Conoco Canada Resources Limited - Annual Report 2000

GULF CANADA RESOURCES LIMITED

ANNUAL INFORMATION FORM For the year ended December 31, 1999

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March 28, 2000
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GULF CANADA RESOURCES LIMITED

ANNUAL INFORMATION FORM

INDEX

Page

Item	1	Incorporation.............................................................................................1
Item	2	General Development of the Business......................................................1
Item	3	Narrative Description of the Business ......................................................3
Item	4	Selected Consolidated Financial Information.........................................15
Item	5	Management’s Discussion and Analysis.................................................16
Item	6	Market for Securities...............................................................................16
Item	7	Directors and Officers.............................................................................16
Item	8	Additional Information ...........................................................................17

ITEM 1

INCORPORATION

Gulf Canada Resources Limited ("Gulf Canada" or the "Company") is a Company organized under the Canada Business Corporation Act ("CBCA"). Gulf Canada is one of Canada's largest independent producers of oil and natural gas, with operations in Western Canada, where the Company has over 80 years of experience in conventional oil and gas operations, and internationally with operations in Indonesia, through Gulf Indonesia Resources Limited ("Gulf Indonesia") and the North Sea.

Gulf Canada’s principal subsidiary is Gulf Indonesia, a 72% owned subsidiary. Gulf Indonesia is a public company incorporated under the Business Corporations Act (New Brunswick) which trades on the New York Stock Exchange under the symbol GRL. Gulf Indonesia, through its wholly owned subsidiaries, is engaged in oil and gas exploration and production activities in Indonesia.

Gulf Canada’s remaining subsidiaries, some of which are inactive and none of which have total assets constituting more than 10% of the Company’s consolidated assets or revenues which constitute more than 10% of the Company’s consolidated revenues, represent less than 30% of Gulf Canada’s total consolidated assets and total consolidated revenues.

Gulf Canada's head office is located at 401-9th Avenue S. W., Calgary, Alberta, Canada T2P

2H7.

ITEM 2

GENERAL DEVELOPMENT OF THE BUSINESS

Gulf Canada was founded in 1906 and operated as a fully integrated oil company until 1986 when the Company sold its refining and marketing assets. In 1988, the Company acquired Asamera, Inc., a predecessor to Gulf Indonesia.

1995

In January 1995, a number of investors (collectively, the "Participants") acquired a 25% interest in Gulf Canada through a treasury offering for aggregate net proceeds to the Company of $293 million. Strategic acquisitions in 1995 and 1996, supported in part through the sale of non-core assets, added to the Company’s total reserves.

In the first half of 1995, the Company prepaid $297 million of long-term debt maturing in 1996. In February 1995, the Company reinstated the dividends on its Series 1 Preference Shares. In July 1995, the Company completed an offering of U.S. $200 million principal amount of ten year subordinated debentures (the "Subordinated Debentures"). Net proceeds from the Subordinated Debentures were used to prepay $266 million of bank debt due in December 1996.

1996

In March 1996, Gulf Canada completed a public offering of 22,059,302 ordinary shares in conjunction with the sale by one of the Participants of 17,000,000 ordinary shares and the sale by A&G Resources Corporation, the Company’s other significant shareholder at the time, of 24,048,698 ordinary shares. The aggregate gross proceeds to Gulf Canada from this offering were $135 million. The net

proceeds from the offering were used, together with internally generated funds, to fund the Company's 1996 capital expenditure budget. In August of 1996, Gulf Canada issued US$250 million principal amount of ten year senior notes. Net proceeds of US$245 million from this offering were used to prepay scheduled bank debt maturities and a portion of other bank operating indebtedness.

In December 1996 Gulf Canada entered into a loan agreement (the”Loan Agreement”) with a Canadian chartered bank to provide a term facility to be used in connection with the acquisition of Clyde Petroleum Plc (“Clyde”) and to replace other bank facilities of the Company. The December 1996 Loan Agreement was subsequently renegotiated, reduced and syndicated in 1997.

1997

During 1997, the Company acquired Clyde Petroleum Plc, which had operations in the North Sea, Indonesia and Australia and other interests internationally. Later that year, the Company acquired Stampeder Exploration Limited which had significant Western Canada assets, including signficant conventional heavy oil assets.

An equity issue in January 1997 raised net proceeds to the Company of US$173 million or Cdn$235 million.

In February 1997, Gulf Canada entered into a credit agreement for the Corridor gas project, of which Gulf Canada’s share was US$270MM. The project was substantially completed in 1999, with Gulf Canada’s share of the facility fully drawn to US$245MM. The loan facility is non-recourse to Gulf Canada, and is limited to the Corridor assets pledged as collateral. The term of the loan is eight years, with the first principal payment made in August, 1999. In March, 1997, Gulf Canada issued US$225 million of senior notes due in 2017. The net proceeds from the offering of approximately C$304 million were used to repay bank indebtedness incurred in the acquisition of Clyde Petroleum.

In April 1997, the Company moved its executive offices to Denver, Colorado.

1998

In 1998, the Company sold its interest in the U.K. North Sea.

Gulf Canada established Gulf Midstream Services (“GMS”), a division that focused on “midstream” business in western Canada. In December 1998, Keyspan Energy Development Corporation, a wholly owned subsidiary of KeySpan Energy Corporation purchased 50% of GMS. The combination focuses on aggressive growth in the midstream business.

