U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C.  20549




FORM
40-F/A


(Amendment No.
1)










(Check
      One)o
                    
                    Registration
      statement pursuant to Section 12 of the Securities Exchange Act of
      1934orx
                    
                    Registration
      statement pursuant to Section 12 of the Securities Exchange Act of
      1934




For the fiscal year
endedDecember 31, 2008




Commission file
number333-148909




OPTI
CANADA INC.


(Exact
name of registrant as specified in its charter)




Canada
              (Province
      or other jurisdiction of incorporation or organization)
            1311
              (Primary
      Standard Industrial
              Classification
      Code Number (if applicable))
            Not
      applicable
              (I.R.S.
      Employer
              Identification
      Number (if Applicable))




2100,
555-4th Avenue S.W., Calgary, Alberta, Canada  T2P 4H2




(403)
249-9425




(Address
and Telephone Number of Registrant’s Principal Executive Offices)




CT
Corporation System, 111 8th Avenue,
New York, NY  10011




(212)
894-8940




(Name,
Address (Including Zip Code) and Telephone Number




(Including
Area Code) of Agent For Service in the United States)






Securities registered or
to be registered pursuant to Section 12(b) of the Act. None


Securities registered or
to be registered pursuant to Section 12(g) of the Act None


Securities for which there
is a reporting obligation pursuant to Section 15(d) of the Act. Debt
Securities





For
annual reports, indicate by check mark the information filed with this
Form:




o Annual
      Information Form
            x Audited
      Annual Financial Statements




Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report:  195,929,526
  Indicate
by check mark whether the registrant by filing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange
Act”).  If “Yes” is marked, indicate the file number assigned to the
registrant in connection with such rule.




Yes o                               No
x




Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports); and (2) has been subject to such filing requirements for the past 90
days.


Yes x                                No
o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
Registrant was required to submit and post such files.


Yes o                               No
x












EXHIBIT
INDEX Exhibit
                      
                      Description99.1
                      
                      Certification of
      Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14 of the
      Securities Exchange Act of 193499.2
                      
                      Certification of
      Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14 of the
      Securities Exchange Act of 193499.3
                      
                      Certification of
      Chief Executive Officer pursuant to 18 U.S.C. Section
  135099.4
                      
                      Certification of
      Chief Financial Officer pursuant to 18 U.S.C. Section
  135099.5
                      
                      Consent
      of PricewaterhouseCoopers LLP99.6
                      
                      Consent
      of McDaniel & Associates Consultants
Ltd.
 
 FORM
40-F/A
 Explanatory
Note
  This Amendment No.
1 (the “Amendment”) to the Annual Report on Form 40-F (the “Original Filing”) of
OPTI Canada Inc. (the “Company”) for the fiscal year ended December 31, 2008 is
being filed for the purpose of filing audited financial statements of the
Company for the year ended December 31, 2008, including the auditors’ report
with respect thereto, that reflect changes resulting from the revision of
previously filed audited financial statements included in the Original Filing.
 In addition, the Company is including in this Amendment its revised
Management’s Discussion and Analysis and is revising and restating its US GAAP
reconciliation note in its financial statements as at December 31, 2008 and 2007
and for the years then ended.
  The Amendment
reflects the retroactive application of the change in accounting policy under
Canadian GAAP as described in note 2(p)(iii) to financial statements filed June
3, 2009 on this Form 40-F/A. This application impacts the previously reported
differences between Canadian GAAP and US GAAP as at December 31, 2008 and 2007
and for the years then ended and therefore the US GAAP reconciliation has been
revised accordingly. Furthermore, as a result of performing a detailed review of
capitalized costs that no longer qualify for capitalization upon the retroactive
application of CICA handbook section 3064, the Company has restated certain
previously reported differences between Canadian GAAP and US GAAP. Specifically,
OPTI has determined that for US GAAP purposes, the Company’s petroleum and
natural gas assets should be considered substantially complete and ready for its
intended use effective July 1, 2008, which is consistent with the “commencement
of operations” date under Canadian GAAP. Previously, OPTI had used a date for US
GAAP purposes of January 1, 2007.
  The impact of this
restatement with respect to the US GAAP reconciliation is described more fully
in note 14 of  the financial statements filed on form 40-F/A with the U.S.
Securities and Exchange Commission.
  Other than as
expressly set forth above, this Amendment to the original filing does not, and
does not purport to, update or restate the information in any Item of the
Original Filing or reflect any events that have occurred after the Original
Filing was filed. The filing of this Amendment shall not be deemed an admission
that the Original Filing, when made, included any known, untrue statement of
material fact or knowingly omitted to state a material fact necessary to make a
statement not misleading.
  Principal
Documents
 The following documents have been filed as part of this Amendment No. 1 to the
Annual Report on Form 40-F, beginning on the following page:
  (a)  
Revised Management’s Discussion and Analysis for the fiscal year ended December
31, 2008; and
 (b)  
Revised and Restated Consolidated Financial Statements for the fiscal year ended
December 31, 2008 (Note 15 to the Consolidated Financial Statements relates to
United States Accounting Principles and Reporting (U.S. GAAP)).
   40 –
F1
















































MANAGEMENT’S
DISCUSSION AND ANALYSIS




For the year
ended




December 31,
2008




Revised
(Retroactive change in accounting policy)















































MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


The
following Management’s Discussion and Analysis (MD&A) dated February 24,
2009 should be read in conjunction with the audited financial statements for the
year ended December 31, 2008.  OPTI Canada Inc. (OPTI) is filing this
revised MD&A and its 2008 revised  financial statements to reflect
the adoption of CICA Handbook section 3064 "Goodwill and Intangible
Assets".  The effects of that standard on the previously filed
MD&A and financial statements are as outlined in Note 2 to the revised
financial statements.  The restatements would have been required at
the 2009 year end and these filings are to comply with regulatory
requirements.





FORWARD-LOOKING
INFORMATION


The
MD&A is a review of our financial condition and results of operations. Our
financial statements are prepared based upon Canadian Generally Accepted
Accounting Principles (GAAP) and all amounts are in Canadian dollars unless
specified otherwise.  Certain statements contained herein are
forward-looking statements, including, but not limited to, statements relating
to: the expected production performance of the Long Lake Project; OPTI Canada
Inc.'s (OPTI) other business prospects, expansion plans and strategies; the
cost, development and operation of the Long Lake Project and OPTI's relationship
with Nexen Inc. (Nexen); OPTI's financial outlook respecting the estimate of the
netback for Phase 1 of the Project; OPTI's anticipated financial condition and
liquidity over the next 12 to 24 months; and our estimated future tax liability.
Forward-looking information typically contains statements with words such as
“intends,” "anticipate," "estimate," "expect," "potential," "could," “plan” or
similar words suggesting future outcomes. Readers are cautioned not to place
undue reliance on forward-looking information because it is possible that
expectations, predictions, forecasts, projections and other forms of
forward-looking information will not be achieved by OPTI. By its nature,
forward-looking information involves numerous assumptions, inherent risks and
uncertainties. A change in any one of these factors could cause actual events or
results to differ materially from those projected in the forward-looking
information.  Although OPTI believes that the expectations reflected
in such forward-looking statements are reasonable, OPTI can give no assurance
that such expectations will prove to be correct.  Forward-looking
statements are based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause actual results to
differ materially from those anticipated by OPTI and described in the
forward-looking statements or information.  The forward-looking
statements are based on a number of assumptions which may prove to be
incorrect.  In addition to other assumptions identified herein, OPTI
has made assumptions regarding, among other things: market costs and other
variables affecting operating costs of the Project;  the ability of
the Long Lake Project joint venture partners to obtain equipment, services and
supplies, including labour, in a timely and cost-effective manner; the
availability and costs of financing; oil prices and market price for the Premium
Sweet Crude (PSCTM) output of the OrCrudeTM Upgrader; foreign currency exchange
rates and hedging risks;  government regulations and royalty regimes;
and the degree of risk that governmental approvals may be delayed or
withheld.  Other specific assumptions and key risks and uncertainties
are described elsewhere in this document and in OPTI's other filings with
Canadian securities authorities.





Readers
should be aware that the list of assumptions, risks and uncertainties set forth
herein are not exhaustive.  Readers should refer to OPTI's current
Annual Information Form (AIF), which is available at www.sedar.com, for a
detailed discussion of these assumptions, risks and uncertainties. The
forward-looking statements or information contained in this document are made as
of the date hereof and OPTI undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable laws
or regulatory policies.





2


Reserve and Resource
Estimates: The estimates of resources and of economically recoverable
bitumen reserves contained herein are forward-looking statements. The estimates
are based upon a number of factors and assumptions made as of the date on which
the reserve and resource estimates were determined, such as geological and
engineering estimates which have inherent uncertainties, the assumed effects of
regulation by government agencies and estimates of future commodity prices and
operating costs, all of which may vary considerably from actual results. All
such estimates are, to some degree, uncertain and classifications of reserves
are only attempts to define the degree of uncertainty involved. The estimates
contained herein with respect to reserves and resources that may be developed
and produced in the future have been based upon volumetric calculations and upon
analogy to similar types of reserves and resources, rather than upon actual
production history. Estimates based on these methods generally are less reliable
than those based on actual production history. Subsequent evaluation of the same
reserves and resources based upon production history will result in variations,
which may be material, in the estimated reserves and resources.





Additional
information relating to our Company, including our AIF, can be found at
www.sedar.com.





FINANCIAL
SUMMARY




In
      millions
                    
                    Years
      ended December 312008
                      (as
      revised)
                    
                    
                    2007
                      (as
      revised)
                    
                    
                    2006
                      (as
      revised)Earnings
      (loss)
                    
                    $
                    (477
                    )(1)
                    
                    $
                    151
                    
                    
                    $
                    (35
                    )Total
      oil sands expenditures (2)
                    
                    
                    706
                    
                    
                    
                    961
                    
                    
                    
                    1,056Working
      capital (deficiency)  (3)
                    
                    
                    (25
                    )
                    
                    
                    271
                    
                    
                    
                    554Shareholders’
      equity
                    
                    $
                    1,471
                    
                    
                    $
                    1,951
                    
                    
                    $
                    1,418Common
      shares outstanding (basic)
                    
                    
                    195.9
                    (4)
                    
                    
                    195.4
                    
                    
                    
                    172.7





Notes:


(1)
Includes $369 million pre-tax asset impairment provision related to working
interest sale to Nexen.
 (2)
Capital expenditures related to Phase 1 and future phase development.
Capitalized interest and non-cash additions or charges are
excluded.
 (3)
Includes current portion of interest reserve account where applicable and
amounts due in June 2009 in relation to our $150 million revolving debt
facility.  This $150 million facility was repaid and cancelled in
January 2009.
 (4)
Common shares outstanding at the end of 2008 after giving effect to the exercise
of common share options would be approximately 203 million common
shares.




OVERVIEW


OPTI
Canada Inc. is a Calgary, Alberta-based company focused on developing major oil
sands projects in Canada using our proprietary OrCrudeTM process. Our first
project, Phase 1 of the Long Lake Project (the Project), consists of 72,000
barrels per day of SAGD (steam assisted gravity drainage) bitumen production
integrated with an upgrading facility. The Upgrader uses the OrCrudeTM process
combined with commercially available hydrocracking and gasification. Through
gasification, this configuration substantially reduces the exposure to and the
need to purchase natural gas. On a 100 percent basis, the Project is expected to
produce 58,500 bbl/d of products, primarily 39 degree API Premium Sweet Crude
(PSCTM) with low sulphur content, making it a highly desirable refinery
feedstock. Due to its premium characteristics, we expect PSCTM to sell
at a price similar to West Texas Intermediate (WTI) crude oil. The Project is
being operated in a joint venture with Nexen Inc.


3





PROJECT
STATUS


First
production of PSCTM from the Long Lake Project was achieved in January 2009.
Preparation is underway to transition gasifier feed from vacuum residue to
asphaltenes, the final step in Upgrader commissioning. Synthesis gas from the
Upgrader has been used in SAGD operations, decreasing operating costs by
reducing the requirement for purchased third-party natural
gas.  During the initial operating period, we expect periods of
downtime but anticipate that the stability of operations will continue to
improve. The Upgrader is currently gasifying but not producing PSCTM due to
issues with water supply and treating but is expected to resume production in
the near future.  Essentially all of the PSCTM produced to date has
been used as diluent.





During
the final commissioning phase, prior to the operation of the solvent
deasphalting and thermal cracking units, there is a high percentage of diluent
that feeds the Upgrader and continues to the hydrocracker, forming part of the
PSCTM stream. We have produced over 20,000 bbl/d (gross) of on-spec PSCTM, with
between 10,000 and 12,000 bbl/d (gross) of this representing upgraded bitumen.
The remainder represents diluent processed through the Upgrader. The percentage
of diluent in the Upgrader feed will decrease as bitumen production
increases.





We
expect Upgrader capacity during ramp-up will be capable of processing all of the
forecasted SAGD volumes and we expect the Project to reach full capacity of
approximately 58,500 bbl/d of PSCTM and other products in 12 to 18
months.





The
reservoir continues to perform as expected given the amount of steam we have
injected. However, SAGD ramp-up has been affected by a variety of surface issues
that have limited the amount of steam we have been able to inject into the
reservoir over the past few months due to power disruptions, extreme cold
weather, and water temperature and treating issues. Since steam injection rates
directly impact bitumen production rates, and the ability to generate steam is
currently limited, bitumen production is lower than previously expected.
Solutions are being developed to place more heat into the front end of the
steaming process to supplement the heat returns from the reservoir. Given
steaming constraints, allocation of steam was necessary and accordingly only 32
of 81 well pairs are presently in production mode. January bitumen production
averaged approximately 13,000 bbl/d (gross). As steam capacity increases, the
remaining wells will be brought on-stream.





ADVANCING
FUTURE PHASES


Our
capital program for 2009 includes funds allocated to advance detailed
engineering on the SAGD and Upgrader facilities for Phase 2 of the Project and
also includes funds for additional core hole drilling to further delineate our
nearer-term development leases.





Regulatory
approval for Phases 2 and 3 of SAGD development at Long Lake (Long Lake South)
was received in February 2009. Phase 2 sanctioning will depend on multiple
factors including initial performance of Phase 1, receiving regulatory approval
for Phase 2 SAGD operations, receiving clarity on proposed climate change
regulations, developing cost estimates and an improved economic environment. We
therefore do not expect to consider sanctioning Phase 2 until mid-2010 at the
earliest.






4




COMPLETION
OF ASSET SALE AND DEBT FACILITY AMENDMENT


On
January 27, 2009, OPTI announced that we had completed the sale of a 15 percent
working interest in our joint venture assets to our partner Nexen for $735
million. Effective January 1, 2009 , OPTI has a 35 percent working interest in
all joint venture assets, including Phase 1 of the Project, all future phase
reserves and resources, and future phases of development.





As a
result of the asset sale, our revolving debt facilities were amended on January
27, 2009. Significant changes include:




•
            $150
      million revolving credit facility was repaid and cancelled;


•
            $500
      million revolving credit facility was reduced to $350 million, a total of
      approximately $400 million was repaid through February 17, 2009, and
      applicable interest rates were increased by approximately  2 to
      4 percent depending on our debt ratings;


•
            First
      lien to earnings before interest, tax, depreciation and amortization
      (EBITDA) covenant commences in the third quarter of 2009 with a maximum
      ratio 2.5:1 as defined in Note 10 to the audited financial statements for
      the year ended December 31, 2008 (previously the first quarter of 2009 and
      a ratio of 3.5:1);


•
            Debt
      to capitalization ratio was increased to 70 percent from 65 percent, also
      as defined in Note 10 to the audited financial statements for the year
      ended December 31, 2008; and


•
            The
      Canadian measurement of our U.S.-dollar-denominated debt was changed from
      a period-end exchange rate to an average rate for the preceding
      quarter.





CORPORATE
UPDATE


OPTI’s
management team is transitioning as a result of the asset sale to
Nexen.  David Halford, Chief Financial Officer, Mary Bulmer, VP Human
Resources and Corporate Services, and Peter Duda, VP Operations will be leaving
to pursue other business opportunities. They will remain with OPTI for various
periods to continue to facilitate the transition.





Travis
Beatty has been appointed Vice President, Finance and Chief Financial Officer of
OPTI effective March 1, 2009. Mr. Beatty joined OPTI in 2002 as Controller and
since then has also held the roles of Treasurer and Director, Planning. Mr.
Beatty is a Chartered Accountant and a Chartered Financial Analyst, and holds a
B.Comm from the University of Calgary.





Al
Smith has been appointed Vice President, Marketing effective March 1, 2009. Mr.
Smith joined OPTI in 2006 as Director, Marketing. Mr. Smith is a professional
engineer in Alberta and is a member of both APEGGA and APEGBC. He holds a
B.A.Sc. in Chemical Engineering from the University of Waterloo.





Going
forward, OPTI’s senior management team will consist of: Sid Dykstra, President
and Chief Executive Officer; Travis Beatty, VP Finance and CFO; Joe Bradford, VP
Legal and Administration and Corporate Secretary; Bill King, VP Development; and
Al Smith, VP Marketing.





5





RESERVES
AND RESOURCES


OPTI
has a significant presence in the Athabasca oil sands, with a 35 percent
interest in over 385 sections of land on three leases:  Long Lake,
Leismer and Cottonwood.  We believe our existing lands will support
approximately 360,000 bbl/d of PSCTMproduction (126,000 bbl/d net to OPTI) from six phases including Long
Lake Phase 1. Based on reserve and resource estimates, we believe there is
potential for three phases at Long Lake, two phases at Leismer and one at
Cottonwood. With a limited delineation program in the 2007/2008 winter drilling
season, total reserve and resource volumes did not change
significantly.





Reserves


McDaniel
& Associates (McDaniel), our reserves and resources evaluator, has prepared
a report evaluating the bitumen reserves and synthetic oil reserves of the Long
Lake leases effective December 31, 2008. Due to the advanced nature of our Long
Lake Phase 2 project, previously recognized Contingent Resources are now booked
as probable and possible reserves.





For
2008, McDaniel has also recognized probable and possible reserves associated
with lands outside the Phase 2 initial development area to include certain lands
pertaining to Phase 3 development. This is due, in part, to the inclusion of
Phase 3 lands in the Long Lake South Environmental Impact Assessment, requisite
levels of delineation being met on the Phase 3 lands, as well as McDaniels’
confidence in the development of these lands now that Phase 1 is
commercial.





The
McDaniel evaluation of our lands recognizes the impact of upgrading on the
resources. Most of the raw bitumen will be upgraded and sold as PSCTM and butane,
and is shown as synthetic crude oil or butane reserves. Bitumen was sold prior
to Upgrader start-up, is planned to be sold during periods of Upgrader downtime,
and is shown as bitumen reserves.





The
following table shows OPTI’s 50 percent working interest in the raw bitumen
reserves and the corresponding sales volumes at December 31, 2008, prior to
taking account of the sale of the 15 percent working interest.





2008
(prior to the sale of the 15 percent working interest)


Raw
      Bitumen
                                  
                                  
                                  Gross Sales VolumesAll
      volumes are millions of barrels
                                  
                                  
                                  
                                  
                                  PSCTM
                                  
                                  
                                  Bitumen
                                  
                                  
                                  ButaneProven
      (1)
                                  
                                  
                                  278
                                  
                                  
                                  
                                  210
                                  
                                  
                                  
                                  16
                                  
                                  
                                  
                                  8Proven
      plus probable (2)
                                  
                                  
                                  1,054
                                  
                                  
                                  
                                  827
                                  
                                  
                                  
                                  22
                                  
                                  
                                  
                                  32Proven
      plus probable plus possible (3)
                                  
                                  
                                  1,148
                                  
                                  
                                  
                                  902
                                  
                                  
                                  
                                  22
                                  
                                  
                                  
                                  34








6


The
following table shows OPTI’s 35 percent working interest in the raw bitumen
reserves and the corresponding sales volumes as at December 31, 2008 after
taking account of the sale of the 15 percent working interest.





2008
(subsequent to the sale of the 15 percent working interest)


Raw
      Bitumen
                              
                              
                              Gross Sales VolumesAll
      volumes are millions of barrels
                              
                              
                              
                              
                              PSCTM
                              
                              
                              Bitumen
                              
                              
                              ButaneProven
      (1)
                              
                              
                              194
                              
                              
                              
                              147
                              
                              
                              
                              11
                              
                              
                              
                              6Proven
      plus probable (2)
                              
                              
                              738
                              
                              
                              
                              579
                              
                              
                              
                              15
                              
                              
                              
                              22Proven
      plus probable plus possible (3)
                              
                              
                              803
                              
                              
                              
                              632
                              
                              
                              
                              15
                              
                              
                              
                              24








Notes
      to both reserve tables:(1)
      Proven reserves are those reserves that can be estimated with a high
      degree of certainty to be recoverable.  It is likely that the
      actual remaining quantities recovered will exceed the estimated proven
      reserves.


(2)
      Probable reserves are those additional reserves that are less certain to
      be recovered than proven reserves. It is equally likely that the actual
      remaining quantities recovered will be greater or less than the sum of the
      estimated proven plus probable
reserves.


(3)
      Possible reserves are those additional reserves that are less certain to
      be recovered than probable reserves. There is a 10 percent probability
      that the remaining quantities actually recovered will be greater than the
      sum of proven plus probable plus possible
  reserves.





Resources


In
addition to estimating our reserves, McDaniel has estimated bitumen resources on
all of OPTI’s lands including the Long Lake, Leismer and Cottonwood
leases.  A summary of the additional resource estimates as at December
31, 2008, on a 50 percent working interest basis prior to taking into account
the 15 percent working interest sale, is shown below:





2008
(prior to the sale of the 15 percent working interest)


All
      volumes are millions of barrels
                            
                            Raw Bitumen(1)Remainder
      of Long Lake leases (2)
                            
                            
                            363Leismer
      (2)
                            
                            
                            954Cottonwood
      (3)
                            
                            
                            717Total
                            
                            
                            2,034







7


The
following table shows OPTI’s 35 percent working interest in the additional
resource estimates after taking account of the sale of the 15 percent working
interest.





2008
(subsequent to the sale of the 15 percent working interest)


All
      volumes are millions of barrels
                              
                              Raw Bitumen(1)Remainder
      of Long Lake leases (2)
                              
                              
                              254Leismer
      (2)
                              
                              
                              668Cottonwood
      (3)
                              
                              
                              502Total
                              
                              
                              1,424





Notes
      to both resource tables:


(1)
              These
      estimates represent the "best estimate" of our resources, are not
      classified or recognized as reserves, and are in addition to our disclosed
      reserve volumes. These resource estimates are categorized primarily as
      Contingent Resources, with some categorized as Prospective Resources. See
      Notes 2 and 3 below.


Contingent
      Resources are those quantities of petroleum estimated, as of a given date,
      to be potentially recoverable from known accumulations using established
      technology or technology under development, but which are not currently
      considered to be commercially recoverable due to one or more
      contingencies. Contingencies may include factors such as economic, legal,
      environmental, political, and regulatory matters, or a lack of markets. It
      is also appropriate to classify as Contingent Resources the estimated
      discovered recoverable quantities associated with a project in the early
      evaluation stage. There is no certainty that it will be commercially
      viable to produce any portion of the Contingent
  Resources.


