Canadian Oil Sands Announces First Quarter Results and a Reduction in Major Project Costs

Canadian Oil Sands Announces First Quarter Results and a Reduction in Major 
Project Costs 
NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: Canadian Oil Sands Limited 
TSX SYMBOL:  COS
OTCQX SYMBOL:  COSWF 
APRIL 30, 2014 
Canadian Oil Sands Announces First Quarter Results and a Reduction in Major
Project Costs 
CALGARY, ALBERTA--(Marketwired - April 30, 2014) - Canadian Oil Sands Limited
(TSX:COS)(OTCQX:COSWF) -  
All financial figures are unaudited and in Canadian dollars unless otherwise
noted. 
"Higher production and crude oil prices contributed to a 30 per cent
increase in cash flow from operations in the first quarter of 2014 compared
with last year's first quarter," said Ryan Kubik, President and Chief
Executive Officer. "Syncrude has also made significant progress on our
major projects. Our Mildred Lake Mine Train Replacement project reached 85 per
cent completion and our estimated cost has come down by $300 million gross to
Syncrude. The project is well on track to be in service by the end of the
year." 
Highlights for the three months ended March 31, 2014: 
/T/ 
--  Cash flow from operations was $357 million ($0.74 per Share) in the 
first quarter of 2014 compared with cash flow from operations of $275 
million ($0.57 per Share) in the same quarter of 2013. Higher sales 
volumes, a higher realized selling price and lower current taxes more 
than offset higher operating expenses and Crown royalties. 
--  Net income for the first quarter of 2014 was $172 million ($0.35 per 
Share) compared with $177 million ($0.37 per Share) in the 2013 first 
quarter. The factors that contributed to the increase in cash flow from 
operations similarly impacted net income, but were offset by an increase 
in deferred tax expense and a larger unrealized foreign exchange loss on 
long-term debt in 2014. 
--  Sales volumes in the first quarter of 2014 averaged 105,300 barrels per 
day, up from 95,700 barrels per day in the comparative 2013 quarter when 
volumes were impacted by unplanned outages in extraction and secondary 
upgrading units.  
--  Operating expenses were $445 million, or $46.91 per barrel, in the first 
quarter of 2014 compared with $355 million, or $41.20 per barrel, in the 
same quarter of 2013. The increase reflects higher natural gas prices, 
the timing of planned maintenance and tailings management activities, 
and increased drilling relative to the comparative 2013 quarter. With 
the exception of natural gas prices, the increased operating expenses 
were anticipated and in line with budget expectations. 
--  The cost estimate for the Mildred Lake Mine Train Replacement project 
has been reduced to $3.9 billion from $4.2 billion (gross to Syncrude) 
and the project remains on schedule for completion in the fourth quarter 
of this year.  
--  Net debt (long-term debt less cash and cash equivalents) rose to $1.4 
billion at March 31, 2014. Based on the assumptions provided today in 
our 2014 Outlook, we expect to end the year within our targeted net debt 
range of $1 billion to $2 billion. 
--  COS declared a quarterly dividend of $0.35 per Share, payable on May 30, 
2014 to shareholders of record on May 23, 2014.   
Highlights                                                                   
Three Months Ended March 31   
2014             2013
---------------------------------------------------------------------------- 
Cash flow from operations(1) ($ millions)    $          357  $           275
 Per Share(1) ($/Share)                      $         0.74  $          0.57 
Net income ($ millions)                      $          172  $           177
 Per Share, Basic and Diluted ($/Share)      $         0.35  $          0.37 
Sales volumes(2)                                                            
 Total (mmbbls)                                         9.5              8.6
 Daily average (bbls)                               105,283           95,683 
Realized SCO selling price ($/bbl)           $       105.73  $         96.11 
West Texas Intermediate ("WTI") (average                                    
 $US/bbl)                                    $        98.61  $         94.36 
SCO premium (discount) to WTI (weighted                                     
 average $/bbl)                              $        (2.93) $          1.00 
Average foreign exchange rate ($US/$Cdn)     $         0.91  $          0.99 
Operating expenses ($ millions)              $          445  $           355
 Per barrel ($/bbl)                          $        46.91  $         41.20 
Capital expenditures ($ millions)            $          217  $           268 
Dividends ($ millions)                       $          170  $           170
 Per Share ($/Share)                         $         0.35  $          0.35
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
(1) Cash flow from operations and cash flow from operations per Share are   
 additional GAAP financial measures and are defined in the "Additional GAAP 
 Financial Measures" section of our Management's Discussion and Analysis    
 ("MD&A").                                                                  
(2) The Corporation's sales volumes differ from its production volumes due  
 to changes in inventory, which are primarily in-transit pipeline volumes.  
 Sales volumes are net of purchases.                                         
/T/ 
2014 Outlook 
Canadian Oil Sands provides the following key estimates and assumptions for
2014: 
/T/ 
--  We have lowered our 2014 Syncrude production estimate to range between 
95 and 105 million barrels, with a single-point estimate of 100 million 
barrels (274,000 barrels per day). Net to Canadian Oil Sands, the 
single-point estimate is equivalent to 36.7 million barrels (100,700 
barrels per day). This change reflects an unplanned Coker 8-1 outage to 
remove coke deposits following a valve leak repair. The revised estimate 
incorporates the additional complexity resulting from the overlap with 
our planned Coker 8-2 turnaround and continues to reflect the successful 
startup of the new Mildred Lake mine trains in the fourth quarter. 
--  Estimated 2014 sales, net of crude oil purchases and transportation 
expense, have risen to $3,528 million, reflecting an increase in the 
forecast realized selling price to $96 per barrel and the revised 
production estimate. 
--  The revised forecast selling price assumes a U.S. $92 per barrel WTI oil 
price, a foreign exchange rate of $0.92 U.S./Cdn and a $4 per barrel SCO 
discount to Canadian dollar WTI. 
--  Our estimate for 2014 operating expenses has increased to $1,693 million 
reflecting a higher natural gas price assumption and actual results 
incurred in the first quarter of the year. Based on our revised single-    point production estimate, this translates to $46.08 per barrel. 
--  Based on these assumptions, estimated 2014 cash flow from operations has 
risen to $1,194 million, or $2.46 per Share. 
--  Estimated capital expenditures have decreased to $928 million, 
reflecting the reduction in the Mildred Lake Mine Train Replacement 
project cost estimate and adjustments to spending on regular maintenance 
capital projects.  
/T/ 
More information on the outlook is provided in our MD&A and the April 30,
2014 guidance document, which is available on our web site at
www.cdnoilsands.com under "Investor Centre". 
The 2014 Outlook contains forward-looking information and users are cautioned
that the actual amounts may vary from the estimates disclosed. Please refer to
the "Forward-Looking Information Advisory" in the MD&A section of
this report for the risks and assumptions underlying this forward-looking
information. 
Annual General Meeting 
COS will hold its Annual General Meeting of Shareholders today, April 30, 2014
at 2:30 p.m. (MDT) in the Ballroom of the Metropolitan Conference Centre,
located at 333 Fourth Avenue SW, Calgary, Alberta. A live audio webcast of the
meeting can be accessed on COS' website at www.cdnoilsands.com. An
archived version of the webcast and presentation material will be available
shortly after the meeting from the website and archived for 90 days.  
Management's Discussion and Analysis 
The following Management's Discussion and Analysis ("MD&A")
was prepared as of April 30, 2014 and should be read in conjunction with the
unaudited consolidated financial statements and notes thereto of Canadian Oil
Sands Limited (the "Corporation") for the three months ended March
31, 2014 and March 31, 2013, the audited consolidated financial statements and
MD&A of the Corporation for the year ended December 31, 2013 and the
Corporation's Annual Information Form ("AIF") dated February 20,
2014. Additional information on the Corporation, including its AIF, is
available on SEDAR at www.sedar.com or on the Corporation's website at
www.cdnoilsands.com. References to "Canadian Oil Sands",
"COS" or "we" include the Corporation, its subsidiaries and
partnerships. The financial results of Canadian Oil Sands have been prepared in
accordance with Canadian Generally Accepted Accounting Principles
("GAAP") and are reported in Canadian dollars, unless otherwise
noted. 
Table of Contents 
/T/ 
1.  Advisories 4-6 
2.  Overview 7-8 
3.  Review of Financial Results 8-13 
4.  Summary of Quarterly Results 14 
5.  Capital Expenditures 15 
6.  Contractual Obligations and Commitments 15 
7.  Dividends 15 
8.  Liquidity and Capital Resources 16 
9.  Shareholders' Capital and Trading Activity 17 
10. 2014 Outlook 17-18 
11. Major Projects 19  
/T/ 
Advisories 
Forward Looking Information 
In the interest of providing the Corporation's shareholders and potential
investors with information regarding the Corporation, including
management's assessment of the Corporation's future production and
cost estimates, plans and operations, certain statements throughout this
MD&A and the related press release contain "forward-looking
information" under applicable securities law. Forward-looking statements
are typically identified by words such as "anticipate",
"expect", "believe", "plan", "intend"
or similar words suggesting future outcomes. 
Forward-looking statements in this MD&A and the related press release
include, but are not limited to, statements with respect to: the expectations
regarding the 2014 annual Syncrude forecasted production range of 95 million
barrels to 105 million barrels and the single-point Syncrude production
estimate of 100 million barrels (36.7 million barrels net to the Corporation);
the timing and duration of the Coker 8-1 maintenance; the timing and duration
of the Coker 8-2 turnaround; the intention to fund the Syncrude major projects
primarily with cash flow from operations and existing cash balances; the
establishment of future dividend levels with the intent of absorbing short-term
market volatility over several quarters; the expected sales, operating
expenses, purchased energy costs, development expenses, Crown royalties,
capital expenditures and cash flow from operations for 2014; the plan to use
existing cash balances to fund capital expenditures and dividends; the
anticipated amount of current taxes in 2014; expectations regarding the
Corporation's cash levels for 2014; the expected price for crude oil and
natural gas in 2014; the expected foreign exchange rates in 2014; the expected
realized selling price, which includes the anticipated differential to West
Texas Intermediate ("WTI") to be received in 2014 for the
Corporation's product; the expectations regarding net debt; the
anticipated impact of increases or decreases in oil prices, production,
operating expenses, foreign exchange rates and natural gas prices on the
Corporation's cash flow from operations; the belief that fluctuations in
the Corporation's realized selling prices, U.S. to Canadian dollar
exchange rate fluctuations and planned and unplanned maintenance activities may
impact the Corporation's financial results in the future; the belief that
capital expenditures and capital deductions for Crown royalties will decline
after 2014 in connection with the substantial completion of the major projects;
the expected amount of total major project costs, anticipated target in-service
dates and estimated completion percentages for the Mildred Lake mine train
replacements and the centrifuge plant at the Mildred Lake mine; the cost
estimates for 2014 and 2015 major project spending; and the estimate that
regular maintenance capital costs for the next few years should be similar to
2014. 