In November 1998, Gulf Canada issued US$200 million of senior notes due in 2005. The net proceeds from the offering of approximately C$298 million were used to repay bank indebtedness.

1999

In 1999, Gulf Canada focused on strengthening its operations by completing the restructuring of its property portfolio. Gulf Canada’s strategy is to grow through a balanced program of exploration, exploitation and expansion. The Company reduced debt, lowered costs and improved operating performance in core areas. The Company seeks dominant positions and control of infrastructure in core areas, allowing it to operate more efficiently and increase returns. In 1999, the Company re-focused on fewer core areas and sold its interests in Australia and small interests in countries throughout the world

where the Company’s interests or its prospects were too small to meet the thresholds for creating a core area.

The executive offices returned to Calgary, Alberta in June 1999.

In 1999, the Company created the Petrovera Resources partnership with PanCanadian Resources to operate its Western Canada conventional heavy oil properties, principally acquired as part of the Stampeder transaction. Also in 1999, a joint venture and operating agreement was signed with Mobil Canada covering significant acreage in Canadian and French territorial waters off the East Coast of Canada. New core areas in conventional oil and gas exploration and development in Western Canada continued to develop, especially in the areas of northwest Alberta and northeast British Columbia.

Gulf Canada’s portfolio also includes steam-enhanced oil recovery projects at Surmont, Alberta and Kerrobert, Saskatchewan. Pilot technology tests the viability of recovering heavy oil and bitumen using steam injection and horizontal wells.

At the end of 1999, approximately 65% of the Company’s production was from Western Canada assets, including a 9% interest in the Syncrude Joint Venture. Internationally, Gulf Canada operates in Indonesia, through its 72% interest in Gulf Indonesia, and in the Netherlands.

Gulf Canada’s debt, net of cash and short-term investments, was $1.87 billion at December 31, 1999.

In early 2000, Gulf Canada, together with three industry partners, announced a feasiblity study regarding development of gas reserves in northern Canada.

ITEM 3

NARRATIVE DESCRIPTION OF THE BUSINESS

Gulf Canada is engaged in the exploration for and development and production of oil, natural gas and natural gas liquids. Directly and through subsidiaries, the Company has significant assets in Western Canada, Indonesia, the North Sea and smaller interests in other international areas.

For detail of volumes sold, by product and average sales prices, reference is made to “Segment Information” of the Consolidated Financial Statements of the Company for the year ended December 31, 1999 on pages 68 and 69 of the Annual Report and to "Five Year Operating Summary" under the heading "Supplemental Information to Consolidated Financial Statements" on page 75 of the Annual Report.

Oil and Gas Drilling Activity

The Company’s drilling activity for each of the last two years is summarized in the following table. “Gross” means all wells in which Gulf Canada has an interest and “net” means gross wells after deducting interests of others:

	Years Ended December 31	Years Ended December 31	Years Ended December 31	Years Ended December 31
	1999		1998
	Gross	Net	Gross	Net
DevelopmentWells:
Productive
Oil	18	12	77	48
Gas	68	12	147	103
Dry	44	14	20	10
Exploration Wells:
Productive
Oil	54	33	27	15
Gas	24	7	97	42
Dry	11	4	81	36
Total Wells	219	82	449	249

Principal Properties

The Company’s principal properties are as follows:

Western Canada

Westerose

The Westerose area in Central Alberta is a mature oil and gas producing area comprised of unit and non-unit production. The Gulf Canada operated Westerose D-3 Pool is the largest unit and was discovered in 1952 and unitized in 1955. A gas cycling scheme was implemented in 1988 and in 1996 concurrent gas cap and oil leg production began. Over the past four years, Gulf Canada has increased year over year volumes in the area through well bore optimization efforts and selective in-fill drilling. Gulf Canada continues to test new technology for producing oil. Gas from the D-3 Pool is processed in the GMS operated Rimbey Gas Plant. Gulf Canada holds various working interests in the Westerose Non-Unit properties. The majority of Gulf Canada’s reserves are in Lower Mannville, Wabamun and Glauconite.

Red Earth

Red Earth is a key Gulf Canada growth area located in Northern Alberta, 500 kilometres north of Edmonton. Current land holdings consist of approximately 840,000 gross acres with an average working interest of 96% and 85% of the area is untested. The key producing fields are North Senex, Panny, Kidney, Senex, House Creek and Trout. Oil production is light oil from the Devonian Keg River formation. Gulf Canada is the predominant area infrastructure owner and operator with the majority of wells, pipelines and roads. The terrain is mostly low and wet with the undeveloped areas being 80% winter access only.

The winter 1999/2000 drilling program consisted of 30 wells, 28 exploitation and [2] exploratory wells. Initial results are extremely encouraging. Of the 29 wells drilled to date, [18] were successful.

In 1999 and early 2000, 174 square kilometres of 3D and 117 kilometres of 2D seismic was acquired and the data is currently being processed. In managing the asset, Gulf Canada sold the mature Nipisi field south of Red Earth as it was not considered a core property. Well and infrastructure optimization and waterflood development will continue in the Red Earth area.

