Financial Statements and Notes - Canadian Oil Sands

c) 5.8% Senior Notes
On August 6, 2003, COSL issued US$300 million of 5.8% unsecured Senior Notes in the United States
pursuant to a private placement exemption. The notes mature on August 15, 2013. They are unsecured
obligations of COSL ranking pari passu with other senior unsecured and unsubordinated indebtedness
of COSL. There are certain covenants under the indenture, including limitations on sale of assets and
granting liens or other security interests. Interest is payable on the notes semi-annually on February 15
and August 15, with the first interest payment due February 15, 2004.
d) 7.9% Senior Notes
On August 24, 2001, COSL issued US$250 million of 7.9% Senior Notes, maturing September 1, 2021.
The notes are unsecured obligations of COSL and rank pari passu with all other unsecured and
unsubordinated indebtedness of COSL. There are certain covenants under the indenture, including
limitations on debt levels, sale of assets and granting liens or other security interests. Interest is
payable on the notes semi-annually on March 1 and September 1.
e) 8.2% Senior Notes
On April 4, 1997, a former subsidiary of the Trust, Athabasca Oil Sands Investments Inc. (AOSII) issued
US$75 million of 8.2% Senior Notes maturing April 1, 2027, and retired US$1.05 million during 2000.
These notes are senior unsecured obligations of COSL (successor to AOSII) and rank pari passu with
all other senior unsecured and unsubordinated obligations. There are certain covenants under the
indenture, including limitations on sale of assets and granting liens or other security interests. Interest
is payable on the notes semi-annually on April 1 and October 1.
10. DEFERRED CURRENCY HEDGING GAINS
Canadian Oil Sands is exposed to fluctuations in the U.S.-Canadian currency exchange rate. In 1996,
Canadian Oil Sands entered into currency hedging contracts to fix the exchange rate in future years.
During 1999, Canadian Oil Sands unwound various positions and exchanged the resulting gain for
adjustments to other existing currency contracts. For accounting purposes, the gain will be recognized
as revenue over the period 2006 to 2016, which is when the hedging contracts would have expired
had they not been unwound (Note 17(a)). During 2003, Canadian Oil Sands received payments totalling
$5.4 million (2002 – $5.1 million) related to the unrecognized gain resulting in a cumulative deferral
of $22 million in currency hedging gains.
11. PREFERRED SHARES
On October 31, 2002, in conjunction with the termination of the Administrative Services Agreement
with EnCana, COSII and AOSII redeemed the preferred shares held by EnCana (formerly PanCanadian
Energy Corporation). The 2,000 shares were redeemed at the retraction amount of approximately
$4.5 million, being the amount of capital paid for the shares when they were issued of $4.4 million,
plus the accrued unpaid dividends of approximately $0.1 million.
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Notes to Consolidated Financial Statements