Document:

Exhibit 10.1
                  Digital Lifestyles Group Inc.

                    727 Brea Canyon Road, #6
                    Walnut, California 91789
                          909.869.0595

                       September 29, 2005

Andy Teng

Re:  Outstanding  amounts owed to Andy Teng ("Teng")  by  Digital
     Lifestyles Group Inc. ("Digital")

Dear Andy:

     On behalf of the Board of Directors of Digital, I am writing
this  letter as an offer of settlement on any and all outstanding
amounts owed by Digital to you (in the aggregate principal amount
of  $_,000,000 (the "Debt")) as of the date hereof  (the  "Letter
Agreement").

     In  connection  with  resolving  this  issue,  I  hereby  am
authorized to offer to you the following:

1.  For satisfaction of $_________ of the Debt, Digital will pay
to you the amount of $_______ (the "Cash Payment").

Said payment shall be made by check or wire transfer of immediate-
ly  available funds within ____ days after your acceptance of this
Letter Agreement.

2.  For satisfaction of the remaining  $1,000,000 of the Debt, you
agree to accept in lieu of payment 1,000,000 shares ofcommon stock
of Digital, par value $0.03 per share, which shall be evidenced by
a stock certificate issued in your name with a  purchase price per
share of $1.00 (the "Stock Payment").You agree and understand that
such shares issued in satisfaction of  the Stock Payment are being
acquired for your own account as an investment and not with a view
to distribution thereof and the stockissued hereunder has not been
registered under the Securities  Act  or any state securities laws
and no transferof the shares shall be permitted unless accompanied
by an opinion of counsel reasonably  satisfactory to  Digital that
an exemption from registration of such shares under the Securities
Act is available for such transfer,    except that no such opinion
shall be required after the  registration for resale of the shares
has become effective. Stop transfer instructions have been or will
be  imposed with respect to the shares so as to restrict resale or
other transfer thereof.   The certificates representing the shares
shall  bear  a restrictive  legend substantially identical to that
set forth as follows:

<PAGE 1>

                    "THE    SECURITIES   REPRESENTED   BY    THIS
                    CERTIFICATE  HAVE  NOT BEEN REGISTERED  UNDER
                    THE  SECURITIES ACT OF 1933, AS  AMENDED,  OR
                    APPLICABLE   STATE  SECURITIES   LAWS.    THE
                    SECURITIES  HAVE BEEN ACQUIRED FOR INVESTMENT
                    AND  MAY  NOT  BE  OFFERED  FOR  SALE,  SOLD,
                    TRANSFERRED OR ASSIGNED IN THE ABSENCE OF  AN
                    EFFECTIVE  REGISTRATION  STATEMENT  FOR   THE
                    SECURITIES UNDER THE SECURITIES ACT OF  1933,
                    AS  AMENDED,  OR APPLICABLE STATE  SECURITIES
                    LAWS,  OR  AN  OPINION  OF  COUNSEL,   IN   A
                    GENERALLY  ACCEPTABLE FORM, THAT REGISTRATION
                    IS  NOT REQUIRED UNDER SAID ACT OR APPLICABLE
                    STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
                    TO RULE 144 UNDER SAID ACT."

     Upon your receipt of the Cash Payment and the Stock Payment,
you  agree  that  both  represents full  and  final  payment  and
satisfaction of the Debt owed to you as of the date hereof.

     Upon  your acceptance of this Letter Agreement, you and your
representatives,  agents,  consultants,  shareholder,   officers,
directors,  employees,  heirs,  devisees,  legatees,  affiliates,
successors  and  assigns  hereby fully and  forever  release  and
discharge  Digital  and  all  of  its  representatives,   agents,
shareholders, consultants, officers, directors, employees, heirs,
devisees,  legatees, parents, affiliates, successors and  assigns
from  any and all claims, demands, losses, costs, damages, rights
and   causes   of  action,  debts,  liabilities  and  obligations
whatsoever, at law or in equity, which either party ever had, now
has  or  hereafter can, shall or may have for, upon, or by reason
of any matter, cause or thing, whether or not previously asserted
or  assertable,  known or unknown relating to the  Debt  owed  by
Digital  to  you  as  of the date hereof, other  than  claims  to
enforce this Letter Agreement, if any.

     This Letter Agreement may be signed in counterparts and when
executed   by   all  parties  shall  constitute  one   integrated
agreement.    A   party's   signature  delivered   by   facsimile
transmission shall be deemed an original and is binding  on  such
party.  Each of the signatories hereto represents and warrants to
be  duly  authorized to fully and completely resolve the disputes
described in this Letter Agreement, make the release contained in
this Letter Agreement, and to bind the party on whose behalf  the
signatory has agreed to act to the terms and conditions contained
in  this  Letter  Agreement.   This  Letter  Agreement  shall  be
construed  and  interpreted in accordance with the  laws  of  the
State of California without regard to any conflicts of law.

     If  you  agree to this Letter Agreement, please  acknowledge
and  sign  below in duplicate.  Please remit one copy to  me  and
retain  the other copy for your records.  I look forward to  your
prompt reply.

                         Sincerely,

                         /s/ Jay Furrow

                         Jay Furrow
                         Director

Acknowledged and Agreed to this the ____ day of ___________,
2005:

Andy Teng

/s/ Andy Teng
Name: Andy Teng

<END>EX-4.9:

 

Exhibit 4.9

CONFORMED COPY

NEXEN INC.

Sale of

Common Shares

by the Selling Shareholders

Underwriting Agreement

September 23, 2005

TD Securities Inc.

800 Home Oil Tower

324-8th Avenue S.W.

Calgary, Alberta

T2P 2Z2

Ladies and Gentlemen:

          The persons named in Schedule II hereto (the “Selling Shareholders”) propose to sell to you
(the “Underwriter”), as underwriter, 7,500,000 common shares of Nexen Inc. (the “Company”) (said
shares to be sold by the Selling Shareholders collectively being hereinafter called the
“Underwritten Securities”). The Selling Shareholders also propose to grant to the Underwriter an
option to purchase up to 1,000,000 additional Common Shares to cover over-allotments (the “Option
Securities”; the Option Securities, together with the Underwritten Securities, being hereinafter
called the “Securities”). To the extent that there is not more than one Selling Shareholder named
in Schedule II, the term Selling Shareholders shall mean either the singular or plural. The use of
the neuter in this Agreement shall include the feminine and masculine wherever appropriate.

          The Company has, under the applicable laws of the Qualifying Provinces (as hereinafter
defined), prepared and filed (or will file in the case of the French language prospectus) a
preliminary short form prospectus of the Company relating to the Securities, including the
documents incorporated by reference in the English and French languages, as applicable (such
prospectus, with the Amended Canadian Preliminary Prospectus (as defined below), a “Canadian
Preliminary Prospectus”). In addition, the Company has filed pursuant to the multi-jurisdictional
disclosure system with the United States Securities and Exchange Commission (the “Commission”) a
registration statement on Form F-10 (“Form F-10”) under the Securities Act of 1933, as amended (the
“Securities Act”) covering the registration of the Securities under the Securities Act, and the
applicable rules and regulations thereunder adopted by the Commission, including the Canadian
Preliminary Prospectus in the English language (with such deletions therefrom

 

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and additions thereto as are permitted or required by Form F-10 and the applicable rules and
regulations of the Commission) (each such prospectus relating to the Securities used before such
registration statement becomes effective, and each such prospectus relating to the Securities
captioned “Subject to Completion” that is used after such effectiveness, is hereby called, together
with the documents incorporated by reference therein, a “Preliminary Prospectus”). Such
registration statement on Form F-10, including the exhibits thereto and the documents incorporated
by reference therein, as amended at the time it becomes effective, is herein called the
“Registration Statement”.

          The Company shall, under the applicable laws of the Qualifying Provinces, as soon as possible
and in any event by 3:00 p.m. (Toronto time) on September 23, 2005, prepare and file an amended
Canadian Preliminary Prospectus (the “Amended Canadian Preliminary Prospectus”), and as soon as
possible obtain an MRRS Decision Document dated the date of filing issued by the Reviewing
Authority (as hereinafter defined), in its capacity as principal regulator pursuant to National
Policy 43-201 Mutual Reliance Review System for Prospectuses and Annual Information Forms (“NP
43-201”) evidencing that a receipt has been issued by the securities regulatory authorities (the
“Qualifying Authorities”) in each province of Canada (the “Qualifying Provinces”) in respect of, in
each case, a Canadian Preliminary Prospectus, and other related documents in respect of the
proposed distribution of the Securities. The Company has identified the Alberta Securities
Commission (the “Reviewing Authority”) as its principal regulator in respect of the proposed
distribution of the Securities. The Company shall also, immediately after the filing of the
Amended Canadian Preliminary Prospectus, but in any event no later than 3:00 p.m. (Toronto time) on
September 23, 2005, prepare and file pursuant to the multi-jurisdictional disclosure system with
the Commission an amendment to the Registration Statement, including the Amended Canadian
Preliminary Prospectus referred to in this paragraph in the English language (with such deletions
therefrom and additions thereto as are permitted or required by Form F-10 and the applicable rules
and regulations of the Commission).

          The Company shall, under the applicable laws of the Qualifying Provinces, (i) as soon as
possible after any comments of the Qualifying Authorities have been satisfied and in any event by
6:00 p.m. (Toronto time) on October 5, 2005, prepare and file, and (ii) as soon as possible and in
any event by 6:00 p.m. (Toronto time) on October 6, 2005, obtain an MRRS Decision Document dated
the date of filing issued by the Reviewing Authority, in its capacity as principal regulator
pursuant to NP 43-201, evidencing that a receipt has been issued by the Qualifying Authorities in
each Qualifying Province in respect of, in each case, a final short form prospectus of the Company
relating to the Securities, including the documents incorporated by reference in the English and
French languages, as applicable (the “Canadian Prospectus”), and other related documents in respect
of the proposed distribution of the Securities. The Company shall also, immediately after the
filing of the Canadian Prospectus but no later than 6:00 p.m. (Toronto time) on October 6, 2005,
prepare and file pursuant to the multi-jurisdictional disclosure system with the Commission, an
amendment to the Registration Statement, including the Canadian Prospectus in the English language
(with such

 

3

deletions therefrom and additions thereto as are permitted or required by Form F-10 and the
applicable rules and regulations of the Commission; such prospectus, including such additions and
deletions and the documents incorporated by reference therein, the “Prospectus”) and shall use its
best efforts to cause the Registration Statement to become effective under the Securities Act upon
the filing of the amendment to the Registration Statement containing the Prospectus.

          The Company has prepared and filed with the Commission an Appointment of Agent for Service of
Process and Undertaking for the Company on Form F-X in conjunction with the initial filing of the
Registration Statement (the “Form F-X”).

