | 400   |       |      |   | 351   |       |  |   | 73    |       |   |   | 8     |      
|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|Net earnings (loss)                            |                                               | $ | 804    |       |      | $ | 654   |       |      | $ | 438   |       |  | $ | 96    |       |   | $ | (5    | )    
|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      
|Capital employed  As at
December 31(2)        |                                               | $ | 7,512  |       |      | $ | 6,678 |       |      | $ | 6,363 |       |  | $ | 3,346 |       |   | $ | 2,905 |      
|Total assets  As at December 31               |                                               | $ | 10,575 |       |      | $ | 9,370 |       |      | $ | 8,829 |       |  | $ | 4,776 |       |   | $ | 4,075 |      
|                                               |                                               |   |        |       |      |   |       |       |      |   |       |       |  |   |       |       |   |   |       |      

Page 63



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##### 



Segmented Financial Information

|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 
|-------------------- |  | ------------------------------ | -- | ---- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | - | --- | - | --- | - | --- | - | --- | - | --- | - | --- | 
|($ millions)         |  | 2002                           |    | 2001 |       | 2000 |       | 1999 |       | 1998
|                     |  |                                |    |      |       |      |       |      |       |     
|Capital expenditures |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |    
|Upstream             |  |  Western Canada               |    | $    | 1,034 |      |       | $    | 1,022 |      |       | $ | 419 |   |     | $ | 238 |   |     | $ | 233 |  
|                     |  |  East Coast Canada            |    |      | 458   |      |       |      | 191   |      |       |   | 194 |   |     |   | 309 |   |     |   | 191 |  
|                     |  |  International                |    |      | 75    |      |       |      | 104   |      |       |   | 87  |   |     |   | 23  |   |     |   | 15  |  
|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                                |    |      |       |      | 1,567 |      |       |      | 1,317 |   |     |   | 700 |   |     |   | 570 |   |     |   | 439 | 
|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 
|Midstream            |  |  Upgrader                     |    |      | 41    |      |       |      | 47    |      |       |   | 12  |   |     |   | 15  |   |     |   | 283 |  
|                     |  |  Infrastructure and marketing |    |      | 17    |      |       |      | 58    |      |       |   | 47  |   |     |   | 79  |   |     |   | 68  |  
|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                                |    |      |       |      | 58    |      |       |      | 105   |   |     |   | 59  |   |     |   | 94  |   |     |   | 351 | 
|Refined products     |  |                                | 44 |      |       |      | 29    |      |       |      | 29    |   |     |   | 34  |   |     |   | 27  |  
|Corporate            |  |                                |    |      |       |      | 23    |      |       |      | 22    |   |     |   | 15  |   |     |   | 8   |   |     |   | 12  | 
|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 
|                     |  |                                |    |      |       | $    | 1,692 |      |       | $    | 1,473 |   |     | $ | 803 |   |     | $ | 706 |   |     | $ | 829 | 
|                     |  |                                |    |      |       |      |       |      |       |      |       |   |     |   |     |   |     |   |     |   |     |   |     | 