You are cautioned not to place undue reliance on forward-looking statements, as
there can be no assurance that the plans, intentions or expectations upon which
they are based will occur. By their nature, forward-looking statements involve
numerous assumptions, known and unknown risks and uncertainties, both general
and specific, that contribute to the possibility that the predictions,
forecasts, projections and other forward-looking statements will not occur.
Although the Corporation believes that the expectations represented by such
forward-looking statements are reasonable and reflect the current views of the
Corporation with respect to future events, there can be no assurance that such
assumptions and expectations will prove to be correct. 
The factors or assumptions on which the forward-looking information is based
include, but are not limited to: the assumptions outlined in the
Corporation's guidance document as posted on the Corporation's
website at www.cdnoilsands.com as of April 30, 2014 and as subsequently amended
or replaced from time to time, including without limitation, the assumptions as
to production, operating expenses and oil prices; the successful and timely
implementation of capital projects; Syncrude's major project spending
plans; the ability to obtain regulatory and Syncrude joint venture owner
approval; our ability to either generate sufficient cash flow from operations
to meet our current and future obligations or obtain external sources of debt
and equity capital; the continuation of assumed tax, royalty and regulatory
regimes and the accuracy of the estimates of our reserves and resources
volumes.  
Some of the risks and other factors which could cause actual results or events
to differ materially from current expectations expressed in the forward-looking
statements contained in this MD&A and the related press release include,
but are not limited to: volatility of crude oil prices; volatility of the
synthetic crude oil ("SCO") to WTI differential; the impact that
pipeline capacity and apportionment and refinery demand have on prices for SCO;
the impacts of regulatory changes especially those which relate to royalties,
taxation, tailings, water and the environment; the impact of new technologies
on the cost of oil sands mining; the impacts of rising costs associated with
tailings and water management; the inability of Syncrude to obtain required
consents, permits or approvals, including without limitation, the inability of
Syncrude to obtain approval to release water from its operations; the impact of
Syncrude being unable to meet the conditions of its approval for its tailings
management plan under Directive 074; various events which could disrupt
operations including fires, equipment failures and severe weather; unsuccessful
or untimely implementation of capital or maintenance projects; the impact of
technology on operations and processes and how new complex technology may not
perform as expected; the obtaining of required owner approvals from the
Syncrude owners for expansions, operational issues and contractual issues;
labour turnover and shortages and the productivity achieved from labour in the
Fort McMurray area; uncertainty of estimates with respect to reserves and
resources; the supply and demand metrics for oil and natural gas; currency and
interest rate fluctuations; volatility of natural gas prices; the
Corporation's ability to either generate sufficient cash flow from
operations to meet its current and future obligations or obtain external
sources of debt and equity capital; the inability of the Corporation to
continue to meet the listing requirements of the Toronto Stock Exchange;
general economic, business and market conditions and such other risks and
uncertainties described in the Corporation's AIF dated February 20, 2014
and in the reports and filings made with securities regulatory authorities from
time to time by the Corporation which are available on the Corporation's
profile on SEDAR at www.sedar.com and on the Corporation's website at
www.cdnoilsands.com. 
You are cautioned that the foregoing list of important factors is not
exhaustive. Furthermore, the forward-looking statements contained in this
MD&A and the related press release are made as of April 30, 2014, and
unless required by law, the Corporation does not undertake any obligation to
update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise. The
forward-looking statements contained in this MD&A and the related press
release are expressly qualified by this cautionary statement. 
Additional GAAP Financial Measures 
In this MD&A and the related press release, we refer to additional GAAP
financial measures that do not have any standardized meaning as prescribed by
Canadian GAAP. Additional GAAP financial measures are line items, headings or
subtotals in addition to those required under Canadian GAAP, and financial
measures disclosed in the notes to the financial statements which are relevant
to an understanding of the financial statements and are not presented elsewhere
in the financial statements. These measures have been described and presented
in order to provide shareholders and potential investors with additional
measures for analyzing our ability to generate funds to finance our operations
and information regarding our liquidity. Users are cautioned that additional
GAAP financial measures presented by the Corporation may not be comparable with
measures provided by other entities. 
Additional GAAP financial measures include: cash flow from operations, cash
flow from operations per Share, net debt, total net capitalization, total
capitalization, net debt-to-total net capitalization and long-term
debt-to-total capitalization. 
Cash flow from operations is calculated as cash from operating activities
before changes in non-cash working capital. Cash flow from operations per Share
is calculated as cash flow from operations divided by the weighted-average
number of Shares outstanding in the period. Because cash flow from operations
and cash flow from operations per Share are not impacted by fluctuations in
non-cash working capital balances, we believe these measures are more
indicative of operational performance than cash from operating activities. With
the exception of current taxes, liabilities for Crown royalties and the current
portion of our asset retirement obligation, our non-cash working capital is
liquid and typically settles within 30 days. 
Cash flow from operations is reconciled to cash from operating activities as
follows: 
/T/ 
Three Months Ended March 31 
($ millions)                                           2014           2013
-------------------------------------------------------------------------- 
Cash flow from operations(1)                  $         357  $         275
Change in non-cash working capital(1)                  (479)            54
--------------------------------------------------------------------------
Cash from (used in) operating activities(1)   $        (122) $         329
--------------------------------------------------------------------------
-------------------------------------------------------------------------- 
(1) As reported in the Consolidated Statements of Cash Flows.              
/T/ 
Net debt, total net capitalization, total capitalization, net debt-to-total net
capitalization and long-term debt-to-total capitalization are used by the
Corporation to analyze liquidity and manage capital, as discussed in the
"Liquidity and Capital Resources" section of this MD&A and in
Note 12 to the unaudited consolidated financial statements for the three months
ended March 31, 2014. 
Overview 
Canadian Oil Sands generated higher-than-forecast cash flow from operations in
the first quarter of 2014 as stable production from the Syncrude Joint Venture
("Syncrude") and a strong realized selling price for our Synthetic
crude oil ("SCO") more than offset the impact of high natural gas
prices. Syncrude production totalled 26.3 million barrels, or 292,500 barrels
per day, and COS realized a $106 per barrel average selling price, 20 per cent
higher than the $88 per barrel forecast in our January 2014 Outlook. 
Operating expenses totalled $445 million, or $46.91 per barrel, reflecting
higher-than-forecast natural gas prices as well as planned maintenance,
tailings management and drilling activities. With the exception of natural gas
prices, the increased operating expenses were anticipated and in line with
budget expectations. 
Capital expenditures on the Mildred Lake Mine Train Replacement project are
trending below budget and the project remains on schedule for completion in the
fourth quarter of this year. Accordingly, we have reduced our total cost
estimate from $4.2 billion to $3.9 billion (gross to Syncrude), tightened the
range around this estimate, and reduced total forecast capital expenditures for
2014. The Centrifuge Tailings Management project continues to track to budget
and remains on schedule for completion in the first half of 2015. 
Net debt rose to $1.4 billion at March 31, 2014, as cash balances were used to
settle approximately $500 million of existing liabilities for Crown royalties
and taxes while a weakening Canadian dollar increased the carrying value of our
long-term debt. Cash flow from operations of $357 million was almost sufficient
to fund first quarter capital expenditures of $217 million and dividends of
$170 million. 
On April 24, Syncrude commenced maintenance work on Coker 8-1 following an
interruption in the unit's operation in order to repair a valve leak. The
maintenance work is expected to overlap the Coker 8-2 turnaround scheduled for
the second quarter. 
We have revised our 2014 Outlook to reflect lower estimated annual Syncrude
production ranging from 95 to 105 million barrels with a single-point estimate
of 100 million barrels (274,000 barrels per day). Estimated sales, net of crude
oil purchases and transportation expense, have risen to $3,528 million,
reflecting a higher $96 per barrel annual realized selling price and the
revised production estimate. We are also estimating: increased operating
expenses, reflecting a higher natural gas price assumption and actual results
incurred in the first quarter of the year; and, lower capital expenditures,
reflecting the reduction in the Mildred Lake Mine Train Replacement cost
estimate and adjustments to spending on regular maintenance capital projects.
As a result of these revisions, estimated 2014 cash flow from operations has
increased $36 million to approximately $1.2 billion and estimated capital
expenditures have fallen to approximately $0.9 billion. Given the assumptions
in our Outlook, we expect net debt levels to be within our targeted range of $1
billion to $2 billion at year end. 
/T/ 
Highlights                                                                  
Three Months Ended March 31  
2014           2013
--------------------------------------------------------------------------- 
Cash flow from operations(1) ($ millions)      $         357  $         275
 Per Share(1) ($/Share)                        $        0.74  $        0.57 
Net income ($ millions)                        $         172  $         177
 Per Share, Basic and Diluted ($/Share)        $        0.35  $        0.37 
Sales volumes(2)                                                           
 Total (mmbbls)                                          9.5            8.6
 Daily average (bbls)                                105,283         95,683 
Realized SCO selling price ($/bbl)             $      105.73  $       96.11 
West Texas Intermediate ("WTI") (average                                   
 $US/bbl)                                      $       98.61  $       94.36 
SCO premium (discount) to WTI (weighted                                    
 average $/bbl)                                $       (2.93) $        1.00 
Average foreign exchange rate ($US/$Cdn)       $        0.91  $        0.99 
Operating expenses ($ millions)                $         445  $         355
 Per barrel ($/bbl)                            $       46.91  $       41.20 
Capital expenditures ($ millions)              $         217  $         268 
Dividends ($ millions)                         $         170  $         170
 Per Share ($/Share)                           $        0.35  $        0.35
---------------------------------------------------------------------------
--------------------------------------------------------------------------- 
(1) Cash flow from operations and cash flow from operations per Share are  
 additional GAAP financial measures and are defined in the "Additional GAAP
 Financial Measures" section of this MD&A.                                 
