John G. Langille - Vice-Chairman Allan P. Markin - Chairman Steve W. Laut - President and COO Réal J.H. Doucet - Senior Vice-President, Oil Sands Douglas A. Proll - CFO and Senior Vice-President, Finance

Gil Yang - Citigroup Brian Dutton - Credit Suisse Terry Peters - Canaccord Adams Stephen Calderwood - Raymond James Robert Plexman - CIBC World Markets Barbara Betanski - UBS Global Andrew Potter - UBS Securities

Good morning, ladies and gentlemen. Welcome to the Canadian Natural Resources Third Quarter Conference Call. I would now like to turn the meeting over to Mr. John Langille, Vice-Chairman of Canadian Natural Resources. Please go ahead, Mr. Langille. John G. Langille - Vice-Chairman: Thank you, operator, and good morning everyone. Thank you for attending this conference call giving us the opportunity to review our third quarter results for 2007. Participating with me today are Allan Markin, our Chairman; Steve Laut, our President and Chief Operating Officer; Doug Proll, our Senior Vice-President of Finance; and Réal Doucet, our Senior Vice-President of Oil Sands. Before we start, I would like to refer you to the forward-looking statements contained in our press release and also note that all dollar amounts are in Canadian dollars and production and reserves are both before royalties unless otherwise stated. I would like to make a couple of quick comments before I turn the call over to Allan, Steve, Doug and Réal. As we discuss our results and operations, the importance of Canadian Natural's balanced portfolio will be illustrated by our ability to efficiently reallocate capital towards higher return projects. Our philosophy of operating with high working interest allows us to actively shift our programs and short order. This is best shown by our decision over a year ago to redirect capital to the higher returning oil projects versus the lower returning natural gas projects. Clearly, we are returns focused. In the third quarter, our conventional oil and natural gas operations continue to generate strong cash flow of C$1.6 billion. For the nine months ending September 30th, cash flow from our conventional operations totaled C$4.7 billion while CapEx directed to our conventional oil and natural gas properties totaled only C$2.4 billion. The excess of cash flow continues to fund progress of the arising Oil Sands mining project, which remains on target for first oil in the third quarter of 2008. We have updated our corporate guidance to reflect year-to-date results and what we expect for the remainder of 2007. With very recent development surrounding the Alberta royalty review and pending changes to the existing structure, we have not yet finalized our plans and budget for 2008. We are targeting completion as exercised by the end of November of this year. With that, Allan, I would like to turn it over to you if you have anything to add. Allan P. Markin - Chairman: Yes. Thank you, John. Good morning, everyone. The first nine months of the year have been a continuation of our defined plan to manage our cost of course to get them lower, while maximizing value. A fine example of our defined plan is the Horizon Project at 84% complete at the end of Q3; we remain on track for targeted first oil in the third quarter of 2008. This has been achieved through our continued focus on execution. Our conventional operations benefited from our disciplined approach as well. Total liquids production is up both quarter-over-quarter and year-over-year, as we focus more on our capital towards these higher yield projects. Conversely, natural gas production decreased as expected and will continue to decline for the remainder of the year, which again reflects our reduced capital spending in 2007 towards lower yield projects in natural gas. The topic on everyone's mind right now is the reaction to the government at Alberta's new royalty program that was announced late in October. The new royalty program will have a negative impact on our development plans in 2008 and onward, the extent of which we are still attempting to fully define. As a result, we will carefully adjust our activity to ensure that we are optimizing our plan. One of our greatest strengths is our flexibility and in the light of the pending changes to the royalties, this flexibility and breadth of all options has become even more important to maintain our focus on maximizing returns to our shareholders. Over to you, Steve. Steve W. Laut - President and Chief Operating Officer: Thanks, Allan, and good morning everyone. As John pointed out, the third quarter met our expectations. Overall, our production was up quarter-over-quarter and gas production came in at the high end of guidance. This performance was achieved despite the setback due to one-time unexpected operational events and some disappointing results in the North Sea. Canadian Natural's capital allocation strategy is effective as Al pointed out our ability to re-allocate capital effectively is clearly one of our strengths, strengths we'll need to rely on, even more so in the future. Cost control is another strength of the company. In reality it is the cornerstone of our strategy. On the cap side of the business, we have seen capital cost reductions in some areas up to 30% from the highs in 2006. With the embedded cost that service companies now have, it is unlikely that we will see any further reductions. One the oil side and particularly in heavy oil, we've seen very little capital cost reductions at this point. At Horizon, we're making solid progress in a very, very challenging environment, as we get closer and closer to commissioning and start-up. Canadian Natural has the assets, a proven strategy, a well defined plan and most importantly, the people to execute that plan. And we are very focused on effectively executing our programs. So briefly, I'll talk in each of the areas starting with gas. Gas producing in the second quarter was 1.622 bcf a day, about the midpoint of our guidance that it would rise upward by 35 million a day at the end of our Q2 call. As expected, production is down from Q2. We drilled only 96 gas wells in Q3 and overall we drilled 303 gas wells in the first nine months of 2007, roughly half of the 581 gas wells we drilled in 2006 for the same nine months. As we continue to reallocate capital, oil projects, as a result of weak gas prices and very strong oil prices. The ability of our gas assets to deliver production at or above guidance with limited gas drilling demonstrates the strength of Canadian Natural's gas assets. Our gas assets are strong and our gas production performance is strong. Turning to oil in Canada, our performance is also very strong at 252,000 barrels a day, up 5% over Q2 and roughly 10% over Q3, 2006. This uplift counts in switching to the production portion of the cycle at Primrose and solid performance at Pelican Lake. This solid performance was delivered despite one-time issue at Primrose due to shutdowns from lighting strikes, unexpected scaling on the new pads and some unexpected issues with our limewater softening facilities. These issues resulted in a load of 3000 barrels a day loss of production in the quarter. At Primrose, our Primrose East expansion, our second phase with overall plant at 300,000 barrels a day of incremental heavy oil production is on track. Primrose East will take Primrose processing capacity from 80,000 barrels a day to 120,000 barrels a day in Q1 2009. At Pelican Lake, our polymer flood expansion continues to be on track and it's delivering as expected. As a reminder Pelican has 2.8 billion barrels in places and with polymer flooding, we can take recovery to up to 25% from 5% on the primary