Upstream Operating Information

|                                   |                                          |   |       |       |      |   |       |       |      |   |       |       |  |   |      |       |  |   |      |       | 
|---------------------------------- | ---------------------------------------- | - | ----- | ----- | ---- | - | ----- | ----- | ---- | - | ----- | ----- |  | - | ---- | ----- |  | - | ---- | ----- | 
|                                   |                                          |   | 2002  |       | 2001 |   | 2000  |       | 1999 |   | 1998 
|                                   |                                          |   |       |       |      |   |       |       |      |   |      
|Daily production, before royalties |                                          |   |       |       |      |   |       |       |      |   |       |       |  |   |      |       |  |   |      |      
|                                   | Light/medium crude oil & NGL (mbbls/day) |   |       | 125.9 |      |   |       | 112.0 |      |   |       | 63.6  |  |   |      | 26.5  |  |   |      | 27.6  | 
|                                   | Lloydminster heavy crude oil (mbbls/day) |   |       | 79.4  |      |   |       | 65.4  |      |   |       | 53.5  |  |   |      | 42.1  |  |   |      | 42.0  | 
|                                   |                                          |   |       |       |      |   |       |       |      |   |       |       |  |   |      |       |  |   |      |      
|                                   |                                          |   | 205.3 |       |      |   | 177.4 |       |      |   | 117.1 |       |  |   | 68.6 |       |  |   | 69.6 |      
|                                   | Natural gas (mmcf/day)                   |   |       | 569.2 |      |   |       | 572.6 |      |   |       | 358.0 |  |   |      | 250.5 |  |   |      | 232.6 | 
|                                   | Total production (mboe/day)              |   |       | 300.2 |      |   |       | 272.8 |      |   |       | 176.8 |  |   |      | 110.4 |  |   |      | 108.4 | 
|Average realized sales prices      |                                          |   |       |       |      |   |       |       |      |   |       |       |  |   |      |       |  |   |      |      
|                                   | Light/medium crude oil & NGL ($/bbl)     |   | $     | 33.28 |      |   | $     | 27.19 |      |   | $     | 33.42 |  |   | $    | 21.52 |  |   | $    | 16.07 | 
|                                   | Lloydminster heavy crude oil ($/bbl)     |   | $     | 26.09 |      |   | $     | 15.85 |      |   | $     | 21.26 |  |   | $    | 16.00 |  |   | $    | 8.26  | 
|                                   | Natural gas ($/mcf)                      |   | $     | 3.83  |      |   | $     | 5.47  |      |   | $     | 5.16  |  |   | $    | 2.41  |  |   | $    | 2.17  | 
|Operating costs ($/boe)            |                                          | $ | 6.24  |       |      | $ | 6.08  |       |      | $ | 5.27  |       |  | $ | 4.80 |       |  | $ | 4.53 |      
|Operating netbacks(1)              |                                          |   |       |       |      |   |       |       |      |   |       |       |  |   |      |       |  |   |      |      
|                                   | Light/medium crude oil & NGL ($/boe)     |   | $     | 21.20 |      |   | $     | 15.08 |      |   | $     | 20.61 |  |   | $    | 13.71 |  |   | $    | 9.78  | 
|                                   | Lloydminster heavy crude oil ($/boe)     |   | $     | 16.02 |      |   | $     | 7.13  |      |   | $     | 12.11 |  |   | $    | 7.75  |  |   | $    | 1.61  | 
|                                   | Natural gas ($/mcfge)                    |   | $     | 2.44  |      |   | $     | 3.51  |      |   | $     | 3.59  |  |   | $    | 1.54  |  |   | $    | 1.46  | 



---

|(1) |  | Operating netbacks are Huskys average realized prices
less royalties, hedging (gains)/losses and operating costs on
a per unit basis.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------

Certain prior years amounts have been reclassified to
conform with current presentation.

Page 64



---



##### 



Upstream Operating Information (continued)