Prospective
      Resources are those quantities of petroleum estimated, as of a given date,
      to be potentially recoverable from undiscovered accumulations by
      application of future development projects. Prospective Resources have
      both an associated chance of discovery and a chance of development. There
      is no certainty that any portion of the Prospective Resources will be
      discovered. If discovered, there is no certainty that it will be
      commercially viable to produce any portion of the
    resources.


(2)
            The
      resource estimates for Leismer and Long Lake are categorized as Contingent
      Resources. These volumes are classified as resources rather than reserves
      primarily due to less delineation and the absence of regulatory approvals,
      detailed design estimates and near-term development
  plans.


(3)
            The
      resource estimate for Cottonwood is categorized as both Contingent and
      Prospective Resources. The estimate of 717 million barrels prior to the
      sale of the 15 percent working interest would be comprised of 274 MMbbl of
      Contingent Resources and 443 MMbbl of Prospective Resources. After taking
      account for the sale of the 15 percent working interest, the estimate of
      502 million barrels is comprised of 192 MMbbl of Contingent Resources and
      310 MMbbl of Prospective Resources. These Contingent Resource volumes are
      classified as resources rather than reserves primarily due to less
      delineation; the absence of regulatory approvals, detailed design
      estimates and near-term development plans; and less certainty of the
      economic viability of their recovery. In addition to those factors that
      result in Contingent Resources being classified as such, Prospective
      Resources are classified as such due to the absence of proximate
      delineation drilling.








NETBACKS


We
provide a financial outlook of our estimated netback for Phase 1 of the Project
that was last updated in our third quarter MD&A dated October 28, 2008. The
netback calculation shown below is consistent with this most recent update and
includes our estimates of revenue, royalties, operating costs and General and
Administrative (G&A) expenses per barrel of product sold.





This
financial outlook is intended to provide investors with a measure of the ability
of our Project to generate netbacks assuming full production capacity. We
believe that the ability of the Project to generate cash to fund interest
payments and future phases of development is a key advantage of our Project and
important to our investors. The netback measure is the most appropriate
financial gauge to demonstrate this ability as corporate costs, interest, and
other non-cash items are excluded from the calculation. The financial outlook
may not be suitable for other purposes. Netbacks generated by our Project are
expected to be lower than shown in this outlook in the years following start-up
due to the lower production volumes during ramp-up and an initially higher
steam-to-oil ratio (SOR). The netback calculation as presented is a non-GAAP
measure. The closest GAAP measure to the netback calculation is cash flow from
operations. However, cash flow from operations includes many other corporate
items that affect cash and are independent of the operations of the
Project.





8


The
actual netbacks achieved by the Project could differ materially from these
estimates. The material risk factors that we have identified toward achieving
these netbacks are as outlined in the Forward-Looking Information section of
this document and in our 2007 Annual Information Form (AIF).  In
particular; the SAGD and Long Lake Upgrader facilities may not operate as
planned; the operating costs of the Project may vary considerably during the
operating period; our results of operations will depend upon the prevailing
prices of oil and natural gas in the worldwide market and those prices can
fluctuate substantially; we will be subject to foreign currency exchange
fluctuation exposure; and our operating cash flows will be directly affected by
the applicable royaltyregime
relating to our business.  The key assumptions relating to the netback
estimate are set out in the notes beneath the table.





Estimated
Future Project Netbacks(1)


In
      CDN$/bbl
                      
                      Post-payout
                      
                      
                      Pre-payout$/bbl
                      
                      
                      $/bblRevenue(1,2)
                      
                      $
                      86.33
                      
                      
                      $
                      86.33Royalties
      and G&A(3)
                      
                      
                      (8.43
                      )
                      
                      
                      (3.84
                      )Operating
      costs(4)Natural
      gas(5)
                      
                      
                      (3.90
                      )
                      
                      
                      (3.90
                      )Other
      variable(6)
                      
                      
                      (2.76
                      )
                      
                      
                      (2.76
                      )Fixed
                      
                      
                      (12.82
                      )
                      
                      
                      (12.82
                      )Property
      taxes and insurance(7)
                      
                      
                      (3.55
                      )
                      
                      
                      (3.55
                      )Netback
                      
                      $
                      54.87
                      
                      
                      $
                      59.46





Notes:


(1)
            The
      per barrel amounts are based on the expected yield for the Project of
      57,700 bbl/d of PSCTM and 800 bbl/d of butane, and assume that the Upgrader
      will have an on-stream factor of 96 percent. These numbers are cash costs
      only and do not reflect non-cash charges.  See “Forward-Looking
      Statements.”


(2)
            For
      purposes of this projection, we assume a WTI price of US$75/bbl, foreign
      exchange rates of CDN$1.00 to US$0.85 and an electricity sales price of
      $106 per megawatt hour. Revenue includes sale of PSCtm,
      bitumen, butane and electricity.


(3)
            Royaltiesare calculated
      based on a light/heavy differential of 30 percent of WTI. We anticipate
      payout for royalty purposes to occur in approximately 2022 based on the
      assumptions noted.


(4)
            Costs
      are in 2009 dollars.


(5)
            Natural
      gas costs are based on our long-term estimate for a SOR of
      3.0.


(6)
            Includes
      approximately $1.00/bbl for greenhouse gas mitigation costs based on an
      approximate average 20 percent reduction of CO2
      emissions at a cost of $20 per tonne of CO2.


(7)
            Property
      taxes are based on expected mill rates for
2009.





Sustaining
capital costs required to maintain production at design rates of capacity are
estimated to be approximately $8 to $9 per barrel of PSCTM, assuming full design
rate production adjusted for long-term on-stream expectations.  The
netbacks as shown are prior to abandonment and reclamation costs.  We
do not include these costs due to the long-term nature of our
assets.





9


CAPITAL
EXPENDITURES


Our
financial condition to date has been affected primarily by capital expenditures
in connection with the construction, commissioning and start-up of the Project,
related financings and the capital expenditures associated with the development
of future phases.





The
Project is essentially complete as of December 31, 2008.  The
remaining capital costs relate to the completion of the steam expansion project,
expected in 2009, and the ash processing unit in the following
year.  The cost to complete these two projects is approximately $45
million net to OPTI.





The
table below identifies historical expenditures incurred by us in relation to the
Project, other oil sands activities and other capital expenditures.




In
      millions
                  
                  Year
      ended
                    2008
                    (as
      revised)
                  
                  
                  Year
      ended
                    2007
                    (as
      revised)
                  
                  
                  Year
      ended
                    2006
                    (as
      revised)Long
      Lake Project - Phase 1Upgrader
                  
                  $
                  285
                  
                  
                  $
                  529
                  
                  
                  $
                  476SAGD
                  
                  
                  195
                  
                  
                  
                  282
                  
                  
                  
                  440Sustaining
      capital and capitalized operations
                  
                  
                  92
                  
                  
                  
                  54
                  
                  
                  
                  -Total
      Long Lake Project
                  
                  
                  572
                  
                  
                  
                  865
                  
                  
                  
                  916Other
      oil sands activities
                  
                  
                  134
                  
                  
                  
                  96
                  
                  
                  
                  140Total
      oil sands expenditures
                  
                  
                  706
                  
                  
                  
                  961
                  
                  
                  
                  1,056Capitalized
      interest
                  
                  
                  139
                  
                  
                  
                  130
                  
                  
                  
                  47Other
      capital expenditures
                  
                  
                  45
                  
                  
                  
                  17
                  
                  
                  
                  6Total
      cash expenditures
                  
                  
                  890
                  
                  
                  
                  1,108
                  
                  
                  
                  1,109Non-cash
      capital charges
                  
                  
                  11
                  
                  
                  
                  1
                  
                  
                  
                  15Total
      capital expenditures
                  
                  $
                  901
                  
                  
                  $
                  1,109
                  
                  
                  $
                  1,124





For the
year ended December 31, 2008, we incurred capital expenditures of $901 million.
Phase 1 expenditures related to Upgrader and SAGD were primarily related to the
completion of construction, commissioning and start-up of the Upgrader, and
ongoing construction of the steam expansion project. Sustaining capital in 2008
related primarily to the installation of electric submersible pumps on some of
our wells and engineering and resource delineation for future Phase 1 well
pads.





We
capitalized our share of the net SAGD operations until July 1, 2008, resulting
in a net cost of $43 million.  The SAGD operating results during the
first half of the year were comprised of Premium Synthetic Heavy (PSH) sales of
$81 million, power sales of $8 million, operating costs of $58 million, diluent
and feedstock volumes consumed costs of $71 million and transportation costs of
$3 million. These operating results reflect early stage SAGD operations and
initial reservoir steaming during the first half of 2008 and as a result we did
not achieve significant revenue from bitumen production during this
period.





10


The
expenditures of $134 million for other oil sands activities during the year
related to engineering costs and resource delineation for future phases. This
was comprised primarily of $56 million related to engineering and regulatory
work, $55 million related to core hole delineation and seismic costs associated
with future phases of development and $7 million in contract cancellation costs
related to a reduction in the scope of our 2008/2009 winter drilling
program.





Capitalized
interest includes interest of $126 million on our senior secured notes (Notes)
and $13 million with respect to our revolving credit facilities. The other
capital expenditures of $45 million in the period related primarily to $30
million on corporate assets and $15 million for costs associated with the
working interest sale to Nexen.





RESULTS
OF OPERATIONS


Year Ended December 31,
2008





In
      millions
                  
                  2008
                    (as
      revised)
                  
                  
                  2007
                    (as
      revised)
                  
                  
                  2006
                    (as
      revised)Total
      Revenue
                  
                  $
                  204
                  
                  
                  $
                  13
                  
                  
                  $
                  10ExpensesOperating
      expenses
                  
                  
                  84
                  
                  
                  
                  -Diluent
      and feedstock purchases
                  
                  
                  165
                  
                  
                  
                  -Transportation
                  
                  
                  8
                  
                  
                  
                  -Interest
      expense
                  
                  
                  39
                  
                  
                  
                  -Impairment
      related to asset sale
                  
                  
                  369
                  
                  
                  
                  -
                  
                  
                  
                  -General
      and administrative
                  
                  
                  18
                  
                  
                  
                  14
                  
                  
                  
                  10Depletion,
      depreciation and accretion
                  
                  
                  17
                  
                  
                  
                  2
                  
                  
                  
                  22Financing
      charges
                  
                  
                  1
                  
                  
                  
                  12
                  
                  
                  
                  -Realized
      gain on hedging instruments
                  
                  
                  (116
                  )
                  
                  
                  -
                  
                  
                  
                  -Unrealized
      loss (gain) on hedging instruments
                  
                  
                  (160
                  )
                  
                  
                  61
                  
                  
                  
                  5Foreign
      exchange translation loss (gain)
                  
                  
                  373
                  
                  
                  
                  (235
                  )
                  
                  
                  29Future
      tax expense (recovery)
                  
                  
                  (116
                  )
                  
                  
                  9
                  
                  
                  
                  (21
                  )





Operational
Overview


Our
overall results in the second half of 2008 reflected the inconsistent
performance of the SAGD operation and resulting relatively low SAGD
volumes.  Continuing challenges with SAGD surface equipment also kept
volumes relatively low in the quarter. As a result of the timing of certain of
our purchases and light heavy spreads, our diluent and feedstock purchases
comprised the majority of our revenue from PSH.  We will not have
exposure to bitumen blend revenue or diluent costs in periods when the Upgrader
is in normal operation.





11


Total
Revenue


For the
year ended December 31, 2008, we earned revenue of $187 million for Premium
Synthetic Heavy (PSH), power sales of $11 million and interest income of $6
million.  Our share of PSH sales averaged 15,450 bbls/day at a price
of approximately $65.78/bbl.  In the same period, we had power sales
of $11 million representing 141,800 MW of electricity sold at an average price
of $79.20/MW.  In 2007, revenue of $13 million was entirely comprised
of interest income.





Expenses, gains and
losses


*
Impairment Related to Asset Sale


To
consider impairment as of December 31, 2008, assets were grouped into categories
of depreciable assets, resource assets and unproved properties based on the
nature of the asset and an assessment of its depreciation basis. Each asset type
was assessed individually for impairment.





We
allocated the sales proceeds to each asset type based on an estimate of fair
value. The sales proceeds allocated to depreciable assets were lower than the
book value of the asset; as a result, an impairment before taxes of $369 million
was recorded in 2008. The sales proceeds allocated to resource assets did not
alter the depletion rate by greater than 20 percent and, as a result, no gain or
loss was recorded. The sales proceeds for resource assets will be recorded as a
reduction to book value as of completion of the sale in 2009. The sales proceeds
for unproved properties will be recorded as a reduction to book value as of
completion of the sale in 2009. All of the Company’s remaining assets were
subject to a ceiling test and cost recovery test which concluded no further
impairment existed.   The ceiling test is described in Note 2 of
the financial statements.





With
respect to the assets sold and the related impairment, there were a number of
business conditions which led to the sale and the impairment. These factors
include: restricted access to capital for OPTI as well as potential purchasers
of our assets; relatively low and declining commodity prices during the second
half of 2008; relatively low SAGD production volumes and delayed start-up of the
Upgrader. We expect that as these conditions improve, the fair value of our
assets will also increase.





*
Operating expenses


For the
year ended December 31, 2008, operating expenses associated with SAGD operation
were $84 million, primarily comprised of natural gas, maintenance, labour and
operating materials and services.  These expenses are attributable to
the last six months of 2008, as operating costs prior to July 1, 2008 were
capitalized.  There were no operating expenses recorded in 2007, as
they were capitalized since we had not achieved significant revenue from bitumen
production during this period.





*
Diluent and Feedstock Purchases


For the
year ended December 31, 2008, diluent and feedstock expenses were $165
million.  Diluent purchases averaged $106.35/bbl.  These
purchases are attributable to the last six months of 2008, as diluent and
feedstock purchases prior to July 1, 2008 were capitalized.  There
were no diluent and feedstock purchases included in operations in
2007





12


*
Transportation


For the
year ended December 31, 2008, transportation expenses were $8 million, which
were comprised of pipeline costs associated with PSH sales.  These
expenses are attributable to the last six months of 2008, as transportation
costs prior to July 1, 2008 were capitalized.  There was no
transportation expenses included in operations in the corresponding period in
2007.





*
Interest Expense


For the
year ended December 31, 2008, interest expense was $39 million.  The
expense relates to the amount of interest associated with our SAGD assets and
does not include interest associated with the Upgrader assets, which continues
to be capitalized. These expenses are attributable to the last six months of
2008, as interest costs prior to July 1, 2008 were capitalized.  There
was no interest expense recorded in 2007, as this cost was capitalized since we
had not achieved significant revenue from bitumen production during this
period.  Our total interest cost for 2008 is $177
million.





*
General and Administrative


For the
year ended December 31, 2008, G&A expenses increased to $18 million from $14
million in 2007. The increase for 2008 is due to higher levels of corporate
staffing.





*
Depletion, Depreciation and Accretion


For the
year ended December 31, 2008, depletion, depreciation and accretion expenses
were $17 million compared to $2 million in 2007. For 2008, the increase in
expense was primarily related to depletion and depreciation of SAGD assets
starting July 1, 2008, while the 2007 expense only included depreciation of
corporate assets.





*
Financing Charges


For the
year ended December 31, 2008, financing charges were $1 million compared to $12
million in 2007. Financing charges relate to the new $150 million revolving debt
facility established in June 2008 and to the issuance of US$750 million in
senior secured notes in 2007.  Our policy is to expense financing
costs as incurred.





*
Foreign Exchange Translation Loss


For the
year ended December 31, 2008, foreign exchange translation loss was to $373
million compared to a $235 million gain in 2007.  The loss or gain is
comprised of the re-measurement of our U.S.-dollar-denominated long-term debt
and cash.  The Canadian dollar weakened as compared to the U.S. dollar
from CAD$0.99 to US1.00 at December 31,2007 to CAD$1.22 to US$1.00 at December
31, 2008.





*
Realized Gain on Hedging Instruments


For the
year ended December 31, 2008, we had a realized gain of $114 million related to
our foreign exchange hedging instruments. In addition, we realized a gain of $2
million related to our US$50/bbl commodity puts.





13





*
Unrealized Loss (Gain) on Hedging Instruments


For the
year ended December 31, 2008, we had a gain of $160 million compared to a loss
of $61 million in 2007. The gain in 2008 was due to a $93 million increase in
the fair value of our foreign exchange hedging instruments due to a weakening
Canadian dollar as compared to the U.S. dollar and a $67 million increase in the
fair value of our commodity contracts put in place for 2009 production. During
2008, spot prices for WTI decreased from approximately US$92/bbl at the
beginning of the year to approximately US$41/bbl at year-end.





*
Future Tax Expense (Recovery)


Future
tax expense for the year ended December 31, 2008 is a recovery of $116 million
compared with a $9 million expense in the corresponding period of 2007. The
recovery of future taxes in 2008 was primarily due to a reduction in book value
associated with the impairment of assets, offset by future tax implications of
foreign exchange movements and flow-through share renunciations.





*
Foreign Exchange Hedging Instruments


OPTI is
exposed to foreign exchange rate risk on our U.S.-dollar-denominated debt. To
partially mitigate this exposure, we have entered into US$875 million of foreign
exchange forwards to manage our exposure to repayment risk on our
U.S.-dollar-denominated long-term debt. The forward contracts provide for the
purchase of U.S. dollars and the sale of Canadian dollars at a rate of
approximately CDN$1.17 to US$1.00 with an expiry in April 2010.  With
respect to our U.S.-dollar-denominated debt, we believe that these forward
contracts provide protection against a decline in the value of the Canadian
dollar below CDN$1.17 to US$1.00 on a portion of our debt. The period-end value
of the forwards is an asset of $32 million. As noted under “Liquidity”, the
value of these derivatives affects our debt covenants as the value of these
contracts is included in the measurement of our debt for covenant
purposes.





SELECTED
ANNUAL INFORMATION





In
      millions
                    (except
      per share amounts)
                  
                  2008
                    (as
      revised)
                  
                  
                  2007
                    (as
      revised)
                  
                  
                  2006
                    (as
      revised)Total
      revenue
                  
                  $
                  204
                  
                  
                  $
                  13
                  
                  
                  $
                  10Net
      (loss) earnings
                  
                  
                  (477
                  )
                  
                  
                  151
                  
                  
                  
                  (35
                  )Net
      (loss) earnings per share, basic and diluted
                  
                  
                  (2.43
                  )
                  
                  
                  0.77
                  
                  
                  
                  (0.20
                  )Total
      assets
                  
                  
                  4,472
                  
                  
                  
                  4,002
                  
                  
                  
                  3,326Total
      long-term liabilities
                  
                  
                  2,656
                  
                  
                  
                  1,861
                  
                  
                  
                  1,749





Prior
to 2008, the amount of revenue in each year is attributable to interest income
resulting from cash and cash equivalents available for investment. The amount of
cash in each year is influenced by the size and timing of financing activities,
as well as capital expenditures related to project development.





Earnings
have been influenced by fluctuating foreign exchange translation gains and
losses primarily related to re-measurement of our U.S.-dollar-denominated
long-term debt, fluctuating realized and unrealized gains and losses on hedging
instruments, fluctuating interest income, increasing levels of G&A expenses
and fluctuating future tax expense.  In 2006, we had a foreign exchange
translation loss of $35 million loss.  During 2007, we had a foreign
exchange translation gain of $235 million and a $61 million unrealized loss on
hedging instruments.  During 2008, we recorded a before tax impairment
of assets as a result of our working interest sale of $369 million and a total
future tax recovery of $116 million. In addition, we had a $373 million foreign
exchange translation loss, a $160 million unrealized gain on hedging instruments
and a $116 million realized gain on hedging instruments.  We
anticipate fluctuations in earnings attributable to these items based on future
changes in foreign exchange rates (Canadian dollars relative to U.S. dollar) and
WTI.  Also in 2008, we earned revenue and operating expenses
associated with early stages of SAGD operation.  These initial stages
of SAGD operation are at relatively low operating volumes and therefore our
operating results associated with these activities are expected to improve as
SAGD production increases.





14


Our
total assets have been increasing continuously as a result of expenditures on
the Project and future phase development, offset by the asset impairment at
December 31, 2008.  Increases in long-term financial liabilities are a
result of a weaker Canadian dollar increasing the measurement amount of our
U.S.-dollar-denominated debt and borrowings under our revolving credit
facilities.





SUMMARY
FINANCIAL INFORMATION





2008
                    
                    
                    2007In
      millions
                      (except
      per share amounts)
                    
                    
                    Q4
                    
                    
                    
                    Q3
                    
                    
                    
                    Q2
                    
                    
                    
                    Q1
                    
                    
                    
                    Q4
                    
                    
                    
                    Q3
                    
                    
                    
                    Q2
                    
                    
                    
                    Q1Total
      revenue
                    
                    $
                    73
                    
                    
                    $
                    128
                    
                    
                    $
                    1
                    
                    
                    $
                    2
                    
                    
                    $
                    3
                    
                    
                    $
                    3
                    
                    
                    $
                    2
                    
                    
                    $
                    5Net
      earnings (loss)
                    
                    
                    (422
                    )
                    
                    
                    (17
                    )
                    
                    
                    (32
                    )
                    
                    
                    (6
                    )
                    
                    
                    32
                    
                    
                    
                    11
                    
                    
                    
                    108
                    
                    
                    
                    -Earnings
      (loss) per share, basic and diluted
                    
                    
                    (2.15
                    )
                    
                    
                    (0.09
                    )
                    
                    
                    (0.16
                    )
                    
                    
                    (0.03
                    )
                    
                    
                    0.16
                    
                    
                    
                    0.06
                    
                    
                    
                    0.55
                    
                    
                    
                    -





Prior
to the third quarter of 2008, quarterly variations in revenue are attributable
to interest income which is primarily the result of the amount of cash and cash
equivalents available for investment during the applicable period. The amount of
cash and cash equivalents is influenced by the size and nature of financing
activities and the level of investing activities during the period.





Earnings
have been influenced by fluctuating foreign exchange translation gains and
losses primarily related to re-measurement of our U.S.-dollar denominated
long-term debt, fluctuating realized and unrealized gains and losses on hedging
instruments, fluctuating interest income, increasing levels of G&A expenses
and fluctuating future tax expense.  During the second quarter of
2007, we had a $112 million foreign exchange translation gain.  In the
third quarter of 2007, we expensed financing charges of $11 million, which
increased our loss during the period. During the fourth quarter of 2007, we had
a $20 million unrealized gain on hedging instruments, a $6 million foreign
exchange translation gain and a $9 million recovery of future taxes primarily as
a result of a reduction in the applicable federal tax rate that increased our
earnings.  During the second quarter of 2008, we had a $34 million
unrealized loss on hedging instruments.  During the fourth quarter of
2008, we had a $96 million SAGD operating loss, a pre-tax asset impairment for
accounting purposes related to our working interest sale of $369 million and a
future tax expense recovery, primarily related to this impairment, of $116
million, as well as a $254 million foreign exchange translation loss and a $105
million realized gain and a $28 million unrealized gain on hedging
instruments.





15


In the
second half of 2008, we earned revenue and operating expenses associated with
early stages of SAGD operation.  These initial stages of SAGD
operation are at relatively low operating volumes and therefore our operating
results associated with these activities are expected to improve as SAGD
production increases.  In addition, we had significant realized and
unrealized gains and losses related to foreign exchange translation losses and
hedging instruments.  We anticipate fluctuations in earnings
attributable to these items based on future changes in foreign exchange rates
(Canadian dollars relative to U.S. dollar) and WTI.