          Any reference herein to the Canadian Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Canadian Securities Laws (as hereinafter
defined) which were filed under Canadian Securities Laws on or before the date of such prospectus;
any reference herein to the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference therein pursuant to
Item 4 of Form F-10 which were filed under the Exchange Act (as hereinafter defined) on or before
the effective date of such Registration Statement or the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference herein to the Prospectuses shall be deemed to refer
to and include each of the Canadian Preliminary Prospectus, the Canadian Prospectus, the
Preliminary Prospectus and the Prospectus, and any reference herein to the terms “amend”,
“amendment” or “supplement” with respect to any of the Prospectuses shall be deemed to refer to and
include all documents deemed to be incorporated by reference therein, including any documents filed
under Canadian Securities Laws or the Exchange Act that are filed after the date of the
Prospectuses or after their respect effective time deemed to be incorporated therein by reference.

          1. Representations and Warranties.

          (i) The Company represents and warrants to, and agrees with, the Underwriter and the Selling
Shareholder that:

     (a) The Company meets the requirements of the securities legislation and the rules and
regulations adopted thereunder, as amended, in each of the Qualifying Provinces and the
published policy statements of the Qualifying Authorities and, as applicable, of the
Canadian Securities Administrators, including the general eligibility requirements for use
of a short form prospectus under National Instrument 44-101 (collectively, the “Canadian
Securities Laws”) and for use of Form F-10 under the Securities Act. At the time the
Registration Statement becomes effective, an MRRS Decision Document will have been obtained
from the Reviewing Authority evidencing the issuance by the Qualifying Authorities of a
receipt for the Canadian Preliminary Prospectus and no order suspending the distribution of
the Securities will have been issued by any Qualifying Authority, any stock exchange in
Canada or any court and no proceedings for that purpose will have been instituted or will
be pending or, to the

 

4

knowledge of the Company, will be contemplated by any Qualifying Authority, and any
request on the part of any Qualifying Authority for additional information will have been
complied with. As of the time that the Prospectus is first filed with the Commission, the
Registration Statement and, as of the time of filing thereof, any post-effective amendment
thereto, each in the form delivered or to be delivered to the Underwriter, will have become
effective under the Securities Act in such form; as of the Closing Time, no stop order
suspending the effectiveness of the Registration Statement will have been issued under the
Securities Act and no proceedings for that purpose will have been instituted or will be
pending, or to the knowledge of the Company, will be contemplated by the Commission; and
any request on the part of the Commission for additional information, if any, will have
been complied with.

     (b) The Preliminary Prospectus consists of, and the Prospectus will consist of, the
Canadian Preliminary Prospectus and the Canadian Prospectus, respectively, except in each
case for modifications required or permitted by Form F-10 and the applicable rules and
regulations of the Commission.

     (c) As of the respective dates of filing thereof, the only documents incorporated or
deemed to be incorporated by reference in the Prospectuses or the Registration Statement,
are or will be the documents listed under the caption “Documents Incorporated By Reference”
in the Prospectuses.

     (d) The documents incorporated or to be incorporated by reference in the Registration
Statement and the Prospectuses, when they were filed with the Qualifying Authorities, were
prepared in accordance, in all material respects, with the disclosure requirements of the
Qualifying Authorities as interpreted and applied by the Qualifying Authorities, and none
of such documents contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectuses or any further
amendment or supplement thereto, when such documents are filed with the Qualifying
Authorities, will comply, in all material respects with the applicable requirements of the
Canadian Securities Laws as interpreted and applied by the Qualifying Authorities, and will
not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading;
in the case of documents incorporated by reference in the Registration Statement which have
been or hereafter are filed with the Commission pursuant to the Exchange Act, such
documents complied and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder (the “Exchange Act
Regulations”), and none of such documents contained or will contain an untrue statement of
a material fact or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.

 

5

     (e) No order preventing or suspending the use of the Preliminary Prospectus or the
Canadian Preliminary Prospectus has been issued by the Commission or a Qualifying Authority
and the Preliminary Prospectus and the Canadian Preliminary Prospectus did not and will not
contain, as of their respective dates, an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by the
Underwriter expressly for use in the Preliminary Prospectus and Canadian Preliminary
Prospectus.

     (f) Each of the Canadian Prospectus and any amendments or supplements thereto will
comply, in all material respects, with the applicable requirements of the Qualifying
Authorities as interpreted and applied by the Qualifying Authorities, including the
Canadian Securities Laws, and the Prospectus and any amendments or supplements thereto will
comply, in all material respects, with the applicable requirements of the Securities Act
and the rules and regulations of the Commission thereunder (the “Securities Act
Regulations”). The Prospectus and any amendments or supplements and the Canadian
Prospectus and any amendments and supplements, will constitute full, true and plain
disclosure of all material facts relating to the Securities, and the Prospectus and any
amendments or supplements and the Canadian Prospectus and any amendments and supplements,
do not and will not, as of their respective dates, and will not, as of the Closing Time,
contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by the
Underwriter expressly for use in the Canadian Prospectus.

     (g) Each of the Canadian Preliminary Prospectus and any amendments or supplements
thereto will comply, in all material respects, with the applicable requirements of the
Qualifying Authorities as interpreted and applied by the Qualifying Authorities, including
the Canadian Securities Laws, and the Preliminary Prospectus and any amendments or
supplements thereto will comply, in all material respects, with the applicable requirements
of the Securities Act and the Securities Act Regulations. The Preliminary Prospectus and
any amendments or supplements, the Canadian Preliminary Prospectus and any amendments and
supplements, will constitute full, true and plain disclosure of all material facts relating
to the Securities, and the Preliminary Prospectus and any amendments or supplements, the
Canadian Preliminary Prospectus and any amendments and supplements, do not and will not, as
of their respective dates, and will not, as of the Closing Time, contain an untrue
statement of a material fact or omit to state a

 

6

material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by the Underwriter expressly for use in the Preliminary
Prospectus.

     (h) The Registration Statement and the Form F-X and any amendments or supplements to
the Registration Statement and the Form F-X comply and will comply, in all material
respects, with the applicable requirements of the Securities Act and the Securities Act
Regulations, and do not and will not, as of the date on which the Registration Statement
becomes effective and as of the effective date of any post-effective amendment thereto,
contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in writing to
the Company by the Underwriter expressly for use in the Registration Statement.

     (i) None of the Company or any of the Company’s subsidiaries listed on Schedule III
hereto (the “Material Subsidiaries”) has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the Prospectuses, any
material loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or contemplated in the
Prospectuses; and, since the respective dates as of which information is given in the
Registration Statement and the Prospectuses, there has not been any change in the capital
stock or any increase in the long-term debt of the Company or any of its subsidiaries
(except the issuance of shares of capital stock upon the reinvestment of dividends in
compliance with the Company’s dividend reinvestment plan and upon the exercise of options
held by directors and employees of the Company pursuant to the Company’s stock option plans
described in the Prospectuses), nor has there been any material adverse change, or any
development involving a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders’ equity or results of operations of
the Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectuses. Since the respective dates as of which information is
given in the Registration Statement and the Prospectuses, there have been no transactions
entered into by the Company or any of its subsidiaries, other than in the ordinary course
of business, which are material to the Company and its subsidiaries considered as one
enterprise. The respective jurisdictions of organization of the Material Subsidiaries are
set forth in Schedule III hereto. Schedule III hereto also accurately sets forth whether
each Material Subsidiary is a corporation, limited partnership or general partnership.

 

7

     (j) With the exception of defects in title that do not in the aggregate materially and
adversely affect the consolidated operations of the Company and its subsidiaries, taken as
a whole, each of the Company and its subsidiaries has good title to its real and personal
property, with the Company and its Material Subsidiaries holding such title free of any
Security Interest other than Permitted Encumbrances, as those terms “Security Interest” and
“Permitted Encumbrances” are defined in the Indenture dated as of April 28, 1998, as
supplemented by the Fifth Supplemental Indenture thereto dated as of March 10, 2005, each
between the Company and CIBC Mellon Trust Company, as trustee (the “Indenture”).

     (k) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the Canada Business Corporations Act (the “CBCA”), with all requisite
corporate power and authority to own and lease its properties and conduct its business as
described in the Prospectuses, and has been duly qualified to carry on its business and is
in good standing under the laws of each other jurisdiction in which it carries on a
material portion of its business or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and each Material
Subsidiary is either a corporation or a partnership (for purposes of this Agreement, the
term “partnership” includes both general partnerships and limited partnerships) and, if a
corporation, has been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and, if a partnership, has
been duly formed and is validly existing as a partnership in good standing (if applicable)
under the laws of the jurisdiction of its formation; and each Material Subsidiary has been
duly qualified to carry on its business and is in good standing, if applicable, under the
laws of each other jurisdiction in which it carries on a material portion of its business
or is subject to no material liability or disability by reason of the failure to be so
qualified in any such jurisdiction. Without limitation to the foregoing, no Material
Subsidiary which is organized under the laws of Canada or any other province thereof
carries on a material portion of its business in the United States or any State thereof or
is subject to any material liability or disability by reason of the failure to be duly
qualified to carry on its business or in good standing in the United States or any State
thereof, and no Material Subsidiary which is organized under the laws of any State of the
United States carries on a material portion of its business in Canada or any province
thereof or is subject to any material liability or disability by reason of the failure to
be duly qualified to carry on its business or in good standing in Canada or any province
thereof; and the only States of the United States in which any of the Material Subsidiaries
carries on a material portion of its business are the States of Texas and Louisiana and the
offshore waters of the States of Texas and Louisiana. As used in this subclause, all
references to “provinces” of Canada shall include both provinces and territories.

     (l) The Company has an authorized capitalization as set forth in the Prospectuses, and
all of the issued shares of the Company, including the

 

8

Securities, have been duly and validly authorized and issued and are fully paid and
non-assessable; all of the issued shares of each Material Subsidiary that is a corporation
have been duly and validly authorized and issued and are fully paid and non-assessable and
such shares are owned, directly or indirectly, by the Company, free and clear of all liens,
encumbrances, equities or claims; except as set forth in Schedule III hereto, all of the
issued and outstanding partnership interests of each Material Subsidiary that is a
partnership have been duly and validly created and are owned, directly or indirectly, by
the Company free and clear of all liens, encumbrances, equities or claims.

     (m) The sale of the Securities, and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions herein contemplated
do not and will not conflict with or result in a breach or violation of any of the terms or
provisions of, result in the imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback agreement, loan
agreement or other similar financing agreement or instrument or other agreement or
instrument (or any guarantee of any of the foregoing) to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is subject
which, individually or in the aggregate, would be reasonably expected to have a material
adverse effect on the current or future consolidated financial position, shareholders’
equity or results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business, nor does or
will such action result in any violation of the provisions of the articles or by-laws of
the Company or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body in Canada or the
United States is required to be obtained by the Company for the sale of the Securities or
the consummation of the transactions contemplated by this Agreement, except such as have
been, or will have been prior to Closing Time, obtained under the Canadian Securities Laws
and the Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Underwriter.