|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    |  | 
|----------------------- | ----------- | --- | --- | -- | --- | --- | ----- | -- | ---- | --- | ----- | -- | ---- | --- | ----- | -- | --- | --- | ----- | -- | --- | --- | ----- | -- | --- | --- | --- | -- | -- | --- | --- | -- | -- | --- | --- | -- | -- | -- | --- | -- | - | -- | -- |  | 
|                        |             |     |     |    |     |     | 2002  |    | 2001 |     | 2000  |    | 1999 |     | 1998 
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |      
|                        |             |     |     |    |     |     | Gross |    | Net  |     | Gross |    | Net  |     | Gross |    | Net |     | Gross |    | Net |     | Gross |    | Net
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |    
|Wells drilled(1)        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |    
|                        | Exploration |     | Oil |    |     | 21  |       |    |      | 20  |       |    |      | 78  |       |    |     | 76  |       |    |     | 16  |       |    |     | 13  |     |    |    | 9   |     |    |    | 9   |     |    |    | 16 |     |    |   | 11 |   
|                        |             | Gas |     |    | 139 |     |       |    | 131  |     |       |    | 102  |     |       |    | 90  |     |       |    | 30  |     |       |    | 20  |     |     |    | 13 |     |     |    | 5  |     |     |    | 9  |    |     |    | 7 |   
|                        |             | Dry |     |    | 15  |     |       |    | 14   |     |       |    | 36   |     |       |    | 34  |     |       |    | 9   |     |       |    | 9   |     |     |    | 9  |     |     |    | 9  |     |     |    | 8  |    |     |    | 6 |   
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    | 
|                        |             |     |     |    |     |     | 175   |    |      |     | 165   |    |      |     | 216   |    |     |     | 200   |    |     |     | 55    |    |     |     | 42  |    |    |     | 31  |    |    |     | 23  |    |    |    | 33  |    |   |    | 24 | 
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    | 
|                        | Development |     | Oil |    |     | 497 |       |    |      | 453 |       |    |      | 594 |       |    |     | 542 |       |    |     | 411 |       |    |     | 363 |     |    |    | 203 |     |    |    | 190 |     |    |    | 75 |     |    |   | 55 |   
|                        |             | Gas |     |    | 485 |     |       |    | 453  |     |       |    | 251  |     |       |    | 221 |     |       |    | 92  |     |       |    | 70  |     |     |    | 42 |     |     |    | 23 |     |     |    | 22 |    |     |    | 7 |   
|                        |             | Dry |     |    | 58  |     |       |    | 55   |     |       |    | 68   |     |       |    | 63  |     |       |    | 30  |     |       |    | 28  |     |     |    | 23 |     |     |    | 22 |     |     |    | 6  |    |     |    | 4 |   
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    | 
|                        |             |     |     |    |     |     | 1,040 |    |      |     | 961   |    |      |     | 913   |    |     |     | 826   |    |     |     | 533   |    |     |     | 461 |    |    |     | 268 |    |    |     | 235 |    |    |    | 103 |    |   |    | 66 | 
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    | 
|                        |             |     |     |    |     |     | 1,215 |    |      |     | 1,126 |    |      |     | 1,129 |    |     |     | 1,026 |    |     |     | 588   |    |     |     | 503 |    |    |     | 299 |    |    |     | 258 |    |    |    | 136 |    |   |    | 90 | 
|                        |             |     |     |    |     |     |       |    |      |     |       |    |      |     |       |    |     |     |       |    |     |     |       |    |     |     |     |    |    |     |     |    |    |     |     |    |    |    |     |    |   |    |    | 
|Success ratio
(percent) |             |     |     | 94 |     |     |       | 94 |      |     |       | 91 |      |     |       | 91 |     |     |       | 93 |     |     |       | 93 |     |     |     | 89 |    |     |     | 88 |    |     |     | 90 |    |    |     | 89 |  



---

|(1) |  | Western Canada.
|--- |  | ---------------

Undeveloped Land Holdings

|                                 |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |     | 
|-------------------------------- | ---------------- | ---- | ------ | ----- |  | ---- | ------ | ----- |  | ---- | ------ | ----- |  |  | ----- | --- |  |  | ----- | --- | 
|(thousands of acres - net)       |                  | 2002 |        | 2001  |  | 2000 |        | 1999  |  | 1998
|                                 |                  |      |        |       |  |      |        |       |  |     
|Western Canada                   |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |    
|                                 | Alberta          |      |        | 4,907 |  |      |        | 5,373 |  |      |        | 5,616 |  |  |       | 692 |  |  |       | 877 | 
|                                 | Saskatchewan     |      |        | 1,986 |  |      |        | 1,921 |  |      |        | 2,639 |  |  |       | 586 |  |  |       | 662 | 
|                                 | British Columbia |      |        | 273   |  |      |        | 141   |  |      |        | 173   |  |  |       | 66  |  |  |       | 133 | 
|                                 | Manitoba         |      |        | 13    |  |      |        | 75    |  |      |        | 162   |  |  |       |    |  |  |       |    | 
|                                 |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |    
|                                 |                  |      | 7,179  |       |  |      | 7,510  |       |  |      | 8,590  |       |  |  | 1,344 |     |  |  | 1,672 |    
|Northwest Territories and Arctic |                  |      | 175    |       |  |      | 409    |       |  |      | 409    |       |  |  | 417   |     |  |  | 474   |    
|Eastern Canada                   |                  |      | 2,104  |       |  |      | 1,471  |       |  |      | 1,489  |       |  |  | 258   |     |  |  | 243   |    
|                                 |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |    
|Total Canada                     |                  |      | 9,458  |       |  |      | 9,390  |       |  |      | 10,488 |       |  |  | 2,019 |     |  |  | 2,389 |    
|International                    |                  |      | 2,066  |       |  |      | 697    |       |  |      | 221    |       |  |  | 389   |     |  |  | 392   |    
|                                 |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |    
|Total                            |                  |      | 11,524 |       |  |      | 10,087 |       |  |      | 10,709 |       |  |  | 2,408 |     |  |  | 2,781 |    
|                                 |                  |      |        |       |  |      |        |       |  |      |        |       |  |  |       |     |  |  |       |    