(2) The Corporation's sales volumes differ from its production volumes due 
 to changes in inventory, which are primarily in-transit pipeline volumes. 
 Sales volumes are net of purchases.                                        
/T/ 
Review of Financial Results 
Cash Flow from Operations 
Q1 2014 versus Q1 2013 ($ millions)  
To view graph comparison, visit the following link:
http://media3.marketwire.com/docs/COSg.jpg 
Cash flow from operations increased to $357 million, or $0.74 per Share, in the
first quarter of 2014 from $275 million, or $0.57 per Share, in the first
quarter of 2013 as higher sales volumes, a higher realized selling price and
lower current taxes more than offset the impact of higher operating expenses
and Crown royalties. 
Syncrude production in the 2014 first quarter totalled 26.3 million barrels, or
292,500 barrels per day, a 12 per cent increase over the 23.4 million barrels,
or 260,400 barrels per day, produced in the 2013 first quarter when volumes
were impacted by unplanned outages in extraction and secondary upgrading units.
Net to the Corporation, sales volumes increased to 9.5 million barrels, or
105,300 barrels per day, in the first quarter of 2014 from 8.6 million barrels,
or 95,700 barrels per day, in the comparative 2013 quarter. 
The average realized selling price increased to $105.73 per barrel in the first
quarter of 2014 from $96.11 per barrel in the same quarter of 2013, primarily
due to a weaker Canadian dollar as higher WTI oil prices offset a deterioration
in the SCO differential to WTI. 
Operating expenses in the 2014 quarter increased $90 million to $46.91 per
barrel, reflecting higher natural gas prices, the timing of planned maintenance
and tailings management activities, and increased drilling relative to the
comparative 2013 quarter. 
The changes in the components of cash flow from operations are discussed in
greater detail later in this MD&A. 
Net Income 
Canadian Oil Sands reported net income of $172 million, or $0.35 per Share, in
the first quarter of 2014 compared with $177 million, or $0.37 per Share, in
the first quarter of 2013. The factors which produced an $82 million increase
in cash flow from operations also impacted net income; however, these were
offset by a $37 million increase in deferred tax expense and a $26 million
larger unrealized foreign exchange loss on long-term debt in 2014. The changes
in the components of net income are discussed in greater detail later in this
MD&A. 
The following table shows the net income components per barrel of SCO: 
/T/ 
Three Months Ended March 31         
($ per barrel)(1)                        2014           2013         Change 
---------------------------------------------------------------------------  
Sales net of crude oil                                                      
 purchases and transportation                                               
 expense                        $      105.06  $       96.16  $        8.90 
Operating expense                      (46.91)        (41.20)         (5.71)
Crown royalties                         (6.13)         (2.69)         (3.44)
---------------------------------------------------------------------------  
$       52.02  $       52.27  $       (0.25)
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Development expense             $       (3.42) $       (2.97) $       (0.45)
Administration and insurance                                                
 expenses                               (1.74)         (1.78)          0.04 
Depreciation and depletion                                                  
 expense                               (13.58)        (14.19)          0.61 
Net finance expense                     (1.44)         (1.58)          0.14 
Foreign exchange loss                   (5.77)         (3.21)         (2.56)
Tax expense                             (7.94)         (7.95)          0.01 
---------------------------------------------------------------------------  
(33.89)        (31.68)         (2.21)
--------------------------------------------------------------------------- 
Net income per barrel           $       18.13  $       20.59  $       (2.46)
--------------------------------------------------------------------------- 
--------------------------------------------------------------------------- 
Sales volumes (mmbbls)(2)                 9.5            8.6            0.9 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(1) Per barrel measures derived by dividing the relevant item by sales      
 volumes in the period.                                                     
(2) Sales volumes, net of purchased crude oil volumes.                       
Sales Net of Crude Oil Purchases and Transportation Expense              
Three Months Ended March 31      
($ millions, except where                                               
 otherwise noted)                        2014         2013       Change 
-----------------------------------------------------------------------  
Sales(1)                          $     1,114  $       961  $       153 
Crude oil purchases                      (105)        (124)          19 
Transportation expense                    (14)          (9)          (5)
-----------------------------------------------------------------------  
$       995  $       828  $       167 
----------------------------------------------------------------------- 
----------------------------------------------------------------------- 
Sales volumes(2)                                                        
 Total (mmbbls)                           9.5          8.6          0.9 
 Daily average (bbls)                 105,283       95,683        9,600 
----------------------------------------------------------------------- 
-----------------------------------------------------------------------  
Realized SCO selling price                                              
 (average $Cdn/bbl)(3)            $    105.73  $     96.11  $      9.62  
West Texas Intermediate ("WTI")                                         
 (average $US/bbl)                $     98.61  $     94.36  $      4.25  
SCO premium (discount) to WTI                                           
 (weighted-average $Cdn/bbl)      $     (2.93) $      1.00  $     (3.93) 
Average foreign exchange rate                                           
 ($US/$Cdn)                       $      0.91  $      0.99  $     (0.08)
----------------------------------------------------------------------- 
-----------------------------------------------------------------------  
(1) Sales include sales of purchased crude oil and sulphur.             
(2) Sales volumes, net of purchased crude oil volumes.                  
(3) Sales net of crude oil purchases and transportation expense divided 
 by sales volumes.                                                       
/T/ 
The $167 million, or 20 per cent, increase in first quarter 2014 sales, net of
crude oil purchases and transportation expense, reflects increased sales
volumes and a higher realized selling price relative to the 2013 first quarter. 
/T/ 
--  Sales volumes in the first quarter of 2014 averaged 105,300 barrels per 
day, up from 95,700 barrels per day in the comparative 2013 quarter when 
volumes were impacted by unplanned outages in extraction and secondary 
upgrading units. 
--  The first quarter 2014 realized selling price increased by $9.62 per 
barrel, reflecting a U.S. $4.25 per barrel increase in WTI oil prices 
and a weaker Canadian dollar, partially offset by a $3.93 per barrel 
deterioration in the SCO differential to WTI.  
/T/ 
The Corporation purchases crude oil from third parties to fulfill sales
commitments with customers when there are shortfalls 
in Syncrude's production and to facilitate certain transportation
arrangements. Sales include the sale of purchased crude oil while the cost of
these purchases is included in crude oil purchases and transportation expense.
Lower crude oil purchases in the first quarter 2014 reflect more stable
production than 2013.  
Operating Expenses 
The following table shows the major components of operating expenses in total
dollars and per barrel of SCO: 
/T/ 
Three Months Ended March 31           
2014                    2013           
$ millions   $ per bbl  $ millions   $ per bbl
---------------------------------------------------------------------------- 
Production and                                                              
 maintenance(1)              $       332 $     35.04 $       282 $     32.70
Natural gas and diesel                                                      
 purchases(2)                         71        7.52          44        5.12
Syncrude pension and                                                        
 incentive compensation               30        3.12          21        2.50
Other(3)                              12        1.23           8        0.88
----------------------------------------------------------------------------
Total operating expenses     $       445 $     46.91 $       355 $     41.20
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
(1) Includes non-major turnaround costs. Major turnaround costs are         
 capitalized as property, plant and equipment.                              
(2) Includes costs to purchase natural gas used to produce energy and       
 hydrogen and diesel consumed as fuel.                                      
(3) Includes fees for management services provided by Imperial Oil          
 Resources, insurance premiums, and greenhouse gas emissions levies.         
/T/ 
The increase in operating expenses in the first quarter of 2014 reflects the
timing of planned maintenance and tailings management activities as well as
increased drilling activity. In addition, a $2.48 per GJ increase in natural
gas prices to $5.43 per GJ raised natural gas purchases. 
Variances in per-barrel operating expenses also reflect changes in sales
volumes, which were higher in the first quarter of 2014. 
The following table shows operating expenses per barrel of bitumen and SCO.
Costs are allocated to bitumen production and upgrading on the basis used to
determine Crown royalties. 
/T/ 
Three Months Ended March 31           
2014                2013(3) 
--------------------------------------------------------------------------- 
($ per barrel)                    Bitumen        SCO     Bitumen        SCO 
--------------------------------------------------------------------------- 
Bitumen production             $    29.79 $    35.41  $    26.43 $    32.36 
Internal fuel allocation(1)          3.10       3.69        2.65       3.25 
--------------------------------------------------------------------------- 
Total bitumen production                                                    
 expenses                      $    32.89 $    39.10  $    29.08 $    35.61 
---------------------------------------------------------------------------  
Upgrading(2)                              $    11.50             $     8.84 
Less: internal fuel                                                         
 allocation(1)                                 (3.69)                 (3.25)
--------------------------------------------------------------------------- 
Total upgrading expenses                  $     7.81             $     5.59 
---------------------------------------------------------------------------  
Total operating expenses                  $    46.91             $    41.20 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(thousands of barrels per day)                                              
--------------------------------------------------------------------------- 
Syncrude production volumes           348        293         319        260 
Canadian Oil Sands sales                                                    
 volumes                                         105                     96 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(1) Reflects energy generated by the upgrader that is used in the bitumen   
 production process and is valued by reference to natural gas and diesel    
 prices. Natural gas prices averaged $5.43 per GJ and $2.95 per GJ in the   
 three months ended March 31, 2014 and March 31, 2013, respectively. Diesel 
 prices averaged $1.08 per litre and $0.90 per litre in the three months    
 ended March 31, 2014 and March 31, 2013, respectively.                     
(2) Upgrading expenses include the production and maintenance expenses      
 associated with processing and upgrading bitumen to SCO.                   
(3) Certain 2013 comparative amounts have been restated to conform to the   
 current year presentation.                                                  
/T/ 
Crown Royalties 
Crown royalties increased to $58 million in the first quarter of 2014 from $23
million in the first quarter of 2013, reflecting an increase in the deemed
bitumen price used to calculate Crown royalties and higher bitumen production
volumes in 2014. 