Technology is an important component in the success at Red Earth. A multi-discipline technical team has utilized three-dimensional visualization extensively in this area to better analyze the seismic, geologic and reservoir performance data. The company has also experienced early success at Panny and House Creek utilizing the “Endless Tubing Unit,” and horizontal underbalanced drilling technology that results in better flow rates due to less formation damage and superior wellbore placement.

Sizable reserves have been identified for addition from 2000 to 2005 which, combined with the Gulf Canada owned and operated infrastructure in the area, provides potential for growth during the next three or four years.

Ghost Pine

The Ghost Pine area, 200 kilometres northeast of Calgary, is comprised of unit and non-unit sweet gas production. The Ghost Pine unit covers approximately 128,000 acres and includes more than 80 separate pools in 8 unitized zones: the Pekisko, Upper & Lower Glauconite, Upper Mannville, Viking, Basal Quartz, Basal Belly River and Banff. 65% of total production is from the Glauconite. In 1999, the Company acquired an additional 19% interest to increase its unit interest in the area to 72%.

Development opportunities include development drilling, debottlenecking of the gathering system and facility and wellbore optimization. Gulf Canada has significant 2-D seismic coverage of the area and is currently shooting a 3-D program to develop new pool drilling prospects. Non-unit production is primarily from the shallowest zone, the Belly River. Gulf Canada has mainly 100% working interest in its non-unit area and holds 25,000 acres of undeveloped land with additional drilling potential. Area gas is processed through a GMS owned and operated facility.

Enhanced Oil Recovery (“EOR”)

The EOR properties of South Swan Hills, Goose River, Swan Hills and Deer Mountain in central Alberta originally contained an estimated 800 million barrels oil in place (net to Gulf Canada). These mature pools have been exploited in the past with waterflood and vertical miscible injection technology. These properties continue to provide excellent cash generation to Gulf Canada. The high quality light sweet crude, low operating costs and low royalty rates result in a high netback.

New technology is being applied to these large Swan Hill reefs to increase the reserve recovery. In 1999, the Company utilized a new 3-D visualization technology to reduce drilling risk and improve placement of horizontal injection wells. The success of the previous horizontal miscible injection wells has led to a development plan which will see this technology applied throughout the EOR area to effect a large increase in the recoverable reserves. Gulf Canada is participating in 5 proposed horizontal miscible injection patterns in 2000. There are up to 40 patterns remaining to be developed over the next five to ten years. There is also an ongoing program of vertical miscible pattern expansion in Swan Hills, as well as infill and reef edge drilling opportunities throughout the EOR area.

Gulf Canada is the operator of the South Swan Hills Unit with 42.6% working interest, the Goose River Unit with 54.5% working interest, and the Deer Mountain Unit with 79% working interest. Gulf Canada has a 17% interest in the Anderson operated Swan Hills Unit.

East Coast Offshore

The area offshore the east coast of Canada is a prospective one for the Company. In 1999, Gulf Canada signed a joint venture and operating agreement with Mobil Canada covering a total of 8.6 million acres in French (off the islands of St. Pierre & Miquelon) and Canadian territorial waters. Mobil has agreed to fund a majority of additional seismic costs and fully fund the drilling of the initial exploratory well on the French permit to earn a 65% working interest in the permit. The drilling of this well must commence prior to April 10, 2001. In addition, Mobil will earn 20% in Gulf Canadian permits with the option to earn an additional 45% by funding additional seismic and exploratory drilling operations. Gulf Canada will be assigned a 10% working interest in Mobil's adjoining Canadian permits with reciprocal rights to earn an additional 10% by funding a portion of future seismic and exploratory operations.

Heavy Oil

A partnership called Petrovera Resources was created with PanCanadian Resources to combine the companies’ conventional heavy oil assets to reap the benefits of combined expertise, technology and economies of scale. At 34,100 boe/d in 1999, Petrovera Resources is currently one of the largest heavy oil producers in Canada. To the end of 1999, Petrovera Resources drilled 29 wells and increased production by 8%.

Gulf Canada is developing Steam Assisted Gravity Drainage (“SAGD”) projects at Surmont and Kerrobert. Gulf Canada’s SAGD projects test the economic potential of technology to develop oil sands which are too heavy to mine. The SAGD technology is responding as expected and production performance at the pilot project is on target. In November, Gulf Canada entered into an agreement with TOTALFINA S.A. to participate in the development of the SAGD properties. In exchange for disproportionate funding during the pilot phase, TOTALFINA earns an option to acquire a 50% working interest in either the Surmont commercial development project or in a combination of the Surmont and Kerrobert projects.

Syncrude

Gulf Canada owns a 9.03% interest in Syncrude, a joint venture created by a number of energy companies for the purpose of mining shallow deposits of oil sands, extracting the bitumen, and upgrading it into a light sweet crude oil, called Syncrude Sweet Blend ("SSB"). The major facilities are at a plant site located at Mildred Lake, about 40 kilometers north of Fort McMurray, Alberta. As of December 31, 1999, Gulf Canada's share of the estimated net* proved reserves of SSB at Syncrude was 185 MMBbls. Gulf Canada’s net share of minable resource meeting the requirements of proved plus probable reserves was approximately 450 MMBbls. “Net reserves” in this context are calculated on the basis of an assumed 12.5% Alberta royalty share. Syncrude holds eight oil sands leases with Gulf Canada’s share being approximately 23,000 net acres.