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##### 



Selected Eleven-Year Financial and Operating Summary

|                                                |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |       |  
|----------------------------------------------- | ---------------------------------- | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ----- | - | ---- | ----- | ---- |  | - | ----- | ---- |  | - | ----- | ---- |  | - | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|($ millions, except where indicated)            |                                    | 2002 |       | 2001 |  | 2000 |       | 1999 |  | 1998 |       | 1997 |  | 1996 |       | 1995 |  | 1994 |       | 1993  |   | 1992
|                                                |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |     
|Sales and operating revenues, net of royalties  |                                    | $    | 6,384 |      |  | $    | 6,596 |      |  | $    | 5,066 |      |  | $    | 2,787 |      |  | $    | 2,023 |       |   | $    | 2,282 |      |  | $ | 2,104 |      |  | $ | 1,783 |      |  | $ | 1,373 |       |   | $ | 1,138 |       |   | $ | 977   |      
|Net earnings (loss)                             |                                    | $    | 804   |      |  | $    | 654   |      |  | $    | 438   |      |  | $    | 96    |      |  | $    | (5    | )     |   | $    | 55    |      |  | $ | 49    |      |  | $ | 20    |      |  | $ | (40   | )     |   | $ | (249  | )     |   | $ | (395  | )    
|Net earnings per share                          |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|                                                | Basic                              |      | $     | 1.88 |  |      | $     | 1.49 |  |      | $     | 1.28 |  |      | $     | 0.34 |  |      | $     | (0.04 | ) |      | $     | 0.20 |  |   | $     | 0.18 |  |   | $     | 0.08 |  |   | $     | (0.15 | ) |   | $     | (0.92 | ) |   | $     | (1.46 | )
|                                                | Diluted                            |      | $     | 1.88 |  |      | $     | 1.48 |  |      | $     | 1.28 |  |      | $     | 0.34 |  |      | $     | (0.04 | ) |      | $     | 0.20 |  |   | $     | 0.18 |  |   | $     | 0.08 |  |   | $     | (0.15 | ) |   | $     | (0.92 | ) |   | $     | (1.46 | )
|Cash flow from operations                       |                                    | $    | 2,096 |      |  | $    | 1,946 |      |  | $    | 1,399 |      |  | $    | 517   |      |  | $    | 449   |       |   | $    | 453   |      |  | $ | 378   |      |  | $ | 303   |      |  | $ | 242   |       |   | $ | 171   |       |   | $ | 183   |      
|Cash flow from operations per share             |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|                                                | Basic                              |      | $     | 4.94 |  |      | $     | 4.60 |  |      | $     | 4.26 |  |      | $     | 1.80 |  |      | $     | 1.61  |   |      | $     | 1.68 |  |   | $     | 1.40 |  |   | $     | 1.12 |  |   | $     | 0.90  |   |   | $     | 0.63  |   |   | $     | 0.68  |  
|                                                | Diluted                            |      | $     | 4.92 |  |      | $     | 4.57 |  |      | $     | 4.26 |  |      | $     | 1.80 |  |      | $     | 1.61  |   |      | $     | 1.68 |  |   | $     | 1.40 |  |   | $     | 1.12 |  |   | $     | 0.90  |   |   | $     | 0.63  |   |   | $     | 0.68  |  
|Capital
expenditures(1)                         |                                    | $    | 1,692 |      |  | $    | 1,473 |      |  | $    | 803   |      |  | $    | 706   |      |  | $    | 829   |       |   | $    | 601   |      |  | $ | 218   |      |  | $ | 155   |      |  | $ | 257   |       |   | $ | 315   |       |   | $ | 312   |      