SHARE
CAPITAL


At
January 31, 2009, OPTI had 195,929,526 common shares and 7,150,116 common share
options outstanding. The common share options have a weighted average exercise
price of $13.14 per share.  At January 31, 2009, OPTI’s fully diluted
shares outstanding were 203,079,642.





Effective
November 2008, 5,991,000 common share warrants with an exercise price of $14.75
per share expired without being exercised. Effective June 2008, $202 million of
call obligations with an exercise price of $2.20 per share expired without being
exercised.





LIQUIDITY
AND CAPITAL RESOURCES


Liquidity


For the
year ended December 31, 2008, cash used by operating activities was $10 million,
cash provided by financing activities was $651 million and cash used in
investing activities was $764 million. These changes, combined with a gain on
our U.S.-dollar-denominated cash of $10 million, resulted in a decrease in cash
and cash equivalents during the year of $93 million.





During
2008 we funded our capital expenditures and ongoing start-up activities from
existing working capital and borrowings under our credit facilities. In 2009,
sales proceeds from the working interest sale to Nexen, operating cash flow and
availability under our revolving credit facilities are expected to fund our
capital expenditures.





After
completion of the working interest sale to Nexen, the Company will have cash and
unused credit facilities of approximately $450 million. In order to continue to
access the revolving credit facility, we are required to meet a first lien to
EBITDA covenant commencing in the third quarter of 2009.  The most
significant risk to us not achieving this covenant is lower than expected
bitumen production and associated PSCTM sales. Commodity pricing is a less
significant risk in 2009 as a substantial portion of our production is
hedged.  We have hedged 6,000 bbl/d at a net price of approximately
US$76/bbl, which is a substantial portion of our expected 2009 PSCTM sales
volume.  An additional 500 bbl/d of 2009 production is hedged with a
US$77/bbl swap (risks associated with our hedging instruments are discussed in
more detail under “Financial Instruments”, below). If we have lower than
expected SAGD production or lower PSCTM sales, we may have to repay amounts
outstanding under the revolving credit facility or may be prevented from further
borrowings. The majority of our operating costs and interest costs are fixed.
Aside from changes in the price of natural gas, our costs will neither decrease
nor increase significantly as a result of fluctuations in WTI prices other than
with respect to royalties, which increase at WTI prices higher than
$55/bbl.





16


We have
semi-annual interest payments of US$71 million in June and December of each year
until maturity of the Notes in 2014. Also, we estimate our share of capital
expenditures required to sustain production of Phase 1 at or near planned
capacity for the Project will be approximately $60 million per year for the next
five years. We expect to fund these payments from operating cash flow and from
existing financial resources.





A
significant portion of our capital budget for 2009 has been
pre-funded.  As part of the working interest sale to Nexen, we
provided $85 million to Nexen in January to be applied against our working
interest share of the 2009 joint venture capital budget of $114 million net to
OPTI.  On a gross basis, the budget is $325 million of which
approximately $200 million relates to sustaining capital including the
completion of an additional well pad, $100 million relates to Phase 2
engineering and $25 million relates to future phases and resource
development.





Recent
developments in capital markets have restricted our access to new debt and
equity. Although our current financial resources are considered sufficient for
the next 12 to 24 months, further deterioration of commodity prices, delays in
ramp-up of SAGD production, or operating issues with the SAGD or Upgrader
operations could result in additional funding requirements earlier than we have
estimated.  Should the Company require such funding, it may be
difficult to obtain such financing on reasonable terms.





If
Phase 2 is sanctioned, which is not currently scheduled for consideration prior
to mid-2010, we expect possible future capital requirements in excess of
operating cash flows.  Unless we have stable operations at or near
capacity for the Project and high commodity prices, such external financing
requirements would be significant.  We expect that these financing
requirements will come at a higher cost and contain more restrictions than the
financings completed to date by OPTI.  Current market conditions would
not support such a financing requirement so some improvement will be required in
order to support such development.  In addition, our joint venture
partner may evaluate the economics of future phases differently than we do and
will likely have a different evaluation of the ability to fund this
development.  As a result, Nexen may decide to proceed with
development of future phases, which may result in OPTI having to reduce our
working interest in such future phases.





Our
debt facilities contain a number of provisions that serve to limit the amount of
debt we may incur. With respect to our revolving credit facility, the key
maintenance covenants are with respect to debt to capitalization and the ratio
of debt outstanding under the revolving credit facility to EBITDA. Maintenance
covenants are important as they are ongoing conditions that must be satisfied to
provide continued access to the revolving credit facility.





The
first lien to EBITDA covenant, as amended in January 2009, is measured quarterly
and requires that this ratio is lower than 2.5:1 commencing for the quarter
ended September 30, 2009. The first three measurements of EBITDA for this
covenant will annualize EBITDA as measured from July 1, 2009, to the end of the
applicable covenant period. Thereafter, EBITDA will be based on a trailing four
quarters. Realized cash gains on commodity contracts, such as our existing puts
and forwards, are included in EBITDA for the purposes of the covenant. If we are
unable to generate sufficient EBITDA, we may be required to repay all or a
portion of amounts outstanding under that facility or be unable to make
additional borrowings under the revolving credit facility prior to the end of a
covenant quarter or will be required to request and obtain approval for a waiver
from our lenders under the facility.





17


The
covenant as amended in January 2009 for debt to capitalization requires that we
do not exceed a ratio of 70 percent as calculated on a quarterly
basis.  The covenant is calculated based on the book value of debt and
equity. The book value of debt is adjusted for the effect of any foreign
exchange derivatives issued in connection with the debt that may be outstanding.
At December 31, 2008, this means that our debt would be reduced by the value of
our foreign exchange forward in the amount of $32 million. With respect to
U.S.-dollar-denominated debt, for purposes of the debt to capitalization ratio,
the debt is translated to Canadian dollars based on the average exchange rate
for the quarter. The debt to capitalization is therefore influenced by the
variability in the measurement of the foreign exchange forward, which is subject
to mark to market variability and average foreign exchange rate changes during
the quarter.





In
respect of new borrowings under the $350 million revolving credit facility prior
to reaching completion of the Project, we are required to have sufficient funds
(including cash and undrawn revolver) to fund our share of remaining Project
costs.





With
respect to our senior secured notes, the covenants are in place primarily to
limit the total amount of debt that OPTI may incur at any time. This limit is
most affected by the present value of our total proven reserves using forecast
prices discounted at 10 percent.  Based on our 2008 reserve report, as
adjusted for our new working interest in the joint venture, we have sufficient
capacity under this test to incur additional debt beyond our existing $350
million revolving credit facility and existing senior secured notes. Other
leverage factors, such as debt to capitalization and total debt to EBITDA, are
expected to be more constraining than this limitation.





Capital
Resources


Our
long-term debt currently consists of US$1,750 million of senior secured notes
and a $350 million revolving credit facility.  At February 17, 2009,
we have approximately $280 million of cash on hand and have drawn $87 million on
our $350 million revolving credit facility.





At
December 31, 2008, our cash resources included cash of $217 million. Our cash
and cash equivalents are invested exclusively in money market instruments issued
by major Canadian banks. At December 31, 2008, $486 million had been drawn on
the $500 million revolving credit facility and $146 million had been drawn on
the $150 million revolving credit facility. As of February 17, 2009, after using
proceeds from the working interest sale to Nexen to fund a partial pay-down, $87
million remained outstanding on the $350 million revolving credit facility and
our $150 million revolving credit facility had been repaid and
cancelled.  We eliminated the working capital deficiency that existed
at December 31, 2008 as a result of the completion of the working interest sale
to Nexen on January 27, 2009.





18


CREDIT
RATINGS


OPTI,
OPTI's revolving credit facility and OPTI’s Notes are currently rated by Moody’s
Investor Service (Moody’s) and Standard and Poors (S&P).  Please
refer to the table below for the respective ratings.





Type of Security
                Moody's
                S&POPTI
      Corporate Rating
                B1
                B+Revolving
      Credit Facility
                Ba3
                BB8.25%
      Notes
                B2
                BB7.875%
      Notes
                B2
                BB





The
Moody’s ratings have been under review for potential downgrade by Moody’s since
November 2008.  The S&P ratings have been on credit watch with
negative implications since November 2008.





A
security rating is not a recommendation to buy, sell or hold securities and may
be subject to revision or withdrawal at any time by the rating
organization.





CONTRACTUAL
OBLIGATIONS AND COMMITMENTS




Commitments
for contracts and purchase orders at December 31, 2008, related to project
development are $22 million based on a working interest of 50
percent.





During
the 12 months ended December 31, 2008, our long-term debt increased by $486
million due to borrowings under our $500 million revolving credit facility and
the short-term portion increased by $146 million due to borrowings on our $150
million revolving credit facility.





The
following table shows our contractual obligations and commitments related to
financial liabilities at December 31, 2008. This table is prior to the
January 2009 working interest sale to Nexen, which would reduce payments under
our capital leases, operating leases and contracts and purchase orders by 30
percent.






19




In
      millions
                  
                  Total
                  
                  
                  < 181 days
                  
                  
                  181- 365 days
                  
                  
                  
                  2010-2011
                  
                  
                  
                  2012-2013
                  
                  
                  2014 or laterAccounts
      payable and accrued liabilities
                  
                  $
                  200
                  
                  
                  $
                  195
                  
                  
                  $
                  5
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Short-term
      debt(1)
                  
                  
                  146
                  
                  
                  
                  146
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Long-term
      debt (Notes-interest)(2)
                  
                  
                  1,034
                  
                  
                  
                  86
                  
                  
                  
                  86
                  
                  
                  
                  345
                  
                  
                  
                  345
                  
                  
                  
                  172Long-term
      debt (Notes-principal)(2)
                  
                  
                  2,132
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,132Long-term
      debt (Revolving)(3)
                  
                  
                  486
                  
                  
                  
                  136
                  
                  
                  
                  -
                  
                  
                  
                  350
                  
                  
                  
                  -
                  
                  
                  
                  -Capital
      leases(4)
                  
                  
                  106
                  
                  
                  
                  2
                  
                  
                  
                  3
                  
                  
                  
                  9
                  
                  
                  
                  8
                  
                  
                  
                  84Operating
      leases and other commitments(5)
                  
                  
                  115
                  
                  
                  
                  6
                  
                  
                  
                  7
                  
                  
                  
                  28
                  
                  
                  
                  29
                  
                  
                  
                  45Contracts
      and purchase orders(6)
                  
                  
                  22
                  
                  
                  
                  22
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total
      commitments
                  
                  $
                  4,241
                  
                  
                  $
                  593
                  
                  
                  $
                  101
                  
                  
                  $
                  732
                  
                  
                  $
                  382
                  
                  
                  $
                  2,433





Notes:


(1)
            Consists
      of CDN$146 million of borrowings on our short-term revolving debt
      facility. This facility was repaid and cancelled in January
      2009.


(2)
            Consists
      of US$1,000 million and US$750 million under our
      Notes.  Amounts represent scheduled principal and interest
      payments.


(3)
            Consists
      of $486 million drawn on the revolving credit facility. The repayment
      represents only the required reduction to reduce the facility to $350
      million in January 2009 and the final repayment of the facility at its
      scheduled maturity in 2011. In addition, we are contractually obligated
      for interest payments on borrowings and standby charges in respect to
      undrawn amounts under the revolving credit facility, which are not
      reflected in the above table as amounts cannot be estimated due to the
      revolving nature of the facility and variable interest rates. See
      “Liquidity” section for repayments completed as part of working interest
      sale.


(4)
            Consists
      of our share of future payments under our product transportation
      agreements with respect to future tolls during the initial contract term
      at a working interest of 50
percent.


(5)
            Consists
      of our share of payments under our product transportation agreements with
      respect to future tolls during the initial contract term at a working
      interest of 50 percent. This amount also includes our share of future
      commitments with respect to rail traffic transportation assuming a 50
      percent working interest.


(6)
            Consists
      of our share of commitments associated with contracts and purchase orders
      in connection with the Project and our other oil sands
      activities.





OFF-BALANCE-SHEET
ARRANGEMENTS


We have
no off-balance-sheet arrangements.





CONTROLS
AND PROCEDURES


Disclosure
Controls and Procedures


The
Chief Executive Officer and the Chief Financial Officer are responsible for
establishing and maintaining disclosure controls and procedures (DC&P), as
such term is defined in National Instrument 52-109 Certification of Disclosure in
Issuers' Annual and Interim Filings,for OPTI. They have, as at the
financial year ended December 31, 2008, designed such DC&P, or caused them
to be designed under their supervision, to provide reasonable assurance that
information required to be disclosed by OPTI in its annual filings, interim
filings or other reports filed or submitted by OPTI under applicable securities
legislation is recorded, processed, summarized and reported within the time
periods specified in applicable securities legislation and that all material
information relating to OPTI is made known to them by others, particularly
during the periods in which OPTI's annual and interim filings are being
prepared.





20


Under
the supervision of the Chief Executive Officer and the Chief Financial Officer,
OPTI conducted an evaluation of the effectiveness of our DC&P as at December
31, 2008. Based on this evaluation, the officers concluded that as of December
31, 2008, OPTI's disclosure controls and procedures provide reasonable assurance
that information required to be disclosed by OPTI in its annual filings, interim
filings or other reports that we file or submit under applicable securities
legislation is recorded, processed, summarized and reported within the time
periods specified in such legislation and that these controls and procedures
also provide reasonable assurance that material information relating to OPTI is
made known to our Chief Executive Officer and Chief Financial Officer by
others.




It
should be noted that while our officers believe that OPTI’s disclosure controls
and procedures provide a reasonable level of assurance with regard to their
effectiveness, they do not expect that the disclosure controls and procedures or
internal controls over financial reporting will prevent all errors and fraud. A
control system, no matter how well conceived or operated, can provide only
reasonable, but not absolute, assurance that the objectives of the control
system are met.





Internal
Controls over Financial Reporting


The
Chief Executive Officer and the Chief Financial Officer are responsible for
establishing and maintaining internal control over financial reporting (ICFR),
as such term is defined in National Instrument 52-109 Certification of Disclosure in
Issuers' Annual and Interim Filings,for OPTI. They have, as at the
financial year ended December 31, 2008, designed ICFR, or caused it to be
designed under their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with Canadian GAAP.  The control
framework our officers used to design OPTI's ICFR is the Internal Control - Integrated
Framework (COSO Framework) published by The Committee of Sponsoring
Organizations of the Treadway Commission (COSO).





Under
the supervision of the Chief Executive Officer and the Chief Financial Officer,
OPTI conducted an evaluation of the effectiveness of our ICFR as at December 31,
2008 based on the COSO Framework. Based on this evaluation, the officers
concluded that as of December 31, 2008, OPTI's ICFR provides reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with Canadian
GAAP.





There
were no changes in our internal control over financial reporting during the year
ended December 31, 2008 that materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.





CRITICAL
ACCOUNTING ESTIMATES


Capital
Assets


We
capitalize costs in connection with the development of oil sands projects. The
measurement of these costs at each financial statement date requires estimates
to be made with respect to construction progress, materials procurement and
drilling progress. An increase in the measurement amount of these items would
increase our property, plant and equipment and accrued liabilities
accordingly.





21


Capital
assets are reviewed for impairment whenever events or conditions indicate that
the net carrying amount may not be recoverable from estimated future cash
flows.  We have evaluated the book value of our assets in connection
with the working interest sale to Nexen.  We have determined that the
related assets sold were impaired as of December 31, 2008 and as a result
recorded a loss of $369 million.  We have also evaluated the remaining
assets and determined that these costs are recoverable based on our ceiling test
as described in our accounting policies.





The
quantity of reserves is subject to a number of estimates and projections,
including assessment of engineering data, projected future rates of production,
characteristics of bitumen reservoirs, commodity prices, foreign exchange rates,
operating costs and sustaining capital expenditures. These estimates and
projections are uncertain as we do not have any commercial production history to
assist in the development of these forward-looking estimates. However, all
reserve and associated financial information is evaluated and reported on by a
firm of qualified independent reserve evaluators in accordance with the
standards prescribed by applicable securities regulators.





The
calculation of future cash flows based on these reserves is dependent on a
number of estimates, production volumes, facility performance, commodity prices,
royalties, operating costs, sustaining capital and foreign exchange rates. The
price used in our assessment of future cash flows is based on our independent
evaluators’ estimate of future prices and evaluated for reasonability by OPTI
against other available information.  Although the future prices used
are significantly higher than current prices, we believe these prices are
reasonable estimates for a long-term outlook.  In addition, lower
prices could be used without resulting in any additional
impairment.  Different or significantly lower price assumptions could
result in a ceiling test impairment.  Impairment and a corresponding
loss would be recognized in earnings in the period in which capitalized costs
exceeded estimated future cash flows.





Asset Retirement
Obligations


We
measure asset retirement obligations at each financial statement date. The
estimate is based on our share of costs to reclaim the resource assets and
certain facilities related to the Project as well as other resource assets
associated with future phases. The liability is primarily related to reclamation
of the SAGD facility and drilling assets. To determine the future value of the
liability, we estimate the amount, timing and inflation of the associated
abandonment costs.  We then calculate the present value of the cost to
record the current asset retirement obligation using a credit-adjusted risk-free
rate. In some cases, due to the long-lived nature of the asset, the timing of
future abandonment cannot be made and no asset retirement obligation is
recorded. Due to the long-term nature of current and future project
developments, abandonment costs will be incurred over many years in the future.
As a result of these factors, different estimates could be used for such
abandonment costs and the associated timing. Assumptions of higher future
abandonment costs, higher inflation, higher credit-adjusted risk-free rates or
an assumption of earlier or specified timing of abandonment would cause the
asset retirement obligation and corresponding asset to increase. These changes
would also cause future accretion expenses to increase and future earnings to
decrease.





22


Future
Taxes


We
measure our future tax asset or liability based on estimates of temporary
differences between our book and tax assets. In addition, an estimate is
required for both the timing and tax rate of this reversal. Should these
estimates change, it could impact the measurement amount of our asset or
liability as well as future tax recovery or expense and earnings. These
estimates would not impact cash flow from operations.  At December 31,
2008, we have recorded a future tax asset.  The recognition of a
future tax asset requires further estimates that these taxes will be recoverable
in the future.  We have estimated future cash flow based on reports
from our independent engineers and concluded that, more likely than not, we will
be able to earn taxable earnings in excess of the future tax asset that we have
recorded.





ACCOUNTING
POLICIES


On
January 1, 2008, we adopted the following Canadian Institute of Chartered
Accountants (CICA) standards: Section 1535 “Capital Disclosures,” Section 3862
“Financial Instruments - Disclosures,” and Section 3863 “Financial Instruments -
Presentation.”





Section
1535 requires the disclosure of OPTI’s objectives, policies and processes for
managing capital. This includes qualitative information regarding OPTI’s
objectives, policies and processes for managing capital and quantitative data
about what OPTI manages as capital. These disclosures are based on information
that is used internally by our management.





Sections
3862 and 3863 replace Section 3861 “Financial Instruments - Disclosure and
Presentation,” which revises financial instruments disclosure requirements and
leaves unchanged the presentation requirements. These new sections place
increased emphasis on disclosures about the nature and extent of risks arising
from financial instruments and how OPTI manages those risks.





There
is no impact on our financial position or results of operations as a result of
the adoption of these sections.





NEW
ACCOUNTING PRONOUNCEMENTS


The
CICA issued a new accounting standard Section 3064 “Goodwill and Intangible
Assets”, which OPTI adopted for the reporting period beginning January 1, 2007
as if the policy had always been applied. This standard replaces Section 3062
“Goodwill and Other Intangible Assets” and Section 3450 “Research and
Development Costs.” The new section establishes standards for
the recognition, measurement, presentation and disclosure of goodwill and
intangible assets. The provisions relating to the definition and initial
recognition of intangible assets are equivalent to the corresponding provisions
of International Financial Reporting Standard (IFRS) IAS 38, “Intangible
Assets.” Emerging Issues Committee (EIC) 27 “Revenues and Expenditures During
the Pre-Operating Period” is no longer applicable for OPTI as we have adopted
CICA 3064. Accounting Guidelines (AcG) 11 “Enterprises in the Development Stage”
is amended to delete references to deferred costs and to provide guidance on
development costs as intangible assets under Section 3064.





23


This
revised MD&A and related revised financial statements reflect the changes
described in Note 2 of the financial statements.  As a result of these
changes, OPTI expensed certain previously capitalized costs with retroactive
effect on January 1, 2007 with a corresponding increase to opening deficit. The
opening deficit increased by $85 million and this increase is comprised of
deferred costs related to SAGD start-up activities, translation of OPTI’s
U.S.-dollar debt, offset by gains related to financial derivatives associated
with OPTI’s debt and by a recovery of future tax expense.





IFRS


The
Canadian Accounting Standards Board has announced that Canadian Generally
Accepted Accounting Principles (GAAP) no longer apply for all publically
accountable enterprises as of January 1, 2011. From that date forward, OPTI will
be required to report under International Financial Reporting Standards (IFRS)
as set out by the International Accounting Standards Board (IASB). Any
adjustments resulting from a change in policy are applied retroactively with
corresponding adjustment to opening retained earnings.





OPTI is
currently in the initial stages of planning for the IFRS transition. A formal
changeover plan has not been approved by management. We are currently evaluating
potential areas impacted by the new standards including adoption criteria as
prescribed under IFRS1 - First-Time Adoption of International Financial
Reporting Standards.





Business
Impact of IFRS


OPTI
has recorded a pre-tax asset impairment for accounting purposes of $369 million
with respect to the working interest sale to Nexen.  Under IFRS this
loss would have been significantly higher as all of OPTI’s assets would have
been considered impaired based on the implied valuation. IFRS permits subsequent
recovery of such write downs in future periods to the extent that fair value
increases. Therefore, the cumulative effect of the Nexen working interest sale
at the date of adoption on January 1, 2011 will depend on a fair value
assessment of the assets as of December 31, 2010.





FINANCIAL
INSTRUMENTS


The
Company considers its risks in relation to financial instruments in the
following categories:





Credit
Risk


Credit
risk is the risk that counterparty to a financial instrument will not discharge
its obligations, resulting in a financial loss to the Company. The Company has
policies and procedures in place that govern the credit risk it will assume. We
evaluate credit risk on an ongoing basis including an evaluation of counterparty
credit rating and counterparty concentrations measured by amount and percentage.
Our objective is to have no credit losses.





The
primary sources of credit risk for the Company arise from the following
financial assets: (1) cash and cash equivalents; (2) accounts receivable; and
(3) derivatives contracts. The Company has not had any credit losses in the past
and the risk of financial loss is considered to be low given the counterparties
used by the Company. As at December 31, 2008, the Company has no financial
assets that are past due or impaired due to credit-risk-related
defaults.





24


Liquidity
Risk


Liquidity
risk is the risk that the Company will not be able to meet obligations
associated with financial liabilities. Our financial liabilities are comprised
of accounts payable and accrued liabilities, long-term debt and obligations
under capital leases. The Company frequently assesses its liquidity position and
obligations under its financial liabilities by preparing regular financial
forecasts. We mitigate liquidity risk by maintaining a sufficient cash balance
as well as maintaining sufficient current and projected liquidity to meet
expected future payments. Our financial liabilities arose primarily from the
development of the Project. As at December 31, 2008, the Company has met all of
the obligations associated with its financial liabilities.  As noted
under “Liquidity,” continued access to our revolving credit facility is a key
liquidity risk.





