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|  (CDN$      thousands)                              |   | December      312008 |    |   | December      312007 |   |
|----------------------------------------------------------|--------|----------------------|---------|--------|----------------------|--------|
|                                                     |   |                 |    |   |                 |   |
| Assets      (note      9)                                |   |                 |    |   |                 |   |
| Current                                                  |   |                 |    |   |                 |   |
| Cash and short-term      investments                     |   |                 | 5,994   |   |                 |   | 13,658 |   |
| Accounts receivable (note      16)                       |   |                 | 69,181  |   |                 |   | 36,448 |   |
| Bridge      facility receivable (note      16)           |   |                 | 14,000  |   |                 |   | -- |   |
| Prepaid expenses and      deposits                       |   |                 | 3,444   |   |                 |   | 2,571 |   |
|                                                     |   |                 | 92,619  |   |                 |   | 52,677 |   |
| Nova      Scotia offshore term deposits (note      5)    |   |                 | 15,167  |   |                 |   | 14,559 |   |
| Long      term portion of lease prepayment (note      6) |   |                 | 727     |   |                 |   | 1,309 |   |
| Goodwill      (note      4,8)                            |   |                 | --      |   |                 |   | -- |   |
| Property,      plant and equipment, net (notes      4,7) |   |                 | 311,703 |   |                 |   | 186,154 |   |
|                                                     |   |                 | 420,216 |   |                 |   | 254,699 |   |
|                                                     |   |                 |    |   |                 |   |   |   |
| Liabilities                                              |   |                 |    |   |                 |   |   |   |
| Current                                                  |   |                 |    |   |                 |   |   |   |
| Accounts payable and accrued      liabilities            |   |                 | 90,585  |   |                 |   | 22,230 |   |
| Revolving credit facility (note      9)                  |   |                 | 43,263  |   |                 |   | 17,784 |   |
|                                                     |   |                 | 133,848 |   |                 |   | 40,014 |   |
| Convertible      preferred shares (note      10)         |   |                 | 17,194  |   |                 |   | 13,571 |   |
| Asset      retirement obligations (note      11)         |   |                 | 16,698  |   |                 |   | 11,325 |   |
| Future      income taxes (note      12)                  |   |                 | 10,754  |   |                 |   | 8,853 |   |
|                                                     |   |                 | 178,494 |   |                 |   | 73,763 |   |
| Contingencies      and commitments (note      19)   |   |                 |    |   |                 |   |   |   |
| Subsequent      event (note      20)                     |   |                 |    |   |                 |   |   |   |
|                                                     |   |                 |    |   |                 |   |   |   |
| Shareholders'      Equity                                |   |                 |    |   |                 |   |   |   |
| Share      capital (note      13)                        |   |                 | 261,845 |   |                 |   | 186,557 |   |
| Equity      portion of preferred shares (note      13)   |   |                 | 2,320   |   |                 |   | 2,320 |   |
| Warrants  (note      13)                       |   |                 | 3,946   |   |                 |   | -- |   |
| Contributed      surplus (note      13)                  |   |                 | 19,624  |   |                 |   | 14,314 |   |
| Deficit                                                  |   |                 | (46,013 | )      |                 |   | (22,255 | ) |
|                                                     |   |                 | 241,722 |   |                 |   | 180,936 |   |
|                                                     |   |                 | 420,216 |   |                 |   | 254,699 |   |

| (Signed)      “Richard Watkins” | (Signed)      “Alex Squires” |
|---------------------------------------------|------------------------------------------|
| Richard      Watkins                        | Alex      Squires                        |
| Director                                    | Director                                 |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      6 |
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| (CDN$      thousands, except per share amounts)        |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                   |   |   |    |   |   |   |    |   |   |
| Revenue                                                |   |   |    |   |   |   |    |   |   |
|    Petroleum      and natural gas sales |   |   | 75,730  |   |   |   | 48,492  |   |   |   | 49,428 |   |
| Transportation                                         |   |   | (771    | )      |   |   | (645    | )      |   |   | (662 | ) |
| Royalties                                              |   |   | (14,404 | )      |   |   | (7,914  | )      |   |   | (8,245 | ) |
|                                                   |   |   | 60,555  |   |   |   | 39,933  |   |   |   | 40,521 |   |
| Financial instruments (note      18)                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Realized losses                                        |   |   | (496    | )      |   |   | --      |   |   |   | -- |   |
| Unrealized gain                                        |   |   | 796     |   |   |   | --      |   |   |   | -- |   |
|                                                   |   |   | 60,855  |   |   |   | 39,933  |   |   |   | 40,521 |   |
| Interest and other      income                         |   |   | 700     |   |   |   | 925     |   |   |   | 1,371 |   |
|                                                   |   |   | 61,555  |   |   |   | 40,858  |   |   |   | 41,892 |   |
|                                                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Expenses                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Operating                                              |   |   | 14,197  |   |   |   | 9,883   |   |   |   | 9,042 |   |
| General and      administrative                        |   |   | 14,074  |   |   |   | 13,315  |   |   |   | 9,312 |   |
| Stock based compensation (note      13)                |   |   | 6,397   |   |   |   | 4,218   |   |   |   | 5,891 |   |
| Depletion, depreciation and      accretion             |   |   | 39,755  |   |   |   | 26,595  |   |   |   | 25,686 |   |
| Interest on preferred      shares                      |   |   | 1,390   |   |   |   | 1,340   |   |   |   | 998 |   |
| Interest on credit      facility                       |   |   | 2,248   |   |   |   | 2,012   |   |   |   | 1,049 |   |
| Foreign exchange loss      (gain)                      |   |   | (698    | )      |   |   | (653    | )      |   |   | 312 |   |
| Loss      on investment (note      20)                 |   |   | --      |   |   |   | --      |   |   |   | 600 |   |
| Loss on abandonment (note      11)                     |   |   | 378     |   |   |   | 42      |   |   |   | -- |   |
| Goodwill      impairment (note      8)                 |   |   | 10,365  |   |   |   | --      |   |   |   | -- |   |
| Bad      debt expense                                  |   |   | 218     |   |   |   | --      |   |   |   | -- |   |
| Capital      taxes                                     |   |   | 16      |   |   |   | 55      |   |   |   | 33 |   |
|                                                   |   |   | 88,340  |   |   |   | 56,807  |   |   |   | 52,923 |   |
| Loss      before income taxes                          |   |   | (26,785 | )      |   |   | (15,949 | )      |   |   | (11,031 | ) |
| Future      income tax recovery (note      12)         |   |   | (3,027  | )      |   |   | (6,013  | )      |   |   | (118 | ) |
| Net      loss and comprehensive loss                   |   |   | (23,758 | )      |   |   | (9,936  | )      |   |   | (10,913 | ) |
| Deficit,      beginning of year                        |   |   | (22,255 | )      |   |   | (12,319 | )      |   |   | (1,406 | ) |
| Deficit,      end of year                              |   |   | (46,013 | )      |   |   | (22,255 | )      |   |   | (12,319 | ) |
| Basic      and diluted loss per share (note      13)   |   | $      | (0.16   | )      |   | $      | (0.07   | )      |   | $ | (0.09 | ) |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      7 |
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| (CDN$      thousands)                                                                                 |   | 2008   |     |   | 2007   |   |    | 2006   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
|                                                                                                  |   |   |     |   |   |   |    |   |   |
| Cash      provided by (used in):                                                                      |   |   |     |   |   |   |    |   |   |
|                                                                                                  |   |   |     |   |   |   |    |   |   |
| Operating                                                                                             |   |   |     |   |   |   |    |   |   |
| Net loss                                                                                              |   |   | (23,758  | )      |   |   | (9,936  | )      |   |   | (10,913 | ) |
| Items not involving      cash:                                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
|               Depletion, depreciation and accretion           |   |   | 39,755   |   |   |   | 26,595  |   |   |   | 25,686 |   |
|               Stock based compensation                        |   |   | 6,397    |   |   |   | 4,218   |   |   |   | 5,891 |   |
|               Share dividends paid on preferred shares        |   |   | 946      |   |   |   | 711     |   |   |   | 641 |   |
|               Accretion expense on preferred shares           |   |   | 444      |   |   |   | 442     |   |   |   | 357 |   |
|               Loss on investment                              |   |   | --       |   |   |   | --      |   |   |   | 600 |   |
|               Unrealized gain on financial instruments        |   |   | (796     | )      |   |   | --      |   |   |   | -- |   |
|               Forfeiture of Nova Scotia Term Deposits         |   |   | 416      |   |   |   | 500     |   |   |   | 558 |   |
|               Future income tax recovery                      |   |   | (3,027   | )      |   |   | (6,013  | )      |   |   | (118 | ) |
|               Change in the carrying cost of preferred shares |   |   | 3,179    |   |   |   | (2,343  | )      |   |   | 381 |   |
|               Loss on abandonment                             |   |   | 378      |   |   |   | 42      |   |   |   | -- |   |
|               Goodwill impairment                             |   |   | 10,365   |   |   |   | --      |   |   |   | -- |   |
|               Asset retirement expenditures                   |   |   | (398     | )      |   |   | (361    | )      |   |   | -- |   |
|                                                                                                  |   |   | 33,901   |   |   |   | 13,855  |   |   |   | 23,083 |   |
| Changes in non-cash working      capital (note      15)                                               |   |   | (1,240   | )      |   |   | (4,993  | )      |   |   | (8,453 | ) |
|                                                                                                  |   |   | 32,661   |   |   |   | 8,862   |   |   |   | 14,630 |   |
|                                                                                                  |   |   |     |   |   |   |    |   |   |   |   |   |
| Financing                                                                                             |   |   |     |   |   |   |    |   |   |   |   |   |
| Issue of common      shares                                                                           |   |   | 54,617   |   |   |   | 26,200  |   |   |   | 26,968 |   |
| Issue of Nova Scotia offshore      term deposits                                                      |   |   | (608     | )      |   |   | (254    | )      |   |   | (963 | ) |
| Cash      dividends paid on preferred shares                                                          |   |   | --       |   |   |   | (187    | )      |   |   | -- |   |
| Convertible      preferred share issue                                                                |   |   | --       |   |   |   | --      |   |   |   | 17,455 |   |
| Revolving credit facility      advances (repayments)                                                  |   |   | 25,479   |   |   |   | 9,874   |   |   |   | (4,941 | ) |
| Changes in non-cash working      capital (note      15)                                               |   |   | 896      |   |   |   | 238     |   |   |   | -- |   |
|                                                                                                  |   |   | 80,384   |   |   |   | 35,871  |   |   |   | 38,519 |   |
|                                                                                                  |   |   |     |   |   |   |    |   |   |   |   |   |
| Investing                                                                                             |   |   |     |   |   |   |    |   |   |   |   |   |
| Exploration and development      expenditures                                                         |   |   | (119,819 | )      |   |   | (66,282 | )      |   |   | (59,548 | ) |
| Exploration and development      divestitures                                                         |   |   | --       |   |   |   | 41,310  |   |   |   | -- |   |
| Purchase      of investments                                                                          |   |   | --       |   |   |   | --      |   |   |   | (3,106 | ) |
| Disposal      of investments                                                                          |   |   | --       |   |   |   | --      |   |   |   | 2,506 |   |
| Acquisition, net of cash and      working capital acquired  (note      4)                   |   |   | (22,565  | )      |   |   | --      |   |   |   | -- |   |
| Change in non-cash working      capital (note      15)                                                |   |   | 21,675   |   |   |   | (13,441 | )      |   |   | 2,539 |   |
|                                                                                                  |   |   | (120,709 | )      |   |   | (38,413 | )      |   |   | (57,609 | ) |
| Increase      (decrease) in cash and short-term investments                                           |   |   | (7,664   | )      |   |   | 6,320   |   |   |   | (4,460 | ) |
| Cash      and short-term investments, beginning of year                                               |   |   | 13,658   |   |   |   | 7,338   |   |   |   | 11,798 |   |
| Cash      and short-term investments, end of year                                                     |   |   | 5,994    |   |   |   | 13,658  |   |   |   | 7,338 |   |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      8 |
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| 1.     | Creditor      protection and restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Canadian      Superior Energy Inc. (“Canadian Superior” or the “Company”) is engaged in      the exploration for, and acquisition, development and production of      petroleum and natural gas, and LNG projects, with operations in Western      Canada, offshore Nova Scotia, Canada, offshore Trinidad and Tobago, the      United States and North Africa.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | CCAA      Proceedings  |
|   | On      March 5, 2009 (“Petition Date”), Canadian Superior made an application for      protection under the Companies’ Creditors Arrangement Act (“CCAA”) and an      Initial Order was granted by the Court of Queen’s Bench of Alberta (the      “Court”) for creditor protection for 20 days, which was subsequently      extended to May 4, 2009 and is subject to further extension by the Court.      There is no guarantee that the Company will be able to obtain court orders      or approvals with respect to motions the Company may file from time to      time, to extend the applicable stays of actions and proceedings against      the Company. Pursuant to the Initial Order, the Company received approval      to continue to undertake various actions in the normal course in order to      maintain stable and continuing operations during the CCAA      Proceedings.  |
|   | In      addition to the Initial Order, on February 11, 2009 Deloitte & Touche      Inc. was appointed Interim Receiver (the “Receiver”) of the Company’s      Participation Interest in Block 5(c) Trinidad pursuant to a Court Order      granted by the Court of Queen’s Bench of Alberta. The Receiver has assumed      temporary operatorship of the Block 5(c) Trinidad Properties. This Interim      Receivership has no effect on the creditors subject to the CCAA Initial      Order.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Under      the terms of the Initial Order, the Court appointed Hardie and Kelly Inc.      as Monitor of the Company (the “Monitor”). The Monitor will report to the      Court from time to time on the Company’s financial and operational      position and any other matters that may be relevant to the CCAA      proceedings. In addition, the Monitor may advise the Company on their      development of a comprehensive restructuring plan and, to the extent      required, assist the Company with a restructuring.                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | As      a consequence of the commencement of the CCAA proceedings, generally, all      actions to enforce or otherwise effect payment of repayment of liabilities      of the Company and their officers and directors have been stayed until May      4, 2009, or such further date as may be ordered by the Court.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In      connection with CCAA proceedings, the Company has granted a charge against      some or all of the Company’s assets and any proceeds from the sales      thereof, as follows and in the following priority:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   | · | First,      the administrative charge, in favor of the Receiver, including the fees of      the Receiver and the fees and disbursements of its legal      counsel;                                                                                                                                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Second,      as secured creditor, $14.0 million of the debt owing to the Canadian      Western Bank is charged by way of a fixed and specific charge as against      the whole of the Company’s Participating Interest in Block      5(c);                                                                                                                |
|   | · | Third,      the Receiver’s borrowings charge, representing the whole of the Company’s      Participating Interest in Block 5(c) is charged by way of a fixed and      specific charge as security for payment of the monies borrowed by the      Receiver, provided the outstanding principal amount does not exceed US $47      million; and       |
|   | · | Fourth,      the success fee of Scotia Waterous (USA) Inc., shall be secured by a      charge on all of the property of the Company equal to 5% of the      transaction value to a minimum of US$3.0 million, subordinate to any and      all secured indebtedness of Canadian Western Bank, BG International      Limited (“BG”) and the Receiver. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      9 |
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| 1.     | Creditor      protection and restructuring (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Contributing      factors  |
|   | Canadian      Superior operates in a highly sensitive commodity priced market whereby      prices for natural gas and oil fluctuate in response to, among other      things, domestic and foreign supply and demand, import and export      balances, government regulations, weather, and fluctuations in the      availability and price of other replacement energy sources. In addition,      the extreme volatility in the financial, foreign exchange, equity and      credit markets globally and the expanding economic downturn have      compounded the situation.  Market conditions further restricted      the Company’s ability to access capital and credit markets, which was      compounded by actions taken by the Company’s bankers giving notice to      replace them as bankers in a short time frame during adverse conditions in      the financial markets globally. This situation was further exasperated by      one of the Company’s joint venture partners in Trinidad Block 5(c)      inability to pay it’s obligations as they came due.                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | After      consideration of a number of alternatives, the Company determined, with      the unanimous authorization of its Board of Directors, that a financial      and business restructuring could be most effectively and quickly achieved      within the framework of creditor protection.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Comprehensive      restructuring plan  |
|   | The      Company is in the process of restructuring its business to maximize the      chances of preserving all or a portion of the Company. The Company      announced its intention to maximize the value of the Block 5(c) asset, the      sale of which is expected to be sufficient to satisfy all creditors,      leaving the Company whole, without debt, with Western Canadian assets, and      the exploration plays in Libya, Tunisia, offshore Nova Scotia and the      Liberty Natural Gas project in New Jersey.  Subsequently the      Company received an unsolicited arms length offer with respect to the      Western Canadian Basin assets.  Proceedings and the development      of a restructuring plan may result in additional sales or divestures, but      the Company can provide no assurance that it will be able to complete any      sale or divesture on acceptable terms or at all.  There can be      no assurance that any plan will be confirmed or approved by the Court or      that any plan will be implemented successfully.                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Basis      of presentation and going concern issues  |
|   | The      Company’s consolidated financial statements have been prepared using the      same Canadian generally accepted accounting principles (“GAAP”) as applied      by the Company prior to the CCAA proceedings. While the Company has filed      for and been granted creditor protection, these financial statements      continue to be prepared using the going concern concept, which assumes the      Company will be able to realize its assets and discharge its liabilities      in the normal course of business for the foreseeable future. The CCAA      proceedings provide the Company with a period of time to stabilize it’s      operations and financial condition and develop a plan. However, it is not      possible to predict the outcome of these CCAA proceedings and, as such,      realization of assets and discharge of liabilities is subject to      significant uncertainty. Accordingly, substantial doubt exists as to      whether the Company will be able to continue as a going concern. Further,      it is not possible to predict whether the actions taken in any      restructuring will result in improvements to the financial condition of      the Company sufficient to allow it to continue as a going concern. If the      going concern basis is not appropriate, adjustments will be necessary to      the carrying amounts and/or classifications of assets and liabilities, and      to the expenses in these financial statements.  |
|   | The      audited consolidated financial statements do not purport to reflect or      provide for the consequences of the CCAA proceedings. In particular, such      consolidated financial statements do not purport to show: (a) as to      assets, their realizable value on a liquidation basis or their      availability to satisfy liabilities; (b) as to shareholders’ accounts, the      effect of any changes that may be made in the capitalization of the      Company; or (c) as to operations, the effect of any changes that may      ultimately be required in its business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | If      a restructuring occurs and there is substantial realignment of the equity      and non-equity interests in the Company, the Company will be required,      under GAAP, to adopt “fresh start” reporting. Under fresh start      accounting, the Company would undertake a comprehensive re-evaluation of      its assets and liabilities based on the reorganization value as      established and confirmed in the plan. The financial statements do not      present any adjustments that may be required under fresh start      reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      10 |
|------------------------------------------|--------------|--------------|

