Canadian Superior Energy has entered into an agreement for the private placement in the amount of US $10,000,000 by way of the issuance of Units consisting of 5% US Cumulative Redeemable Convertible Preferred Shares (the "Preferred Shares") and Common Share Purchase Warrants. Each Preferred Share will be convertible into forty Common Shares of Canadian Superior (4,000,000 Common Shares in aggregate) at a price of US $2.50 per Common Share. If Canadian Superior elects, it also has the option to pay the quarterly dividend by way of issuance of Common Shares at market, based on a 6% annualized dividend rate in lieu of the 5% annualized cash dividend rate. In addition, the Preferred Shares are redeemable and retractable five years from the date of issue or earlier, subject to earlier redemption or retraction in certain events. 10,000 Units, each consisting of 10 US $100 Preferred Shares, along with 800,000 Common Share Purchase Warrants are being issued to West Coast Asset Management, Inc. (and/or its affiliates), currently the holder of 6,793,680 Common Shares of Canadian Superior, in consideration for the transaction, subject to customary terms and conditions on closing and subject to regulatory approval. Closing is expected on or before December 29, 2005. The proceeds from the offering will be used by Canadian Superior for the drilling and development of its holdings offshore Trinidad and Tobago. The Warrants comprising part of the Units are exercisable for a period of thirty (30) months from the date of issue at an exercise price of US $3.00 per Common Share. In addition, the Parties reserve the right by agreement to increase the private placement from US $10,000,000 to US $15,000,000 between now and January 31, 2006.