Market
Risk


Market
risk is the risk that the fair value (for assets or liabilities considered to be
held for trading and available for sale) or future cash flows (for assets or
liabilities considered to be held-to-maturity, other financial liabilities, and
loans and receivables) of a financial instrument will fluctuate because of
changes in market prices. We evaluate market risk on an ongoing basis. We assess
the impact of variability in identified market risks on our medium-term cash
requirements and impact with respect to covenants on our credit facilities. At
December 31, 2008, we had mitigation programs to reduce market risk related to
foreign exchange and commodity price changes. Changes in these market risks
related to foreign exchange would not have had an impact on our earnings as
translation gains and losses on our U.S.-dollar debt and related hedging
activities were capitalized. The primary market risks related to our commodity
contracts relates to future estimated prices for WTI. A $5 change in estimated
future WTI prices would change our unrealized loss by approximately $10 million
in U.S. dollars at December 31, 2008 as a result of an estimated change in the
value of our commodity contracts.





The
following sections describe these risks in relation to the Company’s key
financial instruments.





*
Cash and Cash Equivalents


The
Company has cash deposits with Canadian banks and has money market investments.
Counterparty selection is governed by the Company’s Treasury Policy, which
limits concentration of investments and requires that all instruments be rated
as investment grade by at least one rating agency. As at December 31, 2008 the
amount in cash and cash equivalents was $217 million and the maximum exposure to
a single counterparty was $51 million which is guaranteed by a Canadian
bank.





At
December 31, 2008, the remaining terms on investments made by the Company are
less than 90 days with interest fixed over the period of investment. Maturity
dates for investments are established to ensure cash availability for project
development and interest payments. Investments are held to maturity and the
maturity value does not deviate with changes in market interest
rates.





25


Our
cash balances are currently invested almost exclusively in money market
instruments with major Canadian banks in the form of banker’s acceptances or
term deposits. These instruments are widely offered by banks we deal with and
are considered direct obligations of the banks that offer them. We manage our
exposure to these banks in two primary ways: by limiting the amount invested
with a single issuer or guarantor and by investing for relatively short periods
of time. We do not expect any investment losses based on these money market
investments.





*
Accounts Receivable


Our
accounts receivable includes amounts due from Nexen Inc. related to project
development and Nexen Marketing related to marketing activities, interest earned
but not received on money market investments, and amounts due from the Canada
Revenue Agency in relation to GST refunds. The amounts due from Nexen increased
significantly subsequent to year-end as a result of the completion of the
working interest sale.  The agreement included $85 million as a
pre-funded amount for 2009 development activities. These funds will be released
as work is completed on the 2009 joint venture capital program. OPTI is entitled
to a refund of such dollars or contribution of further dollars in the event that
OPTI’s working interest share of 2009 joint venture capital expenditures is less
than or exceeds $85 million. The Company’s credit risk in regard to accounts
receivable therefore relates primarily to the risk of default by Nexen, which
has an investment-grade corporate rating from Moody’s Investor Service, and by
financial institutions with an investment grade rating. Therefore, we estimate
the risk of credit loss as low.





*
Accounts Payable and Accrued Liabilities


Accounts
payable and accrued liabilities are comprised primarily of amounts due in
respect of development of the Project and certain other corporate expenses.
Payment terms on these amounts are typically 30 to 60 days from receipt of
invoice and generally do not bear interest. The Company has met its obligations
in respect of these liabilities. As at December 31, 2008 accounts payable and
accrued liabilities were $200 million.





*
Debt and Obligations under Capital Lease


The
terms of the Company’s debt and obligations under capital lease are described in
the notes to our audited financial statements as at December 31, 2008. The
Company has met its obligations in respect of these liabilities. The Company
accounts for its borrowings under all of its long-term debt and obligations
under capital lease on an amortized cost basis. As at December 31, 2008
long-term debt was $2,618 million, short-term debt was $146 million and
obligations under capital leases were $30 million.





The
revolving credit facilities are variable interest rate facilities with borrowing
rates and duration established at the time of the initial borrowing or
subsequent extension. Our current borrowings have an approximate initial term of
90 days and therefore fluctuations in the value of such borrowings are not
material during the term they are outstanding. The Company is exposed to
interest rate changes if and when it extends each borrowing. The extent of the
exposure to interest rate risk depends on the amount outstanding under the
facility. As at December 31, 2008, there was $486 million drawn under the $500
million revolving credit facility and $146 million drawn under the $150 million
revolving credit facility.  As described under ”Capital Resources,”
these amounts were reduced in early 2009.  During 2008, a 1 percent
change in interest rates would not have had a material impact on the interest
expense due to the fixed nature of our senior notes and relatively low average
balance of our revolving credit facilities.





26


Our
senior secured notes are comprised of US$1,750 million of debt which has fixed
U.S. dollar semi-annual interest payments. Changes in the exchange rate between
the Canadian dollar and U.S. dollar impact the carrying value of the senior
secured notes. A US$0.01 change in the exchange rate will impact the carrying
value of the senior secured notes by approximately US$18 million. A US$0.01
change in the exchange rate will change our interest costs by approximately
US$1.4 million. The exposure to exchange rate fluctuations has been partially
mitigated by the forward contracts described under “Foreign Exchange Hedging
Instruments.” These changes also influence our compliance with debt covenants as
described under ”Liquidity.”





*
Derivative Contracts


The
Company periodically uses derivative contracts to hedge certain of the Company’s
projected operational or financial risks. In the past, such instruments have
involved the use of interest rate swaps, cross-currency interest swaps,
currency-forward contracts and crude oil put options. Derivative contracts
outstanding at December 31, 2008 are described in the notes to our audited
financial statements as at December 31, 2008. These instruments are designated
as held-for-trading and are measured at fair value at each financial statement
date.





As at
December 31, 2008, we had US$875 million of foreign currency forwards to manage
a portion of the exposure to the foreign exchange variations on the Company’s
long-term debt. Changes in the exchange rate between Canadian and U.S. dollars
change the value of these instruments. The foreign currency forwards at December
31, 2008 had a fair value of $32 million. The foreign exchange forwards are
measured by the present value of the difference between the settlement amounts
of the foreign currency forwards as measured in Canadian dollars. The
counterparties to the foreign currency forwards are major Canadian and
international banks. Our exposure to non-payment from any single institution is
less than 25 percent of the value of the forwards.





The
fair value of the foreign currency forwards is determined by calculating the
present value of the existing contract as measured in Canadian dollars in
reference to established market rates, primarily foreign exchange rates at the
end of the year and discounted at market interest rates. The foreign currency
forwards were valued primarily using a period-end foreign exchange rate of 1.22.
Based on the active market for the underlying market variables used in the
valuation, we do not believe other market assumptions with respect to these
variables could result in a materially different valuation than the one we have
determined. This conclusion is supported by an internal comparison completed by
OPTI to compare the valuation provided by each counterparty to the forwards. The
value of the foreign currency forwards would change by approximately $8 million
for each $0.01 change in the foreign exchange rate between U.S. and Canadian
dollars.  This change would have a corresponding impact on our
earnings before taxes.





We have
established commodity hedging contracts to mitigate the Company’s exposure of
future operations to decreases in the price of its synthetic crude oil. The
Company has chosen to use put options and commodity price swaps to mitigate a
portion of the exposure. As at December 31, 2008 the Company had deferred
premium put options covering 2.2 million barrels of 2009 production at a price
of US$80/bbl (deferred premiums to be paid on the expiration of the option are
$4/bbl); and commodity price swaps covering 0.2 million barrels of 2009
production at a price of US$77/bbl. The value of these financial instruments as
at December 31, 2008 was an asset of $78 million. The counterparties to the
commodity hedges are major Canadian and international banks. Our exposure to
non-payment from any single institution is approximately 60 percent of the value
of the commodity hedge, which is due from a major Canadian bank.





27


The
fair value of the commodity hedges is determined by calculating the present
value of the existing contract as measured in Canadian dollars in reference to
established market rates, primarily future estimated prices for WTI and
period-end foreign exchange rates. Based on the active market for the underlying
market variables used in the evaluation, we do not believe other market
assumptions with respect to these variables could result in a materially
different valuation than the one we have determined. This conclusion is
supported by an internal comparison completed by OPTI to compare the valuation
provided by each counterparty to the contract. The value of the commodity hedges
would change by approximately US$2 million for each US$1/bbl change in future
estimated prices for WTI. This change would have a corresponding impact on our
earnings before taxes for the year.





We view
the credit risk of these counterparties as low due to the diversification of the
instrument with a number of banks.





RISK
FACTORS


Readers
should be aware that the list of assumptions, risks and uncertainties set forth
herein are not exhaustive. Readers should refer to OPTI's current Annual
Information Form (AIF), which is available at www.sedar.com, for a detailed
discussion of these assumptions, risks and uncertainties.





Market
Risks


We are
involved in a capital intensive industry.  Oil sands development
requires significant investment prior to any cash being returned to the business
in the form of operating cash flow. Our development cycle for each phase can be
greater than five years. This means significant external capital may be
required. In addition, a combination of poor operating results, requirement for
major repairs or improvements to our facilities and low commodity prices could
require us to seek additional capital during 2009. Recent developments in the
banking sector and the economy as a whole have meant such capital may be
restricted in terms of size, extremely expensive in historical terms, or not
available at all. Although the recent asset sale to Nexen has improved our
short-term financial position, there is no assurance that, should we require
additional capital in the future, we will be able to obtain such financing on a
timeline suitable for OPTI.





Risk Factors During
Operations


*
Oil Prices and Foreign Exchange


Our
financial results will be dependent upon the future price of crude oil. Oil
prices fluctuate significantly in response to regional, national and global
supply and demand factors beyond our control. Political and economic
developments around the world can affect world oil supply and oil
prices.





The
Long Lake Upgrader will ultimately produce a fully upgraded product called
PSCTM.
The price we will receive for PSCTM will be dependent on the demand for it and
will primarily be influenced by changes in the market price for WTI, which is
influenced by global market factors. To a lesser extent, the price we receive
for PSCtm
will be affected by regional factors such as supply of other synthetic and
conventional crude oils. Although we expect PSCtm
to trade at a price similar to WTI, PSCtm
will be a new synthetic crude oil product and no assurance can be given as to
its price and marketability. We have engaged Nexen Marketing, which has
extensive experience in marketing synthetic crude, to sell all of our production
from the Long Lake Project.





28


After
the Long Lake Upgrader start-up and during periods when the Upgrader is not
operating, including planned and unplanned maintenance and repair, we may be
unable to upgrade the bitumen produced by the Project. During these periods,
bitumen would be mixed with diluent and sold as a bitumen blend. The blend would
be priced significantly lower than conventional light oil or PSCtm.





Our
future results of operations will be impacted by certain factors outside of our
control, such as the gravity and quality of the bitumen produced from the Long
Lake leases, which can ultimately determine the amount of syngas and PSCtm
produced from the Long Lake Upgrader.





Crude
oil prices are generally based on a U.S.-dollar market price, while most of our
operating and capital costs are denominated in Canadian dollars. Fluctuations in
exchange rates between the U.S. and Canadian dollars result in foreign currency
exchange exposure. Therefore, changes in the exchange rate will affect the price
we receive for PSCtm.
We have protected a portion of this exposure to oil price fluctuation from our
commodity contracts and have no protection from foreign exchange rates
fluctuations related to the sale of our products.





*
Operating Risk


The
performance of the SAGD operation, the Long Lake Upgrader, or both may differ
from our expectations. There are many factors related to the characteristics of
the reservoir and SAGD operating facilities that could cause bitumen production
to be lower than anticipated.





The
Long Lake Upgrader is comprised of a number of facilities that upgrade bitumen,
in part using high pressure and temperature. There are inherent risks in the
initial and ongoing operation of our facility. The processing of hydrocarbons
requires intensive planning and execution expertise. Problems during this
process could result in increases to cost, reduced production or damage to
facilities. All of these factors could negatively affect our results from
operations.





*
Non-operator


Nexen
is the operator of the Long Lake Project. We rely on Nexen’s operating expertise
to generate cash flow from the Project and to provide information on the status
and results of operations. There are no assurances that Nexen will be able to
generate financial results from the Project or that Nexen will be able to
provide adequate financial and operational information on a timely
basis.





*
Natural Gas


During
commercial operations, we will require a significant amount of natural gas to
provide energy to generate steam for SAGD operations. The integrated Project
design has mitigated a large amount of the risk, as syngas is expected to be
produced through the gasification process and will be used to provide energy to
the steam generation facilities. The amount of third-party natural gas purchases
required is largely determined by the SOR that is required for SAGD production.
If the SOR is higher than anticipated, we may be required to purchase natural
gas beyond existing forecasted levels at prevailing market rates. This would
cause our operating costs to increase and reduce our earnings.





29


*
Reserves and Resources


There
are numerous uncertainties inherent in estimating quantities of reserves and
resources, including many factors beyond our control, and no assurance can be
given that the indicated level of reserves or resources or recovery of bitumen
will be realized. In general, estimates of resources and of economically
recoverable bitumen reserves are based upon a number of factors and assumptions
made as of the date on which the reserve and resource estimates were determined,
such as geological and engineering estimates that have inherent uncertainties,
the assumed effects of regulation by governmental agencies and estimates of
future commodity prices and operating costs, all of which may vary considerably
from actual results. All such estimates are, to some degree, uncertain and
classifications of reserves are only attempts to define the degree of
uncertainty involved. For these reasons, estimates of the economically
recoverable bitumen, the classification of such reserves based on risk of
recovery, prepared by different engineers or by the same engineers at different
times, may vary substantially.





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





Reserve
and resource estimates may require revision based on actual production
experience. Such figures have been determined based upon assumed oil prices and
operating costs. Market fluctuations of oil prices may render uneconomic the
recovery of certain grades of bitumen. Also, short-term factors relating to oil
sands resources may impair the profitability of the Project in any particular
period.





Should
the reserve estimate change in future periods, there could be a material impact
on the fair value of our securities, our results of operations and our ability
to obtain financing.





*
Commodities Risk


During
regular operations, our exposure to natural gas prices is reduced as the Long
Lake Upgrader is expected to generate syngas, which will be used instead of
natural gas. In the long-term, we expect approximately two thirds of our natural
gas requirements will be generated by syngas with approximately one third being
supplied from purchased natural gas. Although we expect stable Upgrader
operations, during periods of Upgrader downtime we have significant exposure to
natural gas prices. During these periods, virtually all of the energy required
to generate steam for the SAGD operations will be from the purchase of natural
gas.





During
periods when the Upgrader is not in operation, we will be producing raw bitumen
from the SAGD process. These bitumen barrels will be blended with a purchased
diluent and sold as a bitumen blend. The price per barrel of purchased diluent
will approximate WTI. The price we receive for this bitumen blend may vary
widely and may be at a significant discount to WTI. At low commodity prices and
high differentials between light oil and heavy oil in Northern Alberta as
experienced in late 2008, the revenue we receive for bitumen blend may
approximate the cost of the diluent.





30


Project Development
Risk


*
Financing Risk


Continuing
access to our revolving credit facility is critical to our financial position,
as noted under “Liquidity,” and there are risks of failure to meet covenants
that would impair this access. The development of oil sands projects in
connection with the Project and our multi-stage expansion plan requires a
significant amount of capital investment that occurs over a number of years. We
currently do not have the capital or committed financing necessary to complete
our future phases of development and we expect to need to complete additional
debt or equity financing to obtain the funds necessary to complete future
phases. The cost of additional financing may not make future projects
economically feasible.





*
Regulatory Risk


We are
subject to extensive Canadian federal, provincial and local laws and regulations
governing exploration, development, transportation, production, exports,
occupational health, protection and reclamation of the environment, safety and
other matters.





Completed
phases of the Project will produce greenhouse gases (GHGs) and other industrial
air pollutants. The Canadian federal government has released a framework that
outlines proposed new requirements governing the emission of GHGs and other
industrial pollutants. It is possible that new federal or provincial
requirements with respect to GHGs and industrial air pollutants will be imposed.
This may require additional funding or facilities to comply with such
requirements.





*
Risks to Future Phase Development


We have
announced phased development for up to five additional phases of projects of a
similar size to the Project. The development of these phases is subject to a
number of risks, primarily in the areas of resource extent and quality, cost,
execution, long-term commodity price expectation and regulatory approval. If the
estimates of costs to complete these future phases are higher than anticipated,
these future phases may be deferred or cancelled. The execution of these future
phases requires specialized labour, module construction, engineering expertise
and construction management. As oil sands development in Alberta has been and
may be in the future at high levels of development activity, some or all of
these resources may not be available to us on the schedule that we require,
which could delay future development.  We have regulatory approval for
the Phase 2 upgrader, but do not have regulatory approval for any future phase
of SAGD development or upgraders. These regulatory approvals may delay or
restrict our development of future phases.





31


*
Infrastructure Risk


The
Project will depend on successful operation of certain infrastructure owned and
operated by others, including, without limitation:




•
            pipelines
      for the transportation of feedstocks and petroleum products to be sold
      ;


•
            pipelines
      for the transportation of natural
gas;


•
            a
      railway spur for the transportation of products and byproducts including
      sulfur;


•
            disposal
      facilities for by-products of the Project (e.g. sulphur);
    and


•
            electricity
      transmission systems for the provision and/or sale of
      electricity.





The
failure of any or all of these utilities to supply service will negatively
impact the operation of the Project which, in turn, may have a material adverse
effect on our business or results of operations.





32





















































Financial
Statements




Revised
(Retroactive change in accounting policy) and Restated (US GAAP)
























For
the year ended


December
31, 2008
















Independent
Auditors’ Report
 To
the Directors of OPTI Canada Inc.:
 We
have audited the balance sheets of OPTI Canada Inc. as at December 31, 2008 and
2007 and the statement of earnings (loss), comprehensive earnings (loss) and
retained earnings (deficit), shareholders’ equity and cash flows for each of the
years in the two year period ended December 31, 2008. These financial statements
are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
 We
conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.
 In
our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2008 and 2007
and the results of its operations and its cash flows for each of the years in
the two year period ended December 31, 2008 in accordance with Canadian
generally accepted accounting principles.
 As
discussed in Note 2, 4 and 6 to the financial statements, the Company has
changed its accounting for costs incurred during the pre-operating period.
Furthermore, as discussed in Note 14 to the financial statements, the Company
has restated its 2008 and 2007 reconciliation to United States generally
accepted accounting principles (US GAAP).
 Chartered
Accountants
 Calgary,
Alberta Canada
 February
24, 2009 (except for Note 2, 4, 6 and 14, which is as of May 25,
2009)
 “PricewaterhouseCoopers”
refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership,
or, as the context requires, the PricewaterhouseCoopers global network or other
member firms of the network, each of which is a separate and independent legal
entity.







2008


Balance
Sheets


As
at December 31





(amounts
      in thousands of Canadian dollars)
                                      
                                      2008
                                        (Revised
      - Note 2p)
                                      
                                      
                                      2007
                                        (Revised
      - Note 2p)ASSETSCurrentCash
      and cash equivalents (note 2f)
                                      
                                      $
                                      217,145
                                      
                                      
                                      $
                                      310,504Accounts
      and other receivables
                                      
                                      
                                      22,807
                                      
                                      
                                      
                                      13,495Commodity
      contracts (note 3)
                                      
                                      
                                      78,003
                                      
                                      
                                      
                                      -Future
      income taxes (note 6)
                                      
                                      
                                      2,709
                                      
                                      
                                      
                                      -Interest
      reserve account (note 2n)
                                      
                                      
                                      -
                                      
                                      
                                      
                                      137,328320,664
                                      
                                      
                                      
                                      461,327Property,
      plant and equipment (note 4)
                                      
                                      
                                      4,052,525
                                      
                                      
                                      
                                      3,540,784Future
      income taxes (note 6)
                                      
                                      
                                      67,534
                                      
                                      
                                      
                                      -Financial
      hedging instruments (note 9c)
                                      
                                      
                                      31,679
                                      
                                      
                                      
                                      -$
                                      4,472,402
                                      
                                      
                                      $
                                      4,002,111LIABILITIESCurrentAccounts
      payable and accrued liabilities
                                      
                                      $
                                      199,907
                                      
                                      
                                      $
                                      190,723Short-term
      debt (note 5)
                                      
                                      
                                      145,500
                                      
                                      
                                      
                                      -345,407
                                      
                                      
                                      
                                      190,723Long-term
      debt (note 5)
                                      
                                      
                                      2,618,000
                                      
                                      
                                      
                                      1,734,775Obligation
      under capital lease (note 11b)
                                      
                                      
                                      30,195
                                      
                                      
                                      
                                      29,600Other
      long-term liabilities (note 7)
                                      
                                      
                                      7,937
                                      
                                      
                                      
                                      66,677Future
      income taxes (note 6)
                                      
                                      
                                      -
                                      
                                      
                                      
                                      29,5923,001,539
                                      
                                      
                                      
                                      2,051,367SHAREHOLDERS’ EQUITY(note 8)Capital
      stock
                                      
                                      
                                      1,847,461
                                      
                                      
                                      
                                      1,837,253Warrants
                                      
                                      
                                      -
                                      
                                      
                                      
                                      15,686Contributed
      surplus
                                      
                                      
                                      31,080
                                      
                                      
                                      
                                      11,897Retained
      earnings (deficit)
                                      
                                      
                                      (407,678
                                      )
                                      
                                      
                                      85,9081,470,863
                                      
                                      
                                      
                                      1,950,744$
                                      4,472,402
                                      
                                      
                                      $
                                      4,002,111
 Commitments
(note 11)
 Subsequent
events (note 13)
 See
accompanying notes to the financial
statements








Signed
            “Chris P
      Slubicki”
            
            Signed
            “Bruce G.
      Waterman”Director
            
            
            Director




May 25, 2009






OPTI
CANADA INC. – 2 – 2008 ANNUAL FINANCIAL STATEMENTS





2008


Statements
of Earnings (Loss), Comprehensive Earnings (Loss)


and
Retained Earnings (Deficit)


Years
ended December 31








2008
                              
                              
                              2007(amounts
      in thousands of Canadian dollars, except per share
amounts)
                              
                              (Revised
      - Note 2p)
                              
                              
                              (Revised
      - Note 2p)RevenuePetroleum
      sales
                              
                              $
                              187,069
                              
                              
                              $
                              -Power
      sales
                              
                              
                              11,232
                              
                              
                              
                              -Interest
      income
                              
                              
                              5,985
                              
                              
                              
                              13,303Royalties
                              
                              
                              (365
                              )
                              
                              
                              -203,921
                              
                              
                              
                              13,303ExpensesForeign
      exchange translation loss (gain)
                              
                              
                              372,626
                              
                              
                              
                              (235,161
                              )Impairment
      of assets (note 13)
                              
                              
                              369,353
                              
                              
                              
                              -Diluent
      and feedstock purchases
                              
                              
                              164,547
                              
                              
                              
                              -Operating
                              
                              
                              83,759
                              
                              
                              
                              -Interest
                              
                              
                              38,527
                              
                              
                              
                              -General
      and administrative
                              
                              
                              17,616
                              
                              
                              
                              14,206Depletion
      , depreciation and accretion
                              
                              
                              17,067
                              
                              
                              
                              2,011Transportation
                              
                              
                              8,230
                              
                              
                              
                              -Financing
      charges
                              
                              
                              893
                              
                              
                              