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| 1.     | Creditor      protection and restructuring (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In      accordance with GAAP appropriate for a going concern, petroleum and      natural gas properties and long lived assets, are carried at cost less      accumulated amortization and any impairment losses and they are reviewed      for impairment whenever events or changes in circumstances indicate that      the carrying amount of such assets may not be recoverable.  The      series of events that led the Company to the Initial Order and the events      since then triggered impairment tests for its petroleum and natural gas      properties. There can be no assurance that expected future cash flows will      be realized or will be sufficient to recover the carrying amount of      petroleum and natural gas properties and long-lived assets.  |
|   | 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 revenue and expenses during the reporting periods. The Initial      Order materially affects the degree of uncertainty associated with the      measurement of many amounts in the financial statements. More      specifically, it could impact the recoverability tests and fair value      assumptions used in the impairment test of petroleum and natural gas      properties.                                                                     |
| 2.     | Summary      of accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | These      consolidated financial statements are stated in Canadian dollars and have      been prepared in accordance with GAAP. Certain comparative amounts have      been reclassified to conform to current period presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Principles      of consolidation  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | The      consolidated financial statements include the accounts of Canadian      Superior and its wholly owned subsidiary companies.  All      material intercompany accounts and transactions have been      eliminated.  |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Cash      and short-term investments  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Cash      and short-term investments consist of balances with banks and investments      in highly liquid short-term deposits with a maturity date of less than      ninety days.  |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Measurement      uncertainty  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Management      makes estimates and assumptions that affect the reported amounts of assets      and liabilities and disclosures of contingent assets and liabilities at      the date of the consolidated financial statements, and revenues and      expenses during the reporting period.  Such estimates primarily      relate to unsettled transactions and events as of the date of the      consolidated financial statements.  Accordingly, actual results      may differ from these estimates.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Amounts      recorded for depreciation, depletion and accretion, asset retirement costs      and obligations and amounts used for ceiling test and impairment      calculations are based on estimates of natural gas and crude oil reserves      and the future costs required to develop those reserves.  By      their nature, these estimates are subject to measurement uncertainty and      the impact on the consolidated financial statements of changes in such      estimates in future periods could be      material.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Inherent      in the fair value calculation of asset retirement obligations are numerous      assumptions and judgments, including the ultimate settlement amounts,      inflation factors, credit adjusted discount rates, timing of settlement      and changes in the legal and regulatory environments.  To the      extent future revisions to these assumptions impact the fair value of the      existing asset retirement obligation liability, a corresponding adjustment      is made to the property, plant and equipment balance.  |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Property,      plant and equipment  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (i) | Capitalized      costs  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | The      Company is engaged in the acquisition, exploration, development and      production of oil and gas in Canada, Trinidad and Tobago, Libya and      Tunisia. The Company follows the full-cost method of accounting for oil      and gas operations whereby all costs relating to the acquisition of,      exploration for and development of oil and gas reserves are      capitalized.  Such costs include land acquisition costs,      geological and geophysical expenses, carrying charges on non-producing      properties, costs of drilling both productive and nonproductive wells,      costs of production equipment and overhead charges related to acquisition,      exploration and developmentactivities. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      11 |
|------------------------------------------|--------------|--------------|