     (n) Neither the Company nor any of its subsidiaries is in (i) violation of its
articles or by-laws or other constating or organizational documents, (ii) violation of any
statute, law, rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator, or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as applicable,
or (iii) default in the performance or observance of any

 

9

obligation, agreement, covenant or condition contained in (A) any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it or its properties may be bound which violation or default, as the case
may be, individually or in the aggregate, would be reasonably expected to have a material
adverse effect on the current or future consolidated financial position, shareholders’
equity or results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business, or (B),
without limitation to the provisions of clause (A) of this sentence, the Agreement for
Petroleum Exploration and Production (including any amendments or supplements thereto and
any ancillary agreements or instruments) regarding the Masila Block Development Project in
Yemen. The only subsidiary of the Company which is a party to the agreement referred to in
clause (B) of the preceding sentence is CNPY (as defined in Schedule III hereto).

     (o) The statements and opinions set forth in (A) the Prospectuses under the captions
“Enforceability of Civil Liabilities”, “Description of Share Capital” and “Certain Income
Tax Considerations” (and under any similar captions), (B) Part II of the Registration
Statement under the caption “Indemnification”, (C) the Company’s most recent Annual Report
on Form 10-K under the captions “Business and Properties—Additional Factors Affecting
Business—Government Regulations”, “Business and Properties—Additional Factors Affecting
Business—Environmental Regulations” and (D) in the Company’s most recent Quarterly Report
on Form 10-Q under the caption “Legal Proceedings” (and under any similar captions), in
each case insofar as such statements constitute summaries of legal matters, legal
proceedings, laws or regulations (or the interpretation or administration of laws or
regulations by any relevant government authorities), securities or other instruments and
agreements, are (in the case of the statements under the captions referred to in clauses
(A) and (B) above), and were on the date such Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as applicable, was filed with the Commission (in the case of the
statements under the captions referred to in clause (C) and (D) above), accurate and fair
in all material respects.

     (p) Other than as set forth in the Prospectuses, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually or in the aggregate
(i) have a material adverse effect on the performance of this Agreement or the consummation
of any of the transactions contemplated hereby or (ii) have a material adverse effect on
the current or future consolidated financial position, shareholders’ equity or results of
operations of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business; and, to

 

10

the best of the Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.

     (q) The Company is not, and after giving effect to the offering and the sale of the
Securities will not be, an “investment company” or an entity “controlled” by an “investment
company”, as such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”), or required to be registered as an investment company under the
Investment Company Act in order to conduct its business as is presently conducted or
proposed to be conducted as described in the Prospectus or to consummate the transactions
contemplated by this Agreement.

     (r) The Company and its subsidiaries (i) are in compliance with any and all applicable
laws, regulations and other governmental requirements relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a
whole.

     (s) In the ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and properties of the Company
and its subsidiaries, in the course of which it identifies and evaluates associated costs
and liabilities (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities will not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a
whole.

     (t) Intentionally omitted.

     (u) Intentionally omitted.

     (v) Intentionally omitted.

     (w) This Agreement has been duly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable against it
in accordance with its terms, except as

 

11

enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and except as
limited by the application of equitable principles when equitable remedies are sought and
subject to the fact that rights of indemnity and contribution may be limited by applicable
law.

     (x) The financial statements included and incorporated by reference in the
Registration Statement and the Prospectuses, together in each case with the related
schedules and notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the results of operations,
shareholders’ equity and cash flows of the Company and its consolidated subsidiaries for
the periods specified; said financial statements comply as to form with the applicable
accounting requirements of the Canadian Securities Laws and have been prepared in
conformity with generally accepted accounting principles in Canada applied on a consistent
basis throughout the periods involved (except as otherwise noted therein) and have been
reconciled to generally accepted accounting principles in the United States in accordance
with Item 18 of Form 20-F under the Exchange Act. The supporting schedules, if any,
included or incorporated by reference in the Registration Statement and the Prospectuses
present fairly in accordance with generally accepted accounting principles in Canada,
applied on a consistent basis throughout the periods involved (except as otherwise noted
therein), the information required to be stated therein and comply as to form with the
applicable accounting requirements of the Canadian Securities Laws. The pro forma
financial statements and related notes thereto included or incorporated by reference in the
Registration Statement and the Prospectuses present fairly the information shown therein,
have been prepared in accordance with the applicable requirements of the Canadian
Securities Laws with respect to pro forma financial statements and have been prepared in
accordance with the Commission’s rules and guidelines, if applicable, with respect to pro
forma financial statements, and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and circumstances referred to
therein.

     (y) The Company and its subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, “Governmental Licenses”) issued by
appropriate federal, state, local and foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to possess any such
Governmental Licenses would not, singly or in the aggregate, have a material adverse effect
on the current or future consolidated financial position, shareholders’ equity or results
of operations of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business; the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the

 

12

aggregate, have a material adverse effect on the current or future consolidated
financial position, shareholders’ equity or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of any such Governmental Licenses or the failure of any
such Governmental Licenses to be in full force and effect would not have a material adverse
effect on the current or future consolidated financial position, shareholders’ equity or
results of operations of the Company and its subsidiaries; and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses, which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, would have a material adverse
effect on the current or future consolidated financial position, shareholders’ equity or
results of operations of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business.

     (z) There are no contracts, documents or other materials which are required to be
described or referred to in the Registration Statement, the Prospectuses or the documents
incorporated by reference therein, or to be filed as exhibits to the Registration
Statement, which have not been so described, referred to or filed as required.

     (aa) The information set forth or incorporated by reference in the Prospectuses
relating to the estimates by the Company of the proven oil and gas reserves as at the dates
specified have been reviewed and verified by the Company, and the reserve information has
been prepared in accordance with the U.S. Financial Accounting Standards Board Statement
No, 69 “Disclosure about Oil and Gas Producing Activities”.

     (bb) There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply with any provision
applicable to the Company of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes Oxley Act”), including Section 402
related to loans and Sections 302 and 906 related to certifications.

     (cc) Deloitte & Touche LLP, who have certified certain financial statements of the
Company and its consolidated subsidiaries and delivered their report with respect to the
audited consolidated financial statements and schedules included in the Prospectuses as
described in the Prospectuses, are independent public accountants with respect to the
Company within the meaning of the Securities Act and the applicable published rules and
regulations thereunder and of the Canadian Securities Laws and the CBCA.

 

13

     (dd) PricewaterhouseCoopers LLP, who have certified certain financial statements of
EnCana (U.K.) Limited and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectuses as described in the
Prospectuses, were, for the period between January 1, 2004 and November 30, 2004 and during
the periods covered by their report, independent public accountants with respect to EnCana
(U.K.) Limited within the meaning of the Securities Act and the applicable published rules
and regulations thereunder and of the Canadian Securities Laws.

     (ee) No labor problem or dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent that could have a material adverse effect
on the current or future consolidated financial position, shareholders’ equity or results
of operations of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses.

     (ff) The Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

     (gg) The Company has not taken, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.

     (hh) Other than the Material Subsidiaries listed in Schedule III hereto, the Company
has no significant subsidiaries as defined by Rule 1-02 of Regulation S-X.

     (ii) Any certificate signed by any officer of the Company and delivered to the
Underwriter or any Selling Shareholder in connection with the offering of the Securities
shall be deemed a representation and warranty by the Company, as to matters covered
thereby, to the Underwriter or the Selling Shareholder, as the case may be.

     (jj) The Company is a “reporting issuer” or has equivalent status in each of the
Qualifying Provinces within the meaning of the securities laws of such

 

14

provinces and the Company is not in default of any material requirement of the
Canadian Securities Laws.

     (kk) There has not been any reportable disagreement (within the meaning of National
Instrument 51-102 Continuous Disclosure Obligations of the Canadian Securities
Administrators) with the auditors of the Company since the implementation of that
Instrument.

     (ll) As of the date of this Agreement, the Company has, and as of the Closing Time the
Company will have, outstanding unsecured non-convertible debt with a term of issue of at
least four years rated by a nationally recognized statistical rating organization in one of
its four highest generic rating categories.

     (mm) CIBC Mellon Trust Company at its principal offices in the cities of Calgary,
Alberta and Toronto, Ontario has been duly appointed as the registrar and transfer agent in
respect of the Common Shares of the Company.

     (nn) No holders of securities of the Company other than the Selling Shareholders have
rights to the registration of such securities under the Registration Statement.

     (ii) Each Selling Shareholder represents and warrants to, and agrees with, the Underwriter and
the Company that:

     (a) It is duly incorporated and organized and is validly existing under the laws of
the Province of Ontario and has all requisite corporate power and authority to own or lease
its properties and assets, to carry on its business and to sell and deliver the Securities
to be sold by it hereunder.

     (b) It is not selling the Securities to be sold by it hereunder based on information
that it holds that has not otherwise been made publicly available, which, if such
information were made publicly available, could reasonably have a material impact on the
price or value of the Securities.

     (c) It has the corporate power and capacity to execute, deliver and perform its
obligations under this Agreement. This Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding obligation of such Selling
Shareholder enforceable against it in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and except as limited by the application
of equitable principles when equitable remedies are sought and subject to the fact that
rights of indemnity and contribution may be limited by applicable law.

     (d) Neither the sale or delivery of the Securities nor the fulfillment of the terms
hereof will (i) conflict with or result in a breach or violation of any terms or

 

15

provisions of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, (ii) result in any violation of
its articles, by-laws or other constating documents, (iii) contravene any statute or any
order, rule or regulation of any governmental agency having jurisdiction over it; and no
Governmental Authorization of or with any such governmental agency is required for the sale
of the Securities or any of the other transactions contemplated by this Agreement, except
for the filing of the Prospectuses in respect of the Securities under Canadian Securities
Laws, the registration under the Securities Act of the Securities and such governmental
authorizations as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Underwriter, except to the
extent, in each case, that such violation or breach would not prevent it from completing
the sale and delivery of the Securities as contemplated by this Agreement.

     (e) To the extent Canadian law is applicable, (A) it, directly or indirectly, has, and
at the Closing Time, will directly have, valid marketable title to a number of common
shares of the Company equivalent to the number of Securities to be sold hereunder by it,
free and clear of any hypothec, lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction on transfer of any kind other than arising pursuant
to this Agreement; (B) it has the full right, power and authority to sell, assign and
transfer a number of common shares of the Company equivalent to the number of Securities to
be sold hereunder by it to the Underwriter; and (C) upon the delivery of the Securities,
the holders thereof will obtain good and marketable title to such Securities, free and
clear of any hypothec, lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction on transfer of any kind.

     (f) Neither it nor any of its subsidiaries has taken, directly or indirectly, any
action which was designed to or which has constituted or which might reasonably be expected
to cause or result in stabilization or manipulation of the price of any security of the
Company or, except as permitted by this Agreement, facilitate the sale or resale of the
Securities.