                              11,927Realized
      gain on hedging instruments
                              
                              
                              (115,415
                              )
                              
                              
                              -Unrealized
      loss (gain) on hedging instruments
                              
                              
                              (160,460
                              )
                              
                              
                              60,761796,743
                              
                              
                              
                              (146,256
                              )Earnings
      (loss) before taxes
                              
                              
                              (592,822
                              )
                              
                              
                              159,559Income
      taxesFuture
      tax expense (recovery) (note 6)
                              
                              
                              (115,900
                              )
                              
                              
                              8,736Net
      earnings (loss) and comprehensive earnings (loss)
                              
                              
                              (476,922
                              )
                              
                              
                              150,823Retained
      earnings (deficit) - beginning of year
                              
                              
                              85,908
                              
                              
                              
                              (39,737
                              )Adoption
      of new accounting policy (note 2p)
                              
                              
                              -
                              
                              
                              
                              (25,178
                              )Retained
      earnings (deficit) - beginning of year
                              
                              
                              85,908
                              
                              
                              
                              (64,915
                              )Expiration
      of call obligations (note 8)
                              
                              
                              (16,664
                              )
                              
                              
                              -Retained
      earnings (deficit) - end of year
                              
                              $
                              (407,678
                              )
                              
                              $
                              85,908Loss
      per share, basic and diluted
                              
                              $
                              (2.43
                              )
                              
                              $
                              0.77




See accompanying notes to the financial statements






OPTI
CANADA INC. – 3 – 2008 ANNUAL FINANCIAL
STATEMENTS







2008


Statement
of Shareholders’ Equity


Years
ended December 31





(Revised
      - Note 2p)
                  
                  Warrants
                  
                  
                  Call
                    Obligations
                  
                  
                  Common
      & Preferred
                    Shares
                  
                  
                  Contributed
                    Surplus
                  
                  
                  Deficit
                  
                  
                  Total(amounts
      in thousands of Canadian dollars)Balance
      at December 31, 2006
                  
                  $
                  15,686
                  
                  
                  $
                  (16,664
                  )
                  
                  $
                  1,447,679
                  
                  
                  $
                  9,357
                  
                  
                  $
                  (39,737
                  )
                  
                  $
                  1,418,427Issued
      for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  352,156
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  352,156Issued
      for cash - flow-though
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  60,021
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  60,021Share
      issue costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (16,768
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (16,768
                  )Stock
      options exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,795
                  
                  
                  
                  (1,548
                  )
                  
                  
                  -
                  
                  
                  
                  15,247Stock
      based compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,548
                  
                  
                  
                  4,088
                  
                  
                  
                  -
                  
                  
                  
                  5,636Tax
      effect on financing activities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (7,514
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (7,514
                  )Adoption
      of new accounting policy
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (25,178
                  )
                  
                  
                  (27,284
                  )Net
      earnings and comprehensive earnings
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  150,823
                  
                  
                  
                  150,823Balance
      at December 31, 2007
                  
                  $
                  15,686
                  
                  
                  $
                  (16,664
                  )
                  
                  $
                  1,853,917
                  
                  
                  $
                  11,897
                  
                  
                  $
                  85,908
                  
                  
                  $
                  1,950,744Share
      issue costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (71
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (71
                  )Stock
      options exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,870
                  
                  
                  
                  (1,030
                  )
                  
                  
                  -
                  
                  
                  
                  3,840Stock
      based compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,076
                  
                  
                  
                  -
                  
                  
                  
                  5,076Expiration
      of call options
                  
                  
                  -
                  
                  
                  
                  16,664
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (16,664
                  )
                  
                  
                  -Warrants
      exercised
                  
                  
                  (549
                  )
                  
                  
                  -
                  
                  
                  
                  3,750
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,201Reclassified
      expired warrants
                  
                  
                  (15,137
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  15,137
                  
                  
                  
                  -
                  
                  
                  
                  -Tax
      effect on financing activities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,005
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,005
                  )Net
      (loss) and comprehensive (loss)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (476,922
                  )
                  
                  
                  (476,922
                  )Balance
      at December 31, 2008
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  1,847,461
                  
                  
                  $
                  31,080
                  
                  
                  $
                  (407,678
                  )
                  
                  $
                  1,470,863





See accompanying notes to the financial statements






OPTI
CANADA INC. – 4 – 2008 ANNUAL FINANCIAL
STATEMENTS







2008


Statement
of Cash Flows


Years
ended December 31





2008
                            
                            
                            2007(amounts
      in thousands of Canadian dollars)
                            
                            (Revised
      - Note 2p)
                            
                            
                            (Revised
      - Note 2p)Cash
      provided by (used in):Operating
      activitiesNet
      earnings (loss)
                            
                            $
                            (476,922
                            )
                            
                            $
                            150,823Items
      not affecting cashAmortization
      and accretion expense
                            
                            
                            17,067
                            
                            
                            
                            2,011Stock-based
      compensation expense
                            
                            
                            1,895
                            
                            
                            
                            1,356Impairment
      of assets
                            
                            
                            369,353
                            
                            
                            
                            -Imputed
      interest on commodity contract liability
                            
                            
                            189
                            
                            
                            
                            -Unrealized
      (gain) loss on hedging instruments
                            
                            
                            (160,460
                            )
                            
                            
                            60,761Foreign
      exchange translation loss (gain)
                            
                            
                            372,626
                            
                            
                            
                            (235,161
                            )Future
      tax expense (recovery)
                            
                            
                            (115,900
                            )
                            
                            
                            8,7367,848
                            
                            
                            
                            (11,474
                            )Asset
      retirement costs incurred
                            
                            
                            (9
                            )
                            
                            
                            (24
                            )Financing
      charges
                            
                            
                            893
                            
                            
                            
                            11,927Net
      change in non-cash working capital
                            
                            
                            1,157
                            
                            
                            
                            4,4969,889
                            
                            
                            
                            4,925Financing
      activitiesIncrease
      in long-term debt
                            
                            
                            632,000
                            
                            
                            
                            930,700Repayments
      of long-term debt
                            
                            
                            -
                            
                            
                            
                            (612,820
                            )Proceeds
      from share issuances
                            
                            
                            7,041
                            
                            
                            
                            428,972Share
      issue costs
                            
                            
                            (71
                            )
                            
                            
                            (16,768
                            )Financing
      charges
                            
                            
                            (893
                            )
                            
                            
                            (11,927
                            )Decrease
      in principal portion of capital lease obligation
                            
                            
                            (305
                            )
                            
                            
                            -Net
      change in non-cash working capital
                            
                            
                            13,241
                            
                            
                            
                            (4,793
                            )651,013
                            
                            
                            
                            713,364Investing
      activitiesProperty,
      plant and equipment additions
                            
                            
                            (890,324
                            )
                            
                            
                            (1,108,367
                            )Proceeds
      of cross-currency and interest rate swaps
                            
                            
                            -
                            
                            
                            
                            (2,201
                            )Decrease
      in short-term investments
                            
                            
                            -
                            
                            
                            
                            37,097Decrease
      in interest reserve account
                            
                            
                            158,398
                            
                            
                            
                            102,626Net
      change in non-cash working capital
                            
                            
                            (31,950
                            )
                            
                            
                            30,837(763,876
                            )
                            
                            
                            (940,008
                            )Foreign
      exchange gain (loss) on cash and cashequivalents
      held in foreign currency
                            
                            
                            9,615
                            
                            
                            
                            (4,443
                            )Decrease
      in cash
                            
                            
                            (93,359
                            )
                            
                            
                            (226,162
                            )Cash
      and cash equivalents - beginning of year
                            
                            
                            310,504
                            
                            
                            
                            536,666Cash
      and cash equivalents - end of year
                            
                            $
                            217,145
                            
                            
                            $
                            310,504




See
accompanying notes to the financial statements


OPTI
CANADA INC. – 5 – 2008 ANNUAL FINANCIAL
STATEMENTS





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


1.
            SUMMARY
      OF OPERATIONS


OPTI
Canada Inc. (OPTI) is a public Canadian company with its shares listed for
trading on the Toronto Stock Exchange (Symbol: OPC).  OPTI’s primary
activity is the Long Lake Project (the Project), in which OPTI has a 50 percent
working interest as at December 31, 2008.  Effective January 1, 2009,
OPTI has a 35 percent working interest in all the joint venture assets,
including Phase 1 of the Long Lake Project, all future phase reserves and
resources, and future phases of development. See note 13.








2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES


a)
            Property,
      plant and equipment


(i)
              Consolidation


On
      January 1, 2008, OPTI Long Lake LP (Partnership) was dissolved by a
      distribution of assets to each of the partners, OPTI and OPTI GP
      Inc.  On January 1, 2008, OPTI GP Inc. was amalgamated with OPTI
      Canada Inc. Accordingly, the 2007 comparable financial results are
      consolidated.




(ii)
              Petroleum
      and natural gas properties
 OPTI
      follows the full cost method of accounting for petroleum and natural gas
      properties (SAGD assets), whereby all costs of exploring for and
      developing petroleum and natural gas reserves are
      capitalized.  Costs include land acquisition costs, geological
      and geophysical costs, carrying charges on non-productive properties,
      costs of drilling both productive and non-productive wells, costs of
      testing the bitumen upgrading process, related overhead and pre-operating
      costs.
                    
                    Under
      the full cost method of accounting, we deplete oil and gas capitalized
      costs using the unit-of-production method. Depletion is calculated using
      remaining proved developed reserves before royalties.
                    
                    OPTI
      evaluates the carrying value of assets whenever events or conditions occur
      that indicate that the carrying value of assets on our balance sheet may
      not be recoverable from future cash flows.
                    
                    Impairment
      is recognized if the carrying amount of the property, plant and equipment
      (PP&E) exceeds the sum of the undiscounted cash flows expected to
      result from proved reserves (ceiling test). Cash flows are calculated
      based on an estimate of future prices.  In circumstances of
      impairment, the impairment would be calculated as the amount by which
      carrying amounts of the PP&E exceed the net present value of future
      cash flows from proved plus risked probable reserves. The risk-free
      interest rate is used to arrive at the net present value of the future
      cash flows. Any excess carrying value above the net present value of
      OPTI’s future cash flows would be recorded as a permanent
      impairment.  The costs of unproved properties are excluded from
      the ceiling test calculation and subject to a separate impairment test. In
      circumstances of impairment, the impairment would be calculated as the
      amount by which carrying amounts of unproved properties exceed the net
      present value of future cash flows. The impaired amount would be moved to
      the full cost amount subject to depletion.
                    
                    Proceeds
      from the sale of oil and gas properties reduce PP&E, with no gain or
      loss recognized, unless such a sale would significantly alter the rate of
      depletion and depreciation.
                    
                    Effective
      July 1, 2008 revenue and operating costs related to the SAGD assets have
      been recorded in the Statement of Earnings
  (Loss).






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 6 – 2008 ANNUAL FINANCIAL STATEMENTS




TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED







OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


2.   
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(iii)
              Major
      facilities
 Major
      facilities include the Upgrader and central plant facilities related to
      the SAGD assets.  Operating costs net of revenues in relation to
      major facilities that are not considered to be ready for their intended
      use are capitalized.  Judgement is required to determine whether
      facilities are ready for their intended use.  The factors
      considered include whether the plant is producing a saleable product, and
      whether the plant is operating at pre-determined operating levels or other
      factors as circumstances warrant.  Once the assets are
      considered ready for their intended use, revenue is recognized and
      operating costs are recorded in earnings during the year.
                    
                    An
      impairment loss is recognized on major facilities when the carrying amount
      is not recoverable and exceeds its fair value. The carrying amount is not
      recoverable if the carrying amount exceeded the sum of the undiscounted
      cash flows from expected use and eventual disposition. If the carrying
      amount is not recoverable, an impairment loss is measured as the amount by
      which the assets exceed the discounted future cash flows from the major
      facilities assets.
                    
                    OPTI’s
      major facilities are depreciated using the unit of production method based
      on the facilities’ productive capacity over 40 years.
                    
                    Effective
      July 1, 2008 revenue and operating costs related to the SAGD assets have
      been recorded in the Statement of Earnings
  (Loss).




(iv)
              Asset
      retirement obligations


OPTI
      recognizes the fair value of the liability for asset retirement
      obligations in the period it is incurred with a corresponding increase to
      the carrying amount of the related asset.  The initial
      obligation recognized is accreted over time until the future period in
      which the obligation is settled.  The related asset will be
      amortized over its estimated useful life using straight line or the unit
      of production method once operations
commence.


(v)
              Corporate
      assets
 Corporate
      office assets are recorded at cost less accumulated amortization, which is
      calculated using the declining balance method at rates of 30 percent to 50
      percent per
annum.




(vi)
              Maintenance
      and turnarounds
 Expenditures
      associated with maintenance activities or major turnarounds that improve
      the productive capacity or extend the life of an asset are capitalized.
      These costs are included in property and equipment when incurred and
      charged to depletion and depreciation over the estimated useful life.
      Maintenance and repairs, other than major turnaround costs, are expensed
      as incurred.





(vii)
              Capitalized
      interest
 OPTI
      capitalizes interest costs in relation to its long-term debt for major
      development projects.  These costs are subsequently amortized to
      income with the related assets.  Capitalization of interest
      ceases when the assets are ready for their intended
      use.  Effective July 1, 2008 interest expense related to the
      SAGD assets has been recorded in the Statement of Earnings
      (Loss).





b)
            Joint
      venture


A
significant portion of OPTI’s activities are conducted within a joint
venture.  The accounts reflect OPTI’s proportionate interest in such
activities.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 7 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)


c)
            Revenue
      recognition - Oil and gas products


Revenue
from the production of oil and gas products is recognized when the risks and
rewards are transferred to the customer. At the Long Lake Project, our share of
sales are recognized when the Oil and gas product leaves the plant gate. Revenue
represents OPTI’s share and is recorded gross of royalty obligations to
governments and other mineral interest owners.





d)
            Revenue
      recognition - Power


Revenue
from power generated in excess of the Long Lake project requirements is
recognized when the risks and rewards are transferred to the customer. At the
Long Lake Project, our share of sales is recognized when the excess power leaves
the plant gate.  Revenue represents OPTI’s share.





e)
            Transportation


We
pay to transport our share of oil and gas products sold, as well as transmission
costs for our share of excess power sold.  This transportation is presented
in our financial statements as transportation expense.





f)
            Cash
      and cash equivalents


Cash
and cash equivalents include cash, bankers’ acceptances, term deposits and
bankers’ deposit notes that carry terms less than 91 days at the date of
purchase.





g)
            Accounts
      receivable


Accounts
receivable are recorded based on our revenue recognition policy, see notes 3(d)
and 3(e). If applicable, an allowance for doubtful accounts will be recorded to
provide for specific doubtful receivables.





h)
            Leases


Leases
that transfer substantially all the benefits, risks and rewards of ownership to
OPTI are recorded as capital leases and classified as PP&E with a
corresponding increase to obligations under capital leases.  All other
leases are classified as operating leases under which leasing costs are expensed
in the period incurred.





i)
            Income
      taxes


OPTI
uses the liability method of accounting for income taxes.  Future tax
assets and liabilities are recognized based on differences in the financial
statement carrying amount for assets and liabilities and the associated tax
balance.  Future taxes are measured based on substantially enacted tax
rates in the period in which the temporary differences are expected to be
realized or settled.  The asset must be more likely than not to be
realized, otherwise a valuation allowance reduces the tax asset.





j)
            Flow-through
      shares


Tax
deductions for income tax purposes related to exploratory and development
activities funded by flow-through share arrangements are renounced to investors
in accordance with income tax legislation.  Share capital is reduced,
with a corresponding increase to the future tax liability, by the estimated cost
of the tax deductions when such deductions are renounced to the
investors.





k)
            Stock-based
      compensation plans


Stock
options granted to directors, officers, employees and consultants are accounted
for using the fair value method under which compensation expense is recorded
based on the estimated fair value of the options at the grant date using the
Black-Scholes option pricing model.  Compensation cost is either
expensed or capitalized over the vesting period with a corresponding increase in
contributed surplus.  When stock options are exercised, the cash
proceeds along with the amount previously recorded as contributed surplus are
recorded as share capital.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 8 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)


l)
            Earnings
      (loss) per share


Earnings
(loss) per share is calculated using net earnings or loss and the weighted
average number of common shares outstanding during the year.  For the
year ended December 31, 2008, the weighted average number of common shares of
all classes outstanding is 195.7 million (December 31, 2007 - 177.4 million) and
on a fully diluted basis is 195.7 million (December 31, 2007 - 181.6
million).  OPTI uses the treasury stock method of calculating diluted
earnings or loss per common share.  There is no difference in basic or
diluted loss per share.





The
number of shares used in earnings (loss) per share calculations is reconciled as
follows:




Number
      of shares (thousands)
                          
                          December
      31, 2008
                          
                          
                          December
      31, 2007Weighted
      average shares outstanding
                          
                          
                          195,930
                          
                          
                          
                          195,356Diluted
      effect of stock options(1)
                          
                          
                          -
                          
                          
                          
                          -Weighted
      average diluted shares outstanding
                          
                          
                          195,930
                          
                          
                          
                          195,356Basic
      and fully diluted loss per share
                          
                          $
                          (2.43
                          )
                          
                          $
                          0.77


1 -
As a result of the net loss for the year ended December 31, 2008 and the effects
of the treasury stock method of calculating diluted shares at December 31, 2007,
all potentially dilutive securities were considered anti-dilutive.





m)
            Use
      of estimates


The
preparation of the financial statements in accordance with Canadian Generally
Accepted Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect reported amounts and presentation of assets,
liabilities, revenues, expenses and disclosures of contingencies and
commitments.  Such estimates primarily relate to unsettled
transactions and events at the balance sheet date which are based on information
available to management at each financial statement date.  Actual
results could differ from those estimated.





The
estimate of the percentage of completion of various projects at the financial
statement date affects PP&E additions and the related accrued
liability.  Various estimates are required in consideration of
impairment of capitalized costs.  Consideration of impairment includes
estimates relating to future cash flows, regulatory approval, and commodity
prices.





For
petroleum and natural gas properties, OPTI assesses impairment using management
estimates of total proved oil and gas reserves, commodity prices and capital and
operating costs required to develop those reserves. By their nature, these
estimates and the related future net cash flows are subject to measurement
uncertainty, and the impact of differences between actual and estimated amounts
on the financial statements of future periods could be material. Our reserve
estimates, which have been estimated by independent engineering firms, are
subject to change as additional information becomes available or if different
assumptions are used.





The
estimate related to asset retirement obligations requires estimates of the
amount and timing of future abandonment liabilities, inflation, and interest
rates.  The recognition of amounts in relation to stock-based
compensation requires estimates related to valuation of stock options at the
time of issuance.  Future taxes require estimates as to the
realization of future tax assets and the timing of reversal of tax assets and
liabilities.  The fair value of the commodity contracts and foreign
exchange hedging instruments is calculated using valuation models that require
estimates as to future market prices.





By
their nature, these estimates are subject to measurement uncertainty and the
effect of changes in such estimates on the financial statements for current and
future periods could be significant.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 9 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.


Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)


n)
            Interest
      reserve account


Cash
is considered to be restricted when its availability is limited to a specified
purpose.  At December 31, 2007, OPTI’s restricted cash balance was
connected with the Senior Secured Notes.  The loan agreements required
OPTI to maintain an account to fund anticipated interest payments through
December 2008.





o)
            Foreign
      currency translation


Monetary
assets and liabilities are translated at exchange rates in effect on the balance
sheet date.  Other assets, other liabilities and expenses are
translated at rates in effect at the date of the transaction.  OPTI
includes foreign exchange gains or losses in earnings. These gains and losses
are related to the revaluations of its U.S. dollar (US$) denominated cash and
cash equivalents, derivatives, U.S. dollar (US$) denominated long-term debt, and
exchange gains and losses resulting from operating activities.





p)
            New
      standards


(i)
            Capital
      disclosures


On
January 1, 2008, OPTI adopted the Canadian Institute of Chartered Accountants
(CICA) handbook section 1535 “Capital Disclosures.” Section 1535 requires the
disclosure of OPTI’s objectives, policies and processes for managing
capital.  This includes qualitative information regarding OPTI’s
objectives, policies and processes for managing capital and quantitative data
about what OPTI manages as capital.  These disclosures are based on
information used internally by OPTI’s management.  See note
10.





(ii)
            Financial
      instruments


On
January 1, 2008, OPTI adopted the CICA handbook section 3862 “Financial
Instruments - Disclosures,” and section 3863 “Financial Instruments -
Presentation.”  Sections 3862 and 3863 replace section 3861 “Financial
Instruments - Disclosure and Presentation” which revises financial instruments
disclosure requirements and leaves unchanged its presentation
requirements.  These new sections place increased emphasis on
disclosures about the nature and extent of risks arising from financial
instruments and how OPTI manages those risks.  See discussion in
OPTI’s 2008 annual Management’s Discussion and Analysis (“MD&A”) under the
heading “Financial Instruments.”