/T/ 
Net Finance Expense                                                          
Three Months Ended March 31   
($ millions)                                           2014            2013 
---------------------------------------------------------------------------  
Interest costs on long-term debt             $           30  $           31 
Less capitalized interest on long-term debt             (24)            (23)
--------------------------------------------------------------------------- 
Interest expense on long-term debt           $            6  $            8 
Interest expense on employee future benefits              3               4 
Accretion of asset retirement obligation                  7               6 
Interest income                                          (2)             (5)
--------------------------------------------------------------------------- 
Net finance expense                          $           14  $           13 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
/T/ 
Interest costs on the Corporation's U.S. dollar-denominated long-term debt
reflect lower average outstanding debt levels in the first quarter of 2014 due
to a U.S. $300 million debt repayment in August, 2013, offset by a weaker
Canadian dollar relative to the first quarter of 2013. 
/T/ 
Foreign Exchange (Gain) Loss                                           
Three Months Ended March 31   
($ millions)                                     2014            2013 
---------------------------------------------------------------------  
Foreign exchange loss - long-term debt $           63  $           37 
Foreign exchange gain - other                      (9)             (9)
--------------------------------------------------------------------- 
Total foreign exchange loss            $           54  $           28 
--------------------------------------------------------------------- 
---------------------------------------------------------------------  
/T/ 
Foreign exchange gains and losses are the result of revaluations of the
Corporation's U.S. dollar-denominated long-term debt, accounts receivable
and cash into Canadian dollars. 
The foreign exchange losses reflect a weakening Canadian dollar in the first
quarter of 2014 (from U.S. $0.94 at December 31, 2013 to U.S. $0.90 at March
31, 2014) and 2013 (from U.S. $1.01 at December 31, 2012 to U.S. $0.98 at March
31, 2013).  
/T/ 
Tax Expense                                                      
Three Months Ended March 31   
($ millions)                                2014           2013 
---------------------------------------------------------------  
Current tax expense              $            60 $           90 
Deferred tax expense (recovery)               15            (22)
--------------------------------------------------------------- 
Total tax expense                $            75 $           68 
--------------------------------------------------------------- 
---------------------------------------------------------------  
/T/ 
Taxes on a portion of the income generated in the Corporation's
partnership in 2012 were deferred to 2013 and, to a lesser extent, to 2014. As
a result, current taxes decreased $30 million in 2014 and deferred taxes
increased $37 million. 
/T/ 
Asset Retirement Obligation                                                  
Three Months              Year  
Ended             Ended  
March 31       December 31 
($ millions)                                         2014              2013 
---------------------------------------------------------------------------  
Asset retirement obligation, beginning                                      
 of period                               $            896  $          1,102 
(Increase) decrease in risk-free                                            
 interest rate                                         50              (217)
Reclamation expenditures                              (17)              (42)
Increase (decrease) in estimated                                            
 reclamation and closure expenditures                 (14)               27 
Accretion expense                                       7                26 
--------------------------------------------------------------------------- 
Asset retirement obligation, end of                                         
 period                                  $            922  $            896 
Less current portion                                  (28)              (28)
--------------------------------------------------------------------------- 
Non-current portion                      $            894  $            868 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
/T/ 
Canadian Oil Sands' asset retirement obligation increased from $896
million at December 31, 2013 to $922 million at March 31, 2014 primarily due to
a decrease in the interest rate used to discount future reclamation and closure
expenditures from 3.25 per cent at December 31, 2013 to 3.0 per cent at March
31, 2014. 
/T/ 
Pension and Other Post-Employment Benefit Plans                              
Three Months              Year  
Ended             Ended  
March 31       December 31 
($ millions)                                         2014              2013 
---------------------------------------------------------------------------  
Accrued benefit liability, beginning of                                     
 period                                  $            308  $            438 
Current service cost                                   11                45 
Interest expense                                        3                16 
Contributions                                         (28)             (109)
Re-measurement (gains) losses:                                              
 Actual return on plan assets in excess                                     
  of estimated return(1)                              (33)              (46)
 Increase in discount rate                              -               (91)
 Other(2)                                               -                55 
--------------------------------------------------------------------------- 
Accrued benefit liability, end of period $            261  $            308 
Less current portion                                  (42)              (82)
--------------------------------------------------------------------------- 
Non-current portion                      $            219  $            226 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(1) Estimated return is based on prescribed 4.5 per cent annualized rate.   
(2) The other re-measurement loss in 2013 reflects an increase in the       
 estimated average lifespan of the plans' beneficiaries as a result of new  
 actuarial standards.                                                        
/T/ 
The Corporation's obligation for Syncrude Canada Ltd.'s
("Syncrude Canada") pension and other post-employment benefits in
excess of the fair value of the assets held in the benefit plans (the
"accrued benefit liability") decreased to $261 million at March 31,
2014 from $308 million at December 31, 2013 as actual returns on plan assets
were higher than expected and contributions to the plans exceeded current
period expenses. 
/T/ 
Summary of Quarterly Results                                                 
2014                    2013                   
Q1         Q4         Q3        Q2        Q1
---------------------------------------------------------------------------- 
Sales(1) ($ millions)    $     995  $     945  $     871 $     921 $     828 
Net income ($ millions)  $     172  $     192  $     246 $     219 $     177
 Per Share, Basic &                                                         
  Diluted                $    0.35  $    0.40  $    0.51 $    0.45 $    0.37 
Cash flow from                                                              
 operations(2) ($                                                           
 millions)               $     357  $     392  $     339 $     343 $     275
 Per Share(2)            $    0.74  $    0.81  $    0.70 $    0.71 $    0.57 
Dividends ($ millions)   $     170  $     169  $     170 $     169 $     170
 Per Share               $    0.35  $    0.35  $    0.35 $    0.35 $    0.35 
Daily average sales                                                         
 volumes(3) (bbls)         105,283    112,092     84,250   100,094    95,683 
Realized SCO selling                                                        
 price ($/bbl)           $  105.73  $   91.47  $  112.55 $  100.90 $   96.11 
WTI(4) (average $US/bbl) $   98.61  $   97.61  $  105.81 $   94.17 $   94.36 
SCO premium (discount)                                                      
 to WTI                  $   (2.93) $  (10.84) $    2.63 $    4.79 $    1.00
(weighted-average $/bbl)                                                     
Operating expenses(5)                                                       
 ($/bbl)                 $   46.91  $   37.60  $   46.15 $   43.23 $   41.20 
Purchased natural gas                                                       
 price ($/GJ)            $    5.43  $    3.28  $    2.59 $    3.41 $    2.95 
Foreign exchange rates                                                      
 ($US/$Cdn)                                                                 
 Average                 $    0.91  $    0.95  $    0.96 $    0.98 $    0.99
 Quarter-end             $    0.90  $    0.94  $    0.97 $    0.95 $    0.98
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
(1) Sales after crude oil purchases and transportation expense.             
(2) Cash flow from operations and cash flow from operations per Share are   
 additional GAAP financial measures and are defined in the "Additional GAAP 
 Financial Measures" section of this MD&A.                                  
(3) Daily average sales volumes net of crude oil purchases.                 
(4) Pricing obtained from Bloomberg.                                        
(5) Derived from operating expenses, as reported on the Consolidated        
 Statements of Income and Comprehensive Income, divided by sales volumes    
 during the period.                                                         
(6) Net income and operating expenses in 2012 have been adjusted to reflect 
 amendments to International Accounting Standard ("IAS") 19, Employee       
 Benefits.                                                                   
Summary of Quarterly Results                             
2012(6)              
Q4        Q3         Q2 
-------------------------------------------------------  
Sales(1) ($ millions)    $     929 $     941  $     740  
Net income ($ millions)  $     218 $     336  $     101 
 Per Share, Basic &                                     
  Diluted                $    0.45 $    0.69  $    0.21  
Cash flow from                                          
 operations(2) ($                                       
 millions)               $     418 $     470  $     245 
 Per Share(2)            $    0.86 $    0.97  $    0.51  
Dividends ($ millions)   $     169 $     170  $     170 
 Per Share               $    0.35 $    0.35  $    0.35  
Daily average sales                                     
 volumes(3) (bbls)         111,669   113,331     89,460  
Realized SCO selling                                    
 price ($/bbl)           $   89.99 $   89.89  $   90.59  
WTI(4) (average $US/bbl) $   88.23 $   92.20  $   93.35  
SCO premium (discount)                                  
 to WTI                  $    2.52 $   (2.00) $   (5.20)
(weighted-average $/bbl)                                 
Operating expenses(5)                                   
 ($/bbl)                 $   38.76 $   36.07  $   50.25  
Purchased natural gas                                   
 price ($/GJ)            $    3.02 $    2.23  $    1.79  
Foreign exchange rates                                  
 ($US/$Cdn)                                             
 Average                 $    1.01 $    1.00  $    0.99 
 Quarter-end             $    1.01 $    1.02  $    0.98 
------------------------------------------------------- 
-------------------------------------------------------  
(1) Sales after crude oil purchases and transportation  
 expense.                                               
(2) Cash flow from operations and cash flow from        
 operations per Share are additional GAAP financial     
 measures and are defined in the "Additional GAAP       
 Financial Measures" section of this MD&A.              
(3) Daily average sales volumes net of crude oil        
 purchases.                                             
(4) Pricing obtained from Bloomberg.                    
(5) Derived from operating expenses, as reported on the 
 Consolidated Statements of Income and Comprehensive    
 Income, divided by sales volumes during the period.    
(6) Net income and operating expenses in 2012 have been 
 adjusted to reflect amendments to International        
 Accounting Standard ("IAS") 19, Employee Benefits.      
/T/ 
During the last eight quarters, the following items have had a significant
impact on the Corporation's financial results and may impact the financial
results in the future:  
/T/ 
--  fluctuations in realized selling prices have affected the Corporation's 
sales and Crown royalties. Monthly average WTI prices have ranged from 
U.S. $82 per barrel to U.S. $107 per barrel, and the monthly average 
differentials between our realized selling price and Canadian dollar WTI 
prices have ranged from an $10 per barrel premium to  
a $15 per barrel discount; 
--  U.S. to Canadian dollar exchange rate fluctuations have resulted in 
foreign exchange gains and losses on the revaluation of U.S. dollar-    denominated debt and have impacted realized selling prices; 
--  planned and unplanned maintenance activities have reduced quarterly 
production volumes and revenues and increased operating expenses; 
--  bitumen values used to calculate Crown royalties from 2009 to 2013 
changed as new information became available; 
--  changes in natural gas prices have impacted operating expenses; and 
--  increases in current taxes reduced cash flow from operations. Prior to 
2013, tax pools sheltered the Corporation's income from significant 
current taxes. In addition, current taxes on income generated in the 
Corporation's partnership vary depending on when income is recognized in 
the Corporation's tax returns.  