     (g) The information contained in the Prospectuses (i) under the caption “Selling
Shareholder”, (ii) in the second clause of the third sentence of the eighth paragraph under
the caption “Plan of Distribution”, (iii) with respect to the Selling Shareholder, in the
seventh paragraph under the caption “Plan of Distribution” and (iv) with respect to the
Selling Shareholder, in the third, fourth and fifth sentences of the ninth paragraph of the
cover page (collectively, the “Selling Shareholder Information”), on its date was and at
the Closing Time will be true and accurate in all material respects.

     (h) Intentionally omitted.

 

16

     (i) Intentionally omitted.

     (j) Intentionally omitted.

     (k) Any certificate signed by any officer of it and delivered to the Underwriter in
connection with the offering of the Securities shall be deemed a representation and
warranty by it, as to matters covered thereby.

     (l) To the extent New York law is applicable, it is the record and beneficial owner of
the Securities to be sold by it hereunder free and clear of all liens, encumbrances,
equities or claims and has duly endorsed such Securities in blank, and, assuming that the
Underwriter acquires its interest in the Securities it has purchased from such Selling
Shareholder without notice of any adverse claim (within the meaning of Section 8-105 of the
New York Uniform Commercial Code (“UCC”)), the Underwriter that has purchased such
Securities delivered at the Closing Time to The Depository Trust Company or other
securities intermediary whose “securities intermediary” jurisdiction (within the meaning of
Section 9-305 of the UCC) is New York, by making payment therefor as provided herein, and
that has had such Securities credited to the securities account or accounts of the
Underwriter maintained with The Depository Trust Company or such other securities
intermediary whose “securities intermediary” jurisdiction (within the meaning of Section
9-305 of the UCC) is New York, will have acquired a security entitlement (within the
meaning of Section 8-102(a)(17) of the UCC) to such Securities purchased by the
Underwriter, and no action based on an adverse claim (within the meaning of Section 8-105
of the UCC) may be asserted against the Underwriter with respect to such Securities.

     (m) Other than as contemplated by this Agreement, there is no broker, finder, agent or
other party that is entitled to receive from it any brokerage or finder’s fee or other fee
or commission as a result of any of the transactions contemplated by this Agreement, and in
the event that any such person acting for and on behalf of or representing it would be
entitled to receive any such fee from the Underwriter by operation of law, such Selling
Shareholder agrees to indemnify and hold harmless the Underwriter from such fee and as well
as from any costs and expenses reasonably incurred in respect thereof.

 

17

          2. Purchase and Sale. (a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, each of the Selling Shareholders agrees to
sell such number of shares opposite such Selling Shareholder’s name in Schedule II hereto to the
Underwriter, and the Underwriter agrees to purchase from the Selling Shareholders, at a purchase
price of $54.25 per share, the amount of the Underwritten Securities set forth opposite the
Underwriter’s name in Schedule I hereto and the Selling Shareholders agree to pay to the
Underwriter a fee of $1.25 per share purchased (the “Underwriter’s Fee”) in consideration of
services performed in connection with the offering of the Securities.

     (b) Subject to the terms and conditions and in reliance upon the representations and
warranties herein set forth, the Selling Shareholders hereby grant an option to the
Underwriter to purchase up to 1,000,000 Option Securities at the same purchase price per
share as the Underwriter shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten Securities by the
Underwriter. Said option may be exercised on one occasion in whole or in part at any time
on or before the 30th day after the Closing Time upon written or telegraphic notice by the
Underwriter to such Selling Shareholders setting forth the number of shares of the Option
Securities as to which the Underwriter is exercising the option and the settlement date.
The maximum number of Option Securities which each Selling Shareholder agrees to sell is
set forth in Schedule II hereto. In the event that the Underwriter exercises less than its
full over-allotment option, the number of Option Securities to be sold by each Selling
Shareholder listed on Schedule II shall be, as nearly as practicable, in the same
proportion as the maximum number of Option Securities to be sold by each Selling
Shareholder and the number of Option Securities to be sold.

          3.
Delivery and Payment. Delivery of and payment for the Underwritten Securities and the Option
Securities (if the option provided for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Time) shall be made at 9:30 AM, Toronto time, on October 7, 2005, or at such
time on such later date not more than three Business Days after the foregoing date as the Underwriter shall
designate, which date and time may be postponed by agreement among the Underwriter and the Selling Shareholders
(such date and time of delivery and payment for the Securities being herein called the “Closing Time”). Delivery
of the Securities shall be made to the Underwriter against payment by the Underwriter of the aggregate purchase
price of the Securities being sold by each of the Selling Shareholders to or upon the order of the Selling
Shareholders by wire transfer payable in same-day funds to the accounts specified by the Selling Shareholders.
Delivery of the Underwritten Securities and the Option Securities shall be made through, at the option of the
Underwriter, the facilities of the Canadian Depositary for Securities Limited or The Depositary Trust Company or,
in the event such delivery is not practicable, the Selling Shareholders shall duly and validly deliver to the
Underwriter one or more definitive share certificate(s) representing the Securities to be sold by them hereunder,
endorsed in such name or

 

18

names as the Underwriter will direct the Selling Shareholders in writing not less than
24 hours prior to such Closing Time.

          The Selling Shareholders shall, prior to the Closing Time, make all necessary arrangements for
the exchange of such definitive certificate(s), at the principal offices of CIBC Mellon Trust
Company in the city of Calgary for one or more global share certificates representing the
Securities registered in the name of The Canadian Depository for Securities Limited or such other
names as shall be designated by the Underwriter not less than 24 hours prior to the Closing Time.

          Each Selling Shareholder will pay all applicable state transfer taxes, if any, involved in the
transfer to the Underwriter of the Securities to be purchased by it from such Selling Shareholder,
and the Underwriter will pay any additional stock transfer taxes involved in further transfers.

          If the option provided for in Section 2(b) hereof is exercised after the third Business Day
prior to the Closing Time, the Selling Shareholders will deliver the Option Securities to the
Underwriter on the date specified by the Underwriter (which shall be within three Business Days
after exercise of said option) for the account of the Underwriter, against payment by the
Underwriter of the purchase price thereof to or upon the order of the Selling Shareholders by wire
transfer payable in same-day funds to the accounts specified by the Selling Shareholders. If
settlement for the Option Securities occurs after the Closing Time, the Company and such Selling
Shareholders will deliver to the Underwriter on the settlement date for the Option Securities, and
the obligation of the Underwriter to purchase the Option Securities shall be conditional upon
receipt of, supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered at the Closing Time pursuant to Section 6 hereof.

          4. Offering by Underwriter. It is understood that the Underwriter proposes to offer
the Securities for sale to the public as set forth in the Prospectuses. It is understood that the
Underwriter proposes to offer the Securities initially at the offering price that will be specified
on the cover page of the Prospectuses. After the Underwriter has made a reasonable effort to sell
all of the Securities at the price specified on such cover page, the offering price may be
decreased and may be further changed from time to time to an amount not greater than that set out
on such cover page, and the compensation realized by the Underwriter will be decreased by the
amount that the aggregate price paid by purchasers for the Securities is less than the proceeds
paid by the Underwriter to the Selling Shareholders. The Underwriter shall notify the Company and
the Selling Shareholders in writing promptly after it has completed its distribution of the
Securities and promptly after it has completed any actions taken to stabilize the market price of
the common shares of the Company, and agrees that in any event the distribution shall cease by the
30th day after Closing Time.

          5. Agreements.

          (i) The Company agrees with the Underwriter:

 

19

     (a) To prepare the Registration Statement and the Prospectuses in a form approved by
the Underwriter and make those filings as described in paragraphs 2, 3 and 4 of this
Agreement; to make no amendment or any supplement to the Registration Statement or the
Prospectuses after the date of this Agreement and prior to the completion of the
distribution of the Securities by the Underwriter without the prior written consent of the
Underwriter (not to be unreasonably withheld or delayed); to advise the Underwriter
promptly of any such amendment or supplement and to furnish the Underwriter with copies
thereof; to file promptly with the Qualifying Authorities all documents required to be
filed by the Company with the Qualifying Authorities that are deemed to be incorporated by
reference into the Prospectuses and with the Commission all reports and any definitive
proxy or information statements required to be filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, in each case for so long as the delivery of
a prospectus is required in connection with the offering or sale of the Securities, and
during such same period to advise the Underwriter, promptly after it receives notice
thereof, (i) of the time when any amendment to the Prospectuses or Registration Statement
or any pre-effective or post-effective amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectuses has been filed with the
Qualifying Authorities or the Commission, (ii) of the issuance by the Qualifying
Authorities or the Commission of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Securities, (iii) of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, (iv) of the
initiation or threatening of any proceeding for any of the foregoing purposes, or (v) of
any request by the Qualifying Authorities or the Commission for the amending or
supplementing of the Registration Statement or the Prospectuses or for additional
information relating to the Securities, the Registration Statement, the Prospectus or the
Canadian Prospectus, each as amended or supplemented; and, in the event of the issuance of
any such stop order or of any such order preventing or suspending the use of any prospectus
relating to the Securities or suspending any such qualification, to use its best efforts to
obtain the withdrawal of such order as promptly as possible;

     (b) Contemporaneously with, or immediately prior to, the filing of the Canadian
Prospectus, the Company shall deliver to the Underwriter, without charge, in Calgary: (i) a
copy of the Canadian Prospectus, including all documents incorporated by reference, in each
of the English and French language, as applicable, signed and certified as required by the
Canadian Securities Laws in the Qualifying Provinces; (ii) a copy of any document filed by
the Company under the Canadian Securities Laws; (iii) opinions of Canadian counsel to the
Company, dated, in the case of the Canadian Preliminary Prospectus, as of the date of the
Canadian Preliminary Prospectus and, in the case of the Canadian Prospectus, as of the date
of the Canadian Prospectus, in form and substance satisfactory to the Underwriter,
addressed to the Company, the Selling Shareholders, their Canadian counsel, the Underwriter
and its Canadian counsel,

 

20

to the effect that the French language version of the Canadian Preliminary Prospectus
or the Canadian Prospectus, as the case may be, including all documents incorporated by
reference, except for the unaudited financial statements and audited financial statements
of the Company, the schedules and notes thereto and the related auditors’ report on such
statements as well as the other financial information forming part of the management’s
discussion and analysis of financial condition and result of operations included in the
documents incorporated by reference (collectively, “Financial Information”) as to which no
opinion need be expressed by such counsel, is in all material respects a complete and
accurate translation of the English language version thereof; (iv) an opinion dated, in
the case of the Canadian Preliminary Prospectus and, in the case of the Canadian
Prospectus, as of the date of the Canadian Prospectus, in form and substance satisfactory
to the Underwriter and from an accounting firm or firms satisfactory to the Underwriter,
addressed to the Underwriter, the Company, the Selling Shareholders and their respective
Canadian counsel, to the effect that the French language version of the Financial
Information contained in the Canadian Preliminary Prospectus or the Canadian Prospectus, as
the case may be is, in all material respects, a complete and proper translation of the
English language version thereof. The deliveries set forth above shall also constitute the
Company’s consent to the Underwriter use of the Canadian Prospectus for the distribution of
the Securities in the Qualifying Provinces in compliance with provisions of this Agreement
and the Canadian Securities Laws.