----

| 2.     | Summary      of accounting policies (continued)  |
|--------|-------------------------------------------------------|
|   |                                                  |   | Proceeds      received from disposals of properties and equipment are credited against      capitalized costs unless the disposal would alter the rate of depletion      and depreciation by more than 20%, in which case a gain or loss on      disposal is recorded.  |
|   |                                                  | (ii) | Depletion      and depreciation  |
|   |                                                  |   | Depreciation      and depletion of producing oil and gas properties is recorded based on      units of production.  Unit rates are computed for unamortized      exploration drilling and development costs using proved developed reserves      and for unamortized leasehold costs using all proved      reserves.  Proved reserves are estimated by independent      engineers and are subject to future revisions based on availability of      additional information.  Asset retirement costs are amortized      over proved reserves using the unit-of-production method.  Gains      and losses on asset disposals or retirements are included in the statement      of operations as a separate component of revenue.  |
|   |                                                  |   | Costs      of acquiring and evaluating unproved properties are initially excluded      from depletion calculations.  These unevaluated properties are      assessed periodically to ascertain whether impairment has      occurred.  When proved reserves are assigned or the property is      considered to be impaired, the cost of the property or the amount of the      impairment is added to costs subject to depletion      calculations.  |
|   |                                                  |   | Corporate      assets are depreciated on a declining balance basis over its estimated      useful life at rates varying from 20% to 100%.  |
|   |                                                  | (iii) | Ceiling      test  |
|   |                                                  |   | The      Company performs a ceiling test in a two-stage test performed      quarterly.  Impairment is recognized if the carrying value of      the oil and gas assets less accumulated depletion and the lesser of cost      and fair value of unproven properties exceeds the estimated future cash      flows from proved oil and gas reserves, on an undiscounted basis, using      forecast prices and costs.  If impairment is recognized, the      Company will measure the amount of the impairment by comparing the      carrying value of the oil and gas assets less accumulated depletion and      the lesser of cost and fair value of unproven properties to the estimated      future cash flows from the proved and probable oil and gas reserves,      discounted at the Company’s credit adjusted risk-free rate of interest,      using forecast prices and costs.  Any impairment is included in      the statement of operations for the respective year.  |
|   | (e)                                                   | Joint      ventures  |
|   |                                                  | The      Company’s exploration and development activities related to oil and gas      are conducted jointly with others, which may include related parties (Note      16). The accounts reflect only the Company’s proportionate interest in      such activities.  |
|   | (f)                                                   | Income      taxes  |
|   |                                                  | The      Company follows the asset and liability method of accounting for future      income taxes.  Under this method, future income tax assets and      liabilities are recorded based on temporary differences between the      carrying amount of balance sheet items and their corresponding tax      bases.  In addition, the future benefits of income tax assets,      including unused tax losses, are recognized, subject to a valuation      allowance, to the extent that it is more likely than not that such future      benefits will ultimately be realized.  Future income tax assets      and liabilities are measured using enacted tax rates and laws expected to      apply when the tax liabilities or assets are to be either settled or      realized.  |
|   | (g)                                                   | Revenue      recognition  |
|   |                                                  | Revenue      from the sale of oil and gas is recognized based on volumes delivered to      customers at contractual delivery points and rates.  The costs      associated with the delivery, including operating and maintenance costs,      transportation, and production-based royalty expenses are recognized in      the same period in which the related revenue is earned and      recorded. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      12 |
|------------------------------------------|--------------|--------------|

----

| 2.     | Summary      of accounting polices (continued)  |
|--------|------------------------------------------------------|
|   | (h)                                                  | Flow-through      shares  |
|   |                                                 | The      Company, from time to time, issues flow-through shares to finance a      portion of its oil and gas exploration activities.  The      exploration and development expenditures funded by flow-through shares are      renounced to subscribers in accordance with the Income Tax Act      (Canada).  The estimated value of the tax pools foregone is      reflected as a reduction in share capital with a corresponding increase in      the future income tax liability at the time the relevant expenditures are      renounced.  |
|   | (i)                                                  | Basic      and diluted per share amounts  |
|   |                                                 | Basic      per share amounts are calculated by dividing net earnings or loss by the      weighted average number of common shares outstanding during the      period.  The Company utilizes the treasury stock method in the      determination of diluted per share amounts.  Under this method,      the diluted weighted average number of shares is calculated assuming that      proceeds arising from the exercise of in-the-money options and other      dilutive instruments are used to purchase, for cancellation, common shares      of the Company at their average market price for the period.  |
|   | (j)                                                  | Foreign      currency translation |
|   |                                                 | Transaction      amounts denominated in foreign currencies are translated into their      Canadian dollar equivalents at exchange rates prevailing at the      transaction dates. Carrying values of monetary assets and liabilities      reflect the exchange rates at the balance sheet date. Gains and losses on      translation or settlement are included in determination of net income or      loss for the current period.  |
|   | (k)                                                  | Stock      based compensation  |
|   |                                                 | Under      the Company’s stock option plan described in note 13, options to purchase      common shares are granted to directors, officers, employees and      consultants at current market prices or higher on the date of      grant.  Stock-based compensation expense is recorded in the      statement of operations for all options granted with a corresponding      increase recorded as contributed surplus.  Compensation expense      is based on the estimated fair values of the options at the time of the      grant as determined using a Black-Scholes option pricing      model.  The expense is recognized on a straight-line basis over      the vesting period of the option.  Upon the exercise of the      stock options, consideration paid together with the amount previously      recognized in contributed surplus is recorded as an increase in share      capital.  In the event that vested options expire, previously      recognized compensation expense associated with such stock options is not      reversed.  The Company incorporates an estimated forfeiture rate      for stock options that will not vest.  |
|   | (l)                                                  | Asset      retirement obligation  |
|   |                                                 | The      Company recognizes the estimated liability associated with an asset      retirement obligation (“ARO”) in the financial statements at the time the      asset is acquired and the liability is incurred. The estimated fair value      of the ARO liability is recorded as a long term liability, with a      corresponding increase in the carrying amount of petroleum and natural gas      properties. The capitalized amount is depleted on a unit-of-production      method over the life of the proved reserves. The liability amount is      increased each reporting period due to the passage of time and the amount      of accretion is charged to net income or loss in the period. The ARO can      also increase or decrease due to changes in the estimates of timing of      cash flows or changes in the original estimated undiscounted cost. Actual      costs incurred upon settlement of the ARO are charged against the ARO to      the extent of the liability recorded.  |
|   | (m)                                                  | Convertible      preferred shares  |
|   |                                                 | The      Company’s convertible debt instruments are segregated into their debt and      equity components at the date of issue, based on the relative fair market      values of these components in accordance with the substance of the      contractual agreements.  The debt component of the instruments      is classified as a liability, and recorded as the present value of the      Company’s obligation to make future interest payments in cash, and settle      the redemption value of the instrument in cash or in a variable number of      shares.  The carrying value of the debt component is accreted to      the original face value of the instruments, over their deemed life, using      the effective interest method.  The conversion option, which      makes up the equity component of the instruments, is recorded using the      residual value approach.  Upon conversion, any gain or loss      arising from extinguishment of the debt is recorded in income of the      current period.  |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      13 |
|------------------------------------------|--------------|--------------|

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| 2.     | Summary      of accounting polices (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (n)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Financial      instruments  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Financial      assets and liabilities held for trading are measured at fair value with      changes in those fair values recognized in the statement of      operations.  Financial assets available for sale are measured at      fair value, with changes in those fair values recognized in other      comprehensive income.  Financial assets held to maturity, loans      and other receivables and other financial liabilities are measured at      amortized cost using the effective interest method of      amortization.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Derivatives      are classified as held for trading and measured at their fair      value.  Gains or losses related to periodic revaluation are      recorded to the statement of operations.  |
| 3.     | Adoption      of new accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | On      January 1, 2008, the Company prospectively adopted CICA Section 1535      Capital Disclosures.  This Section establishes standards for      disclosing information about an entity’s objectives, policies and      processes for managing its capital structure.  The disclosures      have been included in Note 14.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | On      January 1, 2008, the Company prospectively adopted the following two new      CICA standards: Financial Instruments - Disclosures (Section 3862) and      Financial Instruments - Presentation (Section 3863), which replace      Financial Instruments - Disclosure and Presentation (Section      3861).  The new disclosure standard increases the emphasis on      the risks associated with both recognized and unrecognized financial      instruments and how those risks are managed.  The new      presentation standard carries forward former presentation      requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | On      October 1, 2008, the Company adopted CICA Section 3064 Goodwill and      Intangible Assets.  This section provides guidance on the      recognition, measurement, presentation and disclosure for goodwill and      intangible assets, other than the original recognition of goodwill or      intangible assets acquired in a business      combination.  Retroactive application of prior-period financial      statements is required.  Goodwill is the excess of the purchase      price over the fair value of identifiable assets and liabilities acquired      in a business combination.  Goodwill is not amortized and is      tested for impairment annually or more frequently if events or changes in      circumstances indicate that the asset might be impaired.  To      assess impairment, the fair value of the reporting unit is compared to the      carrying amount of the reporting unit including goodwill.  If      the fair value of the reporting unit is less than the carrying value of      the reporting unit including goodwill, then a second test is performed to      determine the amount of impairment.  The amount of the      impairment is determined by deducting the fair value of the individual      assets and liabilities from the fair value of the reporting unit to      determine the implied goodwill.  An impairment loss is      recognized for the excess of the carrying value of goodwill over the      implied fair value.  |
|   | The      Canadian Accounting Standards Board requires all public companies to adopt      International Financial Reporting Standards (“IFRS”) for interim and      annual financial statements relating to fiscal years beginning on or after      January 1, 2011. Early adoption is permitted if certain conditions are      met. Companies will be required to provide IFRS comparative information      for the previous fiscal year. We cannot at this time reasonably estimate      the impact of adopting IFRS on our consolidated financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 4.     | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | On      March 26, 2008, Canadian Superior closed the acquisition of Seeker      Petroleum Ltd. (“Seeker”), a private company for consideration of      approximately $51.6 million.  The purchase was funded through      the issuance of common shares of the Company and advances from the credit      facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      acquisition was accounted for under the purchase method as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   | Consideration                  |   |   |   |
|--------|--------------------------------|--------|--------|--------|
|   | Cash                           |   |   | 22,211 |   |
|   | Common      shares (7,651,866) |   |   | 28,465 |   |
|   | Transaction      costs         |   |   | 887    |   |
|   |                           |   |   | 51,563 |   |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      14 |
|------------------------------------------|--------------|--------------|