Over the last five years, gross production of SSB has increased by about 17% to over 223 MBbls/d in 1999. In December 1999, the Alberta Energy and Utilities Board (AEUB) approval for expansion of the Mildred Lake upgrading facilities to approximately 474 MBbls/d was received. The approval also extends the project licensed term to the year 2035.

Syncrude is currently completing construction of Stage 2 of a four phase growth program called Syncrude 21. Stage 2 is planned to begin full operation in mid-2000 and will increase the annual productive capacity to approximately 257 MBBLs/d.

Mackenzie Delta Gas

Gulf Canada has entered into an agreement with three industry partners to study the feasibility of developing gas in the Mackenzie Delta in Northern Canada.

The Netherlands

Gulf Canada acquired its first interest in The Netherlands when it acquired Clyde in 1997. At the time, Clyde owned interests in two principle properties. These were the operated P Quadrant (“P Quad”) production assets and non-operated Joint Development Area (JDA). Clyde also held varying interests in exploration acreage in the Dutch sector. Since that time, Gulf Canada has increased its interests in the P Quad assets and added the 100% owned and operated Kotter Logger oil properties.

P Quad

Gulf Canada holds an interest in 10 operated licences in the P Quad with interests ranging from 20% to 45%. The key asset is its 27% ownership in the P6A processing platform which has over 200mmcf/d (33000boe/d) of capacity. Six smaller satellite facilities in the P Quad feed gas to this facility. Gulf Canada currently processes a peak of approximately 9000 boe/d through these facilities with a net annual average ownership of 1500 boe/d. Gulf Canada is actively exploring in the P and adjacent quadrants with the objective of adding gas to this facility to take advantage of spare processing capacity.

Since 1997, Gulf Canada has drilled two successful exploration wells in the Q quadrant which will be tied into P6A in 2000. The Q4-9 discovery of 1999 was a follow up to the 1998 Q4-8 discovery. Production from the first of the Q4 discoveries is expected in late 2000 and will add 18mmcf/d and 26 mmcf/d to Gulf Canada’s production in 2001 and 2002 respectively. Reserve additions for these wells range from 50 to 80 bcf.

JDA

The JDA is a non-operated property which produces from many fields and facilities in a 6 block area of the Dutch North Sea. In total this area produces an annual average of over 80,000 boe/d. Gulf Canada’s share is about 3.5% or almost 3000 boe/d.

Kotter and Logger

In 1998, Gulf Canada acquired ownership and operatorship of the Kotter and Logger oil fields, which were slated for abandonment by the previous owners. Since then, Gulf Canada has produced 2.5 million barrels of oil from these assets at an average daily rate of approximately 3900 b/d. Several well and water flood optimizations more than offset the historical annual decline of approximately 20%. As a result, Gulf Canada expects to maintain profitable production from these fields for at least two more years.

Algeria

Gulf Canada was awarded the El Ouar permit in 1990 through a joint venture. The permit is adjacent to many of the recently discovered Anadarko and Burlington Resources oil and gas-condensate fields. The original El Ouar permit was subdivided into El Ouar I – the IAN appraisal area of 520 square kilometres and El Ouar II – the exploration area of 3405 square kilometres. Gulf Canada’s net interest is 33.33%.

The IAN-1 (In Admedjene North-1) discovery well was drilled in 1998 and tested at 6,660 Boe/d and 42.7mmcfpd. A 3D seismic survey over the discovery was acquired in 1999.

The initial term of El Ouar I ended on November 18, 1999 and currently the permit is in a oneyear extension period. At present the group is carrying out development and commerciality studies and expect to drill an appraisal well in late 2000/early 2001. Dependent on the outcome of this well, first production is expected in 2004.

The El Ouar II term runs for three years from December 1999 and plans are being finalised to acquire 200 kilometres of 2D seismic over the most prospective areas of the permit.

Indonesia

Corridor Block PSC, Southern Sumatra

The Company operates producing oil and gas fields in the Corridor Block PSC, which has been extended until 2023. Gulf Indonesia is operator of the Corridor Block PSC with a 54% working interest. The PSC currently has 55 commercially producing wells in nine fields. Crude oil and condensate volumes in 1999 averaged 4,200 bbl/d (3,500 net).

Corridor Gas Project

The Grissik Gas Plant started-up in October 1998 and reached full production in the first quarter 1999. Full year sales volumes averaged 161 mmcfd (154 net), in spite of difficulties encountered with restricted pipeline capacity early in the year and the discovery of heavy hydrocarbons in the Dayung gas stream which shortens the operating life of gas membranes used to remove carbon dioxide from the gas production. Pre-treatment facilities will be installed in mid-2000 to remove the heavy hydrocarbons prior to arrival at the membranes. Expansion of the Grissik Gas Plant and related infrastructure is expected to start in 2000 to accommodate additional volumes.

The Company has discovered and delineated substantially more gas reserves than required to meet the current sales contract supplying the Duri steamflood operated by Caltex. The uncommitted reserves at Sumpal and Suban, and reserves from the adjacent South Jambi B Block will be used to supply future sales contracts currently under negotiation for additional gas use at the Duri steamflood and for sale to Singapore markets.

Corridor TAC, Southern Sumatra

The Company operates several small non-contiguous areas located onshore in southern Sumatra with producing oil fields in the Corridor Block under a Technical Assistance Contract (“TAC”) between the Company and Pertamina. The Company is operator of the block with a 60% working interest. The term of the TAC has been extended to 2010.