     (c) Promptly from time to time to take such action as the Underwriter may reasonably
request to qualify the Securities for offering and sale under the securities laws of such
jurisdictions in the United States as the Underwriter may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities;

     (d) To furnish the Underwriter with copies of the Registration Statement and the
Prospectuses in such quantities as the Underwriter may from time to time reasonably
request; and, if the delivery of a prospectus is required with respect to any Securities at
any time up to the expiration of 30 days after the Closing Time relating to and in
connection with the offering or sale of such Securities and if at such time any event shall
have occurred as a result of which the Prospectuses would include an untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they
were made when such prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the Registration
Statement or one of the Prospectuses or to file under the Canadian Securities Laws or the
Exchange Act any document incorporated by reference in the Registration Statement or one of
the Prospectuses in order to comply with the Canadian Securities Laws, the Exchange Act or
the Securities Act, to notify the

 

21

Underwriter as promptly as possible by telephone (confirmed in writing), and as
promptly as possible, to file such document, subject to Section 5(a) hereof, and to prepare
and furnish without charge to the Underwriter and to any dealer in securities as many
copies as the Underwriter may from time to time reasonably request of an amendment to the
Registration Statement or an amendment or supplement to one of the Prospectuses, which will
correct such statement or omission or effect such compliance;

     (e) To make generally available to its securityholders as soon as practicable, but in
any event not later than 15 months after the “effective date” of the Registration Statement
(as defined in Rule 158(c) under the Securities Act), an earnings statement of the Company
and its subsidiaries on a consolidated basis (which need not be audited) complying with
Section 11(a) of the Securities Act and the Securities Act Regulations (including, at the
option of the Company, Rule 158);

     (f) To furnish to the Underwriter, at the oral or written request of the Underwriter
to the Company, as soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders’ equity and cash flows of
the Company and its subsidiaries on a consolidated basis certified by independent public
accountants) and, as soon as practicable after the end of each of the first three quarters
of each fiscal year (beginning with the fiscal quarter ending after the effective date of
the Registration Statement), an interim report containing the consolidated financial
statements (which may be unaudited) of the Company and its subsidiaries for such quarter in
reasonable detail; and

     (g) To furnish to the Underwriter, at the oral or written request of the Underwriter
to the Company, (i) copies of all reports or other communications (financial or other)
furnished to the Company’s shareholders, (ii) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission, the Qualifying
Authorities or any national securities exchange on which the Securities or any class of
securities of the Company are listed and (iii) such additional publicly available
information in a format so made available concerning the business and financial condition
of the Company as the Underwriter may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its shareholders generally or to the
Commission).

     (ii) Each Selling Shareholder agrees with the Underwriter that:

     (a) Except as contemplated by this Agreement, during the period beginning from the
date of this Agreement and continuing until the date that is 60 days after the Closing
Time, such Selling Shareholder will not, without prior written consent of the Underwriter,
directly or indirectly offer, pledge, sell,

 

22

contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any common shares of the Company or substantially similar securities, or any
securities convertible into or exchangeable into or exercisable for any of the foregoing,
or file a registration statement under the Securities Act or a prospectus with any
securities or regulatory authority in Canada with respect to any of the foregoing; other
than in any transactions made on behalf of such Selling Shareholder by third-party
investment managers with discretionary investment authority where such Selling Shareholder
has no prior knowledge of such transaction.

     (b) Such Selling Shareholder will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Securities.

     (c) Such Selling Shareholder will advise the Underwriter promptly and, if requested by
the Underwriter, will confirm such advice in writing, so long as delivery of a prospectus
relating to the Securities by an underwriter or dealer may be required under the Securities
Act, of any change in the Selling Shareholder Information.

          (iii) Each Selling Shareholder agrees with the Company that it will advise the Company
promptly and, if requested by the Company, will confirm such advice in writing, so long as delivery
of a prospectus relating to the Securities by an underwriter or dealer may be required under the
Securities Act, of any change in the Selling Shareholder Information.

          6. The Company covenants and agrees with the Underwriter that the Company will pay or cause to
be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and
accountants in connection with the filing with respect to the Securities under the Canadian
Securities Laws and the registration of the Securities under the Securities Act and all other
expenses in connection with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus, any Canadian Preliminary Prospectus and the Canadian
Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof
to the Underwriter and dealers; (ii) the cost of printing or reproducing this Agreement, any Blue
Sky survey, closing documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in
connection with the qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the
Underwriter up to a maximum aggregate amount of $12,500 (U.S.) in connection with such
qualification and in connection with the Blue Sky surveys; (iv) any filing fees incident to, and
the fees and disbursements of counsel for the Underwriter in connection with, any required review
by

 

23

the National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of any transfer
agent and any agent of any transfer agent and the fees and disbursements of counsel for any
transfer agent in connection with the delivery of the Securities; and (vii) all other costs and
expenses incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that, except as provided in
this Section and Sections 8, 9 and 13 hereof, the Underwriter will pay all of its own costs and
expenses, including the fees and disbursements of its counsel, transfer taxes on resale of any of
the Securities by it, and any advertising expenses connected with any offers it may make. In
addition, the Selling Shareholders covenant and agree with the Underwriter that the Selling
Shareholders will pay or cause to be paid all fees incident to the performance of their obligations
under this Agreement that are not otherwise specifically provided for herein, including but not
limited to (i) fees and expenses of counsel and other advisers for such Selling Shareholders and
(ii) expenses and transfer taxes incident to the sale and delivery of the Securities to be sold by
the Selling Shareholders to the Underwriter herein. Nothing contained in this Section shall affect
as between the Company and the Selling Shareholders the agreements contained in the Side Letter
dated as of September 23, 2005 between the Company and the Selling Shareholders.

          7. Conditions to the Obligations of the Underwriter. The obligations of the
Underwriter to purchase the Underwritten Securities and the Option Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company and the Selling
Shareholders contained herein as of the date and time that this Agreement is executed and delivered
by the parties hereto (the “Execution Time”) and the Closing Time and any settlement date pursuant
to Section 3 hereof, to the accuracy of the statements of the Company and the Selling Shareholders
made in any certificates pursuant to the provisions hereof, to the performance by the Company and
the Selling Shareholders of their respective obligations hereunder and to the following additional
conditions:

     (a) As of the Closing Time, the Canadian Prospectus shall have been filed with the
Qualifying Authorities and an MRRS Decision Document shall have been obtained from the
Reviewing Authority evidencing issuance by each of the Qualifying Authorities of a receipt
in respect of the Canadian Prospectus, and no order having the effect of ceasing or
suspending the distribution of or the trading in the Securities or any other securities of
the Company shall have been issued by any Qualifying Authority or any stock exchange and no
proceedings for that purpose shall have been instituted or threatened by any Qualifying
Authority or any stock exchange and any request for additional information shall have been
complied with.

     (b) Shearman & Sterling LLP, United States counsel for the Underwriter, and Bennett
Jones LLP, Canadian counsel for the Underwriter, shall have furnished to the Underwriter
such opinion or opinions, dated the Closing Time for such Securities, with respect to the
Securities, the Registration Statement, the

 

24

Prospectus and the Canadian Prospectus, each as amended or supplemented, and other
related matters as the Underwriter may reasonably request, and such counsel shall have
received such documents and information as they may reasonably request to enable them to
pass upon such matters;

     (c) The General Counsel of the Company shall have furnished to the Underwriter his
written opinion, dated the Closing Time for such Securities in form and substance
satisfactory to the Underwriter, to the effect that:

     (i) All of the issued shares of the Company, including the Securities, have
been duly and validly authorized and issued and are fully paid and non-assessable;
all of the issued shares of each Canadian Subsidiary (as defined below) that is a
corporation have been duly and validly authorized and issued and are fully paid and
non-assessable and such shares are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims; and all of the
partnership interests of each Canadian Subsidiary that is a partnership (which term
includes both limited and general partnerships) have been duly and validly created
and are owned directly or indirectly by the Company (except as set forth in
Schedule III attached hereto), free and clear of all liens, encumbrances, equity or
claims; the Securities being sold by the Selling Shareholders are duly listed, and
admitted and authorized for trading, on the Toronto Stock Exchange and the New York
Stock Exchange; the certificates for the Securities are in valid and sufficient
form. As used in this Agreement, the term “Canadian Subsidiary” means each
Material Subsidiary that is organized under the laws of Canada or any province or
territory thereof and CNPY (as defined in Schedule III hereto); and

     (ii) The statements in the Company’s most recent Annual Report on Form 10-K
under the captions “Business and Properties—Additional Factors Affecting
Business—Government Regulations”, “Business and Properties—Additional Factors
Affecting Business—Environmental Regulations” and in the Company’s most recent
Quarterly Report on Form 10-Q under the caption “Legal Proceedings” (and under any
similar captions), in each case insofar as such statements constitute summaries of
legal matters, legal proceedings, laws or regulations, or instruments or
agreements, were, on the date such Annual Report on Form 10-K or Quarterly Report
on Form 10-Q, as applicable, was filed with the Commission, accurate, complete and
fair in all material respects.

     In rendering such opinion, such counsel may state that he expresses no opinion as to
matters governed by laws other than the federal laws of Canada and the laws of the Province
of Alberta. As to matters of law, other than the laws of the Province of Alberta and the
federal laws of Canada, such counsel may rely upon the opinions of local counsel reasonably
satisfactory to the Underwriter, in

 

25

which case the opinion shall state that he believes that both he and the Underwriter
are justified in so relying. In the event that such counsel shall, in rendering such
opinion, rely on one or more opinions of local counsel, each such opinion of local counsel
shall be dated the Closing Time, shall either be addressed to the Underwriter or shall
expressly state that the Underwriter may rely upon such opinion as if it were addressed to
the Underwriter, shall be delivered to the Underwriter at the Closing Time and shall
otherwise be satisfactory in form and substance to the Underwriter. In rendering such
opinion, such counsel may state that he has relied as to factual matters, to the extent he
deems appropriate, on certificates of public officials and officers of the Company.