----

| 4. | Acquisition      (continued) |
|----|------------------------------|

|   | Net      assets received at fair value   |   |   |    |
|--------|------------------------------------------|--------|--------|---------|
|   | Cash                                     |   |   | 1,716   |
|   | Working      Capital                     |   |   | (387)   |
|   | Fair      value of financial instruments |   |   | (796)   |
|   | Property,      plant and equipment       |   |   | 40,953  |
|   | Goodwill                                 |   |   | 10,365  |
|   | Asset      retirement obligation         |   |   | (1,243) |
|   | Future      income taxes                 |   |   | 955     |
|   |                                     |   |   | 51,563  |

| 5.     | Nova      Scotia offshore term deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Under      the terms of the licenses referred to in Note 19, the Company has assigned      term deposits totalling $15.2 million (2007 - $14.6      million).  Accordingly, this amount has been classified as a      non-current asset.  To the extent that the expenditures are not      incurred within the period allowed, the Company would forfeit its      proportionate share of any remaining deposits relating to the unexpended      work commitment.  The following table summarizes the work      commitment and work deposit which would be forfeited in proportion to the      amount of work commitment not completed by the expiry date, a date which      can be extended to a total of nine years as described    below: |

|   | License | Work      Deposit ($) | Remaining      Commitment ($) | Expiry      Date       |
|--------|---------|-----------------------|-------------------------------|------------------------|
|   | EL 2406 | 11,396,943            | 40,962,046                    | December      31, 2009 |
|   | EL 2415 | 3,464,250             | 12,857,000                    | December      31, 2009 |
|   | EL 2409 | 305,505               | 1,250,000                     | December      31, 2009 |
|   | Total   | 15,166,698            | 55,069,046                    |                   |

|   | The      Canada-Nova Scotia Offshore Petroleum Board (“CNSOPB”) has an additional      extension program that allows, when approved by the CNSOPB, these expiry      dates to be extended up to nine years by payment of annual extension fees,      which can be refunded based on allowable expenditure rules and drilling      activity.  This allows the Company to extend EL 2406 to December      31, 2010, EL 2415 to December 31, 2012 and EL 2409 to December 31, 2012 on      a year by year basis if the Company chooses.  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.     | Long      term portion of lease prepayment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | In      February 2007, the Company paid a lump payment to acquire new office space      with lease payments under the prevailing lease rates. This lump payment is      being allocated over the life of the lease with any portions more than a      year in advance being classified as a long term asset. As at December 31,      2008 there are 27 months left on the lease with 15 months classified as a      long term asset.                                                                                                                        |
| 7.     | Property,      plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|   |                  | December      31, 2008 | December      31, 2007    |
|--------|-----------------------|------------------------|---------------------------|
|   |                  |  Cost             | Accumulated      DD&A | Netbook      value |  Cost | AccumulatedDD&A | Netbook      value |
|   | Oil      and Gas      |                   |                      |   |   |   |   |
|   | Canada                | 371,710                | (155,905)                 | 215,805 | 278,624 | (117,491) | 161,133 |
|   | Trinidad              | 80,643                 | --                        | 80,643 | 24,836 | -- | 24,836 |
|   | United States         | 12,308                 | --                        | 12,308 | -- | -- | -- |
|   | Libya/Tunisia         | 2,471                  | --                        | 2,471 | -- | -- | -- |
|   |                  | 467,132                | (155,905)                 | 311,227 | 303,460 | (117,491) | 185,969 |
|   | Corporate      assets | 1,225                  | (749)                     | 476 | 883 | (698) | 185 |
|   | Total      PP&E   | 468,357                | (156,654)                 | 311,703 | 304,343 | (118,189) | 186,154 |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      15 |
|------------------------------------------|--------------|--------------|

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| 7.     | Property,      plant and equipment, net (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      calculation of depletion and depreciation included an estimated $12.5      million (December 31, 2007 - $8.7 million) for future development capital      associated with proven undeveloped reserves and excluded $123.6 million      (December 31, 2007 - $54.4 million) related to unproved properties and      projects under construction or development.  Of the costs      excluded $22.7 million (December 31, 2007 - $20.8 million) relates to      Western Canada, $5.5 million (December 31, 2007 - $8.8 million) to East      Coast Canada, $80.6 million (December 31, 2007 - $24.8 million) to      Trinidad and Tobago, $12.3 million (December 31, 2007 – nil) to a      liquefied natural gas regasification (“LNG”) project in the United States      (note 16) and $2.5 million (December 31, 2007 – nil) for offshore      Libya/Tunisia.  |
|   | On      August 11, 2007, Canadian Superior farmed out a portion of its interest in      the “Intrepid” Block 5(c) Production Sharing Contract (“PSC”) offshore      Trinidad and Tobago.  The farmee paid US$38.7 million to the      Company representing their share of certain capital and administrative      costs incurred by Canadian Superior.  This transaction has been      recorded as reduction to Trinidad capital and general and administrative      costs in 2007 (Note 19).                                                                                                                                                                                                                                                                                                                                                                 |
|   | During      the twelve months ended December 31, 2008, the Company capitalized $16.9      million of general and administrative (“G&A”) expenses (2007 - $2.8      million) related to exploration and development activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The      Company performed a ceiling test calculation at December 31, 2008 and      determined that there was no impairment in the carrying value of the      company’s oil and gas assets. The prices used in the ceiling test      evaluation of the Company’s oil and gas assets is summarized in the      following chart:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|   |                | Crude      Oil                                   | Natural      Gas                             |
|--------|---------------------|--------------------------------------------------|----------------------------------------------|
|   |                | West      Texas Intermediate (US$/bbl) | Edmonton      Par      Price (Cdn$/bbl) | AECO      Gas Price      (Cdn$/mmbtu) |
|   | 2009                | 57.50                                            | 68.61                                        | 7.58 |
|   | 2010                | 68.00                                            | 78.94                                        | 7.94 |
|   | 2011                | 74.00                                            | 83.54                                        | 8.34 |
|   | 2012                | 85.00                                            | 90.92                                        | 8.70 |
|   | 2013                | 92.01                                            | 95.91                                        | 8.95 |
|   | 2014-2018      (1)  | 97.68                                            | 101.87                                       | 9.54 |
|   | Thereafter      (2) | 2.0%                                             | 2.0%                                         | 2.0% |

|   | (1) | Prices      shown are the average over theperiod |
|--------|-----|--------------------------------------------------|

|   | (2) | Percentage      change of 2.0% represents the change in the future prices each year after      2018 to the end of the reservelife. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

| 8.     | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company reviewed the valuation of goodwill at December 31, 2008 and      determined that the fair value of the reporting entity had declined. Based      on this review, an impairment of goodwill of $10.4 million (December 31,      2007 – nil) has been recorded as a non-cash charge to the statement of      operations at December 31, 2008.  There has been no impairment      to the carrying amount of the Company’s petroleum and natural gas assets      at December 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 9.     | Revolving      credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | At      December 31, 2008, the Company had a $45.0 million demand revolving credit      facility (the “credit facility”). The credit facility is secured by a $100      million first floating charge demand debenture on the assets of the      Company and a general security agreement covering all the assets of the      Company. As at December 31, 2008, the Company had drawn $43.3 million      (December 31, 2007 - $17.8 million) against the credit facility at a      variable interest rate of prime plus 1.0% (December 31, 2007 – prime plus      1.0%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Subsequent      to year end, on February 12, 2009, the bank demanded for payment in full      the amounts outstanding together with any accrued interest and other legal      fees and charges by February 23, 2009 or they would take such steps to      protect its position. At February 12, 2009, the amounts outstanding and      owing to the bank were $44.2 million. In addition, on February 18, 2009      the bank applied the proceeds from an asset sale by the Company as a      permanent reduction to the operating facility to a maximum availability of      $37.5 million.  On February 23, 2009, the bank did not take      steps to protect its position. Instead, with the filing of the Initial      Order for CCAA (see note 1) on March 5, 2009, the bank was under no      obligation to advance or re-advance any monies or otherwise extend any      credit to the Company. During the first stay period to March 25, 2008 and      the second stay period to May 4, 2009 the bank did allow the Company to      use the available line of credit.  |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      16 |
|------------------------------------------|--------------|--------------|

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| 10.    | Convertible      preferred shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | On      February 1, 2006, the Company completed a private placement in the amount      of US$15.0 million by way of the issuance of Units consisting of 5% US      Cumulative Redeemable Convertible Preferred Shares (the "Preferred      Shares") and Common Share Purchase Warrants. Each Preferred Share will be      convertible into forty Common Shares of Canadian Superior (6,000,000      Common Shares in aggregate) at a price of US$2.50 per Common Share. If      Canadian Superior elects, it also has the option to pay the quarterly      dividend by way of issuance of Common Shares at market, based on a 5.75%      annualized dividend rate in lieu of the 5% annualized cash dividend rate.      In addition, the Preferred Shares are redeemable and retractable five      years from the date of issue or earlier, subject to earlier redemption or      retraction in certain events.  The Company, issued 15,000 Units,      each consisting of 10 US$100 Preferred Shares and 1,200,000 Common Share      Purchase Warrants. The Warrants comprising part of the Units are      exercisable for a period of thirty six months from the date of issue at an      exercise price of US $3.00 per Common Share.  During the twelve      months ended December 31, 2008, the Company issued 389,640 common shares      (December 31, 2007 – 259,260) to satisfy its quarterly dividend      requirements.  |
|   | The      following table summarizes the face and carrying value of the liability      and equity component of the convertible preferred shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|   |                            | Liability      component | Equity      component |
|--------|---------------------------------|--------------------------|-----------------------|
|   |                            | Face      value          | Carrying      value   | Fair      value |
|   | Balance,      December 31, 2006 | 17,053                   | 15,472                | 2,320 |
|   | Foreign      exchange           | --                       | (2,343)               | -- |
|   | Accreted      non-cash interest | --                       | 442                   | -- |
|   | Balance,      December 31, 2007 | 17,053                   | 13,571                | 2,320 |
|   | Foreign      exchange           | --                       | 3,179                 | -- |
|   | Accreted      non-cash interest | --                       | 444                   | -- |
|   | Balance,      December 31, 2008 | 17,053                   | 17,194                | 2,320 |

| 11.    | Asset      retirement obligations                                                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      following table presents the reconciliation of the carrying amount of the      obligations associated with the retirement of the property, plant and      equipment:  |

|   | December      31,                         | 2008   | 2007   |
|--------|-------------------------------------------|--------|--------|
|   | Balance,      beginning of year           | 11,325 | 9,482  |
|   | Liabilities      settled                  | (401)  | (319)  |
|   | Liabilities      assumed upon acquisition | 1,243  | --     |
|   | Liabilities      incurred                 | 3,242  | 1,352  |
|   | Accretion      expense                    | 1,289  | 810    |
|   | Balance,      end of year                 | 16,698 | 11,325 |

|   | The      following significant assumptions were used to estimate the asset      retirement obligation: |
|--------|--------------------------------------------------------------------------------------------------------|

|   | Twelve      months ended December 31,                       | 2008   | 2007   |
|--------|-------------------------------------------------------------|--------|--------|
|   | Undiscounted      cash flows                                | 29,300 | 19,691 |
|   | Credit      adjusted discount rate (%)                      | 7.75   | 7.62   |
|   | Inflation      rate (%)                                     | 1.50   | 1.50   |
|   | Weighted      average expected timing of cash flows (years) | 7.65   | 5.73   |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      17 |
|------------------------------------------|--------------|--------------|