(iii)
            Goodwill
      and Intangible Assets


On
January 1, 2009 OPTI adopted the CICA handbook section 3064 “Goodwill and
Intangible Assets”.  For the purposes of these financial statements,
this change in accounting policy has been applied retroactively in accordance
with CICA handbook Section 1506 “Accounting Changes”, with an adjustment to the
opening deficit balance at January 1, 2007.  This standard replaced
section 3062 “Goodwill and Other Intangible Assets” and section 3450 “Research
and Development Costs.”  The new section establishes
standards for the recognition, measurement, presentation and disclosure of
goodwill and intangible assets.  The provisions relating to the
definition and initial recognition of intangible assets are equivalent to the
corresponding provisions of International Financial Reporting Standard IAS 38,
“Intangible Assets.”  Emerging Issues Committee (EIC) abstract 27
“Revenues and Expenditures During the Pre-Operating Period” will no longer apply
once section 3064 is adopted.  Accounting Guideline (AcG) 11
“Enterprises in the Development Stage” is amended to delete references to
deferred costs and to provide guidance on development costs as intangible assets
under section 3064.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 10  – 2008 ANNUAL FINANCIAL
STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED


OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) The Company’s previously issued financial statements have been revised and
reissued to reflect the retroactive adoption of this change in accounting
policy.  The impact of adoption is as follows:








Year
      ended December 31, 2007
                    (amounts
      in thousands of Canadian dollars, except per share
amounts)
                  
                  As
      previously issued 2007
                  
                  
                  Adjustment
                  
                  
                  Revised 2007Foreign
      exchange translation gain
                  
                  $
                  -
                  
                  
                  $
                  235,161
                  
                  
                  $
                  235,161Unrealized
      loss on hedging instruments
                  
                  
                  (3,779
                  )
                  
                  
                  (56,982
                  )
                  
                  
                  (60,761
                  )Future
      tax recovery (expense)
                  
                  
                  9,134
                  
                  
                  
                  (17,870
                  )
                  
                  
                  (8,736
                  )Net
      earnings (loss) and comprehensiveearnings
      (loss)
                  
                  
                  (9,486
                  )
                  
                  
                  160,309
                  
                  
                  
                  150,823Loss
      per share, basic and diluted
                  
                  $
                  (0.05
                  )
                  
                  $
                  0.82
                  
                  
                  $
                  0.77








At
      December 31, 2007
                  
                  As
      previously issued 2007
                  
                  
                  Adjustment
                  
                  
                  Revised 2007Opening
      (deficit)
                  
                  $
                  (39,737
                  )
                  
                  $
                  (25,178
                  )
                  
                  $
                  (64,915
                  )Property,
      plant & equipment
                  
                  
                  3,373,908
                  
                  
                  
                  166,876
                  
                  
                  
                  3,540,784Future
      income tax
                  
                  
                  2,153
                  
                  
                  
                  (31,745
                  )
                  
                  
                  (29,592
                  )Closing
      (deficit) retained earnings
                  
                  
                  (49,223
                  )
                  
                  
                  135,131
                  
                  
                  
                  85,908








Year
      ended December 31, 2008
                    (amounts
      in thousands of Canadian dollars, except per share
amounts)
                  
                  As
      previously issued 2008
                  
                  
                  Adjustment
                  
                  
                  Revised 2008Petroleum
      sales
                  
                  $
                  -
                  
                  
                  $
                  187,069
                  
                  
                  $
                  187,069Power
      sales
                  
                  
                  -
                  
                  
                  
                  11,232
                  
                  
                  
                  11,232Royalties
                  
                  
                  -
                  
                  
                  
                  (365
                  )
                  
                  
                  (365
                  )Operating
      expenses
                  
                  
                  -
                  
                  
                  
                  (83,759
                  )
                  
                  
                  (83,759
                  )Diluent
      and feedstock purchases
                  
                  
                  -
                  
                  
                  
                  (164,547
                  )
                  
                  
                  (164,547
                  )Transportation
                  
                  
                  -
                  
                  
                  
                  (8,230
                  )
                  
                  
                  (8,230
                  )Interest
      expense
                  
                  
                  -
                  
                  
                  
                  (38,527
                  )
                  
                  
                  (38,527
                  )Depletion,
      depreciation and amortization
                  
                  
                  (5,973
                  )
                  
                  
                  (11,094
                  )
                  
                  
                  (17,067
                  )Impairment
      of assets
                  
                  
                  (391,686
                  )
                  
                  
                  22,333
                  
                  
                  
                  (369,353
                  )Foreign
      exchange translation loss
                  
                  
                  -
                  
                  
                  
                  (372,626
                  )
                  
                  
                  (372,626
                  )Unrealized
      gain on hedging instruments
                  
                  
                  66,973
                  
                  
                  
                  93,487
                  
                  
                  
                  160,460Realized
      gain on hedging instruments
                  
                  
                  1,653
                  
                  
                  
                  113,762
                  
                  
                  
                  115,415Future
      tax recovery
                  
                  
                  85,025
                  
                  
                  
                  30,875
                  
                  
                  
                  115,900Net
      earnings (loss) and comprehensiveearnings
      (loss)
                  
                  
                  (256,532
                  )
                  
                  
                  (220,390
                  )
                  
                  
                  (476,922
                  )Earnings
      (loss) per share, basic and diluted
                  
                  $
                  (1.31
                  )
                  
                  $
                  (1.12
                  )
                  
                  $
                  (2.43
                  )








At
      December 31, 2008
                  
                  As
      previously issued 2008
                  
                  
                  Adjustment
                  
                  
                  Revised 2008Opening
      (deficit) retained earnings
                  
                  $
                  (49,223
                  )
                  
                  $
                  135,131
                  
                  
                  $
                  85,908Property,
      plant & equipment
                  
                  
                  4,160,901
                  
                  
                  
                  (108,376
                  )
                  
                  
                  4,052,525Future
      income tax
                  
                  
                  47,126
                  
                  
                  
                  23,117
                  
                  
                  
                  70,243Closing
      deficit
                  
                  
                  (322,419
                  )
                  
                  
                  (85,259
                  )
                  
                  
                  (407,678
                  )








OPTI
previously capitalized gains and losses related to the translation of OPTI’s
U.S. dollar debt, capitalized operations, as well as unrealized gains and losses
related to certain financial derivatives associated with its long-term debt. As
a result of the adoption of this new accounting standard, these capitalized
amounts will no longer meet the criteria for capitalization.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 11 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED


OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)


(iv)
            Future
      accounting changes


On
February 13, 2008 the CICA Accounting Standards Board announced that Canadian
public reporting issuers will be required to report under International
Financial Reporting Standards (IFRS) in 2011. Prior to the adoption date,
certain MD&A disclosures are required, beginning for the fourth quarter of
2008. OPTI is currently evaluating the impact of these new
standards.





q)
            Adoption
      of new accounting policies


On
January 1, 2007, OPTI adopted the Canadian Institute of Chartered Accountants
(CICA) handbook sections  1530 “Comprehensive Income,” section 3251
“Equity,” section 3855 “Financial Instruments - Recognition and Measurement” and
section 3865 “Hedges.”  These standards result in changes in the
accounting for financial instruments and hedges as well as introduce
comprehensive income as a separate component of shareholders’
equity.  As required, these standards have been adopted prospectively
and comparative amounts for the prior periods have not been
restated.





(i)
            Comprehensive
      income


Comprehensive
income is comprised of net earnings or loss and other comprehensive income
(OCI).  OCI represents the change in equity for a period that arises
from unrealized gain and losses on available-for-sale securities and changes in
the fair market value of derivative instruments designated as cash flow
hedges.  OPTI does not currently have any transactions that give rise
to OCI, therefore OPTI’s net loss and comprehensive loss for the years ended
December 31, 2007 and 2008 are the same amount.





(ii)
            Equity


This
section establishes the standards for presentation of equity and changes in
equity during the period.  The section requires separate presentation
of changes in equity for the period arising from net income, OCI, contributed
surplus, retained earnings, share capital and reserves.  Accumulated
OCI is included in the consolidated balance sheet as a separate component of
shareholders’ equity.





(iii)
            Financial
      instruments


This
section establishes standards for the recognition and measurement of financial
instruments, which is comprised of financial assets, financial liabilities,
derivatives and non-financial derivatives.





A
financial asset is cash or a contractual right to receive cash or another
financial asset, including equity, from another party.  A financial
liability is the contractual obligation to deliver cash or another financial
asset to another party.





A
derivative is a financial instrument whose value changes in response to a
specified variable, requires little or no net investment and is settled at a
future date.  An embedded derivative is a derivative that is a part of
a non-derivative contract and not directly related to that
contract.  Under this standard, embedded derivatives must be accounted
for as a separate financial instrument.  A non-financial derivative is
a contract that can be settled net in cash or another financial
instrument.





Under
this standard, all financial instruments are initially recorded at fair-value
and are subsequently accounted for based on one of five classifications: held
for trading, held-to-maturity, other financial liabilities, loans and
receivables or available-for-sale.  The classification of a financial
instrument depends on its characteristics and the purpose for which it was
acquired.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 12 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)






A)
            Held
      for trading


Held
for trading financial instruments are financial assets or financial liabilities
that are purchased with the intention of selling or repurchasing in the near
term.  Any financial instrument can be designated as held for trading
as long as its fair value can be reliably measured.  A derivative is
classified as held for trading unless designated as and considered an effective
hedge.  Held for trading instruments are recorded at fair value with
any subsequent gains or losses from changes in the fair value included in
earnings.





OPTI’s
commodity contracts and foreign exchange hedging instruments are derivatives and
accounted for as held for trading financial instruments and are recorded at fair
value.





B)
            Held-to-maturity


Held-to-maturity
investments are non-derivative financial assets with fixed or determinable
payments and a fixed maturity that OPTI has the intent and ability to hold to
maturity.  These financial assets are measured at amortized cost using
the effective interest method.  Any gains or losses arising from the
sale of a held-to-maturity investment are included in earnings.  All
of OPTI’s cash equivalents and the interest reserve account are designated as
held-to-maturity investments.





The
fair values of cash equivalents, short-term investments and the interest reserve
account approximate their carrying value due to their short-term
nature.





C)
            Other
      financial liabilities


Items
classified as other financial liabilities, excluding asset retirement
obligation, on OPTI’s financial statements are accounted for at amortized cost
using the effective interest method.  Any gains or losses in the
realization of other financial liabilities are included in
earnings.





D)
            Receivables


Items
classified as receivables in OPTI’s financial statements are accounted for at
amortized cost using the effective interest method.  Any gains or
losses on the realization of receivables are included in earnings.





The
fair value of accounts and other receivables and accounts payable and accrued
liabilities approximate their carrying values due to the short-term nature of
these instruments. All costs related to debt issuance are expensed as
incurred.





E)
            Available-for-sale


Available-for-sale
assets are those financial assets that are not classified as held for trading,
held-to-maturity or loans and receivables.  Available-for-sale
instruments are recorded at fair value.  Any gains or losses arising
from the change in fair value is recorded in OCI and upon the sale of the
instrument or other-than-temporary impairment, the cumulative gain or loss is
included in earnings.





OPTI has not designated any financial
instruments as available-for-sale assets.





Fair
values are based upon quoted market prices available from active markets or are
otherwise determined using a variety of valuation techniques and models using
quoted market prices.





Effective
January 1, 2007, transaction costs relating to all financial instruments are
expensed as incurred.  As a result, $38 million of deferred financing
costs, net of taxes of $11 million, have been charged to opening
deficit.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 13 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


3.
            COMMODITY
      CONTRACTS


OPTI
has deferred premium West Texas Intermediate (WTI) put options that provide a
US$80 per barrel strike price for 6,000 bbl/d of crude oil through
2009.  At December 31, 2008 these instruments had an estimated value
of $73 million.  The cost of the put options is paid as the contracts
expire and has been included in accounts payable and accrued
liabilities.  Additionally, OPTI has crude swaps at US$77 per barrel
for 500 bbl/d of crude oil through 2009, with an estimated value of $5 million
at December 31, 2008.





4.
            PROPERTY,
      PLANT AND EQUIPMENT





December
      31, 2008 (Revised - Note 2p)Cost
                            
                            
                            Accumulated
      DD&A
                            
                            
                            Net
      book valueOil
      sands assets - subject to depletion
                            
                            
                            1,169,515
                            
                            
                            
                            (9,150
                            )
                            
                            
                            1,160,365Oil
      sands assets - subject to depreciation
                            
                            
                            2,862,762
                            
                            
                            
                            (1,944
                            )
                            
                            
                            2,860,818Corporate
      assets and computer software
                            
                            
                            3,555
                            
                            
                            
                            (2,408
                            )
                            
                            
                            1,147Capital
      lease
                            
                            
                            30,195
                            
                            
                            
                            -
                            
                            
                            
                            30,1954,066,027
                            
                            
                            
                            (13,502
                            )
                            
                            
                            4,052,525





December
      31, 2007 (Revised - Note 2p)Cost
                          
                          
                          Accumulated
      DD&A
                          
                          
                          Net
      book valueOil
      sands assets - subject to depletion
                          
                          
                          899,172
                          
                          
                          
                          -
                          
                          
                          
                          899,172Oil
      sands assets - subject to depreciation
                          
                          
                          2,597,206
                          
                          
                          
                          -
                          
                          
                          
                          2,597,206Corporate
      assets and computer software
                          
                          
                          17,470
                          
                          
                          
                          (2,665
                          )
                          
                          
                          14,805Capital
      lease
                          
                          
                          29,600
                          
                          
                          
                          -
                          
                          
                          
                          29,6003,543,448
                          
                          
                          
                          (2,665
                          )
                          
                          
                          3,540,783





During
the year ended December 31, 2008, OPTI capitalized $3 million (2007 - $5
million) of general and administrative expenses and $138 million (2007 - $130
million) of interest.  Depletion and depreciation of SAGD assets commenced
July 1, 2008 as these assets were ready for their intended use. The cost of
unproved property was $423 million (2007 - $289 million). As a result of the
asset sale noted in note 13, subsequent events, an impairment loss before taxes
of $369 million was recorded in 2008.





For
the calculation of the December 31, 2008 ceiling test, the benchmark prices for
WTI in US$/barrel were as follows: 2009 - $60.00; 2010 - $71.40; 2011 - $83.20;
2012 - $93.90; 2013 - $97.40; and thereafter annual increases of 2 percent. See
note 2a(ii) for discussion of impairment policy.





OPTI
is engaged in the development of oil sands projects.  Since inception,
OPTI has been developing the Long Lake Project and proceeding with the
development of future phases.





Years
      endedAmounts
      capitalized
                      
                      Inception
      to 2008
                        (Revised
      -Note 2p)
                      
                      
                      2008
                        (Revised
      -Note 2p)
                      
                      
                      2007
                        (Revised
      -Note 2p)Revenue
                      
                      $
                      (98,254
                      )
                      
                      $
                      (88,630
                      )
                      
                      $
                      -Operating
      costs
                      
                      
                      242,027
                      
                      
                      
                      171,578
                      
                      
                      
                      36,995Standby
      charges on debt
                      
                      
                      33,210
                      
                      
                      
                      1,603
                      
                      
                      
                      3,491Interest
                      
                      
                      329,652
                      
                      
                      
                      138,953
                      
                      
                      
                      130,109General
      and administrative costs
                      
                      
                      22,751
                      
                      
                      
                      2,636
                      
                      
                      
                      4,538Future
      tax
                      
                      
                      6,203
                      
                      
                      
                      997
                      
                      
                      
                      911







NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 14 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


5.
            DEBT
      FACILITIES


OPTI’s
debt consists of the following:


2008
                        
                        
                        2007Senior
      secured notes (a)
                        
                        $
                        2,131,500
                        
                        
                        $
                        1,734,775$500
      million revolving credit facility (b)
                        
                        
                        486,500
                        
                        
                        
                        -Long-term
      debt
                        
                        
                        2,618,000
                        
                        
                        
                        1,734,775Short-term
      debt: $150 million revolving credit facility (c)
                        
                        
                        145,500
                        
                        
                        
                        -Total
      debt
                        
                        $
                        2,763,500
                        
                        
                        $
                        1,734,775


a)
            Senior
      secured notes


OPTI
has US$1,000 million senior secured notes which bear interest at a fixed 8.25
percent and mature on December 15, 2014.  These notes are
collateralized by a second priority security interest on all OPTI’s existing and
future property.  OPTI may redeem up to 35 percent of these notes
prior to December 15, 2009 with net proceeds from certain equity
offerings.  At any time prior to December 31, 2010, OPTI may redeem
these notes at the principal amount, plus the applicable premium and accrued
interest and at any time after December 31, 2010 at redemption prices between
104.13 percent and 100 percent of the principal amount.





OPTI
also has US$750 million senior secured notes.  These notes bear
interest at a fixed 7.875 percent and mature December 15, 2014.  The
other terms and conditions associated with these notes are substantially the
same as the notes described above. See note 10 for discussion of the debt
covenants.





b)
            $500
      million revolving credit facility


OPTI
has a $500 million revolving credit facility due December 15,
2011.  Amounts drawn under this facility can take the form of prime
rate based loans, bankers’ acceptances, LIBOR loans or letters of
credit.  The facility will bear interest at the prime rate, bankers’
acceptance rate or at LIBOR plus a spread above the reference rate between 1.0
percent and 2.5 percent per annum.  During 2008 the weighted average
interest rate on borrowings of this line was 5.4% (2007 - 6.6%). This facility
is collateralized by a first priority security interest on all present and after
acquired property of OPTI.  The revolving credit facility includes
certain conditions precedent to all borrowings which include a sufficient
funding test related to the Project.  At December 31, 2008, $486.5
million was outstanding under this facility.  Subsequent to December
31, 2008, the $500 million revolving credit facility was reduced to $350
million. See note 13, Subsequent events.





c)
            $150
      million revolving credit facility


On
June 23, 2008, OPTI established a $150 million revolving credit facility due
June 22, 2009.    Borrowings under this facility can take
the form of prime rate based loans, bankers’ acceptances, LIBOR loans or letters
of credit. Borrowings will bear interest at the prime rate, bankers’ acceptance
rate or at LIBOR plus a spread above the reference rate between 1.0 percent and
2.5 percent per annum.  During 2008 the weighted average interest rate
on borrowings of this line was 5.4% (2007 - nil).  This facility is
collateralized by a first priority security interest on all present and after
acquired property of OPTI.  This facility includes certain conditions
precedent to all borrowings which include a sufficient funding test related to
the Project.  At December 31, 2008, $145.5 million was outstanding
under this facility.  Subsequent to December 31, 2008, this $150
million revolving credit facility was repaid and cancelled. See note 13,
Subsequent events.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 15 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


6.
            FUTURE
      INCOME TAXES


The
provision for income taxes reflects an effective tax rate of 20 percent (2007 -
5 percent) which differs from the statutory tax rate of 29.5 percent (2007 -
32.1 percent).  The reasons for the difference are discussed
below.


2008
                            
                            
                            2007
                            
                            
                            2008
                              (Revised
      - Note 2p)
                            
                            
                            2007
                              (Revised
      - Note 2p)Expense
      (recovery) based on book earnings - Federal rate
                            
                            
                            19.5
                            %
                            
                            
                            22.1
                            %
                            
                            $
                            (115,601
                            )
                            
                            $
                            35,294Expense
      (recovery) based on book earnings - Provincial rate
                            
                            
                            10.0
                            %
                            
                            
                            10.0
                            %
                            
                            
                            (59,282
                            )
                            
                            
                            15,956Expense
      (recovery) based on book earnings - total
                            
                            
                            29.5
                            %
                            
                            
                            32.1
                            %
                            
                            
                            (174,883
                            )
                            
                            
                            51,250Impact
      of future tax rate and timing changes
                            
                            
                            
                            21,072
                            
                            
                            
                            (2,488
                            )Non-deductible
      portion of unrealized foreign exchange losses on U.S.$
debt
                            
                            
                            
                            58,517
                            
                            
                            
                            (39,640
                            )Non-taxable
      portion of realized foreign exchange gains on swaps
                            
                            
                            
                            (13,789
                            )
                            
                            
                            -Non-taxable
      portion of unrealized foreign exchange gains on hedging
      instruments
                            
                            
                            
                            (8,390
                            )
                            
                            
                            (4,170
                            )Stock-based
      compensation
                            
                            
                            
                            559
                            
                            
                            
                            435Other
                            
                            
                            
                            1,014
                            
                            
                            
                            3,349Future
      tax (recovery) expense
                            
                            
                            $
                            (115,900
                            )
                            
                            $
                            8,736





Significant components of OPTI’s future
tax liabilities (assets) are as follows:


2008
                              (Revised
      - Note 2p)
                            
                            
                            2007
                              (Revised
      - Note 2p)Book
      value in excess of tax value - capital assets
                            
                            $
                            242,934
                            
                            
                            $
                            231,143Book
      value in excess of tax value - long-term debt
                            
                            
                            (23,663
                            )
                            
                            
                            25,928Asset
      retirement obligation
                            
                            
                            (1,984
                            )
                            
                            
                            (1,767
                            )Benefit
      of share issuance costs
                            
                            
                            (9,198
                            )
                            
                            
                            (15,561
                            )Losses
      for income tax purposes
                            
                            
                            (278,332
                            )
                            
                            
                            (210,151
                            )Future
      tax liability (asset)
                            
                            
                            (70,242
                            )
                            
                            
                            29,592
                            (2,153)Short-term
      future tax liability (asset)
                            
                            
                            (2,709
                            )
                            
                            
                            -Long-term
      future tax liability (asset)
                            
                            $
                            (67,534
                            )
                            
                            $
                            29,592





At
December 31, 2008, the expiry dates of losses for income tax purposes are $13
million in 2009, $9 million in 2014, $16 million in 2015, $117 million in 2026,
$685 million in 2027, and $273 million in 2028. In 2008, OPTI has not taken a
valuation allowance against any portion of the future tax benefits.








7.
            OTHER
      LONG-TERM LIABILITIES


OPTI’s
other long-term liabilities consists of the following:


2008
                    
                    
                    2007Foreign
      exchange hedging instruments (a)
                    
                    $
                    -
                    
                    
                    $
                    59,607Asset
      retirement obligation (b)
                    
                    
                    7,937
                    
                    
                    
                    7,070Other
      long-term liabilities
                    
                    $
                    7,937
                    
                    
                    $
                    66,677





a)
            Foreign
      exchange hedging instruments


In
2008, OPTI settled its existing foreign currency hedging instruments for a net
realized gain of $114 million. These instruments consisted of a US$200 million
foreign exchange forward contract and US$875 million of cross currency swaps.
OPTI’s new foreign exchange hedging instruments are in other long-term assets
and discussed in note 9c.






NOTES
TO FINANCIAL STATEMENTS


OPTI
CANADA INC. – 16 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


7.
            OTHER
      LONG-TERM LIABILITIES(CONTINUED)





b)
            Asset
      retirement obligation


OPTI’s
obligations with respect to asset retirement relate to reclamation of sites and
facilities on which the Project operations are situated.  The
obligation is recognized in the period in which the obligation is created based
on the estimated future reclamation cost using an average discount rate of 11.5
percent and estimated inflation of 3.0 percent annually.  The total
undiscounted future obligation is $151 million.





Continuity
      of asset retirement obligationPresent
      value of obligation at January 1, 2007
                          
                          $
                          5,832New
      obligations during the year
                          
                          
                          835Asset
      retirement costs incurred
                          
                          
                          (24
                          )Accretion
      expense
                          
                          
                          427Present
      value of obligation at December 31, 2007
                          
                          
                          7,070New
      obligations during the year
                          
                          
                          309Asset
      retirement costs incurred
                          
                          
                          (9
                          )Accretion
      expense
                          
                          
                          567Present
      value of obligation at December 31, 2008
                          
                          $
                          7,937





OPTI
estimates its obligations related to drilling activities will be settled over
approximately the next 20 years and obligations relating to resource assets will
be settled in approximately 55 years.  OPTI’s upgrading facilities
related to the Project have retirement obligations with indeterminate settlement
dates and for which present value cannot be reasonably determined because the
asset currently has an indeterminable useful life.  An asset
retirement obligation for these assets will be recorded in the period in which
the lives of the assets become reasonably determinable.





