Canadian Oil Sands has declared first quarter 2009 cash from operating activities of CAD50 million (CAD0.10 per unit) compared with CAD441 million (CAD0.92 per unit) in the same quarter in 2008. The decline in cash from operating activities and net income in 2009 reflects the significant decline in crude oil prices with average West Texas Intermediate (WTI) prices down 56% from the first quarter of 2008. The financial results also reflect higher operating costs net of lower Crown royalties. Higher future income tax recoveries were recorded in the 2009 first quarter, rising net income, while changes in non-cash working capital decreased cash from operating activities compared with the year-ago quarter.

We experienced a difficult first quarter with very weak crude oil prices and more than the usual winter challenges, said Marcel Coutu, president and chief executive officer. We expect production to improve as constraints in bitumen supply are gradually addressed and we complete the turnaround work that began in the first quarter, positioning us for a much stronger second half of the year. Our financial plan during this economic downturn remains on track with a focus on maintaining a healthy balance sheet, and more importantly, a solid liquidity position.

Coutu added: I am cautiously optimistic that crude oil prices are now on a recovering trend. Despite a global recession that may extend for a few more quarters, an eventual oil price recovery may be accelerated by natural production declines due to lower industry reinvestment in producing fields and outright production cuts by OPEC nations.

Canadian Oil Sands has declared a distribution of CAD0.15 per unit for the second quarter of 2009, unchanged from the year-ago quarter. The distribution is payable on May 29, 2009 to unit holders of record on May 11, 2009. Eligible unit holders can elect to take part in the trust’s premium distribution, distribution re-investment and optional unit purchase plan (DRIP) by contacting their financial advisor or Computershare Trust Company.

During the first quarter of 2009, sales volumes averaged about 103,000 barrels per day as compared to 99,000 barrels per day for the year-ago quarter. Constraints in bitumen supply and unplanned maintenance decreased production in the first quarter of both years. In mid-March 2009, Syncrude started turnaround work on Coker 8-3. The turnaround was planned to begin early in the second quarter, and its advancement also impacted first quarter volumes.

Operating costs in the first quarter of 2009 were CAD38.78 per barrel compared with CAD35.93 per barrel in the year-ago quarter, reflecting a CAD35 million raise in total operating costs in the first quarter of 2009 over the in the year-ago quarter. The raise was mainly due to higher maintenance costs, higher labor costs and additional mining activity in 2009 relative to 2008.

Canadian Oil Sands 2009 outlook estimates production of 40 million barrels (109,500 barrels per day), operating costs of about CAD33.50 per barrel, and capital expenditures totaling CAD453 million. The approximation for production was decreased in March 2009 to reflect the lower than anticipated first quarter production and the early turnaround of Coker 8-3, which delayed a sulphur plant turnaround and resulted in an addition of the overall turnaround schedule. Based on the trust’s assumption of WTI crude oil averaging $50 per barrel in 2009, together with our other assumptions outlined in our Outlook, we are estimating cash from operating activities of CAD1.21 per unit in 2009.

Review Of Syncrude Operations:

During the first quarter of 2009, crude oil production from the Syncrude joint venture (Syncrude) totaled 24.6 million barrels, or 274,000 barrels per day, compared with 24.3 million barrels, or 267,000 barrels per day, in the year-ago quarter. Net to the Trust, production totaled nine million barrels in the first quarter of 2009 compared with 8.9 million barrels in 2008, based on Canadian Oil Sands 36.74% working interest.

Production volumes in the first quarter of 2009 were impacted by constraints in bitumen production, which were caused by reliability and mine productivity issues, and by the turnaround of Coker 8-3 that began mid-March 2009. Bitumen constraints, and the disruption of several operating units in January 2008, also decreased SCO production during the first quarter of 200 8.

Operating costs were CAD38.78 per barrel in 2009 vers$35.93 per barrel in the year-ago quarter.

Business Environment:

In the first quarter of 2009, the global recession, volatile commodity prices and foreign exchange (FX) rates impacted the trust. During this period, US dollar WTI prices fluctuated between CAD33.98 per barrel and CAD54.34 per barrel and the Canadian to US exchange rate fluctuated between CAD0.77 US/CADand CAD0.85 US/CAD. In general, commodity prices have strengthened during the first quarter with US dollar WTI prices averaging CAD48 per barrel in March 2009 against CAD42 per barrel in January 2009.

As a result of weak economic conditions, a number of crude oil projects have been delayed or delayed, including oil sands projects in the Fort McMurray region. It is still too early to determine if there will be any long term decreases in costs at Syncrude resulting from lower industry activity as a number of Syncrude’s contracts are for multiple years and were entered into prior to the economic slowdown. Generally, there is less demand for workers and contractors in the existing economic environment, alleviating somewhat the challenge of finding and retaining qualified staff; however, it is still too early to determine the potential impact of this on Syncrude.

Credit markets appear to have stabilized relative to the fourth quarter of 2008 with many entities able to access capital during the first quarter of 2009, albeit at a higher cost than recent years.

Review Of Financial Results:

The decrease in net income was mainly the result of lower revenues and higher operating costs, net of lower Crown royalties and higher future income tax recoveries.

Cash from operating activities reduced to CAD50 million for the first quarter of 2009 against CAD441 million in the year-ago quarter. The change in quarter-over-quarter cash from operating activities was due to the decreased revenues, reflecting lower commodity prices, higher operating costs and changes in non-cash working capital partly counterbalanced by lower Crown royalties.

Changes in non-cash working capital decreased cash from operating activities by CAD19 million in the first quarter of 2009, mainly as a result of higher accounts receivable at March 31, 2009 against December 31, 2008. The increase in accounts receivable reflected higher oil prices in March 2009 against December 2008, partly counterbalanced by lower sales volumes. In the first quarter of 2008, changes in non-cash working capital increased cash from operating activities by CAD26 million, mainly as a result of higher accounts payable at March 31, 2008 relative to December 31, 2007.