----

| 12.    | Future      income taxes                                                               |
|--------|----------------------------------------------------------------------------------------|
|   | The      Company's computation of future income tax recovery is as      follows:  |

|   | Twelve      months ended December 31,                    |   | 2008     | 2007     | 2006     |
|--------|----------------------------------------------------------|--------|----------|----------|----------|
|   | Loss      before income taxes                            |   | (26,785) | (15,949) | (11,031) |
|   | Combined      federal and provincial income tax rate (%) |   | 29.5     | 32.1     | 34.0     |
|   | Computed      income reduction                           |   | (7,902)  | (5,120)  | (3,751)  |
|   | Increase      (decrease) resulting from:                 |   |     |     |     |
|   | Non      deductible crown royalties, net                 |   | --       | --       | 1,442    |
|   | Resource      allowance                                  |   | --       | --       | (606)    |
|   | Unsuccessful      takeover costs                         |   | --       | --       | 725      |
|   | Impairment      of goodwill                              |   | 3,058    | --       | --       |
|   | Stock based      compensation                            |   | 1,888    | 1,354    | 2,003    |
|   | Tax adjustment – rate change      and other        |   | 332      | (340)    | 69       |
|   | Tax      pool amendments                                 |   | (403)    | (1,907)  | --       |
|   |                                                     |   | (3,027)  | (6,013)  | (118)    |

|   | The      net future tax liability is comprised of:  |
|--------|----------------------------------------------------------|

|   |                                                 | December      312008 | December      312007 |
|--------|------------------------------------------------------|----------------------|----------------------|
|   | Non-capital      loss carryforwards                  | (2,848)              | (817)                |
|   | Asset      retirement obligations                    | (4,592)              | (3,114)              |
|   | Share      issue costs                               | (1,478)              | (1,127)              |
|   | Net      book value of assets in excess of tax basis | 20,414               | 14,124               |
|   | Other                                                | (742)                | (213)                |
|   |                                                 | 10,754               | 8,853                |

|   | As      at December 31, 2008, the Company had approximately $256.3 million in tax      pools (December 31, 2007 - $149.7 million) and $10.6 million in      non-capital losses (December 31, 2007 - $3.0 million) available for      deduction against future taxable income.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Non-capital      losses expire as follows:                                                                                                                                                                                                                                          |

|   | 2010      | 220    |
|--------|-----------|--------|
|   | 2011-2025 | --     |
|   | 2026      | 2,970  |
|   | 2027      | 7,387  |
|   |      | 10,577 |

| 13.    | Share      capital  |
|--------|--------------------------|
|   | (a)                      | Authorized  |
|   |                     | Unlimited      number of common shares, no par value.  |
|   |                     | Unlimited      number of preferred shares, no parvalue. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      18 |
|------------------------------------------|--------------|--------------|

----

| 13.    | Share      capital (continued)  |
|--------|--------------------------------------|
|   | (b)                                  | Common      shares and warrants issued |

|   |                                                 | December      31, 2008 | December      31, 2007 |
|--------|------------------------------------------------------|------------------------|------------------------|
|   |                                                 | Number(#)              | Amount($)              | Number(#) | Amount($) |
|   | Share      capital, beginning of year                | 140,312                | 186,557                | 131,216 | 161,964 |
|   | Issued      upon private placement                   | 8,750                  | 33,189                 | -- | -- |
|   | Issued      upon acquisition of Seeker Petroleum     | 7,652                  | 28,465                 | -- | -- |
|   | Issued      upon the conversion of purchase warrants | --                     | --                     | 500 | 1,385 |
|   | Issued      upon the exercise of stock options       | 1,218                  | 2,758                  | 1,864 | 3,518 |
|   | Issued      for preferred share dividend             | 390                    | 946                    | 259 | 712 |
|   | Issued      for cash on flow-through shares          | 10,323                 | 16,000                 | 6,473 | 22,654 |
|   | Issue      costs, net of future tax reduction        | --                     | (928)                  | -- | (889) |
|   | Tax      benefits renounced on flow-through-shares   | --                     | (6,229)                | -- | (4,241) |
|   | Stock      based compensation for exercised options  | --                     | 1,087                  | -- | 1,454 |
|   | Share      capital, end of year                      | 168,645                | 261,845                | 140,312 | 186,557 |
|   |                                                 |                   |                   |   |   |
|   | Warrants,      beginning of year                     | --                     | --                     | 500 | 312 |
|   | Exercised                                            | --                     | --                     | (500) | (134) |
|   | Expired                                              | --                     | --                     | -- | (178) |
|   | Issued      upon private placement                   | 4,375                  | 3,946                  | -- | -- |
|   | Warrants,      end of year                           | 4,375                  | 3,946                  | -- | -- |

|   | On      November 16, 2007, the Company completed a private placement of 6,472,500      flow-through common shares at $3.50 per share for gross proceeds of $22.7      million.                                                                                                                                                                                                                                                                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | On      December 31, 2007, 500,000 warrants were exercised into 500,000 common      shares at US$2.50 per share for gross proceeds of US$1.3      million.                                                                                                                                                                                                                                                                                                                                          |
|   | On      March 26, 2008, the Company issued 7,651,866 common shares as part of the      acquisition of Seeker Petroleum.                                                                                                                                                                                                                                                                                                                                                                             |
|   | On      September 3, 2008, the Company completed a private placement of 8,750,000      units, each unit comprised of one common share and one-half of a warrant      at a price of US$4.00 per unit for total gross proceeds of US$35.0      million. Each warrant entitles the holder to purchase a common share for a      period of one year at a price of US$4.75 per common share. The fair value      of the 4,375,000 warrants is US$3.7 million or approximately US$0.85 per      warrant.  |
|   | On      December 5, 2008, the Company completed a private placement of 10,323,581      flow-through common shares at $1.55 per share for gross proceeds of $16.0      million.                                                                                                                                                                                                                                                                                                                      |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Stock      options  |
|   | The      Company has a stock option plan for its directors, officers, employees and      key consultants.  The exercise price for stock options granted      is no less than the quoted market price on the grant date with options      vesting in increments over a three year period.  An option’s      maximum term is ten years.                                                                                                                                     |

|   |                              | December      31, 2008         | December      31,2007                        |
|--------|-----------------------------------|--------------------------------|----------------------------------------------|
|   |                              |                           |                                         |
|   |                              | Number of      options(#) | Weighted      average exercise      price($) | Number of      options(#) | Weighted      average exercise      price($) |
|   | Balance,      beginning of period | 15,489                         | 2.27                                         | 12,965 | 2.05 |
|   | Forfeited                         | (490)                          | 3.25                                         | (875) | 2.45 |
|   | Exercised                         | (1,218)                        | 2.26                                         | (1,864) | 1.89 |
|   | Granted                           | 2,675                          | 3.25                                         | 5,263 | 2.70 |
|   | Balance,      end of period       | 16,456                         | 2.38                                         | 15,489 | 2.27 |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      19 |
|------------------------------------------|--------------|--------------|

----

| 13.    |   Share      capital (continued)                                                              |
|--------|---------------------------------------------------------------------------------------------------------|
|   |                                                                                                    |
|   | The      following table summarizes stock options outstanding under the plan at      December 31, 2008: |

|   |                          | Options      outstanding        | Options      exercisable                                       |
|--------|-------------------------------|---------------------------------|----------------------------------------------------------------|
|   |                          |                            |                                                           |
|   |  Exercise      price ($) |  Number      of options(#) | Average      remaining contractual      life (years) | Weighted      average exercise      price($) |  Number      of options(#) | Weighted      average exercise      price($) |
|   | 0.80-1.00                     | 97                              | 1.57                                                           | 0.81 | 97 | 0.81 |
|   | 1.01-1.50                     | 865                             | 3.73                                                           | 1.24 | 865 | 1.24 |
|   | 1.51-2.00                     | 2,586                           | 5.79                                                           | 1.77 | 2,586 | 1.77 |
|   | 2.01-3.00                     | 10,513                          | 7.34                                                           | 2.46 | 9,240 | 2.42 |
|   | 3.01-3.80                     | 2,395                           | 8.90                                                           | 3.21 | 944 | 3.10 |
|   | 0.80-3.80                     | 16,456                          | 7.10                                                           | 2.38 | 13,732 | 2.26 |

|   | The      following table summarizes stock options outstanding under the plan at      December 31, 2007:  |
|--------|---------------------------------------------------------------------------------------------------------------|

|   |                          | Options      outstanding        | Options      exercisable                             |
|--------|-------------------------------|---------------------------------|------------------------------------------------------|
|   |                          |                            |                                                 |
|   |  Exercise      price ($) |  Number      of options(#) | Average      remaining contractual      life (years) | Weighted      average exercise      price($) |  Number      of options(#) | Weighted      average exercise      price($) |
|   | 0.80-1.00                     | 97                              | 2.57                                                 | 0.81 | 97 | 0.81 |
|   | 1.01-1.50                     | 925                             | 4.73                                                 | 1.30 | 925 | 1.30 |
|   | 1.51-2.00                     | 2,892                           | 6.54                                                 | 1.78 | 2,736 | 1.78 |
|   | 2.01-3.00                     | 11,150                          | 8.12                                                 | 2.45 | 8,864 | 2.40 |
|   | 3.01-3.50                     | 425                             | 9.15                                                 | 3.18 | 191 | 3.21 |
|   | 0.80-3.50                     | 15,489                          | 7.63                                                 | 2.27 | 12,813 | 2.19 |

|   | (d)                                                                                                                                                                                                                                                                                                                                             | Stock      based compensation  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|   | The      Company uses the fair value method to account for its stock based      compensation plan.  Under this method, compensation costs are      charged over the vesting period for stock options granted to directors,      officers, employees and consultants, with a corresponding increase to      contributed surplus.  |
|   | The      following table reconciles the Company’s contributed    surplus:                                                                                                                                                                                                                                                                 |

|   |                              | December      31, 2008 | December      31, 2007 |
|--------|-----------------------------------|------------------------|------------------------|
|   | Balance,      beginning of period | 14,314                 | 11,372                 |
|   | Issuance      of stock options    | 6,397                  | 4,218                  |
|   | Exercise      of stock options    | (1,087)                | (1,454)                |
|   | Expiry      of warrants           | --                     | 178                    |
|   | Balance,      end of period       | 19,624                 | 14,314                 |

|   | The      fair value of options granted during the period was estimated based on the      date of grant using the Black-Scholes option pricing model with weighted      average assumptions and resulting values for grants as      follows:  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                    | December      31, 2008 | December      31, 2007 |
|--------|---------------------------------------------------------|------------------------|------------------------|
|   | Risk      free interest rate (%)                        | 4.1                    | 4.1                    |
|   | Expected      life (years)                              | 5.0                    | 10.0                   |
|   | Expected      dividend yield (%)                        | --                     | --                     |
|   | Expected      volatility (%)                            | 65.9                   | 41.7                   |
|   | Weighted      average fair value of options granted ($) | 1.58                   | 1.57                   |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      20 |
|------------------------------------------|--------------|--------------|