8.
            SHAREHOLDERS’
      EQUITY


a)      Authorized


Unlimited
number of common shares and preferred shares without nominal or par
value.





b)
            Issued
      and outstanding





Number
      of shares
                                (thousands)
                              
                              
                              AmountCommon
      shares - January 1, 2007
                              
                              
                              172,684
                              
                              
                              $
                              1,447,679Issued
      for cash (c)
                              
                              
                              18,535
                              
                              
                              
                              352,156Issued
      for cash - flow-through (c)
                              
                              
                              2,430
                              
                              
                              
                              60,021Common
      share options exercised
                              
                              
                              1,707
                              
                              
                              
                              18,343Share
      issue costs
                              
                              
                              
                              
                              
                              
                              (16,768
                              )Tax
      effect on flow-through shares and share issue costs
                              
                              
                              
                              
                              
                              
                              (7,514
                              )Common
      shares - December 31, 2007
                              
                              
                              195,356
                              
                              
                              
                              1,853,917Common
      share options exercised
                              
                              
                              357
                              
                              
                              
                              4,870Warrants
      exercised
                              
                              
                              217
                              
                              
                              
                              3,750Share
      issue costs
                              
                              
                              
                              
                              
                              
                              (71
                              )Tax
      effect on flow-through shares and share issue costs
                              
                              
                              
                              
                              
                              
                              (15,005
                              )Common
      shares - December 31, 2008
                              
                              
                              195,930
                              
                              
                              $
                              1,847,461Call
      obligations - December 31, 2007
                              
                              
                              
                              
                              
                              
                              (16,664
                              )Expiration
      of call obligations (e)
                              
                              
                              
                              
                              
                              
                              16,664Call
      obligations - December 31, 2008
                              
                              
                              
                              
                              
                              
                              -Total
      capital stock - December 31, 2008
                              
                              
                              195,930
                              
                              
                              $
                              1,847,461







NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 17 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


8.
            SHAREHOLDERS’
      EQUITY(CONTINUED)


c)      2007
equity issuance


On
November 21, 2007 OPTI issued 18,534,500 common shares at a price of $19.00 per
common share and 2,430,000 flow-through common shares at a price of $24.70 per
common share for aggregate gross proceeds of $412 million.





d)      Outstanding
warrants


OPTI
had common share warrants outstanding that entitled the holders to purchase a
total of 5,991,000 common shares at a price of $14.75 each. These warrants
expired in November 2008 and have been reclassified as contributed
surplus.





e)      Call
obligations


On
June 30, 2008, $202 million of outstanding call obligations expired unexercised
by OPTI.  The call obligations consisted of unconditional and
irrevocable call options whereby OPTI, at its option, could have required a
subscription for either a convertible preferred share or a common share for the
face amount of the call obligation.  The exercise price per share of
the call obligations was $2.20 per share.  The amount of the expired
call obligations has been recorded as an adjustment to deficit.





f)      Outstanding
stock options


OPTI
may grant stock options to executives, certain employees, consultants, and
directors as determined by the Board of Directors.  The exercise price
of each option is determined by the Board based on the current market price of
OPTI’s common shares at the date of the grant.  Vesting rights are
determined at the discretion of the Board.  Under OPTI’s plans,
options vest at the time of grant or over a five-year period.  The
remaining number of options that are authorized for issuance under the stock
option plan is approximately 9 million. Options outstanding expire at dates up
to 2018.





OPTIONS
      OUTSTANDING
                        
                        Options
                          (thousands)
                        
                        
                        Exercise
      price
                          (per
      share)Balance
      January 1, 2007
                        
                        
                        8,136
                        
                        
                        $
                        11.69Granted
                        
                        
                        1,003
                        
                        
                        
                        19.58Forfeited
                        
                        
                        (224
                        )
                        
                        
                        15.77Exercised
                        
                        
                        (1,707
                        )
                        
                        
                        9.82Balance
      December 31, 2007
                        
                        
                        7,208
                        
                        
                        $
                        13.03Granted
                        
                        
                        761
                        
                        
                        
                        15.74Forfeited
                        
                        
                        (452
                        )
                        
                        
                        17.80Exercised
                        
                        
                        (357
                        )
                        
                        
                        10.76Balance
      December 31, 2008
                        
                        
                        7,160
                        
                        
                        $
                        13.14





Options
      outstanding (1)
                      
                      
                      Exercisable
      options(1)Exercise
      price range
                      
                      Options
                        (thousands)
                      
                      
                      Remaining
      contractual life (years)
                      
                      
                      Weighted
      average exercise price
                      
                      
                      Options
      (thousands)
                      
                      
                      Weighted
      average exercise price$1.95
      to $4.99
                      
                      
                      281
                      
                      
                      
                      2.7
                      
                      
                      $
                      4.22
                      
                      
                      
                      260
                      
                      
                      $
                      4.32$5.00
      to $9.99
                      
                      
                      2,890
                      
                      
                      
                      1.7
                      
                      
                      
                      9.06
                      
                      
                      
                      2,834
                      
                      
                      
                      9.12$10.00
      to $14.99
                      
                      
                      1,153
                      
                      
                      
                      5.7
                      
                      
                      
                      10.97
                      
                      
                      
                      782
                      
                      
                      
                      10.95$15.00
      to $19.99
                      
                      
                      2,009
                      
                      
                      
                      8.5
                      
                      
                      
                      18.14
                      
                      
                      
                      465
                      
                      
                      
                      18.54$20.00
      to $23.50
                      
                      
                      827
                      
                      
                      
                      7.6
                      
                      
                      
                      21.27
                      
                      
                      
                      257
                      
                      
                      
                      21.23Balance
      December 31, 2008
                      
                      
                      7,160
                      
                      
                      
                      5.0
                      
                      
                      $
                      13.14
                      
                      
                      
                      4,598
                      
                      
                      $
                      10.79


(1)   The
intrinsic value of all options outstanding and exercisable was zero as of
December 31, 2008.





At
December 31, 2007 there were 4,139,556 exercisable common share options with a
weighted average exercise price of $9.88.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 18 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


8.
            SHAREHOLDERS’
      EQUITY(CONTINUED)


The
following table sets forth non-vested stock options activity and related
information during the year ended December 31, 2008:




Number
      of Options (thousands)
                      
                      
                      Weighted
      Average
                        Grant
      date Fair ValueNon-vested
      at the beginning of the year
                      
                      
                      3,068
                      
                      
                      $
                      10.47Granted
                      
                      
                      761
                      
                      
                      $
                      8.33Vested
      and forfeited
                      
                      
                      (1,267
                      )
                      
                      $
                      10.42Non-vested
      at the end of the year
                      
                      
                      2,562
                      
                      
                      $
                      9.80





As
      of December 31, 2008 there was $12.9 million of unrecognized compensation
      cost related to stock


options
      outstanding. That cost is expected to be recognized over a weighted
      average period of 2.5 years.





g)    Stock-based
compensation


During
the year ended December 31, 2008, there were 760,500 (2007 - 1,002,500) common
share options granted which had a total fair value of $4 million (2007 - $7
million) equating to $5.07 per option (2007 - $6.54).





The
fair value was calculated using the Black-Scholes pricing model at the date of
each grant using the following assumptions:





2008
                          
                          
                          2007Expected
      life of options(1)
                          
                          10
      years
                          
                          10
      yearsExpected
      dividend yield of options(2)
                          
                          
                          0
                          %
                          
                          
                          0
                          %Expected
      volatility(3)
                          
                          
                          45
                          %
                          
                          
                          36
                          %Risk
      free interest rate(4)
                          
                          
                          2.75%
      - 3.75
                          %
                          
                          
                          4.0
                          %Estimated
      forfeiture rate(5)
                          
                          
                          15
                          %
                          
                          
                          15
                          %








(1)
              The
      expected life of the options is based on the term of the
      options.(2)
              The
      expected dividend yield of options is 0% since OPTI has not historically
      paid dividends, nor does it intend
to.


(3)
            Expected
      volatility is based on the annual historical volatility of OPTI’s share
      price from the date of OPTI’s Initial Public
  Offering.


(4)
            The
      risk free rate is based upon interest rates for a zero coupon 10 year
      Government of Canada bond.


(5)
            The
      estimated forfeiture rate is based on historical
    forfeitures.





Stock-based
compensation costs for the year ended December 31, 2008 are $5 million (2007 -
$4 million), of which $2 million is included in general and administrative
expenses (2007 - $1 million) and $3 million is included in PP&E (2007 - $3
million).





h)    Contributed
surplus


The
following outlines changes in contributed surplus:


Balance
      January 1, 2007
                      
                      $
                      9,357Capitalized
      stock-based compensation
                      
                      
                      2,732Expensed
      stock-based compensation
                      
                      
                      1,356Stock
      options exercised
                      
                      
                      (1,548
                      )Balance
      December 31, 2007
                      
                      $
                      11,897Capitalized
      stock-based compensation
                      
                      
                      3,181Expensed
      stock-based compensation
                      
                      
                      1,895Reclassified
      expired warrants
                      
                      
                      15,137Stock
      options exercised
                      
                      
                      (1,030
                      )Balance
      December 31, 2008
                      
                      $
                      31,080







NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 19 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


9.
            FINANCIAL
      INSTRUMENTS AND RISK MANAGEMENT


a)
            Fair
      values


OPTI’s
      financial instruments include cash equivalents, interest reserve account,
      accounts receivable and accounts payable and accrued liabilities. Due to
      the short-term nature of the instruments, the carrying values approximate
      the fair values. The commodity contracts, cross currency interest rate
      swaps and foreign exchange contracts are considered to be held-for-trading
      and are recorded at fair value.  OPTI’s senior secured notes and
      the revolving credit facilities are recorded at cost. At December 31,
      2008, the estimated fair value of the notes is US$934 million (CDN$1,137
      million) and the carrying value of the revolving credit facilities
      approximates their fair value due to their variable rate, first priority
      security position and short-term duration of instruments outstanding under
      the facilities.





b)
            Risk
      management


OPTI
      provides a risk management discussion as required by the CICA handbook
      section 3862 “Financial Instruments - Disclosures” on its exposure to and
      management of credit risk, liquidity risk and market risk in the 2008
      annual MD&A under the heading “Financial
  Instruments”.





c)
            Financial
      hedging instruments


At
      December 31, 2008, OPTI has foreign exchange forward contracts to provide
      for a fixed  payment of CDN$1,028 million in exchange for
      receipt of US$875 million on April 16, 2010 at a rate of approximately
      CDN$1.17 per U.S. dollar. Prior to the commencement of operations, any
      gains or losses based on mark to market of the contract are capitalized to
      property, plant and equipment.





d)
            Commodity
      contracts


During
      2008, OPTI purchased put options that provide a price floor for a portion
      of its anticipated 2009 production.  See note
  3.





10.
            CAPITAL
      MANAGEMENT


OPTI’s objectives when managing its capital
are:


•
            to
      manage capital in a manner that will maintain compliance with its
      financial covenants;


•
            to
      manage a strong capital base so as to maintain investor, creditor and
      market confidence and to sustain future development of the
      business;


•
            to
      maintain an appropriate balance between debt and equity sources of
      financing; and


•
            to
      maintain sufficient undrawn credit capacity to provide
      liquidity.





OPTI
defines its capital as follows:


•
            capital
      stock; and


•
            debt,
      including long and short-term
portions.





Virtually
all of our capital to date has resulted from the issuance of debt and
equity.  To date, OPTI has been funded with both long-term debt and
equity. A description of debt and related changes in the period is described in
note 5 and note 13.  Equity capital for OPTI is described in note 8.
We expect to generate positive operating cash flows to support funding for
interest costs and future expenditures once bitumen production rises and the
Upgrader has achieved stable operations. The sale of a portion of the Long Lake
project in January 2009 is expected to provide an additional financing for
2009.





OPTI
is a public company and has established access in past transactions to both
public and private debt and equity markets.  OPTI anticipates
continued long-term access to both the debt and equity markets to fund future
growth of the business.  In the short-term, there may be times where
access to debt and equity markets is restricted or unavailable.





All
of OPTI’s debt facilities set certain limitations on its capital structure
primarily through financial covenants. Measurement of the ratios for this
purpose is defined in the relevant credit agreement.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 20 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


10. 
CAPITAL MANAGEMENT (CONTINUED)





OPTI
is presently in compliance with these financial maintenance
covenants:





Calculated
      ratio at December 31,Financial
      Ratio
                      Covenant(1)
                      
                      2008
                      
                      
                      2007Debt
      to Capitalization (2)
                      Maximum
      65%
                      
                      
                      64
                      %
                      
                      
                      50
                      %First
      Lien to EBITDA (3)
                      Minimum
      3.5:1
                      
                      
                      N/A
                      (4)
                      
                      
                      N/A
                      (4)





(1)
Covenants noted are as of December 31, 2008 and have not been restated for the
change inaccounting
policy described in note 2p(iii) because our banking agreements require us to
calculate the covenants based on accounting policies in effect at the time of
the agreement. On January 27, 2009, the facilities were renegotiated and
resulted in adjustments to the covenants. See note 13.


(2)
"Debt to Capitalization” means, as at any date of determination, the ratio of
Total Consolidated Debt to Total Capitalization (net of the effect of any
currency Hedge Agreements relating to any Debt included
therein).  "Total Capitalization" means, as at any date of
determination, the aggregate of Total Consolidated Debt, and Shareholders'
Equity on such date.


(3)
EBITDA (defined here as total revenue less direct costs and selling and
administrative costs) is not a recognized measure under GAAP, does not have a
standardized meaning prescribed by GAAP and therefore may not be comparable to
similar measures presented by other issuers. First Lien for the purposes of this
ratio includes the debt outstanding under the revolving credit
facilities.


(4)
Under the amended revolving credit facility, the first time this covenant is
applicable is the third quarter of 2009, previously it was to be assessed for
the first quarter of 2009.





With
respect to our senior secured notes, the covenants are in place primarily to
govern the total amount of debt that OPTI may incur at any time.  This
limit is most affected by the present value of our total proved reserves using
forecast prices discounted at 10 percent.  We have sufficient capacity
under this test to incur additional debt beyond our amended $350 million
revolving credit facility.  Other leverage factors, such as debt to
capitalization, interest coverage ratios and total debt to EBITDA are expected
to be more constraining in future than this limitation. Under certain payment
related defaults under our revolving credit facility, we may be required to
offer to repay our senior secured notes.





OPTI
sets internal targets for its financial ratios that are similar to the
requirements in the debt agreements.  These internal targets support
evaluation of the timing and amount of new debt and equity that balance creation
of value for stakeholders with the management of risks associated with
debt.   Capital funding plans and targets are set annually based
on expected growth programs and forecasted financial results for the
business.





In
management’s opinion, OPTI has met its objectives as outlined and has available
borrowing capacity under its debt facilities. Ongoing access to its revolving
credit facility requires that production levels for the project continue to ramp
up so that the company can meet its financial ratios described
above.





11.
            COMMITMENTS


a)
            Project
      commitments


OPTI
has commitments in connection with contracts and purchase orders of $22 million
at December 31, 2008.   Commitment amounts are measured within contracts
and purchase orders through letters of intent, scheduled work releases and
forecast expenditures for labour and equipment utilization. These commitments
will be realized in incurred expenditures over time as certain milestones are
met, work is completed, or both.





b)
            Lease
      obligations and other commitments


OPTI
has an agreement with Enbridge Pipelines (Athabasca) Inc. that provides for the
storage, measurement and transportation of crude oil and other liquids between
the Athabasca main line and the Long Lake Project site.  This
agreement is considered to be a capital lease for accounting purposes. This
agreement has a primary term of 25 years and an option for renewal of five
additional years.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 21 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


11. 
COMMITMENTS(CONTINUED)


Capital
lease payments on this agreement for the next five years and thereafter are as
follows:





2009
                        
                        $
                        4,6462010
                        
                        
                        4,6462011
                        
                        
                        4,6472012
                        
                        
                        4,3152013
                        
                        
                        4,149Thereafter
                        
                        
                        79,517Total
      including interest
                        
                        
                        101,920Less
      imputed interest
                        
                        
                        (71,725
                        )Capital
      lease obligation
                        
                        $
                        30,195





The
above table is based on OPTI’s 50 percent working interest in the Long lake
Project as of December 31, 2008. Capital lease obligation as at January 27, 2009
was $21.1 million based on a 35 percent working interest. See note
13.





OPTI
has an agreement with Enbridge Pipelines (Athabasca) Inc. for transportation of
oil products from Long Lake to Hardisty.  The initial term of this
agreement extends to 2012.  OPTI also has an agreement with Pembina
Oil Sands Pipeline L.P. for a pipeline which transports synthetic crude oil, for
use as a diluent, available to the Long Lake site.  This agreement has an
initial term of 25 years.  These two pipeline agreements are considered to
be operating leases for accounting purposes, total expenses related to these 2
contracts were $[XX] in 2008 (2007- $nil).   OPTI entered into a
long-term traffic guarantee agreement with Canadian National Railway Company
(CN) under which traffic is moved to and from the Project site by rail and CN
invests in upgrades to the Athabasca Northern Railway rail line.  The rail
line will move, amongst other commodities, sulphur, catalysts, and construction
materials to and from the Project site for periods up to 2032. Total expenses
related to this contract was $[XX] in 2008 (2007- $nil). Prior to the
commencement of operations, OPTI capitalizes operating lease
payments.





Operating
lease payments on these agreements for the next five years and thereafter are as
follows:





2009
                      
                      $
                      13,4182010
                      
                      
                      14,2792011
                      
                      
                      13,7252012
                      
                      
                      14,1772013
                      
                      
                      14,414Thereafter
                      
                      
                      44,728Total
                      
                      $
                      114,741





The
above table is based on OPTI’s 50 percent working interest in the Long lake
Project. Actual commitments are $80 million based on a 35 percent working
interest in the Long Lake Project. See note 13.





12.
            SUPPLEMENTAL
      INFORMATION TO STATEMENT OF CASH
FLOW





2008
                      
                      
                      2007Cash
      taxes paid
                      
                      $
                      -
                      
                      
                      $
                      -Cash
      interest received
                      
                      
                      5,909
                      
                      
                      
                      23,281Cash
      interest paid
                      
                      
                      173,511
                      
                      
                      
                      142,049Non-cash
      changes to property, plant and equipment
                      
                      
                      (358,760
                      )
                      
                      
                      697Non-cash
      changes to capital stock
                      
                      
                      (13,246
                      )
                      
                      
                      (5,966
                      )








NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 22 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


12. 
SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOW (CONTINUED)





2008
                        
                        
                        2007Change
      in non-cash working capitalAccounts
      and other receivables
                        
                        $
                        (10,224
                        )
                        
                        $
                        (6,014
                        )Accounts
      payable and accrued liabilities
                        
                        
                        (7,328
                        )
                        
                        
                        36,554Net
      change in non-cash working capital
                        
                        $
                        (17,552
                        )
                        
                        $
                        30,540Operating
      activities
                        
                        $
                        1,157
                        
                        
                        $
                        4,496Financing
      activities
                        
                        
                        13,241
                        
                        
                        
                        (4,793
                        )Investing
      activities
                        
                        
                        (31,950
                        )
                        
                        
                        30,837Net
      change in non-cash working capital
                        
                        $
                        (17,552
                        )
                        
                        $
                        30,540




13.
            SUBSEQUENT
      EVENTS


On
January 27, 2009, OPTI completed a sale of a 15 percent working interest in its
joint venture assets to Nexen Inc. (Nexen) for $735
million.  Effective January 1, 2009, OPTI has a remaining 35 percent
working interest in all the joint venture assets, including Phase 1 of the Long
Lake Project, all future phase reserves and resources, and future phases of
development.  As part of the sale, Nexen retained $85 million of the
proceeds to pre-fund OPTI’s share of 2009 joint venture capital requirements.





To
consider impairment as of December 31, 2008, assets were grouped to depreciable
assets, resource assets and unproved properties based on the nature of the asset
and an assessment of their depreciation basis. Each asset type was assessed
individually for impairment.





We
allocated the sales proceeds to each asset type based on an estimate of fair
value.  The sales proceeds allocated to depreciable assets were lower than
the book value of the asset, as a result a loss before taxes of $369 million was
recorded in 2008. The sales proceeds allocated to resource assets did not alter
the depletion rate by greater than 20 percent and as a result no gain or loss
was recorded.  The sales proceeds will be recorded as a reduction to book
value as of completion of the sale in 2009. The sales proceeds for unproved
properties and resource assets will be recorded as a reduction to book value as
of completion of the sale in 2009.  The remaining assets were subject to a
ceiling test and cost recovery test which concluded no further impairment
existed.





Additionally,
as a result of the asset sale, the revolving debt facilities were amended on
January 27, 2009. Significant changes include:


•
            $150
      million revolving credit facility was repaid and
  cancelled;


•
            $500
      million revolving credit facility was reduced to $350 million, $400
      million was repaid through February 25, 2009 and applicable interest rates
      were increased by approximately 2 to 4 percent depending on our debt
      rating;


•
            First
      lien to EBITDA covenant commences in the third quarter of 2009 with a
      maximum ratio 2.5:1 as defined in Note 10 (previously the first quarter of
      2009 and a ratio of 3.5:1);


•
            Debt
      to Capitalization ratio was  increased to 70 percent from 65
      percent as defined in Note 10; and


•
            The
      Canadian measurement of our U.S. dollar denominated debt was changed from
      a period end exchange rate to the average rate for the preceding quarter
      for debt covenant calculation
purposes.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 23 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


14.
            RECONCILATION
      TO U.S. GAAP (Revised and Restated)


OPTI
prepares its financial statements in accordance with accounting principles
generally accepted in Canada (“Canadian GAAP”) which differ from those
principles that the Company would have followed had its financials statements
been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”). The following adjustments and additional
disclosures would be required in order to present the financial statements in
accordance with US GAAP.





OPTI
is revising and restating its US GAAP reconciliation note in its financial
statements as at December 31, 2008 and 2007 and for the years then ended. The
revision relates to the retroactive application of the change in accounting
policy under Canadian GAAP as described in note 2(p)(iii). OPTI has revised its
financial statements prepared in accordance with Canadian GAAP to reflect this
change. This change impacts the previously reported differences between Canadian
GAAP and US GAAP as at December 31, 2008 and 2007 and for the years then ended
and therefore the revised US GAAP reconciliation has been adjusted
accordingly.





As
a result of performing a detailed review of capitalized costs that no longer
qualify for capitalization upon the retroactive application of CICA handbook
section 3064, the company has corrected its previously reported differences
between Canadian GAAP and US GAAP. Specifically, OPTI has determined that for US
GAAP purposes, the company’s petroleum and natural gas assets should be
considered substantially complete and ready for its intended use effective July
1, 2008, which is consistent with the “commencement of operations” date under
Canadian GAAP. Previously, OPTI had used a date for US GAAP purposes of January
1, 2007. The impact of this restatement is a net decrease in US GAAP net loss of
$89 million and $28 million in 2008 and 2007, respectively.