for an additional 560 million barrels of low cost incremental oil. The polymer flood at Pelican Lake will add significant value for Canadian Natural Shareholders. On a primary side, we drilled 94 heavy oil wells in Q3 and expect to drill another 100 wells in Q4. Heavy oil differential is widened to 30% of WTI expected with the mid West refinery capacity restricted for maintenance and other issues. We expect the differentials to widen in Q4. However, we are running above 30% today. Mine differentials on the other hand are running about 19% of WTI. We currently have about 25,000 barrels of day of heavy oil sold at mine prices. Obviously, the more heavy oil we could sell in the Gulf Coast, the better the margins are. As I mentioned in Q2, there is significant interest from Gulf Cost refiners to increase capacity to the Gulf for Canadian crude driven largely by decline in Mexican oil volumes and the uncertainties around Mexican heavy oil supply. As Canada's heavy... largest heavy oil cruiser and our vast resources of 3 billion barrels in our defined plan and additional 8 billion barrels will cover through our future projects. Adding additional pipeline capacity will add significant value to the already tremendous value of our heavy oil resources create for Canadian Natural shareholders. In the North Sea production was 52,000 barrels a day down in Q2 substantially. This drop in productivity can be attributed to a number of issues. The major issues being the failure of three subsea control modules at the T-Block and delays associated with Canadian [ph] vessels to repair those modules. The short come effects of [indiscernible] management at Ninian and the disappointing results at Lyell. As you know we brought on two wells in Lyell late in the third quarter. Although, initial production rates were high, production dropped off very steeply. As a major portion of the formation rock is much tighter than expected. The reserves are in place however their rate is significantly lower than expected, about 5600 barrels a day lower. We'll now take a timeout on the oil development and utilize the new data we have from the wells and the more front developed and most cost effective way for Lyell future development. Our injection wells at Columbia also [indiscernible] and injection rates are much lower than expected. We're currently looking at ways to stimulate these wells to bring injection back up to the required levels. In Offshore West Africa and Côte d'Ivoire, production was 28,954 barrels a day, down somewhat from Q2. Production was down due to increasing GORs at West Espoir and limited GAAP timing capacity at the Espoir FPSO. The deepwater rig contracted for Baobab has now not surprisingly been slipped to Q1 2008. We have a one-year contract and expect to repair three of the five [ph] wells. At Olowi, our shallow water development in Gabon is on schedule. The tankers in dry dock and all the major contracts have been awarded first oil in Olowi is late 2008, early 2009 with production ramping up to 20,000 barrels a day. Overall, the progress in offshore West Africa has been good and we remain on track with the highest return projects in the company's portfolio. And before I ask Réal to give you an update on Horizon, our world class Oil Sands project, I'll make a few general comments. We are currently constructing Phase 1, which will add 110,000 barrels a day of oil with phases 2,3 taking us up to 232,000 barrels a day and plans for phases 4 and 5 to take production just under 500,000 barrels a day or 0.5 million barrels a day of light suite 34 degree crude with no declines for 40 years. The first phase at 110,000 barrels a day is on schedule for Q3 commissioning and our costs are within 8 to 14% of our C$6.8 billion estimate developed in 2004. We are disappointed that we are over our estimate however considering the ramped cost escalation that has occurred since 2004 when oil prices were in C$3 range, we have done very well. We are now 84% complete having progressed 9% so much to our Q2 progress. With three quarters remaining to Q3 '08 commissioning, we need to only keep 5.3% per quarter. Even with the winter months and Christmas ahead of us, we are in very good shape. That being said we face many challenges not unlike the challenges we faced already and overcome. It won't get any easier from this point on however we are very confident we will continue to be successful in overcoming these impairments as we move forward. Phase 1 is incorporated as you know our significant amount of work for phases 2 and 3 and all the long-lead items and vessels have been ordered for Phase 2 and 3. This gives Canadian Natural a distinct and strategic cost of that range and we filled out the remaining phases on the Horizon project. We continue to evaluate the most effective way to do phases 2 and 3; to maximize our cost control international in this current environment. With that, I'll turn it over to Réal to give you a more detailed update. Réal? Réal J.H. Doucet - Senior Vice-President, Oil Sands: Thank you, Steve. Like Steve said, we are right now over 84% of complete total, 106% completed in constructions high and we've achieved 9% to past 3 months. Our contractors' current work for five days 8700 people and we're very focused right now on completing as much work as possible before the winter. Now one thing we started also was the commissioning and startup of the plan that has been reviewed and confirmed by external industry experts, and have assisted us in optimizing our processes. Also during the fourth quarter of 2007, the next three months, we will carry out a formalized detailed risk assessment of our commissioning and start-up schedule to identify the areas of exposure and then [indiscernible] plans are developed. If you remember we have done that also at the beginning of engineering at the end of engineering before construction, and we're doing it now also before we start the major event for the start-up and commissioning. This is keeping up with the discipline that we have used in this project execution. Remember also, our previous decision was made to differ few contract and believe certain process pieces of the project to capture cost reduction opportunities. This has caused overlap between come construction projects of this side and has resulted in an increase on our treatment power requirements. However, our supporting transportation infrastructure has been successfully expanded or accommodated for higher manpower to ensure workers are adequately accommodated. Like Steve said right now, our detailed engineering area is essentially complete, so for us right now the effort for the engineering is really to go with the [ph] drawing and filing all the drawings and the suppliers information, the manufactures and formation for our operations and maintenance. Procurement is 98% complete. We have awarded over C$5.5 billion in purchase orders and contracts so far. We have had 35,000 standard loads delivered on site, loads of all kinds to build this project. We have also on opportunity side now nailed down fairly much all the operations and maintenance services that we need for the operation and we are also now negotiating the supplier agreement for the operation. On the modularization side that program has been extremely successful over the past three months. We have delivered 80 oversized loads and so far on site, we have 1,504 oversized loads that have been delivered without delay. And that constitutes essentially the overall modularization and transportation program, which will be coming to an end here before year end. On the construction side, the mine overburden removal have done 43.8 