----

| 13.    | Share      capital (continued) |
|--------|--------------------------------|
|   |                           |   |
|   | (e)                            | Employee      stock savings plan |
|   |                           |   |
|   |                           | The      Company has an employee stock savings plan (“ESSP”) in which employees are      provided with the opportunity to receive a portion of their salary in      common shares, which is then matched on a share for share basis by the      Company.  The Company purchased approximately 173,882 shares      under the ESSP during the twelve months ended December 31, 2008 (2007 –      95,000). |
|   |                           |   |
|   | (f)                            | Basic      and diluted per share |
|   |                           | The      Company used the treasury stock method to calculate net loss per common      share. |

|   | Twelve      months ended December 31,      |   | 2008    | 2007    | 2006    |
|--------|--------------------------------------------|--------|---------|---------|---------|
|   | (thousands,      except per share amounts) |   |    |    |    |
|   | Weighted      average common shares        |   |    |    |    |
|   | Basic      and diluted                     |   | 150,688 | 133,719 | 121,911 |
|   |                                       |   |    |    |    |
|   | Basic      and diluted loss per share      |   | ($0.16) | ($0.07) | ($0.09) |

|   | For      the calculation of diluted loss per share the Company excluded the      following securities that areanti-dilutive: |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | Twelve      months ended December 31, |   | 2008   | 2007   | 2006   |
|--------|---------------------------------------|--------|--------|--------|--------|
|   | (thousands)                           |   |   |   |   |
|   | Stock      options                    |   | 16,456 | 15,586 | 13,062 |
|   | Convertible      preferred shares     |   | 15,000 | 15,000 | 15,000 |
|   | Warrants                              |   | 4,375  | --     | 500    |

|   | (g) | Equity      portion of preferred shares |
|--------|-----|-----------------------------------------|

|   | Warrant      equity on preferred shares               |   | 351   |
|--------|-------------------------------------------------------|--------|-------|
|   | Conversion      equity on preferred shares            |   | 1,969 |
|   | Balance,      December 31, 2008 and December 31, 2007 |   | 2,320 |

| 14.    | Capital      disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | The      Company’s objective in managing capital is to ensure a sufficient      liquidity position to finance its ongoing operations, general and      administrative expenses and working capital requirements. Initially, the      Company had funded its activities through bank facilities, private      placements and public offerings of common shares.   The      capital management objective of the Company remained the same as that of      the previous year.  The CCAA proceedings have significantly      affected the Company’s ability to manage its capital structure in the near      term. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | The      Company’s primary short-term objectives of managing capital      are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | To      ensure a successful restructuring and financial reorganization of the      Company;                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | To      maintain a level of corporate liquidity necessary to fund the Company’s      operating cycle; and |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | To      preserve its financial flexibility in order to benefit from potential      opportunities as they arise. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                            |
|   | Under      the CCAA proceedings, the Company manages its liquidity and makes      adjustments in response to changes in economic conditions and the risk      characteristics of the underlyingassets.                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      21 |
|------------------------------------------|--------------|--------------|

----

| 15.    | Supplemental      cash flow information  |
|--------|-----------------------------------------------|
|   |                                          |   |
|   | a)                                            | Changes      in non-cash working capital |

|   | Twelve      months ended December 31,         |   | 2008     | 2007     | 2006    |
|--------|-----------------------------------------------|--------|----------|----------|---------|
|   |                                          |   |     |     |    |
|   | Accounts      receivable                      |   | (32,733) | (19,334) | (8,146) |
|   | Bridge      facility                          |   | (14,000) | --       | --      |
|   | Prepaid      expenses                         |   | (873)    | (1,786)  | (11)    |
|   | Long      term portion of lease prepayment    |   | 582      | (1,309)  | --      |
|   | Accounts      payable and accrued liabilities |   | 68,355   | 4,233    | 2,243   |
|   | Change      in non-cash working capital       |   | 21,331   | (18,196) | (5,941) |

|   | The      change in non-cash working capital has been allocated to the following      activities: |
|--------|--------------------------------------------------------------------------------------------------|

|   |      |   | 2008    | 2007     | 2006    |
|--------|-----------|--------|---------|----------|---------|
|   |      |   |    |     |    |
|   | Operating |   | (1,240) | (4,993)  | (8,453) |
|   | Financing |   | 896     | 238      | --      |
|   | Investing |   | 21,675  | (13,441) | 2,539   |
|   |      |   | 21,331  | (18,196) | (5,914) |

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

|   |                    |   | 2008   | 2007   | 2006   |
|--------|-------------------------|--------|--------|--------|--------|
|   |                    |   |   |   |   |
|   | Interest      paid      |   | 2,248  | 2,482  | 2,061  |
|   | Capital      taxes paid |   | 16     | 55     | 33     |

| 16.    | Related      parties transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | During      the twelve months ended December 31 2008, the Company paid $2.3 million      (2007 - $1.9 million), on industry terms, for equipment rentals to a      company controlled by an officer and director of Canadian      Superior.  Also during 2008, the Company invoiced $1.1 million      (2007 - $0.7 million), to this related party company for payroll      services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | On      May 20, 2008, Canadian Superior announced its participation in the      proposed development of a liquefied natural gas regasification project in      US federal waters offshore New Jersey.  The project will be      conducted by Excalibur Energy (USA) Inc., which is a 50/50 joint venture      between Canadian Superior and a company controlled and owned by certain      officers and directors of Canadian Superior and third      parties.  Under the terms of the joint venture agreement      Canadian Superior will advance the first US$10.0 million of the      pre-construction costs for the project.  Joint venture partners      may discontinue their participation in the project at any time by      assigning its respective interest to the remaining partners without any      additional cost or further action required.  In 2008, Canadian      Superior has incurred under normal industry terms and conditions $12.3      million of costs related to thisproject. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      22 |
|------------------------------------------|--------------|--------------|

----

| 16.    | Related      parties transactions (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | As      at December 31, 2008, Canadian Superior carried a receivable in the amount      of US$29.1 million (December 31, 2007 – US$19.7 million) from a company      which one of Canadian Superior’s officers and directors is a shareholder      and was a director until October 23, 2008.  The receivable at      December 31, 2008 was composed of amounts owed to December 31, 2008 of      approximately US$21.1 million, amounts totaling US$3.9 million      representing amounts owing after settlement of dispute with the drilling      contractor and approximately US$4.1 million of drilling costs incurred in      December 2008 not billed until January 2009. These receivables pertain to      costs incurred on Canadian Superior’s “Intrepid” Block 5 (c) project at      Trinidad (note 19) under normal industry terms and    conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | On      September 23, 2008, Canadian Superior entered into a short-term $14.0      million bridge facility with this company to enable it to close on a $30      million equity financing.   At December 31, 2008, $14.0      million had been drawn and was used to satisfy this company’s share of      direct and indirect costs in connection with the exploration program on      the “Intrepid” Block 5 (c) project in Trinidad.  The interest      payable to Canadian Superior at December 31, 2008 was $0.1 million based      on an interest rate of 10% per annum on any outstanding balance. The      company may pay interest incurred in common shares. Subsequent to year end      this company issued 188,216 common shares for interest payable up to and      including January 31, 2009 based on a predetermined calculation. The      bridge security is secured by a debenture creating a first priority      security interest over all present and after-acquired personal property      and a first floating charge over all present and after-acquired real and      personal property of this company.  Upon any drawdown of any      amounts of the bridge facility this company will issue a predetermined      amount of non-transferable warrants to Canadian      Superior.   At December 31, 2008, this company issued      500,000 non-transferable share purchase warrants.  Each warrant      entitles the holder to purchase a common share until October, 2010 at a      price of $3.50 per common share.  In addition, this company paid      a standby fee of $0.1 million to Canadian Superior in  2008. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | At      December 31, 2008, this company was in default on repayment of the bridge      facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | On      February 27, 2009, this company obtained an order from the Court of      Queen's Bench of Alberta granting creditor protection under CCAA. The      Initial Order was for a period ending March 23, 2009. The Initial Order      was obtained after the Board of Directors determined this company was      unable to continue to make required payments under a participation      agreement with Canadian Superior and BG with respect to exploration Block      5(c) or to repay $14.0 million due on February 28, 2009 under a bridge      loan facility with Canadian Superior.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 17.    | Financial      instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      carrying values of financial assets and liabilities approximate their fair      value due to their short periods of maturity and the credit facility      bearing interest at market rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Cash,      short-term investments and Nova Scotia offshore term deposits are      classified as financial assets held for trading and are measured at their      fair value.  Gains or losses related to periodic revaluation are      recorded to net income or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Accounts      receivable and the bridge facility receivable are classified as loans and      receivables and are initially measured at their fair      value.  Subsequent periodic revaluations are recorded at their      amortized cost using the effective interest ratemethod.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Accounts      payable, accrued liabilities, revolving credit facility and convertible      preferred shares are classified as other liabilities and are initially      measured at fair value.  Subsequent periodic revaluations are      recorded at their amortized cost using the effective interest rate      method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Derivatives      are classified as held for trading and measured at their fair      value.  Gains or losses related to periodic revaluation are      recorded to net income or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 18.    | Risk      management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In      order to manage the Company’s exposure to credit risk, foreign exchange      risk, interest rate and commodity price risk, the Company developed a risk      management policy.  Under this policy, it may enter into      agreements, including fixed price, forward price, physical purchases and      sales, futures, currency swaps, financial swaps, option collars and put      options.  The Company's Board of Directors evaluates and      approves the need to enter into such  arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      23 |
|------------------------------------------|--------------|--------------|

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| 18.    | Risk      management (continued)  |
|--------|----------------------------------------|
|   | (a)                                    | Credit      risk |
|   |                                   |   |
|   |                                   | The      Company’s accounts receivable and bridge facility receivable are with      natural gas and liquids marketers, the Government of the Republic of      Trinidad and Tobago and joint venture partners in the petroleum and      natural gas business under  substantially normal industry sale      and payment terms and are subject to normal credit risks.  As at      December 31, 2008, the maximum credit risk exposure is the carrying amount      of the accounts receivable and accruals of $83.2 million (December 31,      2007 – $36.5 million).  As at December 31, 2008, the company’s      receivables consisted of $51.8 million (December 31, 2007 - $26.6 million)      of Block 5(c) joint interest receivables, including US$29.1 million      receivable (December 31, 2007 – US$19.7 million ) from a related party      described in note 16, $7.4 million (December 31, 2007 - $1.0 million) of      Western Canada joint interest billings, $18.3 million (December 31, 2007 -      $4.7 million) in value added tax receivable from the Government of the      Republic of Trinidad and Tobago and $5.6 million (December 31, 2007 - $5.4      million) of revenue accruals and other receivables. Purchasers of the      Company’s oil, gas and natural gas liquids are subject to an internal      credit review to minimize the risk of nonpayment.  The Company      mitigates risk from joint venture partners by obtaining partner approval      of capital expenditures prior to starting a project. |
|   |                                   |   |
|   |                                   | The      Company’s allowance for doubtful accounts is currently $0.3 million      (December 31, 2007 - $0.1 million).  The company provided for an      additional $0.2 million in allowance and did not write-off any receivables      during the year ended December 31, 2008. |
|   |                                   |   |
|   | (b)                                    | Foreign      exchange risk |
|   |                                   |   |
|   |                                   | The      Company is exposed to foreign currency fluctuations as oil and gas prices      received are referenced to U.S. dollar denominated prices.  At      December 31, 2008, the Company has US$3.6 million in cash and short-term      investments (December 31, 2007 – US$8.3 million), US$31.1 million      (December 31, 2007 – US$26.9 million) of Block 5(c) joint interest      receivables, US$15.0 million (December 31, 2007 – US$4.8 million) in value      added tax receivable from the Government of the Republic of Trinidad and      Tobago, US$42.1 million (December 31, 2007 – US$8.5 million) of Block 5(c)      payables, US$2.0 million (December 31, 2007 - nil) of LNG project payables      and US$14.1 million (December 31, 2007 – US$13.3 million) of convertible      preferred shares.  These balances are exposed to fluctuations in      the U.S. dollar.  In addition, the Company is exposed to      fluctuations between U.S. dollars and the domestic currencies of Trinidad      and Tobago and Tunisia.  At this time, the Company has chosen      not to enter into any risk management agreements to mitigate foreign      exchange risk. |
|   |                                   |   |
|   | (c)                                    | Interest      rate risk |
|   |                                   |   |
|   |                                   | The      Company is exposed to interest rate risk as the credit facility bears      interest at floating market interest rates.  The Company has no      interest rate swaps or hedges to mitigate interest rate risk at December      31, 2008. |
|   |                                   |   |
|   | (d)                                    | Commodity      price risk |
|   |                                   |   |
|   |                                   | The Company is exposed to      fluctuations in prices for natural gas, crude oil and natural gas liquids,      as the majority of the Company's production is currently sold at spot      prices that are subject to volatile trading activity.  Commodity      prices fluctuate in response to, among other things, domestic and foreign      supply and demand, import and export balances, government      regulations, weather, and fluctuations in the availability and price of      other replacement energy sources.  A significant drop in      commodity prices could materially impact the Company's petroleum and      natural gas sales, the volume of production it could produce economically,      require downward adjustments to proved reserves and could materially      impact the Company's financial condition.  In addition, a      substantial decrease in commodity prices could impact the Company’s      borrowing base under the credit facility, therefore reducing the credit      facility available, and in some instances, require a portion of the credit      facility to be repaid. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      24 |
|------------------------------------------|--------------|--------------|