The
details of the impact of the revision to Canadian GAAP (on the US GAAP
reconciliation as previously reported ) and the restatement are provided below
in paragraph (k).





a)
            Earnings
      (loss) and comprehensive earnings (loss)
  reconciliation





(amounts
      in thousands of Canadian dollars, except per share
amounts)
                    
                    Year-ended
      December 312008
                    
                    
                    2007(as
      revised and restated)
                    
                    
                    (as
      revised and restated)Net
      earnings (loss) in accordance with CDN GAAP
                    
                    $
                    (476,922
                    )
                    
                    $
                    150,823Standby
      charges capitalized (c)
                    
                    
                    (1,603
                    )
                    
                    
                    (3,491
                    )Reduction
      (increase) in future tax (c,e,f)
                    
                    
                    (1,821
                    )
                    
                    
                    (573
                    )Flow-through
      share premium (d)
                    
                    
                    13,778
                    
                    
                    
                    8,959Tax
      effect of flow-through shares (d)
                    
                    
                    (15,005
                    )
                    
                    
                    (11,706
                    )Deferred
      financing charges (e)
                    
                    
                    893
                    
                    
                    
                    11,927Deferred
      financing amortization (e)
                    
                    
                    (7,481
                    )
                    
                    
                    (6,144
                    )Asset
      impairment under Canadian GAAP (f)
                    
                    
                    369,353
                    
                    
                    
                    -Asset
      impairment under US GAAP (f)
                    
                    
                    (353,877
                    )
                    
                    
                    -Net
      earnings (loss) in accordance with US GAAP
                    
                    $
                    (472,685
                    )
                    
                    $
                    149,795Earnings
      (loss) per share, basic and diluted
                    
                    $
                    (2.41
                    )
                    
                    $
                    0.84








NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 24 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


14.
            RECONCILATION
      TO U.S. GAAP (Revised and Restated)(CONTINUED)





b)
            Balance
      sheet reconciliation




(amounts
      in thousands of Canadian dollars)
                    
                    At
      December 31, 2008
                    
                    
                    At
      December 31, 2007CDN
      GAAP
                    
                    
                    US
      GAAP
                    
                    
                    CDN
      GAAP
                    
                    
                    US
      GAAP(as
      revised - note 2p)
                    
                    
                    (as
      revised and restated)
                    
                    
                    (as
      revised - note 2p)
                    
                    
                    (as
      revised and restated)AssetsProperty,
      plant and equipment(c,f)
                    
                    $
                    4,066,027
                    
                    
                    $
                    4,024,463
                    
                    
                    $
                    3,543,488
                    
                    
                    $
                    3,488,011Accumulated
      depletion and depreciation
                    
                    
                    (13,502
                    )
                    
                    
                    (16,985
                    )
                    
                    
                    (2,665
                    )
                    
                    
                    (6,148
                    )Deferred
      financing charges (e)
                    
                    
                    -
                    
                    
                    
                    39,362
                    
                    
                    
                    -
                    
                    
                    
                    44,211LiabilitiesFlow-through
      share premium  (d)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    13,778Future
      tax liability (asset) (c,f)
                    
                    
                    (70,242
                    )
                    
                    
                    (64,074
                    )
                    
                    
                    29,592
                    
                    
                    
                    24,099Shareholders’
      equityCapital
      stock (d)
                    
                    
                    1,847,461
                    
                    
                    
                    1,931,315
                    
                    
                    
                    1,837,253
                    
                    
                    
                    1,906,102(Deficit)
      retained earnings
                    
                    
                    (407,678
                    )
                    
                    
                    (466,496
                    )
                    
                    
                    85,908
                    
                    
                    
                    22,853Total
      Shareholders’ equity
                    
                    
                    1,470,863
                    
                    
                    
                    1,495,898
                    
                    
                    
                    1,950,744
                    
                    
                    
                    1,956,538








c)
            Under
      Canadian GAAP during the construction period, standby fees associated with
      borrowing facilities can be capitalized. Under US GAAP, during the
      construction period these costs would be expensed as
    incurred.





d)
            Under
      Canadian GAAP, the proceeds from the issuance of flow-through shares are
      recorded in equity at their face value. Under US GAAP, the proceeds must
      be allocated between the sale of the shares and the sale of the tax
      benefit. A liability is created for the difference between the market
      price of the existing shares and the price the investor paid for the
      flow-through shares.  In November 2007, OPTI issued 2,430,000
      flow-through common shares at a price of $24.70 per share for gross
      proceeds of $60 million which has resulted in a $14 million liability.
      When the tax benefits are renounced to shareholders, the difference
      between this liability and the value of the tax basis given up is recorded
      as tax expense. Under Canadian GAAP the value of the tax basis given up
      reduces the value of the flow-through shares issued. During March 2008,
      OPTI fully renounced the tax deductions to investors in relation to the
      flow-through shares issued in 2007 and recorded the related entries to
      future tax.





e)
            On
      January 1, 2007, OPTI adopted to Canadian Institute of Chartered
      Accountants section 3855 “Financial Instruments - Recognition and
      Measurement.” As a result of the adoption, all previously recorded
      deferred financing charges, net of future tax, were recorded as an
      adjustment to opening deficit. Under this new section, all transactions
      costs relating to financial instruments are to be expensed as incurred.
      Under US GAAP, debt transactions costs are deferred and amortized over the
      life of the associated debt.





f)
            OPTI
      recognized an impairment of $369 million (revised - note 2p) at December
      31, 2008 related to the pending sale of assets under Canadian GAAP. The
      carrying value of assets held for sale under US GAAP is lower based on the
      capitalized pre-operating costs and results in a lower impairment. As
      such, the Canadian GAAP impairment was reversed out of net earnings (loss)
      and the recalculated US GAAP impairment was
  included.








NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 25 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


14. 
RECONCILATION TO U.S. GAAP (Revised and Restated)(CONTINUED)





g)
            The
      statement of cash flows are prepared in accordance with Canadian GAAP and
      conform in all material respects to US GAAP except that Canadian GAAP
      allows for the presentation of operating cash flow before changes in
      non-cash working capital in the statement of cash flows. This total cannot
      be presented under US GAAP.





h)
            Under
      Canadian full cost accounting rules, impairment is recognized if the
      carrying amount of the PP&E exceeds the sum of the undiscounted cash
      flows expected to result from proved reserves using estimated future
      prices and costs (the “ceiling test”). Under the full cost method of
      accounting as set forth by the US Securities and Exchange Commission, the
      ceiling test differs from Canadian GAAP in that future net revenues from
      proved reserves are based on prices and costs as at the balance sheet date
      (“constant dollar pricing”) and are discounted at 10 percent. Management
      has reviewed the valuation of the Long Lake Project and other oil sands
      properties and estimates that the recoverable value of these properties
      exceeds their carrying amount. Therefore no difference is
      recorded.





i)
            Accounts
      payable and accrued liabilities


The
components of accounts payable and accrued liabilities are as
follows:


(amounts
      in thousands of Canadian dollars)
                        
                        December
      31, 2008
                        
                        
                        December
      31, 2007Accounts
      payable
                        
                        $
                        19,686
                        
                        
                        $
                        14,242Accrued
      interest payable to financial institutions
                        
                        
                        6,299
                        
                        
                        
                        5,591Accrued
      liabilities
                        
                        
                        173,922
                        
                        
                        
                        170,890Total
                        
                        $
                        199,907
                        
                        
                        $
                        190,723





j)
            Cash
      and cash equivalents


Cash
and cash equivalents is made up of the following instruments held with Canadian
financial institutions:


(amounts
      in thousands of Canadian dollars)
                      
                      December
      31, 2008
                      
                      
                      December
      31, 2007Cash
                      
                      $
                      5,464
                      
                      
                      $
                      3,372CDN
      dollar term deposits *
                      
                      
                      168,480
                      
                      
                      
                      278,134US
      dollar term deposits (CDN equivalent) *
                      
                      
                      43,201
                      
                      
                      
                      28,998$
                      217,145
                      
                      
                      $
                      310,504


* maturing less than 90 days from
balance sheet date





k)
            Revision
      and restatement of U.S. GAAP


The
details of the impact of the revision to Canadian GAAP (note 2p) and its related
impact on the US GAAP reconciliation as previously reported, and the restatement
to correct for the error are as follows:





Year
      ended December 31, 2007
                        (amounts
      in thousands of Canadian dollars, except per share
amounts)
                      
                      As
      previously issued 2007
                      
                      
                      Adjustment
                      
                      
                      Restated
                        2007Net
      earnings (loss) in accordance with CDN GAAP
                      
                      $
                      (9,486
                      )
                      
                      $
                      160,309
                      
                      
                      $
                      150,823Pre-operating
      expenses capitalized  (i)
                      
                      
                      (36,995
                      )
                      
                      
                      36,995
                      
                      
                      
                      -Foreign
      exchange gain (loss) capitalized (ii)
                      
                      
                      235,164
                      
                      
                      
                      (235,164
                      )
                      
                      
                      -Foreign
      currency hedging instruments  (ii)
                      
                      
                      (56,982
                      )
                      
                      
                      56,982
                      
                      
                      
                      -Reduction
      (increase) in future tax   (iii)
                      
                      
                      (9,426
                      )
                      
                      
                      8,853
                      
                      
                      
                      (573
                      )Net
      earnings (loss) in accordance with US GAAP
                      
                      
                      121,820
                      
                      
                      
                      27,975
                      
                      
                      
                      149,795Earnings
      (loss) per share, basic and diluted
                      
                      $
                      0.69
                      
                      
                      $
                      0.15
                      
                      
                      $
                      0.84






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 26 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


14. 
RECONCILATION TO U.S. GAAP (Revised and Restated)(CONTINUED)





At
      December 31, 2007
                        (amounts
      in thousands of Canadian dollars)
                      
                      As
      previously
                        issued
      2007
                      
                      
                      Adjustment
                      
                      
                      Restated
                        2007Property,
      Plant & Equipment (i, ii)
                      
                      $
                      3,438,084
                      
                      
                      $
                      49,927
                      
                      
                      $
                      3,488,011Accumulated
      Depreciation (i)
                      
                      
                      (3,483
                      )
                      
                      
                      (2,665
                      )
                      
                      
                      (6,148
                      )Future
      income tax liability (asset) (i, ii)
                      
                      
                      4,259
                      
                      
                      
                      19,840
                      
                      
                      
                      24,099(Deficit)
      retained earnings  (i, ii, iii)
                      
                      
                      (4,570
                      )
                      
                      
                      27,423
                      
                      
                      
                      22,853








Year
      ended December 31, 2008
                        (amounts
      in thousands of Canadian dollars, except per share
amounts)
                      
                      As
      previously
                        issued
      2008
                      
                      
                      Adjustment
                      
                      
                      Restated
                        2008Net
      earnings (loss) in accordance with CDN GAAP
                      
                      $
                      (256,532
                      )
                      
                      $
                      (220,390
                      )
                      
                      $
                      (476,922
                      )Revenue
      capitalized (i, ii)
                      
                      
                      286,931
                      
                      
                      
                      (286,931
                      )
                      
                      
                      -Pre-operating
      expenses capitalized  (i, ii)
                      
                      
                      (388,118
                      )
                      
                      
                      388,118
                      
                      
                      
                      -Depletion
      and deprecation expense  (i)
                      
                      
                      (11,875
                      )
                      
                      
                      11,875
                      
                      
                      
                      -Foreign
      exchange gain (loss) capitalized  (ii)
                      
                      
                      (372,625
                      )
                      
                      
                      372,625
                      
                      
                      
                      -Foreign
      currency hedging instruments (ii)
                      
                      
                      207,049
                      
                      
                      
                      (207,049
                      )
                      
                      
                      -Asset
      impairment under Canadian GAAP (ii)
                      
                      
                      391,686
                      
                      
                      
                      (22,333
                      )
                      
                      
                      369,353Asset
      impairment under US GAAP  (i, ii)
                      
                      
                      (354,274
                      )
                      
                      
                      397
                      
                      
                      
                      (353,877
                      )Reduction
      (increase) in future tax  (iii)
                      
                      
                      16,002
                      
                      
                      
                      (17,823
                      )
                      
                      
                      (1,821
                      )Net
      earnings (loss) in accordance with US GAAP
                      
                      
                      (491,174
                      )
                      
                      
                      18,489
                      
                      
                      
                      (472,685
                      )Earnings
      (loss) per share, basic and diluted
                      
                      $
                      (2.51
                      )
                      
                      $
                      0.10
                      
                      
                      $
                      (2.41
                      )








At
      December 31, 2008
                      (amounts
      in thousands of Canadian dollars)
                    
                    As
      previously
                      issued
      2008
                    
                    
                    Adjustment
                    
                    
                    Restated
                      2008Property,
      Plant & Equipment (i, ii)
                    
                    $
                    3,973,965
                    
                    
                    $
                    50,498
                    
                    
                    $
                    4,024,463Accumulated
      Depreciation (i)
                    
                    
                    (15,538
                    )
                    
                    
                    (1,447
                    )
                    
                    
                    (16,985
                    )Future
      income tax liability (asset) (i, ii)
                    
                    
                    (67,032
                    )
                    
                    
                    2,958
                    
                    
                    
                    (64,074
                    )Deficit  (i,
      ii, iii)
                    
                    
                    (512,409
                    )
                    
                    
                    45,913
                    
                    
                    
                    (466,496
                    )





NOTES:


i -
Adjustments to these accounts are a result of a correction discussed in note
14


ii
- Adjustment to these accounts are due to for the retroactive adoption  of
CICA Handbook Section 3064  “Goodwill and Intangible Assets”, see note
2p(iii)


iii
- Adjustment to this account is the net result of the adjustments discussed in i
and ii above





l)
            Recent
      Accounting Pronouncements




The
Company has assessed new and revised accounting pronouncements that have been
issued that are not yet effective:




In
May 2008, the FASB issued Statement of Financial Accounting Standards
No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This
standard became effective November 15, 2008 following the SEC’s approval of
the Public Company Accounting Oversight Board Auditing amendments to AU Section,
411 “The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles.” The statement is intended to improve financial reporting
by identifying a consistent hierarchy for selecting accounting principles to be
used in preparing financial statements that are presented in conformity with
U.S. GAAP. The adoption of this standard did not have a material impact on
OPTI’s Financial Statements.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 27 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


14. 
RECONCILATION TO U.S. GAAP (Revised and Restated)(CONTINUED)





As
of January 1, 2009, SFAS 141(R), “Business Combinations,” replaces SFAS
141. This revised standard requires assets and liabilities acquired in a
business combination, contingent consideration, and certain acquired
contingencies to be measured at their fair values as of the date of acquisition.
In addition, acquisition-related and restructuring costs are to be recognized
separately from the business combination. This new standard will only impact
acquisitions occurring on or after January 1, 2009





As
of January 1, 2009, SFAS No. 160, “Noncontrolling Interests in
Financial Statements, an Amendment of ARB No. 51” will come into effect.
This standard requires a noncontrolling interest in a subsidiary to be
classified as a separate component of equity. The standard also changes the way
the U.S. GAAP Statement of Earnings is presented by requiring net earnings to
include the amounts attributable to both the parent and the noncontrolling
interest and to disclose these respective amounts. The adoption of this standard
will not have any impact on OPTI’s Financial Statements.





As
of December 31, 2009, OPTI will be required to prospectively adopt the new
reserves requirements that arise from the completion of the SEC’s project, Modernization of Oil and Gas
Reporting. The new rules include provisions that permit the use of
new technologies to establish proved reserves if those technologies have been
demonstrated empirically to lead to reliable conclusions about reserves volumes.
Additionally, oil and gas reserves will be reported using an average price based
upon the prior 12-month period rather than year-end prices. The new
rules will affect the reserve estimate used in the calculation of DD&A
and the ceiling test for U.S. GAAP purposes. The Company is assessing the impact
these new rules will have on its Financial Statements








15. 
FAS 69 RESERVES DISCLOSURE (unaudited)


The
following oil and gas information is provided in accordance with the FASB
statement No. 69 Disclosures
about Oil and Gas Producing Activities.




These
rules restrict the measurement and evaluation of reserves and cash flow to those
activities associated with a stand-alone SAGD operation.  These rules also
do not permit recognition of resources. In order to satisfy these
requirements, amounts noted include estimated costs to purchase natural gas to
generate steam, costs to purchase diluent to transport raw bitumen and a sales
price based on the resulting blended barrel which has historically sold at a
price substantially lower than WTI .  These assumptions are not consistent
with the planned development of our reserves at the Long Lake Project.  The
Long Lake Project is an integrated project and includes facilities that are
expected to produce a synthetic gas which significantly reduces our need to
purchase natural gas and our expected primary sales product is primarily Premium
Sweet Crude (PSCTM) which is expected to sell at a price similar to WTI and does
not require diluent for transportation.  Our reserves are all located
in Canada.








NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 28 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


15. 
FAS 69 RESERVES DISCLOSURE (unaudited) (CONTINUED)




a)
            Reserve
      Quantity Information




Our
net proved reserves and changes in those reserves for our operations are
disclosed below. The net proved reserves represent management’s best estimate of
proved oil and natural gas reserves after royalties. Reserve estimates for each
property are prepared each year, and all reserves have been assessed by
independent qualified reserves consultants.




Estimates
of crude oil and natural gas proved reserves are determined through analysis of
geological and engineering data, and demonstrate reasonable certainty that they
are recoverable from known reservoirs under economic and operating conditions
that existed at year end.




Thousands
      of barrels
                          
                          BitumenDecember
      31, 2006 Closing / 2007 Opening Total Proved Reserve
    Balance
                          
                          
                          217,829Revisions
      of Previous Estimates of total proved reserves
                          
                          
                          17,525December
      31, 2007 Closing / 2008 Opening Total Proved Reserve
    Balance
                          
                          
                          235,354Extensions
                          
                          
                          9,661Revisions
      of Previous Estimates of total proved reserves
                          
                          
                          31,293Production
                          
                          
                          (1,439
                          )December
      31, 2008 Closing Total Proved Reserve Balance
                          
                          
                          274,869





Notes:


1.
            Represents
      bitumen reserves rather than upgraded synthetic crude oil reserves (PSCTM
      )


2.
            Proved
      reserves are the estimated quantities that geological and engineering data
      demonstrate with reasonable certainty can be recovered in future years
      from known reservoirs under existing economic and operating
      conditions.  Reserves are considered "proved" if they can be
      produced economically, as demonstrated by either actual production or
      conclusive formation testing.


3.
            Reserve
      quantities are shown prior to the 15% working interest sale to Nexen
      completed January 27, 2009.




b)
            Capitalized
      costs







Cdn$
      millions
                
                As
      at December
                  31,
      2008
                
                
                As
      at December
                  31,
      2007Proved
      Properties
                
                $
                1,074
                
                
                $
                828Unproved
      Properties
                
                
                352
                
                
                
                2581,426
                
                
                
                1,086Depreciation,
      depletion and amortization
                
                
                14
                
                
                
                -Net
      Capitalized Costs
                
                $
                1,412
                
                
                $
                1,086




NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 29 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


15. 
FAS 69 RESERVES DISCLOSURE (unaudited) (CONTINUED)




c)
            Costs
      incurred







Cdn$
      millions
                        
                        Years
      ended2008
                        
                        
                        2007Property
      Acquisition CostsProved
                        
                        $
                        -
                        
                        
                        $
                        -Unproved
                        
                        
                        -
                        
                        
                        
                        5Exploration
      costs
                        
                        
                        71
                        
                        
                        
                        55Development
      costs
                        
                        
                        268
                        
                        
                        
                        309Asset
      retirement costs
                        
                        
                        -
                        
                        
                        
                        1Total
      Costs Incurred
                        
                        $
                        339
                        
                        
                        $
                        370




d)
            Results
      of operations for oil and gas producing
  properties







Cdn$
      millions
                            
                            Years
      ended2008
                            
                            
                            2007RevenuesSales
                            
                            $
                            257
                            
                            
                            $
                            -Production
      costs
                            
                            
                            358
                            
                            
                            
                            -Depreciation,
      depletion and amortization
                            
                            
                            14372
                            
                            
                            
                            -Income
      tax expenses
                            
                            
                            -
                            
                            
                            
                            -Results
      of operations from producing activities
                            
                            $
                            (115
                            )
                            
                            $
                            -







e)
            Standardized
      Measure of Discounted Future Net Cash Flows and Changes
      Therein




In
calculating the standardized measure of discounted future net cash flows,
year-end constant prices and cost assumptions were applied to OPTI’s estimated
annual future production from proved reserves to determine cash
inflows.  Future production and development costs are based on
constant period end price assumptions and assume the continuation of existing
economic, operating and regulatory conditions.  Future income taxes
are calculated by applying statutory income tax rates to future pre-tax cash
flows after provision for the tax cost of the oil properties based upon existing
laws and regulations.  The discount was computed by application of a
10% discount factor to the future net cash flows.  The calculation of
the standardized measure of discounted future net cash flows is based upon the
discounted future net cash flows prepared by OPTI’s independent qualified
reserves evaluators in relation to the reserves they respectively
evaluated.






NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 30 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED





OPTI
Canada Inc.
 Notes
to Financial Statements
 Years
ended December 31, 2008 and 2007


15. 
FAS 69 RESERVES DISCLOSURE (unaudited) (CONTINUED)




OPTI
cautions that the discounted future net cash flows relating to proved reserves
are an indication of neither the fair market value of OPTI’s oil properties, nor
the future net cash flows expected to be generated from such
properties.  The discounted future net cash flows do not include the
fair market value of probable or possible oil reserves, nor is consideration
given to the effect of future changes in crude oil prices, development, asset
retirement and production costs and possible changes to tax and royalty
regulations.  In addition, no consideration for the benefit of our on
site Upgrader is included.  The prescribed discount rate of 10% may
not appropriately reflect future interest rates.




Cdn$
      millions
                        
                        Years
      ended2008
                        
                        
                        2007Future
      revenue net of royalties
                        
                        $
                        9,030
                        
                        
                        $
                        12,582Less
      future:Production
      costs
                        
                        
                        5,466
                        
                        
                        
                        4,666Development
      costs
                        
                        
                        1,662
                        
                        
                        
                        1,673Asset
      retirement obligation payments
                        
                        
                        36
                        
                        
                        
                        73Income
      taxes
                        
                        
                        27
                        
                        
                        
                        1,252Future
      net cash flow
                        
                        
                        1,839
                        
                        
                        
                        4,918Less
      effect of 10% annual discount
                        
                        
                        1,193
                        
                        
                        
                        2,803Discounted
      future net cash flow
                        
                        $
                        646
                        
                        
                        $
                        2,115








Cdn$
      millions
                      
                      2008
                      
                      
                      2007Discounted
      net cash flow - beginning of year
                      
                      $
                      2,115
                      
                      
                      $
                      991Changes
      due to prices
                      
                      
                      (1423
                      )
                      
                      
                      1,457Actual
      development costs during the period
                      
                      
                      268
                      
                      
                      
                      272Changes
      in future development costs
                      
                      
                      (300
                      )
                      
                      
                      (451
                      )Accretion
      of discount
                      
                      
                      253
                      
                      
                      
                      131Net
      changes in income taxes
                      
                      
                      415
                      
                      
                      
                      (98
                      )Changes
      resulting from changes to royalty regime
                      
                      
                      (221
                      )
                      
                      
                      252Changes
      resulting from technical reserves revisions
                      
                      
                      290
                      
                      
                      
                      71Changes
      resulting from effects of production timing
                      
                      
                      (250
                      )
                      
                      
                      (301
                      )Changes
      from production costs
                      
                      
                      (501
                      )
                      
                      
                      (209
                      )Discounted
      net cash flow - beginning of year
                      
                      $
                      646
                      
                      
                      $
                      2,115










NOTES
TO FINANCIAL STATEMENTS
 OPTI
CANADA INC. – 31 – 2008 ANNUAL FINANCIAL STATEMENTS
  TABULAR
      AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS
  NOTED




Certifications
and Disclosure Regarding Controls and
Procedures.


Certifications.  See Exhibits 99.1, 99.2. 99.3, 99.4, 99.5
and 99.6 to this Amendment No. 1 to the Annual Report on Form 40-F.


Identification of the Audit
Committee.




The
registrant has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act.  The members of
the audit committee are:  Charles Dunlap, Bruce Waterman and Edythe
Marcoux.


Audit Committee
Financial Expert.




The registrant’s
board of directors has determined that Mr. Bruce Waterman, a member of the
registrant’s audit committee, qualifies as an “audit committee financial expert”
(as such term is defined in Form 40-F), and is “independent” as that term is
defined in the rules of the New York Stock Exchange.




40 -
F2





UNDERTAKING AND
CONSENT TO SERVICE OF
PROCESS


A.           
Undertaking.


The
registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.


B.           
Consent to Service of Process.




The registrant has
previously filed a Form F-X in connection with the class of securities in
relation to which the obligation to file this report arises.


Any
change to the name or address of the agent for service of process of the
registrant shall be communicated promptly to the Commission by an amendment to
the Form F-X referencing the file number of the relevant registration
statement.


SIGNATURES




Pursuant to
the requirements of the Exchange Act, the registrant certifies that it meets all
of the requirements for filing on Form 40-F and has duly caused this annual
report to be signed on its behalf by the undersigned, thereto duly authorized,
on June 3, 2009.




OPTI Canada
Inc.




By: /s/ Joe
Bradford Name: Joe
BradfordTitle:  Vice President, Legal & Administration












40 - F3