million bank cubic meters so far, which represent about 63% of the total overburden to be removed before start-up, and we are slightly ahead of schedule in that area. We have energized already the main electrical substations. There are only two minor subs to be energized and they will be energized before year-end. We have completed also the construction of the Raw Water pond, which is the pond that is going to help us here in the spring time when the water level is low in the river. We started also pre-commissioning activities in the Bitumen Production Areas. The Froth tank completed and hydro-tested for the full major event actually. We've commenced also the extraction plant hydro-testing. As you can imagine on this plant there is a lot of hydro-testing to do and we are well on our way right now to do a lot of hydro-testing here before the freeze [ph] comes up. And we have a strategy also that during the winter, we're going to continue to do hydro-testing with Glyco and this plant is on place already. The Glyco has been order, so it is on schedule as well. We have permanently also power and energized the R1/R2 corridors pumphouses. Those are the big pump house that you have for the hydro-transport coming to the plant side and it's feeling to be [ph]. We started also to commission the Recycle Water Pond, so in terms of water recycling and all those kinds of things, we want to commission all those before we can freeze up [ph]. The major milestone for us here in the fourth quarter will be to complete the closure of Dyke 10 which by the way by now it's already pretty well done. We've completed also the erection of the Crushing Plant and the conveyors in the Ore Preparation Plant, completed also the Primary Separation Cells in Extraction plan. We also completed the Main Control Room and Distributed Control Systems installation. Complete the construction of the Main Lab, so you see there are several job here that are going to be completed before year end that this is when some of the contractors and workers and tradesmen are going to go for Christmas period, they need not have to come back after Christmas. That's a big advantage for us. We also on the system commissioning schedule, the permanent water, total water treatment plan has been commissioned over several months already, the sewer treatment plan also, the natural gas pipeline, the raw and recycle water pipeline, the raw water intake in the pumphouse... river pumphouse that has been started already and is working right now. On the Q4, '07, we have the Raw Water Pond and the other two pumphouses are going to be also conditioned; one of which is already commissioned and the full electrical distribution system will be permanently and fully operational. In the first quarter of '08, the cooling and heating system is the main pipe track and we have also throughout Q2 '08, the full generation of preparation plan for our treatment plan, pipeline in corridors, hydrogen plant coker, the DRU, the gas reading and sulfur recovery [ph], the synthetic crude oil pipeline, the sulfur block pipeline and so on [indiscernible] and all that pretty much all the plans are going to be commissioned within the first and second quarter of '08. To leave for the third quarter, the hydro-treating plant which will be the last one and it is on the critical path right now. Once we have all these plans commissioned, of course, our third quarter will be our first oil drilling down to pipeline. So, so far, the schedule is looking good. We have assessed all our risks. We have also contingency plans. We still have... some plants that have reasonable flow to make it happen on time, so we're comfortable and we think that by the third quarter of '08, we will have oil flowing down the pipeline. So on this, Steve, I will then return it back to you. Steve W. Laut - President and Chief Operating Officer: Thanks Réal for that great update. As you can see, we're making very good progress on our world class Horizon project; which will add significant value to shareholders. And as you probably noticed, we have not commented at this point on the royalty changes in Alberta or giving any guidance on the 2008 capital budget. We are currently in the process of completing a detailed analysis of these changes and what affect that will have on the 2008 budget. We expect to have this analysis complete and the capital allocation process for the 2008 budget later in November. However at this point, we are clear on the following. One, our royalty payments will go up meaning less cash flow to reinvest in development. Two, our gas drilling will be reduced between 30% and 50% of what it would have been in Alberta. Three, our light oil drilling in Alberta will be reduced by 50% of what it would have been. Now regardless of the uncertainty caused by this revised royalty program, we are certain on the strength of our asset base. Our gas side assets are very strong and continue to deliver at or above expectations. Canadian Natural's oil assets are even stronger. In Canada, was up to 11 billion barrels of oil to develop. Internationally, we continue to leverage our mature basin and offshore expertise as well as our government relationship measures into some of the highest return projects in the company's portfolio. And of course Horizon is a world class project, which will add tremendous value to shareholders. Canadian Natural is in a very strong position. We have the assets. We have a well defined plan. We are flexible. We have a discipline and most importantly people to execute that plan and generate significant value for shareholders. I will now turn it over to Doug to give you an update on the financials. Doug? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: Thank you, Steve, and good morning. Canadian Natural's third quarter results were very strong as we generated over C$1.5 billion in cash flow or C$2.92 per share and C$4.7 million or C$8.74 per share for the nine months ended September 30th. These results reflect the strength of our production base particularly crude oil where our focus has been in 2007, current to just pricing again crude oil related and the support of our commodity hedge program in this case natural gas focus. This was offset by the continued strengthening of the Canadian dollar relative to the U.S. dollar and certain other cost pressures in our operating areas. You will note that we did not... we did make progress in managing our operating costs in the third quarter largely due plant operating efficiencies and lower natural gas fuel costs. Our capital expenditure program for the quarter amounted to C$1.4 billion or 4.9 billion for the year-to-date and including the Horizon project capital. We continue to prudently allocate capital with a view to maximizing the strength of our balance sheet through the Horizon Phase 1 construction period. Our commodity hedging program remains intact for the remainder of 2007 and 2008. We will continue to add positions to our portfolio as we finalize our 2008 budget plan. Our liquidly remains strong. At September 30th, the company had unused bank lines of credit of C$1.3 billion and our balance sheet metrics continued to strengthen. Thank you and I will return you to John. John G. Langille - Vice-Chairman: Thank you very much Steve, Réal and Doug for a detailed review of the progress we are making in creating shareholder value in what is a very challenging environmental however our asset base is structured. I believe our strategies are structured. We can overcome all of those challenges as they arise. So with that operator, I would now like to open the call to questions that participants may have. Question And Answer

