Canadian Superior Files Amended Offer for Canada Southern

Canadian Superior Energy Inc. said Wednesday that it has filed a notice of variation and extension relating to its amended offer for Canada Southern Petroleum Ltd.

"Canadian Superior is very pleased today to have filed our amended offer for Canada Southern, which is being mailed to all shareholders of Canada Southern," said Greg Noval, Canadian Superior's Chairman and CEO. "Canadian Superior estimates that its amended offer is worth approximately CDN$17.10 per share (US$14.97). This compares to the competing bid by Canadian Oil Sands Limited of US$13.10 (approximately CDN$14.81)."

"We are confident that Canada Southern shareholders will recognize the value, simplicity, and upside of our offer for Canada Southern," added Noval. "The Directors of Canada Southern, and particularly their Chairman, appear by their own actions to be incapable of evaluating Canadian Southern's own upside and assets and they also appear to be inextricably tied at the hip to Canadian Oil Sands and Canadian Oil Sand's recent offer for Canada Southern. We are confident Canada Southern shareholders will see through this and accept Canadian Superior's bid."

Under the amended offer, Canada Southern shareholders may elect to receive either (i) 2.0 shares of Canadian Superior, CDN$2.50 cash, and one Special Exchangeable Share for each Canada Southern share; or, (ii) CDN$2.50 cash and 2.75 common shares of Canadian Superior for each Canada Southern share, being the consideration offered under Canadian Superior's initial offer for Canada Southern.

Under the amended offer, the Special Exchangeable Shares will be special purpose shares whose value will be tied to the existing Canadian Arctic assets of Canada Southern. Each Special Exchangeable Share will be exchangeable into a separately tradable Arctic Royalty Trust Unit (ART). The ARTs will constitute trust units of a royalty trust to be established by Canadian Superior. Canadian Superior will create a net profits interest in favor of the holders of the ARTs equal to 25% (assuming all Common Shares are exchanged for Special Exchangeable Shares) of the net profits received from the production of natural gas from Canada Southern's interest in the Canadian Arctic.

Canada Southern has stated that its best estimate of the size of its discovered marketable natural gas resource in the Canadian Arctic is 927 bcfe, net to Canada Southern. Canadian Superior estimates the value of each Arctic Royalty Trust Unit to be approximately CDN$10 per Canada Southern share based on a value of approximately CDN$0.65 per MCF of natural gas in place. In the Western Canada sedimentary basin, natural gas is being sold for over CDN$2.00 per MCF of natural gas in place. In Canada Southern's directors' circular, dated May 25, 2006, Canada Southern's board of directors indicated that it believes that Arctic natural gas development will be economically viable.

Canadian Superior is of the view that its amended offer provides Canada Southern shareholders, in addition to the cash component of the offer, with the unique opportunity to participate with Canadian Superior through a business combination that will result (assuming all of the Canada Southern common shares are acquired) in Canada Southern shareholders owning approximately 20% of the combined entity on an accretive basis that would have an expanded Western Canadian production base and at the same time would provide Canada Southern shareholders with the opportunity to participate with Canadian Superior in one of the largest natural gas plays in the world slated for multi-well drilling by Canadian Superior to commence later this year in Trinidad and Tobago with the additional upside created by the Arctic Royalty Trust.

Canadian Superior is a Calgary, Alberta, Canada-based oil and gas exploration and production company with operations in Western Canada, offshore Trinidad and Tobago, and offshore Nova Scotia.