/T/ 
Increased spending on capital projects to replace or relocate Syncrude mine
trains and to support tailings management plans has increased capital
expenditures and reduced Crown royalties over the past eight quarters. These
projects are expected to be substantially complete by the end of 2014, reducing
capital deductions for Crown royalties as project risk declines. 
/T/ 
Capital Expenditures                                                         
Three Months Ended March 31 
($ millions)                                             2014           2013
---------------------------------------------------------------------------- 
Major Projects                                                              
 Mildred Lake Mine Train Replacements          $           88 $          113
 Centrifuge Tailings Management                            73             37
 Aurora North Mine Train Relocations                        -             31
 Aurora North Tailings Management                           -             13
----------------------------------------------------------------------------
Capital expenditures on major projects         $          161 $          194
---------------------------------------------------------------------------- 
Regular maintenance                                                         
 Capitalized turnaround costs                               3              2
 Other                                                     29             49
----------------------------------------------------------------------------
Capital expenditures on regular maintenance    $           32 $           51
---------------------------------------------------------------------------- 
Capitalized interest                           $           24 $           23
----------------------------------------------------------------------------
Total capital expenditures                     $          217 $          268
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
Capital expenditures decreased to $217 million in the first quarter of 2014
reflecting lower spending on the major projects with the completion of the
Aurora North Mine Train Relocation and Aurora North Tailings Management
projects in 2013. As well, regular maintenance capital expenditures, primarily
projects to relocate some of Syncrude's tailings facilities, were lower
compared with the first quarter of 2013. More information on the major projects
is provided in the "Outlook" section of this MD&A. 
Contractual Obligations and Commitments  
Canadian Oil Sands' contractual obligations and commitments are summarized
in the 2013 annual MD&A and include future cash payments that the
Corporation is required to make under existing contractual arrangements entered
into directly or as a 36.74 per cent owner in Syncrude. During 2014, Canadian
Oil Sands assumed $75 million in new funding commitments relating to capital
projects while the Corporation's share of payments prescribed by
regulations on Syncrude Canada's registered pension plans decreased by
approximately $200 million as a result of an actuarial valuation completed in
April, 2014. 
Dividends 
On April 30, 2014, the Corporation declared a quarterly dividend of $0.35 per
Share for a total dividend of approximately $170 million. The dividend will be
paid on May 30, 2014 to shareholders of record on May 23, 2014. The Corporation
paid dividends to shareholders totalling $170 million, or $0.35 per Share, in
the first quarter of 2014. 
Dividend payments are set quarterly by the Board of Directors in the context of
current and expected crude oil prices, economic conditions, Syncrude's
operating performance, and the Corporation's capacity to finance operating
and investing obligations. Dividend amounts are established with the intent of
absorbing short-term market volatility over several quarters and recognize our
intention to fund the current major projects primarily with cash flow from
operations and existing cash balances, while maintaining a strong balance sheet
to reduce exposure to potential oil price declines, cost increases or major
operational upsets. 
/T/ 
Liquidity and Capital Resources                                              
March 31     December 31 
As at ($ millions, except % amounts)                   2014            2013 
---------------------------------------------------------------------------  
Long-term debt(1)                            $        1,665  $        1,602 
Cash and cash equivalents(1)                           (292)           (806)
--------------------------------------------------------------------------- 
Net debt(2,3)                                $        1,373  $          796 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Shareholders' equity(1)                      $        4,759  $        4,732 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Total net capitalization(2,4)                $        6,132  $        5,528 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Total capitalization(2,5)                    $        6,424  $        6,334 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Net debt-to-total net capitalization(2,6)                                   
 (%)                                                     22              14 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Long-term debt-to-total capitalization(2,7)                                 
 (%)                                                     26              25 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(1) As reported in the Consolidated Balance Sheets.                         
(2) Additional GAAP financial measure.                                      
(3) Long-term debt less cash and cash equivalents.                          
(4) Net debt plus Shareholders' equity.                                     
(5) Long-term debt plus Shareholders' equity.                               
(6) Net debt divided by total net capitalization.                           
(7) Long-term debt divided by total capitalization.                          
/T/ 
Net debt, which is comprised of long-term debt less cash and cash equivalents,
rose $577 million to $1,373 million at March 31, 2014 as cash balances were
used to settle existing liabilities of approximately $500 million for Crown
royalties and taxes, while a weakening Canadian dollar increased the carrying
value of our long-term debt by $63 million. Cash flow from operations was
almost sufficient to fund first quarter capital expenditures of $217 million
and dividends of $170 million. As a result, net debt-to-total net
capitalization increased to 22 per cent at March 31, 2014 from 14 per cent at
December 31, 2013. 
We plan to use existing cash to fund capital expenditures and dividends. Based
on the assumptions in our 2014 Outlook, we expect net debt to be within our
targeted range of $1 billion to $2 billion at year end, coincident with the
substantial completion of our major projects. 
Shareholders' equity increased to $4,759 million at March 31, 2014 from
$4,732 million at December 31, 2013, as comprehensive income exceeded dividends
in the first quarter of 2014. 
Canadian Oil Sands has a $1,500 million operating credit facility which expires
June 1, 2017 and a $40 million extendible revolving term credit facility which
expires June 30, 2015. No amounts were drawn against these facilities at March
31, 2014 or December 31, 2013. 
The Senior Notes indentures and credit facility agreements contain certain
covenants that restrict Canadian Oil Sands' ability to sell all or
substantially all of its assets or change the nature of its business, and limit
long-term debt-to-total capitalization to 55 per cent. Canadian Oil Sands is in
compliance with its debt covenants, and with a long-term debt-to-total
capitalization of 26 per cent at March 31, 2014, a significant increase in debt
or decrease in equity would be required to negatively impact the
Corporation's financial flexibility. 
Shareholders' Capital and Trading Activity 
The Corporation's shares trade on the Toronto Stock Exchange under the
symbol COS. On March 31, 2014, the Corporation had a market capitalization of
approximately $11.2 billion with 484.6 million shares outstanding and a closing
price of $23.19 per Share. The following table summarizes the trading activity
for the first quarter of 2014. 
/T/ 
Canadian Oil Sands Limited - Trading Activity                                
First                                           
Quarter       January      February         March 
2014          2014          2014          2014
---------------------------------------------------------------------------- 
Share price                                                                 
 High                $       23.39 $       20.59 $       21.59 $       23.39
 Low                 $       19.64 $       19.64 $       19.78 $       21.02
 Close               $       23.19 $       20.02 $       21.11 $       23.19 
Volume of Shares                                                            
 traded (millions)            87.7          25.2          32.8          29.7
Weighted average                                                            
 Shares outstanding                                                         
 (millions)                  484.6         484.6         484.6         484.6
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
2014 Outlook                                                              
(millions of Canadian dollars, except volume                             
 and per barrel amounts)                                                  
As of         As of  
April 30    January 30  
2014          2014 
------------------------------------------------------------------------  
Operating assumptions                                                    
Syncrude production (mmbbls)                           100           105 
Canadian Oil Sands sales (mmbbls)                     36.7          38.6 
Sales, net of crude oil purchases and                                    
 transportation                               $      3,528  $      3,386 
Realized SCO selling price ($/bbl)            $      96.02  $      87.77 
Operating expenses                            $      1,693  $      1,600 
Operating expenses per barrel                 $      46.08  $      41.48 
Development expenses                          $        176  $        181 
Crown royalties                               $        160  $        128 
Current taxes                                 $        200  $        200 
Cash flow from operations(1)                  $      1,194  $      1,158 
------------------------------------------------------------------------ 
------------------------------------------------------------------------  
Capital expenditure assumptions                                          
Major projects                                $        575  $        653 
Regular maintenance                           $        267  $        361 
Capitalized interest                          $         86  $         83 
Total capital expenditures                    $        928  $      1,097 
------------------------------------------------------------------------ 
------------------------------------------------------------------------  
Business environment assumptions                                         
West Texas Intermediate (U.S.$/bbl)           $      92.00  $      90.00 
Discount to average Cdn$ WTI prices                                      
 (Cdn$/bbl)                                   $      (4.00) $      (5.00)
Foreign exchange rate (U.S.$/Cdn$)            $       0.92  $       0.97 
AECO natural gas (Cdn$/GJ)                    $       4.50  $       3.50 
------------------------------------------------------------------------ 
------------------------------------------------------------------------  
(1) Cash flow from operations is an additional GAAP financial measure    
 and is defined in the "Additional GAAP Financial Measures" section of   
 this MD&A.                                                               
/T/ 
We have lowered our 2014 Syncrude production estimate to range between 95 and
105 million barrels, with a single-point estimate of 100 million barrels
(274,000 barrels per day). Net to Canadian Oil Sands, the single-point estimate
is equivalent to 36.7 million barrels (100,700 barrels per day). This change
reflects an unplanned Coker 8-1 outage to remove coke deposits following a
valve leak repair. The revised estimate incorporates the additional complexity
resulting from the overlap with our planned Coker 8-2 turnaround and continues
to reflect the successful startup of the new Mildred Lake mine trains in the
fourth quarter. 
Estimated 2014 sales, net of crude oil purchases and transportation expense,
have risen to $3,528 million, reflecting an increase in the forecast realized
selling price and the revised production estimate. 
The forecast selling price has increased $8 per barrel to $96 per barrel and
assumes a U.S. $92 per barrel WTI oil price, a $4 per barrel SCO discount to
Canadian dollar WTI and a foreign exchange rate of $0.92 U.S./Cdn. 
We have increased forecast 2014 operating expenses to $1,693 million to reflect
a higher $4.50 per gigajoule ("GJ") natural gas price assumption and
actual results incurred in the first quarter of the year. Based on our revised
single-point production estimate, this translates to $46.08 per barrel. 
Estimated Crown royalties have increased to $160 million, reflecting an
increase in deemed bitumen prices and lower capital deductions, partially
offset by lower bitumen production. 
Estimated capital expenditures have decreased to $928 million, reflecting a
reduction in the Mildred Lake Mine Train Replacement project cost estimate and
adjustments to spending on regular maintenance capital projects.  
Based on these assumptions, estimated 2014 cash flow from operations has risen
to $1,194 million, or $2.46 per Share. 