The TAC currently has 155 commercially producing wells in six fields. Production in 1999 averaged 7,200 Bbls/d (4,600 net). The Company drilled 11 successful infill and horizontal oil development wells in a 12 well program in 1999 and plans to drill up to 15 follow-up wells in 2000.

Kakap PSC, West Natuna Sea

The Company operates the Kakap PSC in the West Natuna Sea, with a 31.25% working interest, currently consisting of some 38 producing oil wells in 10 fields. Gulf’s share of production in 1999 from the Kakap fields was 6,200 Bbls/d (5,100 net) compared to 6,200 bbls/d (6,200 net) in 1998.

In January 1999, the West Natuna Group (Gulf Indonesia’s Kakap PSC, and two third party PSCs) concluded extensive negotiations and signed a supply agreement with Pertamina for natural gas to be used for power generation and petrochemical projects in Singapore. Upon completion of the upstream facilities and the 650-kilometre pipeline system currently under construction, up to 20 mmcf/d net to Gulf Indonesia is contracted to begin flowing from the West Natuna Sea to Singapore in 2001, with possible early gas sales now targeted for the fourth quarter of 2000. The pricing for the gas is based primarily on the price of fuel oil in Singapore continuing Gulf Indonesia’s strategy to link its gas sales price to oil prices. In connection with this project, Gulf Indonesia signed a 23-year extension of the contract term of the Kakap PSC, which now expires in 2028.

Jambi EOR, Southern Sumatra

In January 1990, the Company and Pertamina entered into a 15 year enhanced oil recovery contract to perform secondary recovery operations in a maximum of six fields in the Jambi area of southern Sumatra. The Jambi EOR provides that any incremental oil production over an established primary production decline curve and, after each of Pertamina and the Company have recovered costs, will be shared 92.5% to Pertamina and 7.5% to the working interest owners, of which Gulf holds 60%.

The Jambi EOR has 187 commercial wells in three fields that currently produce 2,300 bbls/d (2,000 net) in 1999 compared to 2,000 Bbls/d (1,800 net) in 1998. In 1999, the Company drilled three infill wells, deepened one well and performed over 60 workovers.

Productive Wells

The following table summarizes Gulf Canada's oil and natural gas wells that are capable of production as at December 31, 1999 not including the Petrovera Resources wells, which are shown in a separate table below. "Gross" means all wells in which Gulf Canada has a working interest and "net" means gross wells after deducting the working interests of others.

NORTH AMERICA - Alberta Saskatchewan B.C. INTERNATIONAL Indonesia Other		OIL	NATURAL GAS	TOTAL
		GROSS NET 1032 522 6 6 0 0 448 253 18 9	GROSS NET 1178 784 0 0 11 3 16 10 133 11	GROSS NET 2210 1306 6 6 11 3 464 263 151 20

TOTAL WELLS 1504 790 1338 808 2842 1598

Petrovera – Oil and Natural Gas Wells

The following table sets forth the number and status of wells in which Petrovera Resources has a working or royalty interest, which are producing or which Petrovera Resources considers to be capable of producing. Gulf Canada has a consolidated 47% interest in the partnership

Operated Non-operated Royalty interest Total		OIL	NATURAL GAS	TOTAL
		GROSS NET 1309 1243 403 154 167 26 1879 1423	GROSS NET 61 57 24 8 62 9 147 74	GROSS NET 1370 1300 427 162 229 35 2026 1497

Undeveloped Land

The following table summarizes Gulf Canada's conventional oil and natural gas land holdings as at December 31, 1999.

NORTH AMERICA Alberta Other Western Canada East Coast Frontier INTERNATIONAL Indonesia Netherlands Other TOTAL	DEVELOPED ACREAGE(1) GROSS NET (IN THOUSANDS) 1,608 955 4 3 0 0 6 0 367 192 1,644 295 0 0 3,629 1,445	UNDEVELOPED ACREAGE(1) GROSS NET (IN THOUSANDS) 2,514 1,907 87 57 8,671 4,285 1,538 396 10,633 7,885 502 202 3,181 1,170 27,128 15,902

(1) "Gross acres" means all acreage in which Gulf Canada has an interest and "net acres" means gross acres after deducting interests of others. "Developed acreage" refers to the acreage to which the Company has assigned proved reserves. "Undeveloped acreage" refers to the acreage to which the Company has not assigned any proved reserves. The table does not include approximately 325,000 gross acres in which royalty interests are held in Indonesia.

Reserves

At December 31, 1999, Gulf Canada’s estimated proved reserves were as follows:

Area	Oil			Natural Gas
	Mmbbls (gross/net)	Mmbbls (gross/net)		BCF (gross/net)
WesternCanada –conventional	98.4/81	35/26.5		893.9/791.1
WesternCanada – heavy oil	50.1/44.1	--/--		14.9/12.5
Syncrude	211.6/185.1	--/--		--/--
Indonesia	27.8/16.0	6.3/3.6	1262.5/996.3
Netherlands	1.9/1.9	0.4/0.4	124.5/122
Total	389.8/328.1	41.6/30.5	2295.7/1921.8

Note: In this table, “Gross” refers to Gulf’s working interest and “net” means net of royalty interest.