Thank you. [Operator Instructions]. The following question is from Gil Yang of Citi. Please go ahead. Gil Yang - Citigroup: Good morning. When the Horizon facility goes up and running, how quickly will the ramp up be to full production capacity? Allan P. Markin - Chairman: Gil, I'll give Réal to give you a little more detailed answer but we expect to be about 85% capacity within... I would say 3.5 to 4 months of first oil start-up. Hope we have answered your question. Gil Yang - Citigroup: Okay. And will it be... will be sort of chunky step-outs? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: We expect it will be... I would expect in the first part, it will really up and down the first month. It will get more steady as we get closer to the end. Gil Yang - Citigroup: Okay. Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: I would say to get past the 85% earlier. That's our plan right now on our budget. Gil Yang - Citigroup: And one tenth of the nameplate capacity and you expect 100%. What kind of operating rates would you expect in the long run? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: I think sometime early in 2009, we'd get to 110,000 per sale. Gil Yang - Citigroup: Okay. And that includes downtime? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: That includes downtime in that number, yes. So the name could perhaps be actually... probably could do a little bit more than 110, but there is going to be plenty of time when you're down few other issues, so 110 is what we think we'll do on an operating... calendar basis. Gil Yang - Citigroup: Right. You made a comment about that you reduced drilling for this year. Your gas production has been pretty decent. How much flexibility do you have in that should you reduce drilling by 30 to 60%, the portfolio was strong that you could actually keep gas production fairly flat with that magnitude of dropping drilling? Steve W. Laut - President and Chief Operating Officer: Our decline rates, decline from rates skills are both 23%, so we did drill to keep our production up because we are now in the process of sanctioning the budget and high grading all our gas prospects, oil prospects and we are going to allocate to capital. Obviously, the royalty program it has made a lot of our gas program uneconomic particularly at these price levels. Gil Yang - Citigroup: Okay. Thank you.