|Total debt                                      |                                    | $    | 2,385 |      |  | $    | 2,192 |      |  | $    | 2,378 |      |  | $    | 1,382 |      |  | $    | 1,131 |       |   | $    | 1,014 |      |  | $ | 853   |      |  | $ | 1,474 |      |  | $ | 1,667 |       |   | $ | 1,570 |       |   | $ | 1,570 |      
|Debt to capital employed (percent)              |                                    |      | 32    |      |  |      | 33    |      |  |      | 37    |      |  |      | 41    |      |  |      | 39    |       |   |      | 43    |      |  |   | 42    |      |  |   | 63    |      |  |   | 69    |       |   |   | 67    |       |   |   | 62    |      
|Debt to cash flow from operations (times)       |                                    |      | 1.1   |      |  |      | 1.1   |      |  |      | 1.7   |      |  |      | 2.7   |      |  |      | 2.5   |       |   |      | 2.2   |      |  |   | 2.3   |      |  |   | 4.9   |      |  |   | 6.9   |       |   |   | 9.2   |       |   |   | 8.6   |      
|Reinvestment ratio(3)(percent)                  |                                    |      | 76    |      |  |      | 78    |      |  |      | 57    |      |  |      | 134   |      |  |      | 199   |       |   |      | 132   |      |  |   | 46    |      |  |   | 44    |      |  |   | 62    |       |   |   | 117   |       |   |   | 118   |      
|Return on average capital employed(2)(percent)  |                                    |      | 12.2  |      |  |      | 10.9  |      |  |      | 12.4  |      |  |      | 6.9   |      |  |      | 4.2   |       |   |      | 7.2   |      |  |   | 6.7   |      |  |   | 5.5   |      |  |   | 1.2   |       |   |   | (8.5  | )     |   |   | (12.8 | )    
|Return on equity(4)(percent)                    |                                    |      | 16.7  |      |  |      | 15.4  |      |  |      | 19.4  |      |  |      | 11.4  |      |  |      | 6.7   |       |   |      | 12.1  |      |  |   | 11.7  |      |  |   | 14.1  |      |  |   | (3.0  | )     |   |   | (28.3 | )     |   |   | (31.0 | )    
|Upstream                                        |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|Daily production, before royalties              |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|Light/medium crude oil & NGL (mbbls/day)        |                                    |      | 125.9 |      |  |      | 112.0 |      |  |      | 63.6  |      |  |      | 26.5  |      |  |      | 27.6  |       |   |      | 27.6  |      |  |   | 28.3  |      |  |   | 27.7  |      |  |   | 29.4  |       |   |   | 29.9  |       |   |   | 28.9  |      
|Lloydminster heavy crude oil (mbbls/day)        |                                    |      | 79.4  |      |  |      | 65.4  |      |  |      | 53.5  |      |  |      | 42.1  |      |  |      | 42.0  |       |   |      | 41.9  |      |  |   | 34.5  |      |  |   | 30.0  |      |  |   | 26.6  |       |   |   | 21.9  |       |   |   | 18.4  |      
|                                                |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|                                                |                                    |      | 205.3 |      |  |      | 177.4 |      |  |      | 117.1 |      |  |      | 68.6  |      |  |      | 69.6  |       |   |      | 69.5  |      |  |   | 62.8  |      |  |   | 57.7  |      |  |   | 56.0  |       |   |   | 51.8  |       |   |   | 47.3  |      
|Natural gas (mmcf/day)                          |                                    |      | 569   |      |  |      | 573   |      |  |      | 358   |      |  |      | 251   |      |  |      | 233   |       |   |      | 246   |      |  |   | 268   |      |  |   | 286   |      |  |   | 248   |       |   |   | 246   |       |   |   | 252   |      