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| 18.    | Risk management      (continued)  |
|--------|----------------------------------------|
|   |                                   | The      Company enters into commodity sales agreements and certain derivative      financial instruments to reduce its exposure to commodity price      volatility.  These financial instruments are entered into solely      for hedging purposes and are not used for trading or other speculative      purposes.  The following commodity price risk contract was in      place during the twelve months ended December 31,  2008: |

|   |   Term                          | Contract | Volume      (GJs/d) | Fixed      price | 2008      Realized losses |
|--------|-------------------------------------------|----------|---------------------|------------------|---------------------------|
|   | Feb      1, 2008 – October 31, 2008 | Swap     | 2,000               | $7.05            | ($496)                    |

| 19.    | Contingencies      and commitments  |
|--------|------------------------------------------|
|   | a)                                       | Nova      Scotia |
|   |                                     |   |
|   |                                     | Since      2000, the Company has acquired several exploration licenses from the      CNSOPB.  Each of these licenses is for a specific period of nine      years, subject to certain requirements being met during the first five      years or six years.  As a condition of the licenses, the Company      is required to post security in the amount of 25% of its work expenditure      bids. The deposit is refundable only to the extent of approved allowable      expenditures.  The duration of the initial five year term, for a      given license, can be extended one additional year to six years by posting      an additional security drilling deposit in an amount of $250,000. The      CNSOPB has an additional extension program that allows the six year period      to be further extended up to nine years by payment of annual extension      fees.  As of December 31, 2008, as a result of the Company      incurring certain expenditures and drilling two exploration wells, the      Company had fully fulfilled its work expenditures on two of the      exploration licenses, allowed three licenses to return to the Crown,      extended one license and held the remaining two under the regular      licensing process.  At December 31, 2008, the Company owned 100%      of two exploration licenses which were forfeited subsequent to year end,      the remaining three exploration licenses have aggregate work expenditure      outstanding of $55.1 million and $15.2 million in term deposits assigned      to the Canadian Receiver General through the CNSOPB (Note    5). |
|   |                                     |   |
|   | b)                                       | Block      5(c) Trinidad and Tobago |
|   |                                     |   |
|   |                                     | The      Company is committed to drill three exploration wells on its “Intrepid”      Block 5(c) under its Block 5(c) PSC with the Government of Trinidad and      Tobago funded in part by a related party participating on a promoted      basis, paying 1/3 of Canadian Superior’s Block 5(c) exploration program,      plus other considerations, to obtain 25% of Canadian Superior’s net      revenue share from this block; and, also by a non-related party paying      approximately 40% of the exploration cost, plus other considerations, for      a 30% interest in the Block 5(c) PSC.  The Company completed the      drilling of the final well of the three well program in March      2009. |
|   |                                     |   |
|   |                                     | On      February 10, 2009 the Company announced that it proposed to monetize a 25%      or larger interest in its "Intrepid" Block 5(c) offshore Trinidad and      Tobago and its related discoveries, subject to acceptable terms and      conditions, and subject to all required approvals. Canadian Superior has      retained a financial advisor, Scotia Waterous (USA) Inc, to assist in the      sale of the asset. |
|   |                                     |   |
|   |                                     | On      February 12, 2009 the Company announced the appointment, upon the      application of BG, a wholly owned subsidiary of the BG Group plc, of a      Receiver of its participating interest in "Intrepid" Block 5(c). Pursuant      to the Court Order, the Receiver, in conjunction with BG, will operate the      property and conduct the flow testing of the "Endeavour" well which      Canadian Superior believes will validate its operations to date. The Court      Order allows the Receiver to charge Canadian Superior interest in Block      5(c) with an amount up to US$47.0 million to pay for its share of the      costs under the joint operating agreement with BG. Canadian Superior will      continue with the monetization of its interest in Block 5(c) as previously      announced and the proceeds from any sale will be applied to its share of      the costs charged against Block 5(c) and to discharge the Receiver (see      Note1). |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      25 |
|------------------------------------------|--------------|--------------|

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| 19.    | Contingencies      and commitments (continued) |
|--------|------------------------------------------------|
|   |                                           |   |
|   | c)                                             | MG      Block Trinidad and Tobago |
|   |                                           |   |
|   |                                           | In      2007, the Company received an exploration and development license from the      Government of Trinidad and Tobago on the Mayaro-Guayaguayare block (“MG      Block”) and as a result is committed to conducting 3D seismic by the end      of 2009 and to drill two exploration wells on the MG block in a joint      venture with the Petroleum Company of Trinidad and Tobago Limited      (“Petrotrin”).  The first well has to be drilled to a depth of      3,000 meters by January 2010 and the second to a depth of 1,800 meters by      July 2010. The Company estimates that its share of the cost of these wells      to be approximately US$15.0 million per well.  The estimated      cost of the 3D seismic program is approximately US$30.0      million.  The Company has provided a performance guarantee of      US$12.0 million to meet the minimum work program. |
|   |                                           |   |
|   | d)                                             | Libya/Tunisia |
|   |                                           |   |
|   |                                           | On      September 3, 2008, Canadian Superior entered into an exploration      production sharing agreement ("EPSA") with a Tunisian/Libyan company,      Joint Exploration, Production, and Petroleum Services Company ("Joint      Oil") and also signed a "Swap Agreement" awarding an overriding royalty      interest and optional participating interest to Joint Oil, in Canadian      Superior's "Mariner" Block, offshore, Nova Scotia, Canada.  If      at the end of August 2011, no royalty well has been spud, Joint Oil has      the right to put back and sell the overriding royalty to the Company for      US$12.5 million. Under terms of the EPSA, Canadian Superior has been named      Operator for the "7th of November Block". |
|   |                                           |   |
|   |                                           | The      exploration work commitment for the first phase (four years) of the seven      year exploration period will include three exploration wells, 300 square      miles of 3D seismic, and one appraisal well.  As a requirement      of the EPSA, Canadian Superior provided a bank guarantee for US$15.0      million to Joint Oil, portions of this guarantee will be reduced by Joint      Oil upon Canadian Superior completing specified requirements under the      EPSA.  Under the terms of the EPSA, the Company has provided a      corporate guarantee and is committed to expend US$49.0 million over the      seven year exploration period. |
|   |                                           |   |
|   | e)                                             | Flow-through      shares |
|   |                                           |   |
|   |                                           | At      December 31, 2008, the Company had yet to incur approximately $16.0      million of Canadian exploration expenses which were renounced for tax      purposes.  These expenses must be incurred by December 31,      2009. |
|   |                                           |   |
|   | f)                                             | Litigation      and claims |
|   |                                           |   |
|   |                                           | The      Company is involved in various claims and litigation arising in the      ordinary course of business.  In the opinion of Canadian      Superior the various claims and litigations arising there from are not      expected to have a material adverse effect on the Company’s financial      position.  The Company maintains insurance, which in the opinion      of the Company, is in place to address any unforeseen    claims. |
|   |                                           |   |
|   | g)                                             | Lease      obligations |
|   |                                           |   |
|   |                                           | At      December 31, 2008, the Company is committed to future payments for office      leases and equipment.  Payments required under these commitments      for each of the next five years are asfollows: |

|   |             | 2009  | 2010  | 2011  | 2012  | Thereafter | Total  |
|--------|------------------|-------|-------|-------|-------|------------|--------|
|   | Office      rent | 2,576 | 3,631 | 4,208 | 3,749 | 17,881     | 32,045 |
|   | Equipment        | 49    | 19    | 11    | 8     | --         | 87     |
|   |             | 2,625 | 3,650 | 4,219 | 3,757 | 17,881     | 32,132 |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      26 |
|------------------------------------------|--------------|--------------|

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| 20.    | Canada      Southern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      June 2006, Canadian Superior made a takeover bid for all of the issued and      outstanding shares of Canada Southern Petroleum Ltd. Canadian Superior      offered 2.75 common shares of Canadian Superior plus $2.50 for each issued      and outstanding share of Canada Southern Petroleum Ltd.  On July      17, 2006, Canadian Superior revised its offer for Canada Southern      Petroleum Ltd. to 2.0 Canadian Superior shares, $2.50. cash and a 25% net      profit interest in Canada Southern’s approximately 927 bcfe of natural      gas, being the estimated net amount of natural gas Canada Southern      attributed to it’s interest in the Canadian Arctic Islands. The offer was      for Canada Southern’s approximately 1,100 boe/d of oil and gas production      and various lands including Canada Southern’s Canadian Arctic island      interests.  The minimum condition attached to the revised offer      was not met and there were 171,495 shares tendered to the original offer.      Canadian Superior Issued 471,612 shares and paid $0.4 million to take up      these shares. The costs incurred, including the fair value of the Canadian      Superior shares issued, exceeded the $2.5 million received on the sale of      the 171,495 Canada Southern shares. The difference has been recorded to      loss on investment in the statement of operations, comprehensive loss and      deficit. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 21.    | Subsequent      event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | On      April 27, 2009, the Board of Directors of Canadian Superior announced the      departure of the Executive Chairman of the Company and the President and      Chief Executive Officer of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 22.    | Reconciliation      with United States Generally Accepted Accounting  Principals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      Company follows Canadian GAAP which differs in some respects with      generally accepted accounting principles in the United States (“U.S.      GAAP”). Significant differences in accounting principles that impact the      Company’s financial statements are described  below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|   | Twelve      months ended December 31,                                               | 2008     | 2007     | 2006             |
|--------|-------------------------------------------------------------------------------------|----------|----------|------------------|
|   |  ($      thousands, except per share amounts)                                  |     |     | As      restated | As previously      reported |
|   |                                                                                |     |     |             |   |
|   | Net      loss in accordance with Canadian GAAP, as reported                         | (23,758) | (9,936)  | (10,913)         | (10,913) |
|   | Flow      through shares                                                            |     |     |             |   |
|   | Income taxes                                                                        | (2,086)  | (2,685)  | (1,005)          | (3,147) |
|   | Change      in fair value of warrants                                               | 3,826    | --       | --               | -- |
|   | Property      acquisitions                                                          |     |     |             |   |
|   | Depletion, amortization and      accretion expense                                  | 325      | 304      | 339              | 339 |
|   | Income taxes                                                                        | (96)     | (93)     | (103)            | (103) |
|   | Ceiling      test                                                                   |     |     |             |   |
|   | Write down of petroleum and      natural gas properties                             | (76,913) | (5,709)  | (2,873)          | (2,873) |
|   | Income taxes                                                                        | 22,689   | 1,741    | 876              | 876 |
|   | Depletion, depreciation and      accretion expense                                  | 7,956    | 3,975    | 3,884            | 3,884 |
|   | Income taxes                                                                        | (2,347)  | (1,212)  | (1,185)          | (1,185) |
|   | Change      in valuation allowance                                                  | (18,345) | (2,542)  | 2,811            | 2,811 |
|   | Convertible      preferred share treatment                                          | 4,569    | (1,186)  | 1,244            | 1,244 |
|   | Net      loss in accordance with U.S. GAAP                                          | (84,180) | (17,343) | (6,925)          | (9,067) |
|   | Convertible      preferred share treatment                                          | (1,149)  | (915)    | (662)            | (662) |
|   | Net      loss attributable to common shareholders in accordance with U.S.      GAAP | (85,329) | (18,258) | (7,587)          | (9,729) |
|   | Net      loss per share in accordance with U.S. GAAP                                |     |     |             |   |
|   | Basic      and diluted                                                              | (0.57)   | (0.13)   | (0.06)           | (0.08) |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      27 |
|------------------------------------------|--------------|--------------|