Thank you. The following question is from Brian Bareby of Legal & General [ph]. Please go ahead.

Hi. Actually, I was wondering at the time of your, I guess last large corporate bond transaction, you had a slide that had some assumptions regarding oil prices and its impact on leverage. Specifically, I think you said something for the effect that had C$60 WTI, I think that at that levels you didn't think would go above 45%. I was wondering with oil where it is and now and I guess the impact of what you assume the Alberta royalty tax situation, have you had a chance to update those assumptions that went into that leverage expectation and if you can comment on where you though that would go, that'll be great? Steve W. Laut - President and Chief Operating Officer: Thanks very much. So our leverage today is about 46% that we see. It's improved from the 49% that we started the year following the Anadarko acquisition. Obviously as our cash flow goes up and our net income goes up, our leverage improves from a balance sheet perspective. I think the offset to the increase in crude oil price that we have seen since that slide was prepared is two things have happened. One is the strength of the Canadian dollar, which has reduced our cash flows because all of our products are substantially priced in US dollars. And the other thing is of course is the price of natural gas is... as we move into the 2008 ledger preparation and the completion of the Horizon Phase 1 construction period of course a large part of our time will be spend in ensuring that our balance sheet remains strong and we can weather any further volatility that happens in 2008 and of course, we will be underpinning our program with more commodity. I hope that answers you question.

Round about that suppose that you... so basically I'm hearing that you haven't had a chance to update it with an impact of today's oil price and the Alberta royalty review? Steve W. Laut - President and Chief Operating Officer: That's correct. The royalty review doesn't have an impact on actual cash flow other than through operating development in 2008, and we haven't done that by preparation. The royalty impact is January 1st, 2009 when the actual royalty structure will change.

Okay. Well, thank you very much. Steve W. Laut - President and Chief Operating Officer: Our metrics are still to ensure that our balance sheet is strong at that 45% level, and I think we are trying to target that number a little bit lower next year but that depends upon the budget cycle and the cash flow that you are able to get. I think we are ready for the next question, operator?

Thank you. The following question is from Brian Dutton of Credit Suisse. Please go ahead. Brian Dutton - Credit Suisse: Yes, good morning, Steve I wonder if you can drill down a little bit further into your operating cost on a few upside this quarter in Western Canada recognizing... I guess the gas prices were a factor in the thermal cost [ph], can you give us any indication of what you may be looking for those costs on a go-forward basis? Steve W. Laut - President and Chief Operating Officer: Brian that's a good question actually. If you know we are offering costs on oil and particularly implements by what part of the steam cycle we are at Primrose, and in Q3 we were in more of the production cycles rather than the stream cycle, so with the amount of oil produced in comparison with the stream injected is below our offering cost. Q4 I expect to see cost fairly similar because we are still in the production part of the cycle at Primrose. Going into Q1 next year, will have production fall off and more injection, so I would expect to operating costs in the first half 2008 go up. Brian Dutton - Credit Suisse: What would the Primrose non gas operating cost be on a normalized basis? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: We have to get the details done with its last type check [ph], I think it was about C$6 a barrel. Brian Dutton - Credit Suisse: And you also had on the conventional heavy oil as well the costs were also down quite sharply? Can you give us some indication what you might be expecting there? Steve W. Laut - President and Chief Operating Officer: We are seeing... I will tell you one thing we are seeing coming up in 2008 and it's across the board, municipal taxes are going up and so they have been raised. And that's probably anywhere to a 15% increase in municipal taxes and goes straight to our operating cost and really the production related. We also will see our power cost go up significantly in 2008 obviously with the timing of oil production. Those are all electric on those pumps. We have some pretty electrical hedges that we quite well back, so our electricity cost have been good but it will go up dramatically in 2008. And so you look at the major components of cost of power and fuel and labor obviously are big components of it. So I would expect just generally speaking, 2008 cost will be higher because of municipal profit taxes, electricity prices. Brian Dutton - Credit Suisse: Okay and last question just on the capital in the North Sea. Your guidance indicates that you're pulling capital away from the North Sea and is that an indication of you plans on a go-forward basis looking to 2008 and 2009? Steve W. Laut - President and Chief Operating Officer: I think it's an indication mainly related to Lyell. Lyell was a major disappointment to us. We do get some streaks of very [indiscernible] but it wasn't as connected to the major second tighter rock [ph]. We need to go back and really understand what's going and at Lyell. There is a big price there and there is a lot of oil, so we pulled that capital as you know and 2008, we will take a timeout, so that capital will go down in 2008 because we don't spend capital Lyell, which we truly understand what is the most optimal way to get that really around, at least cost. Brian Dutton - Credit Suisse: Okay. Thank you very much.