|Total production (mboe/day)                     |                                    |      | 300.2 |      |  |      | 272.8 |      |  |      | 176.8 |      |  |      | 110.4 |      |  |      | 108.4 |       |   |      | 110.6 |      |  |   | 107.5 |      |  |   | 105.4 |      |  |   | 97.4  |       |   |   | 92.8  |       |   |   | 89.3  |      
|Total proved reserves, before royalties (mmboe) |                                    |      | 918   |      |  |      | 927   |      |  |      | 872   |      |  |      | 430   |      |  |      | 431   |       |   |      | 421   |      |  |   | 432   |      |  |   | 416   |      |  |   | 401   |       |   |   | 408   |       |   |   | 472   |      
|Midstream                                       |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|Synthetic crude oil sales (mbbls/day)           |                                    |      | 59.3  |      |  |      | 59.5  |      |  |      | 60.6  |      |  |      | 61.9  |      |  |      | 54.8  |       |   |      | 27.5  |      |  |   | 26.8  |      |  |   | 26.6  |      |  |   | 18.8  |       |   |   | 11.3  |       |   |   | 0.6   |      
|Upgrading differential ($/bbl)                  |                                    | $    | 10.81 |      |  | $    | 17.91 |      |  | $    | 13.77 |      |  | $    | 6.49  |      |  | $    | 7.85  |       |   | $    | 8.54  |      |  | $ | 5.94  |      |  | $ | 4.34  |      |  | $ | 4.18  |       |   | $ | 5.50  |       |   | $ | 5.22  |      
|Pipeline throughput (mbbls/day)                 |                                    |      | 457   |      |  |      | 537   |      |  |      | 528   |      |  |      | 394   |      |  |      | 412   |       |   |      | 417   |      |  |   | 359   |      |  |   | 296   |      |  |   | 238   |       |   |   | 217   |       |   |   | 169   |      
|Refined products                                |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|Light oil sales (million litres/day)            |                                    |      | 7.7   |      |  |      | 7.6   |      |  |      | 7.4   |      |  |      | 7.6   |      |  |      | 6.0   |       |   |      | 4.5   |      |  |   | 4.2   |      |  |   | 3.9   |      |  |   | 3.2   |       |   |   | 2.9   |       |   |   | 2.5   |      
|Asphalt product sales (mbbls/day)               |                                    |      | 20.8  |      |  |      | 21.4  |      |  |      | 20.2  |      |  |      | 17.1  |      |  |      | 19.5  |       |   |      | 17.7  |      |  |   | 15.1  |      |  |   | 13.5  |      |  |   | 13.1  |       |   |   | 10.8  |       |   |   | 9.9   |      
|Refinery throughput                             |                                    |      |       |      |  |      |       |      |  |      |       |      |  |      |       |      |  |      |       |       |   |      |       |      |  |   |       |      |  |   |       |      |  |   |       |       |   |   |       |       |   |   |       |      
|                                                | Lloydminster refinery (mbbls/day)  |      |       | 22.0 |  |      |       | 23.7 |  |      |       | 23.4 |  |      |       | 17.9 |  |      |       | 21.9  |   |      |       | 21.5 |  |   |       | 18.4 |  |   |       | 15.6 |  |   |       | 16.4  |   |   |       | 13.2  |   |   |       | 10.9  |  
|                                                | Prince George refinery (mbbls/day) |      |       | 10.1 |  |      |       | 10.2 |  |      |       | 9.2  |  |      |       | 10.2 |  |      |       | 9.9   |   |      |       | 10.3 |  |   |       | 10.0 |  |   |       | 9.9  |  |   |       | 9.7   |   |   |       | 9.7   |   |   |       | 8.7   |  
|Refinery utilization (percent)                  |                                    |      | 92    |      |  |      | 97    |      |  |      | 93    |      |  |      | 80    |      |  |      | 91    |       |   |      | 91    |      |  |   | 81    |      |  |   | 73    |      |  |   | 75    |       |   |   | 65    |       |   |   | 56    |      