     (d) Blake, Cassels & Graydon LLP, Canadian counsel for the Company, shall have
furnished to the Underwriter and the Selling Shareholder their written opinion, dated the
Closing Time in form and substance satisfactory to the Underwriter, to the effect that:

     (i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the CBCA, with all requisite corporate power and
authority to own and lease its properties and conduct its business as described in
the Prospectuses and to execute, deliver and perform its obligations under this
Agreement;

     (ii) The Company has an authorized share capitalization as set forth in the
Prospectuses;

     (iii) The Company is qualified as an extra provincial corporation to carry on
business under the laws of each Canadian jurisdiction in which it conducts a
material portion of its business so as to require such qualification, or is subject
to no material liability or disability by reason of the failure to be so qualified
(such counsel being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state that they believe
that both the Underwriter and they are justified in relying upon such opinions and
certificates);

     (iv) Each subsidiary incorporated under the laws of Canada or a province
therein has been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; each Canadian
Subsidiary that is a partnership has been duly formed and is validly existing as a
partnership in good standing (if applicable) under the laws of its jurisdiction of
formation; each Canadian Subsidiary is qualified as an extra provincial company or
partnership, as the case may be, to carry on business under the laws of each
Canadian jurisdiction in which it conducts a material portion of its business so as
to require such qualification or is subject to no material liability or disability

 

26

by reason of the failure to be so qualified; and all of the partnership
interests of each Canadian Subsidiary that is a partnership (which term includes
both limited and general partnerships) organized under the laws of the Province of
Saskatchewan have been duly and validly created (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company, provided
that such counsel shall state that they believe that both the Underwriter and they
are justified in relying upon such opinions and certificates);

     (v) To the best of such counsel’s knowledge, and other than as set forth in
the Prospectuses there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the aggregate have
a material adverse effect on the current or future consolidated financial position,
shareholders’ equity or results of operations of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary course
of business; and, to the best of such counsel’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;

     (vi) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms; subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors’ rights as to general equity
principles;

     (vii) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated herein do not and
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (A) any Subject Agreement (as set out
in a schedule attached to such counsel’s opinion) or (B) to the best of such
counsel’s knowledge, any other contract, indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement or other financing agreement or other
agreement or instrument (or any guarantee of any of the foregoing) known to such
counsel (the documents referred to in this clause (B) being hereafter called,
collectively, the “Covered Agreements”) to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its subsidiaries
is subject (except, solely in the case of Covered Agreements, for such conflicts,
breaches, violations, or defaults that would not, individually or in the aggregate,
have a material adverse

 

27

effect on the current consolidated financial position, shareholders’ equity or
results of operations of the Company and its subsidiaries, taken as a whole, nor
does or will such action result in any violation of the provisions of the articles
or by-laws of the Company, or the constating documents, as applicable, of each
Canadian Subsidiary that is a Partnership, or, to the best of such counsel’s
knowledge, of any other subsidiaries of the Company, or any statute, rule or
regulation of any court or governmental agency or body of Canada or the Province of
Alberta having jurisdiction over the Company or any Material Subsidiary or any of
their properties or, to the best of such counsel’s knowledge, any order of any
court or governmental agency or body of Canada or the Province of Alberta having
jurisdiction over the Company or any Material Subsidiary or any of their
properties. In rendering such opinion, such counsel shall state that, in the case
of any Subject Agreement or Covered Agreement which is governed by the laws of a
jurisdiction other than Alberta or Canada, such counsel has assumed that such
Subject Agreement or Covered Agreement, as the case may be, is governed by the laws
of Alberta;

     (viii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of Canada or the
Province of Alberta is required for the consummation by the Company of the
transactions contemplated by this Agreement, except such as have been obtained;

     (ix) To the best of such counsel’s knowledge, neither the Company nor any of
its subsidiaries is in violation of its articles or by-laws or other constating or
organizational document or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any Subject Agreement or
Covered Agreement which, individually or in the aggregate, would have a material
adverse effect on the current consolidated financial position, shareholders’ equity
or results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business;

     (x) The statements set forth in (A) the Prospectuses under the captions (as
applicable) “Description of Share Capital”, “Certain Income Tax Considerations —
Canadian Federal Income Tax Considerations”, and “Enforceability of Civil
Liabilities”, (B) in Part II of the Registration Statement under the caption
“Indemnification of Directors and Officers” (excluding the final paragraph under
such caption), and (C) in the Company’s most recent Annual Report on Form 10-K
under the caption “Business and Properties—Additional Factors Affecting
Business—Environmental Regulations”, in each case insofar as such statements
constitute summaries of legal matters, legal proceedings, laws or regulations (or
the interpretation or administration of laws or regulations

 

28

by any relevant government authorities), or other instruments and agreements,
are (in the case of the statements under the captions referred to in clauses (A)
and (B) above), and were on the date such Annual Report on Form 10-K was filed with
the Commission (in the case of the statements under the caption referred to in
clause (C) above), accurate and fair in all material respects; and the advice and
opinions of such counsel set forth in the Prospectuses are confirmed;

     (xi) Intentionally omitted;

     (xii) Intentionally omitted;

     (xiii) The Prospectuses and each document incorporated or deemed to be
incorporated by reference therein which is required to be so approved has been duly
approved by the Board of Directors of the Company, and the Prospectuses have been
duly executed on behalf of the Company in accordance with the Canadian Securities
Laws;

     (xiv) The documents incorporated by reference in the Prospectuses (other than
the financial statements and related schedules therein, as to which such counsel
need express no opinion), when they were filed with the Qualifying Authorities,
complied as to form, in all material respects, with the requirements of the
Canadian Securities Laws as interpreted and applied by the Qualifying Authorities;
although such counsel is not passing upon and does not assume any responsibility
for the factual accuracy, completeness or fairness of the statements contained in
any such incorporated documents (except as to those matters and to the extent set
forth in the opinions referred to in subsection (xiii)(A) of this Section 7(d)), no
facts have come to their attention that have caused such counsel to believe that
any such incorporated documents (other than the financial statements and related
schedules and other financial data therein, as to which such counsel need express
no opinion), when such documents were filed with the Qualifying Authorities,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
documents were so filed, not misleading;

     (xv) The Company has received a receipt from or on behalf of the Qualifying
Authorities for the Canadian Prospectus filed under the Canadian Securities Laws;
to the best of such counsel’s knowledge after due inquiry, no order of any
Qualifying Authority to cease distribution of the Securities under the Canadian
Prospectus or having the effect of preventing or suspending the use of the Canadian
Prospectus has been issued, and no proceedings for such purpose have been
instituted or threatened; the Canadian Prospectus complies as to form, in all
material

 

29

respects, with the requirements of the Canadian Securities Laws as interpreted
and applied by the Qualifying Authorities; the Canadian Prospectus, as amended or
supplemented has been duly filed with the Qualifying Authorities within the time
required by applicable law;

     (xvi) There are no reports or other information that in accordance with the
requirements of the Canadian Securities Laws must be made publicly available by the
Company in connection with the offering of the Securities that have not been made
publicly available as required; there are no documents required to be filed by the
Company with the Qualifying Authorities or otherwise under the Canadian Securities
Laws in connection with the Canadian Prospectus that have not been filed as
required;

     (xvii) The Company is eligible to file a short form prospectus with the
Qualifying Authorities;

     (xviii) The filing of the Canadian Prospectus with the Reviewing Authority has
been duly approved and authorized by all necessary action on the part of the
Company; and

     (xix) The Company is a “reporting issuer” in Alberta and is not included in a
list of defaulting reporting issuers maintained by the ASC.

     In rendering such opinion, such counsel may state that they express no opinion as to
matters governed by laws other than the federal laws of Canada and the laws of the
Provinces of Alberta and Ontario. As to matters of law, other than the laws of the
Provinces of Alberta and Ontario and the federal laws of Canada, such counsel may rely upon
the opinions of local counsel reasonably satisfactory to the Underwriter, in which case the
opinion shall state that they believe that both they and the Underwriter are justified in
so relying. In the event that such counsel shall, in rendering such opinion, rely on one
or more opinions of local counsel, each such opinion of local counsel shall be dated the
Closing Time, shall either be addressed to the Underwriter or shall expressly state that
the Underwriter may rely upon such opinion as if it were addressed to the Underwriter,
shall be delivered to the Underwriter at the Closing Time and shall otherwise be
satisfactory in form and substance to the Underwriter. In rendering such opinion, such
counsel may state that they have relied as to factual matters, to the extent they deem
appropriate, on certificates of public officials and officers of the Company. In addition
to rendering the opinions set forth above, such counsel shall also include a statement to
the effect that such counsel has participated in the preparation of the Registration
Statement and the Prospectuses and in conferences with officers and other representatives
of the Company, representatives of the independent accountants for the Company and counsel
for the Underwriter at which the contents of the Registration Statement and the
Prospectuses (in each case including the documents incorporated by reference therein) and
related

 

30

matters were discussed and although such counsel has not independently verified, and
is not passing upon and does not assume any responsibility for, the factual accuracy,
completeness or fairness of the statements contained in the Registration Statement and the
Prospectus (except as to those matters and to the extent set forth in the opinions referred
to in subsection (x) of this Section 7(d)), on the basis of such participation, no facts
have come to the attention of such counsel that have caused such counsel to believe (x)
that the Registration Statement or any post-effective amendments thereto, at the time the
Registration Statement or any post-effective amendment thereto became effective, contained
an untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or (y) that the
Prospectuses as of the Closing Time included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading
(except that such counsel need express no view as to financial statements and related
schedules and other financial data included in the Registration Statement and the
Prospectuses); and they do not know of any documents of the character required to be
incorporated by reference into the Prospectuses or filed with the Qualifying Authorities
which are not filed or incorporated by reference as required.