Thank you. The following question is from Terry Peters of Canaccord Adams. Please go ahead. Terry Peters - Canaccord Adams: Thank you. I got a question regarding high grading expect to do on your gas program, and I guess it's pretty good for the balance for this year and next year and in particular, I wonder if you give us some comments on the deep drilling incentive. Is that... and whether that would have or you would expect to take advantage of that or that would have any kind of... lead to a buyer on some of your drilling program for gas? Steve W. Laut - President and Chief Operating Officer: Hi Terry. The deep gas royalty program as we understand entered into a new program does help however the way the royalties are structured now, as you know there are very steep curves with increasing in prices and very, very steep curves with increasing production rate. As you can expect, in a program, we need to drill a program that gets on average decent wells. But what pull that average up is the good wells you hit at higher rates. Now, in theory, if we're smart enough, we don't need to drill that wells that have the high rates. But we're not that smart, and nobody is, so we have to do a program and on average, it works out. With the new royalty program, we effectively take away any upsides you have from drilling a well with high rates that carries all programs. So, yes, it's a deep curve to program that does help. But the way the system is structured, it basic takes away all the upside you get on the very good wells of carrier program and as you see, that's going to have dramatic effect between 30 to 50%, cut in drawing. On dimensional gas, it isn't in the royalty program; very, very difficult to see a way we can actually make a program there go. Terry Peters - Canaccord Adams: So that would suggest that if you... on balance, you still might drill more deep wells in medium or shallow wells in total, but the number would be down. Steve W. Laut - President and Chief Operating Officer: Yeah, I think we'll are going to see as we drill some wells that makes the correct criteria. We will drill shallow gas at very lower rates; but in between probably very little drilling. Terry Peters - Canaccord Adams: And is there a way to gain this because it doesn't start till January 2009? Steve W. Laut - President and Chief Operating Officer: To be honest with you Terry, we drill wells for a longer to one year production. So we're making the change now affective for the life of the well, so I guess one year. Terry Peters - Canaccord Adams: Now you can pay out quick but [ph] okay, thanks very much. Okay, that's it. Thanks.

Thank you. The following question is from Stephen Calderwood of Raymond James. Please go ahead. Stephen Calderwood - Raymond James: Yes, Good morning. On the declining gas production, just to get a handle on what you might expect going forward. Obviously, we know that you've seen about 4% decline from Q2 to Q3 and according to your guidance for Q4, we should see about 3% decline into Q4 and if you look at the nine months drilling so far this year compared to last year, your gas drilling is down about 48%, which is at the upper-end of your range of 30 to 50% less drilling in '08 compared to what you were contemplating before. Does that mean that more like 12% decline on the annualized basis is the reasonable assumption for '08? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: I think Steve there is another way to get the bucket down probably through right in the middle of the cap allocation process and we now have to allocate not only gas, oil, light, heavy North Sea or West Africa but we can surely have a good allocation team very strong here at Alberta and Saskatchewan. So for us to give you an answer right now, I'll be just giving you the wrong answer, so we'll have full details later in November. Stephen Calderwood - Raymond James: I guess the message is that there is a lot of high grading that you can still do to manage your assets, but with respect to the high grading that went off in the beginning of this year that kept your production relative, actually growing after the end of the acquisition. Is that high grading with respect to Anadarko virtually done? John G. Langille - Vice-Chairman: I think with Anadarko, we still seem to get assets here. We still have very good assets on the legacy assets in Natural, so I think the high grading can happen across the board. It's just that basically, the gain changed quite dramatically and we have to really understand to fully allocate capital. Stephen Calderwood - Raymond James: Okay, thanks a lot.