We plan to use existing cash to help fund capital expenditures and dividends.
Based on the assumptions in our 2014 Outlook, we expect net debt to be within
our targeted range of $1 billion to $2 billion at year end, coincident with the
substantial completion of our major projects. 
Changes in certain factors and market conditions could potentially impact
Canadian Oil Sands' Outlook. The following table provides a sensitivity
analysis of the key factors affecting the Corporation's performance. 
/T/ 
Outlook Sensitivity Analysis (April 30, 2014)                                
Cash Flow from      
Operations        
Increase         
$ millions   $ / Share
Variable                          Annual Sensitivity       (1,2)       (1,2)
---------------------------------------------------------------------------- 
Syncrude operating expense                                                  
 decrease                               Cdn$1.00/bbl $        22 $      0.05
Syncrude operating expense                                                  
 decrease                             Cdn$50 million $        11 $      0.02
WTI crude oil price increase           U.S.$1.00/bbl $        25 $      0.05
Syncrude production increase          2 million bbls $        44 $      0.09
Canadian dollar weakening             U.S.$0.01/Cdn$ $        25 $      0.05
AECO natural gas price decrease          Cdn$0.50/GJ $        14 $      0.03
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
(1) These sensitivities are after the impact of taxes.                      
(2) These sensitivities assume Canadian Oil Sands pays Crown royalties based
 on 25 per cent of net bitumen revenues in 2014. Lower bitumen revenues or  
 higher deductible bitumen-related costs may result in minimum Crown        
 royalties based on 1 per cent of gross revenues which will change the      
 sensitivities to these variables.                                           
/T/ 
The 2014 Outlook contains forward-looking information and users are cautioned
that the actual amounts may vary from the estimates disclosed. Please refer to
the "Forward-Looking Information Advisory" section of this MD&A
for the risks and assumptions underlying this forward-looking information. 
Major Projects 
The following tables provide cost and schedule estimates for Syncrude's
major projects. Regular maintenance capital expenditures for years after 2014
will be provided on an annual basis when we disclose the budgets for those
years. 
/T/ 
Major Projects - Total Project Cost and Schedule Estimates(1)                
Total Cost Estimated %             
Total Cost    Estimate Complete at      Target 
Estimate    Accuracy   March 31,  In-Service 
($ billions)         (%)     2014(2)        Date
---------------------------------------------------------------------------- 
Mildred Lake MineSyncrude   $        3.9  +5% / -10%         85%     Q4 2014
 Train                                                                      
 Replacement                                                                 
COS share           1.4                                     
Centrifuge       Syncrude   $        1.9 +15% / -15%         75%     H1 2015
 Tailings                                                                   
 Management                                                                  
COS share           0.7                                     
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Major Projects - Annual Spending Profile(1)                               
Spent to                               
December 31,                              
($ billions)                           2013      2014      2015     Total
------------------------------------------------------------------------- 
Syncrude                    $           3.6 $     1.8 $     0.4 $     5.8
Canadian Oil Sands share    $           1.3 $     0.7 $     0.1 $     2.1
-------------------------------------------------------------------------
------------------------------------------------------------------------- 
(1) Major projects costs include capital expenditures, excluding         
 capitalized interest, and certain development expenses.                 
(2) The estimated percentage complete is based on hours spent as a       
 percentage of total forecasted hours to project completion.              
/T/ 
Capital expenditures on the Mildred Lake Mine Train Replacement project are
trending below budget and the project remains on schedule for completion in the
fourth quarter of this year. Accordingly, we have reduced our total cost
estimate from $4.2 billion to $3.9 billion (gross to Syncrude) and tightened
the range around this estimate. The Centrifuge Tailings Management project
continues to track to budget and remains on schedule for completion in the
first half of 2015. 
The major projects tables contain forward-looking information and users of this
information are cautioned that the actual yearly and total major project costs
and the actual in-service dates for the major projects may vary from the plans
disclosed. The major project cost estimates and major project target in-service
dates are based on current spending plans. Please refer to the
"Forward-Looking Information Advisory" section of this MD&A for
the risks and assumptions underlying this forward-looking information. For a
list of additional risk factors that could cause the actual amount of the major
project costs and the major project target in-service dates to differ
materially, please refer to the Corporation's Annual Information Form
dated February 20, 2014 which is available on the Corporation's profile on
SEDAR at www.sedar.com and on the Corporation's website at
www.cdnoilsands.com. 
/T/ 
Consolidated Statements of Income and Comprehensive Income                  
(unaudited)                                                                 
(millions of Canadian dollars, except per                                   
 Share and Share volume amounts)                                             
Three Months Ended March 31  
2014           2013 
---------------------------------------------------------------------------  
Sales                                          $       1,114  $         961 
Crown royalties                                          (58)           (23)
--------------------------------------------------------------------------- 
Revenues                                       $       1,056  $         938 
---------------------------------------------------------------------------  
Expenses                                                                    
 Operating                                     $         445  $         355 
 Development                                              32             26 
 Crude oil purchases and transportation                  119            133 
 Administration                                           10             10 
 Insurance                                                 6              6 
 Depreciation and depletion                              129            122 
---------------------------------------------------------------------------  
$         741  $         652 
--------------------------------------------------------------------------- 
Earnings from operating activities             $         315  $         286 
 Foreign exchange loss (Note 9)                           54             28 
 Net finance expense (Note 10)                            14             13 
--------------------------------------------------------------------------- 
Earnings before taxes                          $         247  $         245 
 Tax expense (Note 11)                                    75             68 
--------------------------------------------------------------------------- 
Net income                                     $         172  $         177 
Other comprehensive income (loss), net of                                   
 taxes                                                                      
 Items not reclassified to net income:                                      
  Re-measurements of employee future benefit                                 
plans (Note 6)                                         24             14 
 Items reclassified to net income:                                          
 Derivative gains                                         (1)            (1)
--------------------------------------------------------------------------- 
Comprehensive income                           $         195  $         190 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Weighted average Shares (millions)                       485            485 
Shares, end of period (millions)                         485            485  
Net income per Share                                                        
 Basic and diluted                             $        0.35  $        0.37 
---------------------------------------------------------------------------  
See Notes to Unaudited Consolidated Financial                               
 Statements                                                                  
Consolidated Statements of Shareholders' Equity                            
(unaudited)                                                                 
Three Months Ended March 31 
(millions of Canadian dollars)                          2014          2013 
--------------------------------------------------------------------------  
Retained earnings                                                          
 Balance, beginning of period                   $      2,040  $      1,823 
 Net income                                              172           177 
 Re-measurements of employee future benefit                                
  plans                                                   24            14 
 Dividends                                              (170)         (170)
-------------------------------------------------------------------------- 
 Balance, end of period                         $      2,066  $      1,844 
-------------------------------------------------------------------------- 
Accumulated other comprehensive income                                     
 Balance, beginning of period                   $          6  $          9 
 Reclassification of derivative gains to net                               
  income                                                  (1)           (1)
-------------------------------------------------------------------------- 
 Balance, end of period                         $          5  $          8 
-------------------------------------------------------------------------- 
Shareholders' capital                                                      
 Balance, beginning of period                   $      2,674  $      2,673 
 Issuance of shares                                        1             1 
-------------------------------------------------------------------------- 
 Balance, end of period                         $      2,675  $      2,674 
-------------------------------------------------------------------------- 
Contributed surplus                                                        
 Balance, beginning of period                   $         12  $         10 
 Share-based compensation                                  1             1 
-------------------------------------------------------------------------- 
 Balance, end of period                                   13            11 
-------------------------------------------------------------------------- 
Total Shareholders' equity                      $      4,759  $      4,537 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
See Notes to Unaudited Consolidated Financial                              
 Statements                                                                 
Consolidated Balance Sheets                                             
(unaudited)                                                              
March 31  December 31
As at (millions of Canadian dollars)                   2014         2013
------------------------------------------------------------------------ 
Assets                                                                  
Current assets                                                          
 Cash and cash equivalents                     $        292 $        806
 Accounts receivable                                    423          369
 Inventories                                            173          163
 Prepaid expenses                                         5            8
------------------------------------------------------------------------ 
$        893 $      1,346
Property, plant and equipment, net (Note 4)           8,836        8,712
Exploration and evaluation                               54           54
Reclamation trust                                        81           78
------------------------------------------------------------------------ 
$      9,864 $     10,190
------------------------------------------------------------------------
------------------------------------------------------------------------ 
Liabilities and Shareholders' Equity                                    
Current liabilities                                                     
 Accounts payable and accrued liabilities                               
  (Note 5)                                     $        644 $        786
 Current portion of employee future benefits                            
  (Note 6)                                               42           82
 Current taxes                                            -          259
------------------------------------------------------------------------ 
$        686 $      1,127
Long-term debt                                        1,665        1,602
Deferred taxes                                        1,559        1,535
Employee future benefits (Note 6)                       219          226
Asset retirement obligation (Note 7)                    894          868
Other liabilities (Note 8)                               82          100
------------------------------------------------------------------------ 
$      5,105 $      5,458
Shareholders' equity                                  4,759        4,732
------------------------------------------------------------------------ 
$      9,864 $     10,190
------------------------------------------------------------------------
------------------------------------------------------------------------ 
Commitments (Note 14)                                                    
See Notes to Unaudited Consolidated Financial                           
 Statements                                                              
Consolidated Statements of Cash Flows                                       
(unaudited)                                                                  
Three Months Ended March 31 
(millions of Canadian dollars)                           2014          2013 
---------------------------------------------------------------------------  
Cash from (used in) operating activities                                    
Net income                                      $         172 $         177 
Adjustments to reconcile net income to cash flow                            
 from operations:                                                           
 Depreciation and depletion                               129           122 
 Accretion of asset retirement obligation (Note                             
  7)                                                        7             6 
 Foreign exchange loss on long-term debt (Note                              
  9)                                                       63            37 
 Deferred taxes (Note 11)                                  15           (22)
 Share-based compensation                                   4             2 
 Reclamation expenditures (Note 7)                        (17)          (33)
 Change in employee future benefits and other             (16)          (14)
--------------------------------------------------------------------------- 
 Cash flow from operations                      $         357 $         275 
Change in non-cash working capital (Note 15)             (479)           54 
--------------------------------------------------------------------------- 
 Cash from (used in) operating activities       $        (122)$         329 
---------------------------------------------------------------------------  
Cash from (used in) financing activities                                    
Issuance of shares                              $           1 $           - 
Dividends                                                (170)         (170)
--------------------------------------------------------------------------- 
 Cash used in financing activities              $        (169)$        (170)
---------------------------------------------------------------------------  
Cash from (used in) investing activities                                    
Capital expenditures (Note 4)                   $        (217)$        (268)
Reclamation trust funding                                  (3)           (2)
Change in non-cash working capital (Note 15)               (3)           23 
--------------------------------------------------------------------------- 
 Cash used in investing activities              $        (223)$        (247)
---------------------------------------------------------------------------  
Foreign exchange gain on cash and cash                                      
equivalents held in foreign currency            $           - $           6 
---------------------------------------------------------------------------  
Decrease in cash and cash equivalents           $        (514)$         (82)
Cash and cash equivalents, beginning of period            806         1,553 
--------------------------------------------------------------------------- 
Cash and cash equivalents, end of period        $         292 $       1,471 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Cash and cash equivalents consist of:                                       
Cash                                            $         170 $         758 
Short-term investments                                    122           713 
---------------------------------------------------------------------------  
$         292 $       1,471 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
Supplementary Information (Note 15)                                          
See Notes to Unaudited Consolidated Financial                               
 Statements                                                                  
/T/ 
Notes to Unaudited Consolidated Financial Statements 
For the Three Months Ended March 31, 2014 
(Tabular amounts expressed in millions of Canadian dollars, except where
otherwise noted) 
1) Nature of Operations 
Canadian Oil Sands Limited ("Canadian Oil Sands" or the
"Corporation") is incorporated under the laws of the Province of
Alberta, Canada. The Corporation indirectly owns a 36.74 per cent interest
("Working Interest") in the Syncrude Joint Venture
("Syncrude"). Syncrude is involved in the mining and upgrading of
bitumen from oil sands near Fort McMurray in northern Alberta. The Syncrude
Project is comprised of open-pit oil sands mines, utilities plants, bitumen
extraction plants and an upgrading complex that processes bitumen into
Synthetic Crude Oil ("SCO"). Syncrude is jointly controlled by seven
owners and each owner takes its proportionate share of production in kind, and
funds its share of Syncrude's operating, development and capital costs on
a daily basis. The Corporation also indirectly owns 36.74 per cent of the
issued and outstanding shares of Syncrude Canada Ltd. ("Syncrude
Canada"). Syncrude Canada operates Syncrude on behalf of the owners and is
responsible for selecting, compensating, directing and controlling
Syncrude's employees, and for administering all related employment
benefits and obligations. The Corporation's investment in Syncrude and
Syncrude Canada represents its only producing asset. 