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| 22.                                                                                                 | Reconciliation      with United States Generally Accepted Accounting Principals      (continued) |
|-----------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                                                |                                                                                             |
|                                                                                                |                                                                                             |
| The      application of U.S. GAAP results in differences to the following balance      sheet items: |

|   |                                          | December      31, 2008 | December      31, 2007 |
|--------|-----------------------------------------------|------------------------|------------------------|
|   | ($      thousands)                            | Canadian               | United      States     | Canadian | United      States |
|   | Property,      plant and equipment, net       | 311,703                | 211,641                | 186,154 | 154,724 |
|   | Accounts      payable and accrued liabilities | 90,585                 | 92,959                 | 22,230 | 26,308 |
|   | Convertible      preferred shares             | 17,194                 | --                     | 13,571 | -- |
|   | Warrants                                      | --                     | 120                    | -- | -- |
|   | Future      income tax liability              | 10,754                 | --                     | 8,853 | -- |
|   | Share      capital                            | 261,845                | 305,565                | 186,557 | 226,487 |
|   | Share      capital – preferred shares   | --                     | 16,514                 | -- | 16,311 |
|   | Shareholders      equity – warrants     | 3,946                  | --                     | -- | -- |
|   | Contributed      surplus                      | 19,624                 | 14,144                 | 14,314 | 8,834 |
|   | Equity      portion of preferred shares       | 2,320                  | --                     | 2,320 | -- |
|   | Deficit,      opening                         | (22,255)               | (83,780)               | (12,319) | (65,522) |
|   | Deficit,      closing                         | (46,013)               | (169,109)              | (22,255) | (83,780) |

|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Flow-through      shares          |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | The      Company finances a portion of its activities with flow through share      issues whereby the tax deductions are renounced to the share      subscribers.  The tax cost of the deductions renounced to      shareholders is reflected as an increase in the future income tax      liability and a reduction from the stated value of the shares. Under U.S.      GAAP, share capital for flow-through shares issued after 1998 is stated at      the quoted value of the shares at the date of issuance; the tax cost      resulting from deduction renouncements, less any proceeds received in      excess of the quoted value of the shares, must be included in the      determination of the tax expense. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | At      December 31, 2007, the Company determined that the 2006 and 2005 financial      statements contained erroneously recorded adjustments related to the      issuance and renouncement of flow through shares for U.S.      GAAP.  The table above outlines the adjustments to the 2006      financial statements for U.S. GAAP purposes.                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Property      Acquisitions        |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | In      prior years, the Company recorded property acquisitions from related      parties in exchange for common shares at the exchange amount, pursuant to      Canadian GAAP. Under U.S. GAAP, these related party acquisitions are      recorded at the seller’s carrying amount. The resulting differences in the      recorded carrying amounts of the properties results in differences in      depletion and amortization expense in subsequent years.                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Ceiling      Test                 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | At      December 31, 2008, the Company applied a ceiling test to its petroleum and      natural gas properties. Under Canadian GAAP, the application of this test      required no adjustment to the carrying value of the Company’s petroleum      and natural gas properties.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | At      December 31, 2008, under U.S. GAAP the Company applied a full cost ceiling      test using a 10% discount rate to its petroleum and natural gas properties      using December 31, 2008 prices of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | Gas      (per thousand cubic feet)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $   6.22      CDN  |
|   | Oil      and natural gas liquids (per barrel)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $   54.19      CDN |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | The      application of the test resulted in a $12.0 million pre-tax reduction      ($8.4 million after tax) in the carrying value of the Company’s petroleum      and natural gas properties under U.S. GAAP. At September 30, 2008 the      Company incurred a $65.0 million pre-tax reduction ($45.8 million after      tax) in the carrying value of the Company’s petroleum and natural gas      properties under U.S. GAAP.                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |   |
|   | At      December 31, 2007, the Company applied a ceiling test to its petroleum and      natural gas properties. Under Canadian GAAP, the application of this test      required no adjustment to the carrying value of the Company’s petroleum      and natural gasproperties.                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      28 |
|------------------------------------------|--------------|--------------|

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| 22.    | Reconciliation      with United States Generally Accepted Accounting Principals      (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
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|   | At      December 31, 2007, under U.S. GAAP the Company applied a full cost ceiling      test using a 10% discount rate to its petroleum and natural gas properties      using December 31, 2007 prices of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | Gas      (per thousand cubic feet)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $   6.97      CDN |   |
|   | Oil      and natural gas liquids (per barrel)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $      93.39 CDN |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | The      application of the test resulted in a $5.7 million pre-tax reduction ($4.0      million after tax) in the carrying value of the Company’s petroleum and      natural gas properties under U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | At      December 31, 2006, the Company applied a ceiling test to its petroleum and      natural gas properties using December 31, 2006 prices  of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | Gas      (per thousand cubic feet)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $   6.25      CDN |   |
|   | Oil      and natural gas liquids (per barrel)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $      67.58 CDN |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | The      application of the test resulted in a $2.9 million pre-tax reduction ($2.0      million after tax) in the carrying value of the Company’s petroleum and      natural gas properties under U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | The      resulting differences in the recorded carrying amounts of the properties      results in differences in depletion, amortization and accretion expenses      in subsequent years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Valuation      Allowance |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | This      adjustment reflects the accounting of an additional valuation allowance      for U.S. GAAP purposes arising from the differences in treatment regarding      write downs of Petroleum and Natural Gas Properties and reduced depletion,      depreciation and accretion expense.  In addition, the liability      method followed by the Company differs from U.S. GAAP due to the      application of transitional provisions upon the adoption and the use of      substantively enacted versus enacted rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Preferred      shares |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | The      Company has reviewed the Convertible preferred shares and their treatment      under SFAS No. 150 “accounting for Certain Financial Instruments with      Characteristics of both Liabilities and Equity” and SFAS No. 133      “accounting for Derivative Instruments and Hedging Activities”. While the      shares are redeemable they are not mandatorily redeemable as defined by      SFAS No. 150 and therefore would not cause the shares to be recorded as      liabilities. In evaluating the embedded conversion option component in      accordance with SFAS No. 133 the shares are indexed to the Company’s own      stock and would not be required to be accounted for as a derivative under      SFAS No. 133.  Under EITF 00-19 the preferred shares would be      considered “conventional” and therefore not subject to the provisions of      EITF 00-19. Accordingly the preferred shares have been accounted for as      described by APB 14 resulting in the allocation of proceeds between the      shares and warrants based on their relative fairvalues. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Warrants |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | Under      U.S, GAAP the fair value of warrants denominated in currencies other than      the Company’s functional currency are treated as a derivative      liability.  The derivative liability of such warrants is marked      to market at the end of each period and the change in the fair value is      recorded in the statement of operations.  Under Canadian GAAP      the fair value of warrants on the issue date is treated as a component of      shareholders’ equity and is not subsequently marked to market at the end      of each period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|   | ACCOUNTING      PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   | On      January 1, 2008, the Company adopted SFAS No. 157 “Fair Value      Measurement”.  The standard provides enhanced guidance for using      fair value to measure assets and liabilities, the information used to      measure fair value, and the effect of fair value measurement on      earnings.  The standard applies whenever other standards require      (or permit) assets or liabilities to be measured at fair value. It does      not expand the use of fair value in any new circumstances. The adoption of      this standard did not impact the Company’s Financial      Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      29 |
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| 22.    | Reconciliation      with United States Generally Accepted Accounting Principals      (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | In      December 2007, the Financial Accounting Standards Board (“FASB”) issued      Statement 141, “Business Combinations”.  Statement 141      establishes principles and requirements of the acquisition method for      business combinations and related disclosures.  This statement      is effective for fiscal years beginning on of after December 15,      2008.  The Company does not expect the adoption of this      statement to have a material impact on the Consolidated Financial      Statements.                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | In      December 2007, FASB issued Statement 160, “Non-controlling Interests In      Consolidated Financial Statements”, an amendment of ARB No.      51.  This statement clarifies that a non-controlling interest in      a subsidiary should be reported as equity in the Consolidated Financial      Statements.  This statement is effective for fiscal years      beginning on or after December 15, 2008. The Company does not expect the      adoption of this statement to have a material impact on the Consolidated      Financial Statements.                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | In      March 2008, FASB issued Statement 161, “Disclosures about Derivative      Instruments and Hedging Activities”, an amendment of FASB Statement      133.  The statement requires qualitative disclosures about the      objectives and strategies for using derivatives, quantitative data about      the fair value of gains or losses on derivative contracts, and details of      credit-risk-related contingent features in their hedged      position.  The statement also requires the disclosure of the      location and amounts of derivative instruments in the financial      statements.  This statement is effective for fiscal years and      interim periods beginning on or after November 15, 2008.  The      Company does not expect the adoption of this statement to have a material      impact on the Consolidated Financial Statements. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | In      December 2008, FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about      Post-retirement Benefit Plan Assets” which provides guidance on      disclosures about plan assets of a defined benefit pension or other      post-retirement plans.  This statement is effective for fiscal      years ending after December 15, 2009.  The Company does not      expect the adoption of this statement to have a material impact on the      Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                           |
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|   | PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | There      are different presentations between Canadian and U.S. GAAP which are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | 1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Under      U.S. GAAP, there is no difference between net income and other      comprehensive income. |
|   | 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | No      subtotal is permitted under U.S. GAAP within cashflow from operations on      the statement of cashflows. |

|  Canadian      Superior Energy Inc. | 2008      FS | Page      30 |
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