Reserve Reconciliation

The following tables summarize the changes in reserves which occurred in 1999.

		GROSS	GROSS			NET	NET	NET
	Crude	Gas	Natural		Crude	Gas	Natural
	Oil	Liquids	Gas	Sulphur	Oil	Liquids	Gas	Sulphur
Total Proved	(MMBbl)	(MMBbl)	(Bcf)	(MMLT)	(MMBbl)	(MMBbl)	(Bcf)	(MMLT)
Opening Balance @ January 1, 1999	453.6	53.3	2,455.1	3.0	387.8	40.9	2,169.8	2.6
Plus:
Additions - Drilling (Discovery& Extension)	2.8	1.4	228.1	0.0	2.3	0.9	195.0	0.0
Additions - Drilling (Infill)*	1.6	0.1	7.5	0.0	1.1	0.1	6.5	0.0
Additions - Improved Recovery	0.9	0.4	1.7	0.0	0.7	0.3	1.5	0.0
Additions - Other*	3.5	1.4	124.3	0.0	3.1	1.1	106.7	0.0
Purchases of Reserves-in-Place	0.0	0.3	19.8	0.0	0.0	0.3	17.5	0.0
Revisions to Previous Estimates	(0.4)	(1.5)	(2.0)	(0.0)	(0.8)	(1.0)	(5.7)	(0.0)
Less:
Sales of Reserves-in-Place	(40.6)	(8.9)	(335.2)	(0.2)	(34.5)	(7.1)	(299.4)	(0.2)
Production	(31.5)	(4.9)	(203.1)	(0.1)	(27.3)	(3.8)	(185.8)	(0.1)
RoyaltyAdjustments & Rounding	(0.1)	(0.0)	(0.5)	(0.0)	(4.1)	(1.1)	(84.3)	(0.0)

Closing Balance @ December 31, 1999	389.8	41.6	2,295.7	2.6	328.1	30.5	1,921.8	2.3
1999 % Change	-14.1%	-21.8%	-6.5%	-11.4%	-15.4%	-25.5%	-11.4%	-11.4%
RoyaltyFactor %(1999 Actuals)					84.2%	73.1%	83.7%	87.5%

		GROSS	GROSS			NET	NET	NET
	Crude	Gas	Natural		Crude	Gas	Natural
	Oil	Liquids	Gas	Sulphur	Oil	Liquids	Gas	Sulphur
Probable Additional	(MMBbl)	(MMBbl)	(Bcf)	(MMLT)	(MMBbl)	(MMBbl)	(Bcf)	(MMLT)
Opening Balance @ January 1, 1999	693.0	18.8	3,668.9	2.1	595.3	14.6	3,248.8	1.8
Plus:
Additions - Drilling (Discovery& Extension)	1.6	0.7	179.7	(0.0)	1.0	0.4	157.9	(0.0)
Additions - Drilling (Infill)*	(0.8)	0.0	0.7	0.0	(0.5)	0.0	0.6	0.0
Additions - Improved Recovery	1.6	0.1	0.2	0.0	1.3	0.1	0.2	0.0
Additions - Other*	1.0	0.3	64.8	(0.0)	1.0	0.2	58.4	(0.0)
Purchases of Reserves-in-Place	0.0	0.1	8.1	0.0	0.0	0.1	7.2	0.0
Revisions to Previous Estimates	(11.7)	1.3	12.9	0.0	(9.1)	0.8	8.6	0.0
Less:
Sales of Reserves-in-Place	(35.2)	(2.7)	(116.0)	0.2	(30.5)	(2.1)	(102.9)	0.2
Production	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
RoyaltyAdjustments & Rounding	(0.1)	0.0	0.0	0.1	(3.0)	0.2	(34.6)	0.1

Closing Balance @ December 31, 1999	649.5	18.7	3,819.3	2.4	555.4	14.3	3,344.2	2.1
1999 % Change	-6.3%	-0.7%	4.1%	16.3%	-6.7%	-2.3%	2.9%	16.3%
RoyaltyFactor %(1999 Actuals)					85.5%	76.4%	87.6%	87.5%

Capital Expenditures

For the year ended December 31, 1999, the Company spent $118 million (1998 - $322 million) on exploration, including drilling, $202 million (1998 - $456 million) on development.

Gas Plants and Pipelines

Gulf Canada's business includes the acquisition, ownership and operation of assets that generate cash flow and are non-depleting, such as gas processing plants, pipelines and gathering systems. In mid1998, Gulf Canada formed the Gulf Midstream Services (GMS) division to manage the Company's midstream assets. In December 1998, Gulf Canada sold 50% of its interest in GMS to KeySpan Energy Corporation. GMS holds interests in 13 raw gas processing plants and associated gathering systems. Gulf Canada maintains its interest in several other non-operated gas plants.

Other Facilities And Operations

Coal

Although Gulf Canada is not currently engaged in commercial production of coal, it continues to hold some coal properties. The Company's most significant coal property is Mount Klappan in British Columbia where drilling has confirmed a substantial anthracite deposit. Gulf Canada is pursuing the sale of the Mount Klappan coal property.

Marketing

The marketing of crude oil, natural gas liquids and natural gas is an integral part of Gulf Canada's business.