Thank you. [Operator Instructions]. The following question is from Robert Plexman of CIBC World Markets. Please go ahead. Robert Plexman - CIBC World Markets: Good morning. I had a couple of questions regarding Horizon. The first one is a reasoning, Steve, behind the rationale... reasoning behind the decision to push harder this winter to get horizon started up in July and instead of delaying the start-up and possibly taking some of the strain off the cost pressures, if that actually worked that way? And a related question is that Steve you mentioned you expect 5% progress over the next three quarters, but it looks achievable if we relate that to the third quarter. But does it become more challenging as you get closer to that 100% fully completed number and also how would that 5% expected progress rate compare with the experience of last winter? Steve W. Laut - President and Chief Operating Officer: Well, we don't have very good experience for the last because there is different work that's going on now, a lot of tight work and welding. I think it's achievable that Réal could give a bit more detail... give you a few comments. I think the decision to push that work to get cost was the right thing to do and to push... I don't think we are really pushing too much into the winter, as least some into the winter but it's not work that is that its going too negatively effected by winter activity, so most of that we have pushed back into the spring, so we can get it. It's really a matter of controlling the project and taking those parts of the project that you could do in the winter. You still have good productivity and lying those parts that need the long weather. Réal, you want to add a little to that. Réal J.H. Doucet - Senior Vice-President, Oil Sands: Yeah, Steve. Whatever we do really is that we... in positioning this project and looking at the progress that we want to make, it is really relating to the work phase that we are developing instead of paying for the project. What we have done throughout 2007 is by negotiating some better contract, we took our time to redo that where we have provided we were not satisfied we went out and we redid the job, re-negotiated the contract and so on, took some new contractor and see new contractors coming from outside of the province as well to create competition here on site. We have done all this and we are tasting the fruit of that now, and these contractors are coming on site. They are ramping up their manpower. We had created a lot of work... phases of where the people have days to work. All the modules are on site. All the equipments are on site now it's just a matter of unfolding really the site work now, so we don't think it is really pushing unduly the leaders right now or the contractors to work faster than they were anticipating. It is just creating more space on having more contractors on site to unfold the job, so I think 5% progress third quarter is quite reasonable right now only we have most of the work so that will be done will be into three things and it will be into insulations and fewer things like this and a lot of work is inside also, so we think we are going to achieve a reasonable productivity over that one. We do however plan for slightly lower productivity over the winter. It always happened that way and that's why we are thinking that the 5% progress compared to 9% progress during the summer month is quite reasonable to achieve. Robert Plexman - CIBC World Markets: Thanks very much.

Thank you. The following question is from Ken Sander of Peters & Company [ph]. Please go ahead.

Hi, Steve, a couple of questions. First off, in the North given the changes in the capital going forward where do you see production levels settling out? And second question somewhere on West Africa with the drilling that you guys are going to commence in the first or second quarter, what sort of lift do you expect to see in production for '08? Steve W. Laut - President and Chief Operating Officer: We are still doing the budget, so it is a little early for me to give you indication. I think I wouldn't expect to see much of a production left in the North Sea. We were counting on Lyell to give us a big ramp up in 2008 as we postponed that project. It all depends how soon we get on to the wells and how quickly we can repair those wells as to our production ramp. That's still in the process of being fined tuned and we will give you all those details later...

Okay. And the last question given that you guys are considering cutting back on natural gas, is there any thought to acceleration of Horizon spending in '08 or is that going to be still more of 2009 timeframe? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: We are very focused on cost control and with a discipline approach for us to accelerate any of the Horizon Project I am sure is not the right thing to do. Well, actually [ph] I will not do something like that. We are not going to do that. We will take our time for phases 2 and 3 here and we are trying to determine what is the best way to get cost control and those cost for phases 2 and 3. We don't have to make a decision from mid 2008 and we are going to take all the time we have to ensure that we have well thought out and execution program to deliver phases 2 and 3.

Great. Thanks.

Thank you. The following question is from Barbara Betanski of UBS Global. Please go ahead. Barbara Betanski - UBS Global: Thanks very much. Just a quick follow up to Terry's question on the gas drilling side, if you could just describe I guess currently what a typical program would look like in terms of the percentage of shallow wells that you would drill and deep wells in between sort of what you are doing currently? Steve W. Laut - President and Chief Operating Officer: I would think... I actually have a numbers right in front of me but I would say it's very deceiving because you drill a lot of shallow coastal wells. They don't give you a lot of production, so it makes the well count look... well count basis, we probably drilled may be 30 to 40% of wells or shallow wells but they don't give you much production only 50 to 75%. We'll probably... overall the 1000 wells probably I would say 30 to 40% would be, I would say there is medium dept, not deeper and the remainder would in the deeper portion which actually gave you more production. Barbara Betanski - UBS Global: Okay. Thanks very much.

Thank you. The following question is from Stephen Calderwood of Raymond James. Please go ahead. Stephen Calderwood - Raymond James: Sorry, I might have pressed star 1, but I can follow up with that. Is this the fact that this cut back in shallow drilling means that you had developed more strategic relationships with certain service companies that drilled deeper. Is that something like is there one or two drilling companies that are going to become your primary service providers? Steve W. Laut - President and Chief Operating Officer: On service providing we always had relationships regardless with two to three primarily suppliers that we try to work together. They try to support us during periods of difficult in getting rigs and we tried to support them in more period of times, so it's more beneficial relationship. You know shallow gas I think shallow gas drilling to be cut back but only the shallow gas sort of update or net gas drilling CBM drilling was actually okay if anything sort of shallower than 2000 meters that's what we call domestic [ph] gas drilling dramatically heard by the program. Stephen Calderwood - Raymond James: Yes that's our analysis like a medium that pullout so which company do you use to drill the medium depth well? Steve W. Laut - President and Chief Operating Officer: It's all three. Stephen Calderwood - Raymond James: Okay, thanks.

Thank you. The following question is from David Wheeler of Neuberger [ph]. Please go ahead.