The Corporation's office is located at the following address: 2000 First
Canadian Centre, 350 - 7th Avenue S.W., Calgary, Alberta, Canada T2P 3N9. 
2) Basis of Presentation 
These unaudited interim consolidated financial statements are prepared and
reported in Canadian dollars in accordance with Canadian generally accepted
accounting principles as set out in Part 1 of the Chartered Professional
Accountants of Canada Handbook and in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB") and effective on April 30, 2014. 
Certain disclosures that are normally required to be included in the notes to
the annual audited consolidated financial statements have been condensed or
omitted as permitted by International Accounting Standard ("IAS") 34,
Interim Financial Reporting. These unaudited interim consolidated financial
statements should be read in conjunction with the Corporation's audited
consolidated financial statements and notes thereto for the year ended December
31, 2013. 
3) Accounting Policies 
The same accounting policies and methods of computation are followed in these
unaudited interim consolidated financial statements as compared with the most
recent audited annual consolidated financial statements for the year ended
December 31, 2013 except as follows: 
Taxes 
Current taxes in interim periods are accrued based on our best estimate of the
annual effective tax rate applied to year-to-date earnings. Current taxes
accrued in one interim period may be adjusted prospectively in a subsequent
interim period if the estimate of the annual effective tax rate changes. 
Impairment 
In January 2013, the IASB issued amendments to IAS 36, Impairment of Assets,
which removed fair value guidance from the standard to ensure consistency with
the enhanced fair value measurement and disclosure requirements provided under
IFRS 13, Fair Value Measurements. Canadian Oil Sands has applied these
amendments effective January 1, 2014 in accordance with the applicable
transitional provisions, with no impact on the financial statements or
disclosures. 
Levies  
In May 2013, the IASB issued International Financial Reporting Interpretations
Committee ("IFRIC") Interpretation 21, Levies, which provides
guidance on when to recognize a liability for levies imposed by governments.
Canadian Oil Sands has applied this interpretation effective January 1, 2014,
in accordance with the applicable transitional provisions, with no impact on
the financial statements or disclosures. 
4) Property, Plant and Equipment, Net  
/T/ 
Three Months Ended March 31, 2014            
Upgrading              Vehicles                  Asset 
and     Mining        and             Retirement
($ millions)         Extracting  Equipment  Equipment   Buildings      Costs
---------------------------------------------------------------------------- 
Cost                                                                        
Balance at January                                                          
 1, 2014             $    5,508  $   1,941  $     695  $      345 $      851
Additions                     -          -          9           -          -
Change in asset                                                             
 retirement costs             -          -          -           -         36
Retirements                  (4)       (16)       (23)          -          -
Reclassifications(1)         16          6          -           -          -
----------------------------------------------------------------------------
Balance at March 31,                                                        
 2014                $    5,520  $   1,931  $     681  $      345 $      887
---------------------------------------------------------------------------- 
Accumulated                                                                 
 depreciation                                                               
Balance at January                                                          
 1, 2014             $    1,626  $     601  $     349  $      115 $      223
Depreciation                 49         33         14           2         11
Retirements                  (4)       (16)       (23)          -          -
Reclassifications(1)          -          -          -           -          -
----------------------------------------------------------------------------
Balance at March 31,                                                        
 2014                $    1,671  $     618  $     340  $      117 $      234
---------------------------------------------------------------------------- 
Net book value at                                                           
March 31, 2014       $    3,849  $   1,313  $     341  $      228 $      653
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
(1) Reclassifications are primarily transfers from construction in progress 
 to other categories of property, plant and equipment when construction is  
 completed and assets are available for use.                                 
Three Months Ended March 31, 2014             
Major                                            
Turnaround Construction           Mine               
($ millions)                Costs  in Progress    Development         Total 
---------------------------------------------------------------------------  
Cost                                                                        
Balance at January                                                          
 1, 2014             $        174 $      1,647  $         678 $      11,839 
Additions                       3          205              -           217 
Change in asset                                                             
 retirement costs               -            -              -            36 
Retirements                     -            -              -           (43)
Reclassifications(1)            -          (22)             -             - 
--------------------------------------------------------------------------- 
Balance at March 31,                                                        
 2014                $        177 $      1,830  $         678 $      12,049 
---------------------------------------------------------------------------  
Accumulated                                                                 
 depreciation                                                               
Balance at January                                                          
 1, 2014             $         86 $          -  $         127 $       3,127 
Depreciation                   17            -              3           129 
Retirements                     -            -              -           (43)
Reclassifications(1)            -            -              -             - 
--------------------------------------------------------------------------- 
Balance at March 31,                                                        
 2014                $        103 $          -  $         130 $       3,213 
---------------------------------------------------------------------------  
Net book value at                                                           
March 31, 2014       $         74 $      1,830  $         548 $       8,836 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
(1) Reclassifications are primarily transfers from construction in progress 
 to other categories of property, plant and equipment when construction is  
 completed and assets are available for use.                                 
/T/ 
For the three months ended March 31, 2014, interest costs of $24 million were
capitalized and included in property, plant and equipment (three months ended
March 31, 2013 - $23 million) based on an interest capitalization rate of 6.6
per cent for the three months ended March 31, 2014 (6.5 per cent for the three
months ended March 31, 2013). 
5) Accounts Payable and Accrued Liabilities 
/T/ 
March 31     December 31 
($ millions)                                           2014            2013 
---------------------------------------------------------------------------  
Trade payables                               $          528  $          491 
Crown royalties                                         137             334 
Current portion of asset retirement                                         
 obligation                                              28              28 
Interest payable                                         18              23 
---------------------------------------------------------------------------  
$          711  $          876 
Less non-current portion of Crown royalties             (67)            (90)
--------------------------------------------------------------------------- 
Accounts payable and accrued liabilities     $          644  $          786 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
/T/ 
6) Employee Future Benefits 
The Corporation's 36.74 per cent share of Syncrude Canada's
obligation for pension and other post-employment benefits in excess of the fair
value of the assets held in the benefit plans (the "accrued benefit
liability") is as follows: 
/T/ 
Three Months           Year  
Ended          Ended  
March 31    December 31 
($ millions)                                           2014           2013 
--------------------------------------------------------------------------  
Accrued benefit liability, beginning of                                    
 period                                       $         308  $         438 
Current service cost(1)                                  11             45 
Interest expense(2)                                       3             16 
Contributions                                           (28)          (109)
Re-measurement (gains) losses(3):                                          
Actual return on plan assets in excess of                                  
 estimated return(4)                                    (33)           (46)
Increase in discount rate                                 -            (91)
Other(5)                                                  -             55 
-------------------------------------------------------------------------- 
Accrued benefit liability, end of period      $         261  $         308 
Less current portion                                    (42)           (82)
-------------------------------------------------------------------------- 
Non-current portion                           $         219  $         226 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
(1) Current service cost is recognized in net income as operating expense. 
(2) Interest expense is net of estimated return on plan assets and is      
 recognized in net income as net finance expense.                          
(3) Re-measurement (gains) losses are recognized, net of taxes, in other   
 comprehensive income (loss).                                              
(4) Estimated return is based on prescribed 4.5 per cent annualized rate.  
(5) The other re-measurement loss in 2013 reflects an increase in the      
 estimated average lifespan of the plans' beneficiaries as a result of new 
 actuarial standards.                                                       
/T/ 
7) Asset Retirement Obligation 
The Corporation and each of the other Syncrude owners are liable for their
share of ongoing obligations related to the reclamation and closure of the
Syncrude properties on abandonment. The Corporation estimates reclamation and
closure expenditures on disturbed mines and existing facilities will be made
progressively over the next 70 years and has applied a risk-free interest rate
of 3.0 per cent at March 31, 2014 (December 31, 2013 - 3.25 per cent) in
deriving the asset retirement obligation.  
