MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”) JULY 27, 2010
Table of Contents
1. Summary of Quarterly Results
2. Business Environment
3. Capability to Deliver Results and the Strategic Plan
4. Key Growth Highlights
5. Results of Operations
6. Liquidity and Capital Resources
7. Risk Management
8. Critical Accounting Estimates
9. Accounting Policies
10. Outstanding Share Data
11. Reader Advisories
12. Forward-Looking Statements and Information
Summary of Quarterly Results
Cash flow from operations in the quarter of $806 million, comparable to the second quarter of 2009.
Net earnings in the quarter lower compared with the second quarter of 2009 due to lower product margins in
Downstream, increased depletion expense in Southeast Asia, and declines in Upstream production.
Lower production in the second quarter of 2010 compared with the same period in 2009 is primarily due to:
lower natural gas and heavy crude oil production in Western Canada due to reduced capital investment in
2009 in response to economic conditions at the time; and
the decline in crude oil production from the White Rose field which will be partially offset by production
from the North Amethyst satellite field; however, the impact to production rates for the quarter
from North Amethyst was minimal as first oil was achieved on May 31, 2010.
The stronger Canadian dollar in the quarter relative to the U.S. dollar reduced the benefit of higher benchmark
commodity prices year over year.
Capital expenditures of $638 million compared to $492 million in the second quarter of 2009.
Successful appraisal well Liuhua 29-1-2 drilled on Block 29/26 in the South China Sea.
Sunrise Energy Project phase one remains on schedule for full sanction in the fourth quarter of 2010.