Crude Oil

Gulf Canada currently markets its crude oil through an arrangement which took effect January 1, 1998, with Tidal Energy Marketing Inc. ("Tidal"). Tidal was formed in 1997 to carry on crude oil marketing, of which Gulf Canada is a 50% shareholder. Tidal markets crude oil as agent for Gulf Canada, including Gulf Canada’s share of Syncrude’s production, the Province of Alberta, Athabasca Oil Sands Trust and Petrovera Resources as well as other third party customers. In 1999, Tidal marketed approximately 57,000 bbls/day of crude oil and condensate on behalf of Gulf Canada and Gulf Canada’s 50% share of the total volumes marketed by Tidal was 45,000 bbls/day.

In Indonesia, Gulf Indonesia's crude oil production is sold to Pertamina and directly to offshore markets. Further, Gulf Indonesia receives crude oil in kind for the delivery of natural gas to the Duri enhanced oil recovery project in Sumatra. This oil is sold through a long-term contract with Itochu Petroleum Co. to offshore markets. The price received for the crude oil sold to Pertamina, directly offshore and to Itochu is determined monthly by the Indonesian government based on indices for exported Indonesian crude oil, published offshore.

Crude oil from Gulf Canada’s Netherlands operations is sold into world markets.

Natural Gas Liquids

In December 1998, Gulf Canada agreed to sell all of its natural gas liquids production to GMS at market rates. In 1999, GMS marketed approximately 11,774.37 bbls/d of natural gas liquids on behalf of Gulf Canada and approximately 7,251 bbls/d of third party volumes. Natural gas liquids (primarily ethane, propane and butane) are extracted from natural gas processed at various field plants.

Natural Gas

In December 1998, Gulf Canada entered into an arrangement with GMS for the marketing of all of its natural gas production at market rates. In 1999, GMS managed 298.9 mmcf/d of Gulf Canada proprietary volumes and 168.6 mmcf/d of Gulf Canada third party volumes; and marketed 96.5 mmcf/d of other third party volumes. Approximately 35% of Gulf Canada's Western Canada natural gas sales in 1999 were pursuant to long-term contracts with Alberta gas purchasers (known as "aggregators") who resell the gas in both domestic and export markets. The remaining natural gas sales were direct sales to local distribution companies, industrial customers and marketing companies.

In the Netherlands, natural gas is sold under long-term contracts based on pricing for petroleum products.

Segment Information

Reference is made to Note 23 entitled "Segment Information" under the heading "Notes to Consolidated Financial Statements" on pages 68 and 69 of the Consolidated Financial Statements of the Company for the year ended December 31, 1999.

Business Environment

Competitive And Industry Conditions

There is strong competition relating to all aspects of the oil and gas industry, in particular the exploration for and development of new oil and natural gas reserves. Gulf Canada actively competes with a substantial number of other oil and gas companies for reserve acquisitions, exploration leases, licenses and concessions and skilled industry personnel. Gulf Canada's competitors include major integrated oil and gas companies and numerous other independent oil and gas companies and individual producers and operators, many of which have significantly greater financial resources than Gulf Canada.

Gulf Canada's production is subject to deliverability uncertainties related to the proximity of its reserves to pipeline and processing facilities, and shipping restrictions on pipelines that deliver oil and natural gas to commercial markets. Future production from frontier lands will depend upon, among other factors, satisfactory fiscal and regulatory terms, oil [and natural gas] prices, the establishment of sufficient reserves to justify the substantial capital costs of production facilities and the development of transportation systems to bring such reserves to market.

The oil and gas industry generally is subject to a number of risks, to which Gulf Canada is subject. These include risks associated with fluctuations in oil and natural gas prices and exchange rates, uncertainties as to the Company's estimates of its reserves and the Company's ability to replace those reserves, operating risks inherent active oil and gas exploration and development activities, the possible adverse impact of changes in government regulation upon the Company's affairs, risks arising from the restrictions imposed upon the operations and activities of Gulf Canada by the Company's debt instruments and the potential for environmental clean-up obligations and liabilities arising from its current or past operations. The Company endeavors to carry on its business in such a manner as to minimize such risks.

Effect of Environmental Protection Requirements

The operations of Gulf Canada are, and will continue to be, affected in varying degrees by laws and regulations regarding the protection of the environment. All phases of the oil and natural gas business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and Canadian and U.S. federal, provincial, state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with Gulf Canada's past and current operations. The legislation also requires that refineries, service stations, wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs.

Gulf Canada, either directly or through subsidiaries, owned numerous refineries, service stations and related operations in Canada and the United States prior to 1986, and continues to hold former sites, which have given rise to some claims and could give rise to additional claims in the future under laws that provide that responsible parties can include present and prior owners, operators and others, including claims for investigation, clean-up and restoration costs and damages for personal injury. Although Gulf Canada believes that it is currently in substantial compliance with all existing material environmental

regulations, there can be no assurance that future environmental costs will not have a material adverse effect on Gulf Canada's financial condition or results of operations. It is impossible to predict the full impact of these laws and regulations on Gulf Canada's operations. However, it is not anticipated that Gulf Canada's competitive position will be adversely affected by current or future environmental laws and regulations governing its current oil and gas operations. Since 1990, Gulf Canada has implemented a program of regular environmental audits to review operating practices and procedures at major plants and facilities in western Canada and to provide for compliance with regulatory requirements. In addition, acquisitions and divestitures are subject to environmental audits. Gulf Canada's accounting policy is to provide for future site restoration costs, including dismantling plants and abandoning properties, using the unit of production method or, where appropriate, the estimated remaining useful lives of the related assets. Gulf Canada has accrued $159 million for such future costs at December 31, 1999. Total anticipated future costs, given Gulf Canada's current inventory of wells and facilities, including those relating to Syncrude, is estimated to be approximately $496 million over the next 20 years. Gulf Canada also has environmental obligations related to certain mineral operations for which it has recorded a provision. In addition to its environmental responsibility for current operations, Gulf Canada is or may be responsible for future environmental costs related to certain past operations, mainly downstream in nature.