     (e) Paul, Weiss, Rifkind, Wharton & Garrison LLP, United States counsel for the
Company, shall have furnished to the Underwriter and the Selling Shareholders their written
opinion, dated the Closing Time, in form and substance satisfactory to the Underwriter, to
the effect that:

     (i) Each Delaware subsidiary listed on Schedule III hereto (individually, a
“Delaware Subsidiary” and collectively, the “Delaware Subsidiaries”) that is a
corporation is duly incorporated, validly existing and in good standing under the
laws of Delaware. Each of the Delaware Subsidiaries has all necessary corporate or
partnership power and authority to own and hold its respective properties and
conduct its respective businesses as described in the Prospectus;

     (ii) The statements in the Prospectus as amended or supplemented under the
caption “Certain Income Tax Considerations – United States Federal Income Tax
Considerations”, to the extent that they constitute summaries of United States
federal statutes, rules and regulations, or portions thereof, are accurate in all
material respects;

     (iii) This Agreement (to the extent execution and delivery are governed by the
laws of New York) has been duly executed and delivered by the Company;

     (iv) No consent, approval, authorization or order of, or filing, registration
or qualification with, any Governmental Authority, which has

 

31

not been obtained, taken or made (other than as required by any state
securities laws, as to which such counsel need express no opinion) is required
under any Applicable Law for the sale of the Securities or the performance by the
Company of its obligations under this Agreement. For purposes of this opinion, the
term “Governmental Authority” means any executive, legislative, judicial,
administrative or regulatory body of the State of New York or the United States of
America. For purposes of this opinion, the term “Applicable Law” means those laws,
rules and regulations of the United States of America and the State of New York, in
each case which in such counsel’s experience are normally applicable to the
transactions of the type contemplated by this Agreement;

     (v) The Company is not, and after giving effect to the offering and sale of
the Securities will not be, required to be registered as an investment company
under the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission promulgated thereunder;

     (vi) The Registration Statement and the Prospectus, as of their respective
effective or issue dates, appear on their face to be appropriately responsive in
all material respects to the requirements of the Securities Act, except for the
financial statements, financial statement schedules and other financial data
included or incorporated by reference in or omitted from either of them, as to
which such counsel need express no opinion; the Form F-X filed by the Company, as
of its date, appears on its face to be appropriately responsive in all material
respects to the requirements of the Securities Act;

     (vii) The compliance by the Company with all of the provisions of this
Agreement and the performance by the Company of its obligations thereunder will not
(i) result in a violation of the charter or by-laws of the Delaware Subsidiaries,
(ii) breach or result in a default under any agreement, indenture or instrument
governed by New York law and listed on Schedule C to such counsel’s opinion, or
(iii) violate Applicable Law or any judgment, order or decree of any court or
arbitrator in the United States known to such counsel, except where, in the case of
(ii) and (iii) above, the default, breach or violation, either individually or in
the aggregate with all other violations or defaults referred to in this paragraph
(vii) (if any), would not have a material adverse effect on the current or future
consolidated financial position, shareholders’ equity or results of operations of
the Company and its corporate and partnership subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business; and

     (viii) Each of the Company’s most recent Annual Report on Form 10-K and each
Quarterly Report on Form 10-Q filed since the filing

 

32

of the Company’s most recent Annual Report on Form 10-K, when filed by the
Company with the Commission, appeared on its face to be appropriately responsive in
all material respects to the applicable requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.

     In rendering such opinion, such counsel may state that they express no opinion as to
the laws of any jurisdiction other than the Federal laws of the United States, the General
Corporation Law of the State of Delaware (the “DGCL”) and the laws of the State of New
York. In rendering such opinion, such counsel may state that they have relied as to
factual matters, to the extent they deem appropriate, on certificates of public officials
and officers of the Company. In addition to rendering the opinions set forth above, such
counsel shall state that, to their knowledge and based upon, among other things, oral
advice of the staff of the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have been
instituted or are pending. In addition to rendering the opinions set forth above, such
counsel shall also include a statement to the effect that such counsel has participated in
the preparation of the Registration Statement and the Prospectus and in conferences with
officers and other representatives of the Company, representatives of the independent
chartered accountants for the Company, the Underwriter at which the contents of the
Registration Statement, the Prospectus and related matters were discussed and, although the
limitations inherent in the independent verification of factual matters and in the role of
outside counsel are such that such counsel has not undertaken to investigate or verify
independently, and do not assume responsibility for, the accuracy, completeness or fairness
of the statements contained in either the Registration Statement or the Prospectus (other
than as explicitly stated in the opinions referred to in subsections (iii) and (iv) of this
Section 7(e)), based upon such participation, no facts have come to such counsel’s
attention that lead such counsel to believe that (a) the Registration Statement (except for
the financial statements, financial statement schedules and other financial data included
or incorporated by reference in or omitted from the Registration Statement, as to which
such counsel need express no belief), at its effective date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) the Prospectus (except for
the financial statements, financial statement schedules and other financial data included
or incorporated by reference in or omitted from the Registration Statement, as to which
such counsel need express no belief), as of the date the Prospectus as amended or
supplemented was issued and as of the Closing Time, included or includes an untrue
statement of material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

 

33

     (f) Prior to filing the Prospectus with the Commission, the Underwriter shall have
received from the independent accountants of the Company a letter dated such date, in form
and substance satisfactory to the Underwriter containing statements and information of the
type ordinarily included in accountants’ “comfort letters” to underwriters with respect to
the financial statements and certain financial information contained in the Registration
Statement and the Prospectuses.

     (g) At the Closing Time, the Underwriter shall have received from the independent
accountants of the Company a letter, dated as of the Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (f) of this
Section, except that the specified date referred to shall be a date not more than three
business days prior to the Closing Time.

     (h) (i) None of the Company or any of its Material Subsidiaries shall have sustained
since the date of the latest audited financial statements included or incorporated by
reference in the Prospectus relating to the Securities any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and (ii) since the date of
this Agreement or since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or increase in the
long-term debt of the Company or any of its subsidiaries (except the issuance of shares of
capital stock upon the reinvestment of dividends in accordance with the Company’s dividend
reinvestment plan, upon the exercise of options held by directors and employees of the
Company pursuant to the Company’s stock option plans described in the Prospectus), nor has
there been any change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, shareholders’ equity or results of
operations of the Company and its subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is in the judgment of the Underwriter so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Prospectus.

     (i) Intentionally omitted;

     (j) The Company shall have furnished or caused to be furnished to the Underwriter on
the Closing Time a certificate or certificates of officers of the Company satisfactory to
the Underwriter as to the accuracy of the representations and warranties of the Company
herein at and as of the Closing Time, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to the Closing Time, as to the matters
set forth in subsections (a) and

 

34

(h) of this Section and as to such other matters as the Underwriter may reasonably
request;

     (k) Prior to filing the Prospectus with the Commission, the Underwriter shall have
received from PricewaterhouseCoopers LLP, the independent accountants of EnCana (U.K.)
Limited a letter dated such date, in form and substance satisfactory to the Underwriter
containing statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the Prospectuses;

     (l) At the Closing Time, the Underwriter shall have received from
PricewaterhouseCoopers LLP, the independent accountants of EnCana (U.K.) Limited a letter,
dated as of the Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (k) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the Closing Time;
and

     (m) Norton Rose, UK Counsel for the Company, shall have furnished to the Underwriter
and the Selling Shareholders their written opinion, dated the Closing Time, in form and
substance satisfactory to the Underwriter, to the effect that:

     (i) Nexen Petroleum U.K. Limited is duly incorporated in England and Wales and
is validly existing, and in good standing, under the laws of England and Wales; and

     (ii) Nexen Petroleum U.K. Limited has all necessary corporate power and
authority to own and hold its respective properties and conduct its respective
businesses as described in the Prospectus.

     (n) The Selling Shareholders shall have requested and caused Goodmans LLP, counsel for
the Selling Shareholders, to have furnished to the Underwriter and the Company their
opinion dated the Closing Time and addressed to the Underwriter, to the effect that:

     (i) this Agreement has been duly authorized, executed and delivered by the
Selling Shareholders and each Selling Shareholder has full legal right and
authority to sell, transfer and deliver in the manner provided in this Agreement
the Securities being sold by such Selling Shareholder hereunder;

     (ii) neither the sale of the Securities being sold by any Selling Shareholder
nor the consummation of any other of the transactions herein contemplated by any
Selling Shareholder or the fulfillment of the terms hereof by any Selling
Shareholder will conflict with, result in a breach or

 

35

violation of, or constitute a default under any law or the charter or By-laws
of such Selling Shareholder.

     (iii) each Selling Shareholder has been duly incorporated and is validly
existing as a corporation under the Teacher’s Pension Act and has the requisite
corporate power and authority to own the Securities and to execute, deliver and
perform its obligations under this Agreement.

In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than Canada or a province therein, to the
extent they deem proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to counsel for the
Underwriter, and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Selling Shareholders and public officials.

     (o) The Selling Shareholders shall have requested and caused Cleary Gottlieb Steen &
Hamilton LLP, U.S. special counsel for the Selling Shareholders, to have furnished to the
Underwriter and the Company their opinion dated the Closing Time and addressed to the
Underwriter, to the effect that: assuming that (a) the Depository Trust Company is a
“clearing corporation” as defined in Section 8-102(a)(5) of the UCC, and (b) each
Underwriter directly acquires its interest in the Securities it has purchased from the
Selling Shareholders without notice of any adverse claim (within the meaning of Section
8-105 of the UCC), each Underwriter that has purchased such Securities delivered on the
Closing Time to The Depository Trust Company or other securities intermediary whose
“securities intermediary” jurisdiction within the meaning of Section 9-305 of the UCC) is
New York made payment therefor as provided herein, and has had such Securities credited to
the securities account or accounts of such Underwriter maintained with The Depository Trust
Company or such other securities intermediary whose “securities intermediary” jurisdiction
within the meaning of Section 9-305 of the UCC) is New York will have acquired a security
entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such Securities
purchased by such Underwriter, and no action based on an adverse claim (within the meaning
of Section 8-105 of the UCC) may be asserted against such Underwriter with respect to such
security entitlement.

In rendering such opinion, such counsel may state that they express no opinion as to the
laws of any jurisdiction other than the Federal laws of the United States, the General
Corporation Law of the State of Delaware (the “DGCL”) and the laws of the State of New
York. In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York, to the extent
they deem proper and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel for the
Underwriter, and (B) as to matters of

 

36

fact, to the extent they deem proper, on certificates of responsible officers of the
Selling Shareholders and public officials.

     (p) Each Selling Shareholder shall have furnished to the Underwriter a certificate,
signed by any senior officer of such Selling Shareholder, dated the Closing Time, to the
effect that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations and warranties of
such Selling Shareholder in this Agreement are true and correct in all material respects on
and as of the Closing Time to the same effect as if made on the Closing Time.

     (q) As of the Closing Time, the Registration Statement and any post effective
amendment thereto, each in the form delivered to the Underwriter, will have become
effective under the Securities Act in such form and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened by the Commission and any request by
the Commission for additional information shall have been complied with.

          8. Indemnification and Contribution. (a) The Company agrees to indemnify and hold
harmless the Underwriter, the Selling Shareholders and their respective officers, employees, agents
and affiliates and each person, if any, who controls the Underwriter or any Selling Shareholder
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as
follows:

     (i) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment thereto),
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material fact
included in the Preliminary Prospectus, the Prospectus, the Canadian Preliminary
Prospectus or the Canadian Prospectus (or in each case any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

     (ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in settlement
of any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to

 

37

Section 8(e) below) any such settlement is effected with the written consent
of the Company;

     (iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any breach by the Company of its
representations, warranties, covenants and obligations to be complied with pursuant
to this Agreement; and

     (iv) against any and all expense whatsoever, as incurred (including the fees
and disbursements of counsel chosen by the Underwriter or the Selling Shareholder,
as the case may be), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i), (ii) or (iii)
above;

provided, however, that this indemnity shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with written information
furnished to the Company by the Underwriter expressly for use in any Preliminary Prospectus or the
Prospectus or Canadian Prospectus (or in each case any amendment or supplement thereto), or made in
reliance upon the Selling Shareholder Information.

