Petro-Canada Ups Offer for Canada Southern

Petro-Canada on Thursday said that its wholly-owned subsidiary, Nosara Holdings Ltd. was increasing the offer price payable for all of the common shares of Canada Southern Petroleum Ltd. to US$11.00 cash per share. All Canada Southern shareholders tendering their common shares will receive the increased offer price for their common shares, including shareholders who already tendered common shares to the prior Nosara offer.

The offer has also been extended until 7 p.m. (Mountain Daylight Time) July 17, 2006, unless further extended or withdrawn. Along with amending and extending the offer, Petro-Canada plans to request that Canada Southern waive the shareholder rights plan adopted by Canada Southern on May 24, 2006. If Canada Southern does not waive the rights plan, Petro-Canada will seek a hearing with the Alberta Securities Commission for an order to cease trading on any securities issued or to be issued in connection with the rights plan before the expiry time. The offer by Nosara is conditional upon the termination of the rights plan at or prior to the expiry time of the offer.

"The Arctic Islands are a strategic, long-term asset for Petro-Canada," said Kathy Sendall, senior vice-president of Petro-Canada's North American Natural Gas business. "By acquiring Canada Southern, not only do we add an important piece to our northern portfolio, but we also remove the economic burden of the carried interests--a logical step for future development of these resources. In addition, as the controlling interest holder and as an established operator, it just makes sense that we would consolidate and develop these future resources."

Petro-Canada has amended its offer such that the company will take up and pay for any common shares deposited to the offer if all of the terms and conditions of the offer, as amended, have been satisfied or waived at or prior to the expiry time.

Petro-Canada expects to mail a notice of variation and extension for the amended offer to Canada Southern shareholders on June 29, 2006. Petro-Canada has been advised by the depository for the offer that a total of 61,587 common shares have been deposited to the offer as of June 28, 2006.

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and downstream sectors of the industry in Canada and internationally.


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