Foreign Operations

Some of Gulf Canada's reserves and operations outside North America are located in regions that may be considered politically and economically unstable. These reserves and the related operations are subject to certain risks, including increases in taxes and royalties, the establishment of production limits, export restrictions, the involuntary renegotiation of contracts, the nationalization of assets, other risks relating to changes in local government regimes and policies and resulting changes in business customs and practices, payment delays, currency exchange restrictions and losses and impairment of operations by actions of insurgent groups. Gulf Canada, like other international oil companies, attempts to conduct its business and financial affairs in such a manner as to protect against such political and economic risks. Gulf Canada reduces risk associated with foreign projects through farmouts, phased development programs and project financing. There can be no assurance, however, that Gulf Canada will be successful in protecting itself from the risks presented by foreign operations.

ITEM 4

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Selected consolidated financial information is contained on page 75 of the Annual Report under the caption “Five Year Financial Summary”, which is incorporated herein by reference. A summary of quarterly financial information is included on page 76-77 of the Annual Report under the caption “Quarterly Summaries”, which is incorporated herein by reference.

Preferred Share Dividend

Reference is made to the information in note 16 of the Notes to the Consolidated Financial Statements on pages 60 and 61 of the Annual Report, which information is incorporated herein by reference.

ITEM 5

MANAGEMENT'S DISCUSSION AND ANALYSIS

Reference is made to the information under the heading "Management's Discussion and Analysis" on pages 35 through 46 of the Annual Report, which information is incorporated herein by reference.

ITEM 6

MARKET FOR SECURITIES

The Company’s Ordinary Shares and Preferred Shares, Series 1 are listed for trading on the Toronto Stock Exchange and New York Stock Exchange and trade under the symbol GOU and GOU.PR.A, respectively. As a result of the restructuring of stock exchange operations in Canada, the Company’s stock ceased to be listed on the Montreal Exchange in December 1999.

ITEM 7

DIRECTORS AND OFFICERS

Directors

Reference is made to information contained under the heading "Election of Directors" on pages 5 to 7 of the Circular for the names of the directors of Gulf Canada as at the date of this AIF, their current offices, their principal occupations for the five years ended December 31, 1999 and their municipality of residence, which information is incorporated herein by reference.

All directors and officers as a group beneficially own, directly or indirectly, or have control over or exercise direction in respect of, 18,412,909 Ordinary Shares of the Company or approximately 5%.

The Committees of the Board of Directors are described under the heading “Election of Directors” on page 7 of the Circular.

Officers

Reference is made to information contained under the heading "Employment History of Officers" on page 7 of the Circular for the names of the officers of Gulf Canada, their current offices, their principal occupations for the five years ended December 31, 1999, and their municipality of residence, which information is incorporated herein by reference.

ITEM 8

ADDITIONAL INFORMATION

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of the Company’s securities, options to purchase securities and interest of insiders in material transactions, where applicable, is contained in the Circular. Additional financial information is provided in the Company’s consolidated financial statements for the year ended December 31, 1999 contained in the Annual Report.

The Company will provide one copy of this AIF, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in this AIF, one copy of the Annual Report (including the consolidated financial statements for the year ended December 31, 1999 and accompanying report of the auditors), one copy of any interim financial statements subsequent to the consolidated financial statements for the year ended December 31, 1999, a copy of the Circular dated March 13, 2000 upon request to the Secretary of Gulf Canada.

When securities of the Company are in the course of a distribution pursuant to a short form prospectus or a preliminary short form prospectus has been filed in respect of a distribution of the Company’s securities, copies of the foregoing documents and any other documents that are incorporated by reference into the short form prospectus or preliminary short form prospectus may also be obtained from the Secretary of Gulf Canada, upon request.

As of December 31, 1999, Gulf Canada directly employed 558 people.

As of December 31, 1999, more than 40% of the Company’s issued Ordinary Shares were held by U.S. residents.

GLOSSARY OF TERMS

The following terms shall have the meanings set forth below, unless otherwise indicated:

"AIF" This annual information form;
"Annual Report" The Annual Report of Gulf Canada Resources Limited dated February 22, 2000;
"Bbls" or “bbls” Barrels. One barrel equals 0.15891 cubic meters;
"Bbls/d" or “bbls/d” Barrels per day;
“Boe/d” of boe/d” Barrels of oil equivalent per day;

"Circular" The Management Proxy Circular of Gulf Canada Resources Limited dated March 13, 2000;

"Gulf Canada" or “the Company” Gulf Canada Resources Limited;

"Mbbls" Thousands of barrels;

"Mmbbls" Millions of barrels.