---

|(1) |  | Excludes corporate acquisitions.                                                                                                     
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Capital employed for purposes of this calculation has been
weighted for 2000.                                                        
|   
|(3) |  | Reinvestment ratio is based on net capital expenditures including
corporate acquisitions (other than Renaissance Energy Ltd.).       
|   
|(4) |  | Equity for purposes of this calculation has been weighted for
2000 and includes amounts due to shareholders prior to August 25,
2000.

Certain prior years amounts have been reclassified to conform with current
presentation.

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##### 



COMMON SHARE INFORMATION

|                                                                 |      |                      |         |       |         |      |         |       |         |  |         |       |         |  |  | 
|---------------------------------------------------------------- | ---- | -------------------- | ------- | ----- | ------- | ---- | ------- | ----- | ------- |  | ------- | ----- | ------- |  |  | 
|Year ended December 31                                           |      | 2002                 |         | 2001  |         | 2000
|                                                                 |      |                      |         |       |         |     
|Share price                                                      | High |                      | $       | 17.98 |         |      | $       | 20.95 |         |  | $       | 15.95 |        
|                                                                 |      | Low                  |         | $     | 14.00   |      |         | $     | 13.10   |  |         | $     | 11.50   | 
|                                                                 |      | Close at December 31 |         | $     | 16.47   |      |         | $     | 16.47   |  |         | $     | 14.90   | 
|Average daily trading
volumes (thousands)                        |      |                      | 463     |       |         |      | 625     |       |         |  | 979     |      
|Number of common shares outstanding,
December 31 (thousands)     |      |                      | 417,874 |       |         |      | 416,878 |       |         |  | 415,803 |      
|Number of weighted average common
shares outstanding (thousands) |      |                      |         |       |         |      |         |       |         |  |         |      
|                                                                 |      | Basic                |         |       | 417,425 |      |         |       | 416,100 |  |         |       | 415,803 | 
|                                                                 |      | Diluted              |         |       | 419,334 |      |         |       | 418,640 |  |         |       | 416,753 | 

Trading in the common shares of Husky Energy Inc. (HSE)
commenced on the Toronto Stock Exchange on August 28, 2000.
The Company is represented in the S&P/TSX Composite, S&P/TSX
Canadian Energy Sector and in the S&P/TSX 60 indices.

TERMS AND ABBREVIATIONS

|                          |  |                                                                                                                          
|------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|bbls                      |  | barrels                                                                                                                  
|mbbls                     |  | thousand barrels                                                                                                         
|mbbls/day                 |  | thousand barrels per day                                                                                                 
|mmbbls                    |  | million barrels                                                                                                          
|mcf                       |  | thousand cubic feet                                                                                                      
|mmcf                      |  | million cubic feet                                                                                                       
|mmcf/day                  |  | million cubic feet per day                                                                                               
|bcf                       |  | billion cubic feet                                                                                                       
|tcf                       |  | trillion cubic feet                                                                                                      
|boe                       |  | barrels of oil equivalent                                                                                                
|mboe                      |  | thousand barrels of oil equivalent                                                                                       
|mboe/day                  |  | thousand barrels of oil equivalent per day                                                                               
|mmboe                     |  | million barrels of oil equivalent                                                                                        
|mcfge                     |  | thousand cubic feet of gas equivalent                                                                                    
|GJ                        |  | gigajoule                                                                                                                
|mmbtu                     |  | million British Thermal Units                                                                                            
|mmlt                      |  | million long tons                                                                                                        
|NGL                       |  | natural gas liquids                                                                                                      
|hectare                   |  | 1 hectare is equal to 2.47 acres                                                                                         
|Capital Employed          |  | Short- and long-term debt and shareholders
equity                                                                       
|Capital Expenditures      |  | Includes capitalized administrative expenses and
capitalized interest but does not include proceeds or other assets      
|Cash Flow from Operations |  | Earnings from operations plus non-cash charges
before change in non-cash working capital                                 
|Equity                    |  | Capital securities and accrued return, shares, retained earnings and
amounts due to shareholders prior to August 25, 2000
|Total Debt                |  | Long-term debt including current portion and bank operating loans                                                        

Natural gas converted on the basis that six mcf of natural gas
equals one barrel of oil.

In this report, the terms Husky Energy Inc., Husky or the
Company mean Husky Energy Inc. and its subsidiaries and
partnership interests on a consolidated basis.

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