Hi, gentlemen. I just wanted to follow up on the comments on gas drilling. You had mentioned that I would have been down or the royalties have the impact that gas drilling will down 30% to 50% versus where it would have been. Are we seeing a... you guys being to be Anadarko acquisition and decided to look at your assets slow down evaluated, is this an incremental slowdown in gas drilling or was the plant that we were going to step back up gas drilling because of lower service cost, which have come in and we're not stepping backup gas drilling. Are we seeing a further slowdown or we're just not stepping back on the backup on the program? Steve W. Laut - President and Chief Operating Officer: We are; I guess, it is just kind of both. What we do; right now we have about 900 gas wells in the inventory that we could drill in 2008 and with the royalty program, we'll have 30% to 50% reduction in that inventory; that's economic, strictly due to the royalty program.

Okay. How many gas wells would you have drilled or will you drill in '07? Steve W. Laut - President and Chief Operating Officer: '07, we're looking for both 600 wells roughly.

Okay, so it sounds like its going to be something... so you're going to go from 600 to 900 next year? Steve W. Laut - President and Chief Operating Officer: Yes.

You wouldn't be stepping back on and instead we're going to end up at 400 to 600; or something like that? Steve W. Laut - President and Chief Operating Officer: As I said to Barbara, we take the well count because [indiscernible] the account, and most of that increased drilling would have been in the medium or deeper depth of the base.

The more impactful stuff.

Okay, very good. Thanks.

Thank you. The following question is from Roger Quinn of Atena [ph]. Please go ahead.

Hello. Just wanted to clarify on this discussion about the decreased gas drilling in Alberta as it relates to your reserve balances proved reserve balances that is, can we expect less gas prices improve by year end that we are going to see some declines in the North American net gas proved reserve balances from giving your comments? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: We haven't got the reserves done yet. I don't think it will be much material impact on reserves at all.

Okay. And from a cash flow perspective the 30 to 50% decline in gas drilling, what does that equate to roughly? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: Budget done [ph] so we'll... that all will come unfortunately because of the royalty announcement and the amount of time it takes to actually understand what they have done and then do the capital allocation, we will not have the budget done until later in November. At that time we'll be able to give you all the answers as to all the impacts and variations with it.

Great. And then one last question looking at the oil hedges you have in place for the next quarter and next few quarter, it seems like a good... they cover a good part of your production and was with callers and the sealing at least the current prices on a lot is underwater and yet oil keeps climbing and the Canadian dollar sort of following it. Truly protect your cash flow, do you guys have a need at this point to maybe think about some currency hedges or how are you going to manage this? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: Well, I think we've seen the US dollar climb very, very sharply... the Canadian dollar climb very sharply and over the course of the fall and it's kind of been in tandem with oil prices. I think we had 105 and 106 in the last couple of days and certainly has an impact on our cash flow. You are right on our oil hedges. We do have significant hedges in place for next year and they sort of have a feeling on them between C$75 and C$85. We're focusing on our operating costs and trying to get that down. As far as currency quality is going now, I don't think probably... we have looked at it a little bit but I'm not sure that its prudent time to be considering those at this time as we wait for more direction on where the oil markets are going to go.

Okay. Thanks very much.

Thank you. The following question is from Andrew Potter of UBS Securities. Please go ahead. Andrew Potter - UBS Securities: Hi, guys. Just a question on the 2008 budgeting, what quarterly prices are you looking at when you're valuating your 2008 budget? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: I think right now the commodity price that we're looking at is probably C$6.30 price and around C$70 to C$73 WTI price in U.S. dollars. Andrew Potter - UBS Securities: Okay. Perfect. And then one last question just on the royalty impact, looking at it from a different way, how much will service costs have to go down to get you back up to the original plan in terms of activity levels? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: On the gas side, it comes down quite a bit already. There is probably some room to go down on summer but quite frankly, Andrew, we're now concerned that there is embedded costs in the service industry. Also, they have equipment costs and labor costs and to a point where you expect anymore significant cost reductions. It is going to need some pretty significant damage to the surface side of the business, so we are actually concerned about that how we are going to be able to have suppliers here that we need. Andrew Potter - UBS Securities: Right. And how much... for typical gas well in Alberta, I mean how much of that is going down year-over-year? Douglas A. Proll - Chief Financial Officer and Senior Vice-President, Finance: On gas, well it is [ph] we have seen places down 30%, some down 15 to 20% and various to where you are and to sort of terrain [ph] these building cost obviously have gone down dramatically with well count, some of cost have not but overall, 15 to 30%. Andrew Potter - UBS Securities: Okay. That's great. Thanks.

Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Langille. John G. Langille - Vice-Chairman: Thank you very much, operator and thank you ladies and gentlemen for listening in on our conference call and of course as always if you have further questions, please contact our Investor Relations department and they will be happy to get an answer for you. Thank you very much and have a very good day. Thank you.

The conference has now ended. Please disconnect your lines at this time. Thank you for your participation and have a great day.