     (b) Each Selling Shareholder severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration Statement
or the Canadian Prospectus, the Underwriter and each of its officers who sign the Canadian
Prospectus and each person who controls the Company or the Underwriter within the meaning
of either the Securities Act or the Exchange Act and each other Selling Shareholder, if
any, to the same extent as the foregoing indemnity from the Company to the Underwriter, but
only (i) with reference to the Selling Shareholder Information and (ii) against any and all
loss, liability, claim, damage and expense whatsoever, as incurred arising out of any
breach by the Selling Shareholder of its representations, warranties, covenants and
obligations made to the Company to be complied with pursuant to this Agreement. This
indemnity agreement will be in addition to any liability which any Selling Shareholder may
otherwise have. Notwithstanding anything to the contrary in this Section 8, in no case
shall a Selling Shareholder be responsible for any amount under the indemnity provisions of
this Section 8 in excess of the net proceeds such Selling Shareholder receives from the
offering contemplated by this Agreement.

     (c) The Underwriter agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statement, and each

 

38

person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each Selling Shareholder against any
and all loss, liability, claim, damage and expense described in the indemnity contained in
subsections (a) and (b) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in any Preliminary
Prospectus or the Prospectus (or in each case any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Company by the
Underwriter expressly for use in such Preliminary Prospectus or such Prospectus (or any
amendment or supplement thereto).

     (d) Each indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not materially
prejudiced as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 8(a) above, counsel to the indemnified parties
shall be selected by the Underwriter or the Selling Shareholder, as applicable, in the case
of parties indemnified pursuant to Section 8(b) above, counsel to the indemnified parties
shall be selected by the Company or the Underwriter, as applicable, and in the case of
parties indemnified pursuant to Section 8(c) above, counsel to the indemnified parties
shall be selected by the Company or the Selling Shareholder, as applicable. An
indemnifying party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In no event
shall the indemnifying parties be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or Section 9 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i) includes
an unconditional release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

 

39

     (e) If at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by Section
8(a)(ii) effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.

          9. If the indemnification provided for in Section 8 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to reflect (A) as between
the Selling Shareholders and the Underwriter, the relative benefits received by the Selling
Shareholders on the one hand and by the Underwriter on the other hand from the offering of the
Securities; (B) as between the Company and the Selling Shareholders the relative fault of the
Company on the one hand and the Selling Shareholders on the other hand; and (C) as between the
Company and the Underwriter the relative fault of the Company on the one hand and the Underwriter
on the other hand; or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, the Selling Shareholders and the
Underwriter in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

          The relative benefits received by the Selling Shareholders on the one hand and the Underwriter
on the other hand in connection with the offering of such Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net proceeds from the
offering of such Securities pursuant to this Agreement (before deducting expenses) received by the
Selling Shareholders and the total underwriting discount received by the Underwriter, in each case
as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of
such Securities as set forth on such cover.

          The relative fault of the Company, the Selling Shareholders and the Underwriter on the other
hand shall be determined by reference to, among other things, whether any such untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or by the Underwriter and
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

40

          The Company, the Selling Shareholders and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable considerations referred
to above in this Section 9. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.

          Notwithstanding the provisions of this Section 9, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price of the Securities exceeds
the amount of any damages which the Underwriter has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.

          Notwithstanding anything in the provisions in this Section 9, no Selling Shareholder shall be
required to contribute any amount under the contribution provisions of this Section 9 in excess of
the net proceeds such Selling Shareholder receives from the offering contemplated by this
Agreement.

          No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

          For purposes of this Section 9, each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Underwriter, each person, if any, who controls a Selling Shareholder
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Selling Shareholder and each director of the Company, each
officer of the Company who signed the Registration Statement or the Canadian Prospectus, and each
person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the Company.

          10. Intentionally omitted.

          11. The Underwriter will be entitled to terminate its obligation to purchase the Securities by
written notice to that effect given to the Company and the Selling Shareholders at or prior to the
Closing Time if:

     (i) any inquiry, investigation or other proceeding is commenced, announced or
threatened or any order is issued under or pursuant to any relevant statute or by
any stock exchange or other

 

41

regulatory authority or there is any change of law, or interpretation or
administration thereof, which, in the reasonable opinion of the Underwriter,
operates to prevent, suspend or restrict or adversely affect the trading in, or the
distribution of, the Securities or any of them;

     (ii) there occurs any material change (actual, contemplated or threatened) in
the business, affairs, operations, assets, liabilities (contingent or otherwise),
capital or ownership of the Company or any of its subsidiaries, or a change in a
material fact as is contemplated in section 11(a)(ii), which, in the opinion of the
Underwriter, could reasonably be expected to result in the purchasers of a material
number of Securities exercising their right under securities laws to withdraw from
or rescind their purchase thereof or sue for damages in respect thereof or which
has or could reasonably be expected to have a significant adverse effect on the
market price or value of the Securities or any of them; or

     (iii) there should develop, occur or come into effect or existence any event,
action, state, condition or major financial occurrence of national or international
consequence, or any governmental action, law, regulation, inquiry or other similar
occurrence which, in the reasonable opinion of such Underwriter, seriously
adversely affects or may seriously adversely affect the financial markets in Canada
or the United States or the business, operations or affairs of the Company and its
subsidiaries, taken as a whole.

The right of the Underwriter to terminate its obligations under this agreement is in addition to
all other remedies it may have in respect of any default, act or failure to act of the Company or
the Selling Shareholders in respect of any of the matters contemplated by this Agreement.

          12. The respective indemnities, agreements, representations, warranties and other statements
of the Company, the Selling Shareholders and the Underwriter, as set forth in this Agreement and
the provisions of Sections 6, 8, 9, 15 and 16 hereof, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriter or any controlling person of the Underwriter or any Selling Shareholder or any
officer or director or controlling person of a Selling Shareholder, or the Company or any officer
or director or controlling person of the Company, and shall survive delivery of and payment for the
Securities.

          13. If this Agreement is terminated pursuant to Section 11 hereof or if for any other reason,
the Securities are not delivered by or on behalf of any Selling Shareholder as provided herein, the
Company will reimburse the Underwriter for all out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred by the Underwriter in making preparations for the
purchase, sale and delivery of the Securities, but neither the Company nor any Selling Shareholder
shall then be under any

 

42

further liability to any Underwriter with respect to such Securities except as provided in
Sections 6, 8, 9, 15 and 16 (all of which shall remain in full force and effect).

          14. All statements, requests, notices, and agreements hereunder shall be in writing, and if to
the Underwriter shall be delivered or sent by mail or facsimile transmission to Managing Director,
Equity Capital Markets, TD Securities, 222 Bay Street, Ernst & Young Tower, 7th Floor,
Toronto, Ontario, M5K 1A2, Fax: 416-982-4410; if to the Selling Shareholders shall be delivered or
sent by mail or facsimile transmission to: Senior Vice President, Public Equities, Ontario
Teachers’ Pension Plan Board, 5650 Yonge Street, Toronto, M2M 4H5, Fax: (416) 730-5374, and if to
the Company shall be delivered or sent by mail or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.

          15. Intentionally omitted.

          16. To the extent that the Company, any Selling Shareholder or any of its respective
properties, assets or revenues may have or may hereafter become entitled to, or have attributed to
it, any right of immunity, on the grounds of sovereignty, from (i) any legal action, suit or
proceeding, (ii) setoff or counterclaim, (iii) the jurisdiction of any court, (iv) service of
process, (v) attachment upon or prior to judgment, (vi) attachment in aid of execution of judgment,
(vii) execution of judgment, or (viii) other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any
time be commenced, with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement or the Securities, each of the Company and the
Selling Shareholders (to the maximum extent permitted by law) hereby irrevocably and
unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such
relief and enforcement.

          17. Time shall be of the essence of this Agreement. As used herein, the term “Business Day”
or “business day” shall mean any weekday that is not a day on which banking institutions in the
City of Toronto, Ontario and in the City of New York, New York are authorized or obligated by law
or executive order to be closed.

          18. This Agreement shall be governed by and construed in accordance with the laws of Ontario.

          19. This Agreement may be executed by any one or more of the parties hereto and thereto in any
number of counterparts, each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.

          20. This Agreement will inure to the benefit of and be binding upon the parties hereto and
their respective successors and the officers, directors, employees,

 

43

agents and controlling persons referred to in Section 8 hereof, and no other person will have
any right or obligation hereunder.

 

 

          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company, the Selling Shareholder (s) and the Underwriter.

	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 
	 	 	NEXEN INC.
	 
	 	 	 	 	 
	 

	 	By:
	 	/s/ Marvin F. Romanow	 
	 

	 	 	 	Name: Marvin F. Romanow	 
	 

	 	 	 	Title: Executive Vice President
and Chief Financial Officer
	 
	 
	 	 	 	 	 
	 	 	ONTARIO TEACHERS’ PENSION PLAN BOARD
	 
	 	 	 	 	 
	 

	 	By:
	 	/s/ Brian J. Gibson	 
	 

	 	 	 	Name: Brian J. Gibson	 
	 

	 	 	 	Title: Senior Vice President	 

 

 

The foregoing Agreement is hereby

confirmed and accepted as of the

date first above written.

TD Securities Inc.

	 	 	 	 	 
	By:

	 	/s/ Alec W. G. Clark	 	 
	 

	 	 

Name: Alec W. G. Clark
	 	 
	 

	 	Title: Vice President and Director	 	 

 

 

SCHEDULE I

	 	 	 	 	 
	 	 	Number of Underwritten
	Underwriter	 	Securities to be Purchased
	TD Securities Inc.

	 	7,500,000	 

 

 

SCHEDULE II

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Maximum Number of
	 	 	Number of Underwritten	 	Option Securities to
	Selling Shareholders:	 	Securities to be Sold	 	be sold
	Ontario Teachers’
Pension Plan Board

	 	7,500,000	 	 	1,000,000	 

5650 Yonge Street

Toronto, Ontario

M2M 4H5

Fax: (416) 730-5374

 

 

SCHEDULE III

Material Subsidiaries

	 	 	 	 	 
	 	 	 	 	Jurisdiction of
	Subsidiary	 	Type of Entity	 	Organization
	Nexen Petroleum Offshore U.S.A. Inc.

	 	Corporation
	 	Delaware
	Nexen Petroleum U.S.A. Inc.

	 	Corporation
	 	Delaware
	Nexen Marketing

	 	General Partnership
	 	Alberta
	Nexen Petroleum U.K. Limited

	 	Corporation
	 	United Kingdom
	 
	 	 	 	 
	Canadian Nexen Petroleum Yemen
	 	 	 	 
	(“CNPY”)

	 	General Partnership
	 	Alberta
	Nexen Oil Sands Partnership

	 	General Partnership
	 	Alberta
	Nexen Canada No. 2

	 	General Partnership
	 	Alberta
	Canexus Limited Partnership

	 	Limited Partnership
	 	Alberta

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