/T/ 
Three Months         Year  
Ended        Ended  
March 31  December 31 
($ millions)                                              2014         2013 
---------------------------------------------------------------------------  
Asset retirement obligation, beginning of period   $       896  $     1,102 
(Increase) decrease in risk-free interest rate              50         (217)
Reclamation expenditures                                   (17)         (42)
Increase (decrease) in estimated reclamation and                            
 closure expenditures                                      (14)          27 
Accretion expense                                            7           26 
--------------------------------------------------------------------------- 
Asset retirement obligation, end of period         $       922  $       896 
Less current portion                                       (28)         (28)
--------------------------------------------------------------------------- 
Non-current portion                                $       894  $       868 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
/T/ 
8) Other Liabilities 
/T/ 
March 31  December 31
($ millions)                                       2014         2013
-------------------------------------------------------------------- 
Non-current portion of Crown royalties(1)  $         67 $         90
Other                                                15           10
--------------------------------------------------------------------
Other liabilities                          $         82 $        100
--------------------------------------------------------------------
-------------------------------------------------------------------- 
(1) Transition royalties due under Syncrude's Royalty Amending      
 Agreement.                                                          
/T/ 
9) Foreign Exchange 
/T/ 
Three Months Ended March 31  
($ millions)                                        2014           2013 
-----------------------------------------------------------------------  
Foreign exchange loss - long-term debt     $          63  $          37 
Foreign exchange gain - other                         (9)            (9)
----------------------------------------------------------------------- 
Total foreign exchange loss                $          54  $          28 
----------------------------------------------------------------------- 
-----------------------------------------------------------------------  
/T/ 
10) Net Finance Expense 
/T/ 
Three Months Ended March 31 
($ millions)                                         2014           2013 
------------------------------------------------------------------------  
Interest costs on long-term debt            $          30  $          31 
 Less capitalized interest on long-term                                  
  debt                                                (24)           (23)
------------------------------------------------------------------------ 
Interest expense on long-term debt          $           6  $           8 
Interest expense on employee future                                      
 benefits                                               3              4 
Accretion of asset retirement obligation                7              6 
Interest income                                        (2)            (5)
------------------------------------------------------------------------ 
Net finance expense                         $          14  $          13 
------------------------------------------------------------------------ 
------------------------------------------------------------------------  
/T/ 
11) Tax Expense 
/T/ 
Three Months Ended March 31 
($ millions)                                        2014          2013 
----------------------------------------------------------------------  
Current tax expense                        $          60 $          90 
Deferred tax expense (recovery)                       15           (22)
---------------------------------------------------------------------- 
Total tax expense                          $          75 $          68 
---------------------------------------------------------------------- 
----------------------------------------------------------------------  
/T/ 
12) Capital Management 
The Corporation's capital consists of cash and cash equivalents, debt and
Shareholders' equity. The balance of each of these items at March 31, 2014
and December 31, 2013 was as follows: 
/T/ 
March 31    December 31 
As at ($ millions, except % amounts)                   2014           2013 
--------------------------------------------------------------------------  
Long-term debt(1)                             $       1,665  $       1,602 
Cash and cash equivalents(1)                           (292)          (806)
-------------------------------------------------------------------------- 
Net debt(2,3)                                 $       1,373  $         796 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
Shareholders' equity(1)                       $       4,759  $       4,732 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
Total net capitalization(2,4)                 $       6,132  $       5,528 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
Total capitalization(2,5)                     $       6,424  $       6,334 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
Net debt-to-total net capitalization(2,6) (%)            22             14 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
Long-term debt-to-total capitalization(2,7)                                
 (%)                                                     26             25 
-------------------------------------------------------------------------- 
--------------------------------------------------------------------------  
(1) As reported in the Consolidated Balance Sheets.                        
(2) Additional GAAP financial measure.                                     
(3) Long-term debt less cash and cash equivalents.                         
(4) Net debt plus Shareholders' equity.                                    
(5) Long-term debt plus Shareholders' equity.                              
(6) Net debt divided by total net capitalization.                          
(7) Long-term debt divided by total capitalization.                         
/T/ 
Net debt, which is comprised of long-term debt less cash and cash equivalents,
rose $577 million to $1,373 million at March 31, 2014 as cash balances were
used to settle existing liabilities of approximately $500 million for Crown
royalties and taxes, while a weakening Canadian dollar increased the carrying
value of our long-term debt by $63 million. Cash flow from operations was
almost sufficient to fund first quarter capital expenditures of $217 million
and dividends of $170 million. As a result, net debt-to-total net
capitalization increased to 22 per cent at March 31, 2014 from 14 per cent at
December 31, 2013. 
Shareholders' equity increased to $4,759 million at March 31, 2014 from
$4,732 million at December 31, 2013, as comprehensive income exceeded dividends
in the first quarter of 2014. 
The Corporation's senior notes indentures and credit facility agreements
contain certain covenants which restrict Canadian Oil Sands' ability to
sell all or substantially all of its assets or change the nature of its
business, and limit long-term debt-to-total capitalization to 55 per cent.
Canadian Oil Sands is in compliance with its debt covenants, and with a
long-term debt-to-total capitalization of 26 per cent at March 31, 2014, a
significant increase in debt or decrease in equity would be required to
negatively impact the Corporation's financial flexibility. 
13) Financial Instruments 
The Corporation's financial instruments include cash and cash equivalents,
accounts receivable, investments held in 
a reclamation trust, accounts payable and accrued liabilities, and current and
non-current portions of long-term debt. The nature, the Corporation's use
of, and the risks associated with these instruments are unchanged from December
31, 2013. 
Offsetting Financial Assets and Financial Liabilities 
The carrying values of accounts receivable and accounts payable and accrued
liabilities have each been reduced by $74 million ($49 million at December 31,
2013) as a result of netting agreements with counterparties. 
Fair Values 
The fair values of cash and cash equivalents, accounts receivable, reclamation
trust investments and accounts payable and accrued liabilities approximate
their carrying values due to the short-term nature of those instruments. The
following fair values of long-term debt are based on Level 2 inputs to fair
value measurement, which represent indicative bids or spreads for a round lot
transaction within the relevant market: 
/T/ 
March 31   December 31
As at ($ millions)                                        2014          2013
---------------------------------------------------------------------------- 
8.2% Senior Notes due April 1, 2027 (U.S. $73.95                            
 million)                                        $         103 $          95
7.9% Senior Notes due September 1, 2021 (U.S.                               
 $250 million)                                             341           321
6.0% Senior Notes due April 1, 2042 (U.S. $300                              
 million)                                                  369           323
4.5% Senior Notes due April 1, 2022 (U.S. $400                              
 million)                                                  455           425
7.75% Senior Notes due May 15, 2019 (U.S. $500                              
 million)                                                  670           636
---------------------------------------------------------------------------- 
$       1,938 $       1,800
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
14) Commitments 
Canadian Oil Sands' commitments are summarized in the 2013 annual
consolidated financial statements and include future cash payments under
contractual arrangements that it has entered into either directly or as a 36.74
per cent owner in Syncrude. During 2014, Canadian Oil Sands assumed $75 million
in new funding commitments relating to capital projects while the
Corporation's share of payments prescribed by regulations on Syncrude
Canada's registered pension plans decreased by approximately $200 million
as a result of an actuarial valuation completed in April, 2014. 
15) Supplementary Information 
a) Change in Non-Cash Working Capital 
/T/ 
Three Months Ended March 31  
($ millions)                                            2014           2013 
---------------------------------------------------------------------------  
Operating activities:                                                       
 Accounts receivable                           $         (54) $          (4)
 Inventories                                             (10)           (23)
 Prepaid expenses                                          3              3 
 Accounts payable and accrued liabilities                                   
  ("AP")                                                (142)            55 
 Current taxes                                          (259)            46 
 Other                                                   (20)             - 
 AP changes reclassified to investing                                       
  activities                                               3            (23)
--------------------------------------------------------------------------- 
Change in operating non-cash working capital   $        (479) $          54 
---------------------------------------------------------------------------  
Investing activities:                                                       
 Accounts payable and accrued liabilities      $          (3) $          23 
--------------------------------------------------------------------------- 
Change in investing non-cash working capital   $          (3) $          23 
---------------------------------------------------------------------------  
--------------------------------------------------------------------------- 
Change in total non-cash working capital       $        (482) $          77 
--------------------------------------------------------------------------- 
---------------------------------------------------------------------------  
/T/ 
b) Income Taxes and Interest Paid 
/T/ 
Three Months Ended March 31
($ millions)                       2014          2013
----------------------------------------------------- 
Income taxes paid         $         338 $          44
-----------------------------------------------------
----------------------------------------------------- 
Interest paid             $          35 $          20
-----------------------------------------------------
----------------------------------------------------- 
/T/ 
Income taxes paid and the portion of interest costs that is expensed are
included within cash from operating activities on the Consolidated Statements
of Cash Flows. The portion of interest costs that is capitalized as property,
plant and equipment is included within cash used in investing activities on the
Consolidated Statements of Cash Flows. 
c) Cash Flow from Operations per Share  
/T/ 
Three Months Ended March 31
($ millions)                                              2014          2013
---------------------------------------------------------------------------- 
Cash Flow From Operations Per Share, basic and                              
 diluted                                         $        0.74 $        0.57
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
Cash flow from operations per Share is calculated as cash flow from operations,
which is cash from operating activities before changes in non-cash working
capital, divided by the weighted-average number of outstanding Shares in the
period. 
Canadian Oil Sands Limited 
Ryan Kubik, President & Chief Executive Officer 
Shares Listed - Symbol: COS Toronto Stock Exchange 
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Canadian Oil Sands Limited
Siren Fisekci
Vice President, Investor & Corporation Relations
(403) 218-6228
or
Canadian Oil Sands Limited
Scott Arnold
Director, Sustainability & External Relations
(403) 218-6206
or
Canadian Oil Sands Limited
2000 First Canadian Centre
350 - 7 Avenue S.W., Calgary, Alberta T2P 3N9
(403) 218-6200
(403) 218-6201
invest@cdnoilsands.com 
INDUSTRY:  Energy and Utilities - Oil and Gas  
SUBJECT:  ERN 
-0-
-0- Apr/30/2014 20:01 GMT
 
 
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