Memorandum of Understanding

This Memorandum of Understanding made as of the 2nd day of July, 2026 (the “Effective Date”).

Among:

His Majesty The King In Right Of Canada, as represented by the Clerk of the King’s Privy Council and Secretary to the Cabinet (“Canada”)

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His Majesty The King In Right Of Alberta, as represented by the Deputy Minister of Executive Council and Head of the Public Service (“Alberta”)

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Canadian Natural Resources Limited (“Canadian Natural”)

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Cenovus Energy Inc. (“Cenovus”)

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Conocophillips Canada Resources Corp. (“ConocoPhillips Canada”)

− and −

Imperial Oil Resources Limited (“Imperial”)

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Suncor Energy Inc. (“Suncor”)

(together, Canadian Natural, Cenovus, ConocoPhillips Canada, Imperial and Suncor are defined herein as the “Oil Sands Alliance Parties” and each, an “Oil Sands Alliance Party”, and together with Canada and Alberta, the “Participants”)

Whereas

1. The Participants share an interest in supporting a more resilient, competitive, and sustainable Canadian oil sands sector.
2. The Participants recognize that the oil sands are and will continue to be an important contributor to Canadian economic capacity, including through jobs, exports, fiscal revenue, energy sovereignty, emissions reductions, and technological innovation, and that effective, clear and streamlined fiscal and regulatory structures are required to attract the investment needed to sustain and grow this strategic resource.
3. The Participants wish to set out their approach with respect to reducing greenhouse gas emissions from oil sands operations by 16 million tonnes per annum (“Mtpa”) between now and 2045 as defined in Section 2 of this MOU, to support reductions in the emissions intensity of Alberta heavy oil.
4. Canada and Alberta entered into a Memorandum of Understanding (an “MOU”) on November 27, 2025 (the “Canada – Alberta MOU”), which:
   1. among other things, recognized the importance of new energy infrastructure development in Western Canada, including an Alberta-proposed 1 million barrel per day pipeline to the West Coast of Canada to Asian markets (the “West Coast Oil Pipeline” or “WCOP”), enabling increasing production of Alberta oil and natural gas;
   2. acknowledged the mutual interdependence of the approval, commencement and construction of the WCOP, emissions reduction projects, and the oil production growth required to underpin WCOP; and
   3. set forth an intention to work cooperatively with the Oil Sands Alliance Parties to develop and enter into a tripartite MOU to deliver a set of emissions reductions projects that decrease emissions intensity of Canadian heavy oil production.
5. The Participants recognize that Canada and Alberta have materially advanced certain key initiatives contained in the Canada – Alberta MOU, including:
   1. Canada and Alberta reached an agreement in principle on March 25, 2026, with respect to methane equivalency, and have re-affirmed their commitment to enter into a methane equivalency agreement that would take effect no later than January 1, 2027;
   2. Canada and Alberta have entered into the Co-operation Agreement between Alberta and Canada on Environmental and Impact Assessment on April 2, 2026, to implement a streamlined and flexible impact assessment process requiring resolution within two years, and Canada is proposing legislative changes to ensure that federal review and decision-making is no more than one year;
   3. Canada has committed to streamline federal approval processes for projects of national interest;
   4. Canada:
      1. Has extended federal Investment Tax Credits (“ITCs”) to 2035, for eligible capital expenditures on carbon capture, utilization and storage of 50% on carbon capture equipment, and 37.5% on associated transportation and storage/use equipment; and
      2. Will move to introduce legislation, subject to parliamentary approval, to implement ITCs for eligible capital expenditures on enhanced oil recovery of 25% on carbon capture equipment, and 18.75% on associated transportation and storage/use equipment;
   5. In Budget 2025, Canada stated that effective carbon markets, enhanced oil and gas methane regulations, and the deployment at scale of technologies such as CCSU, would obviate the need for the previously proposed oil and natural gas emissions cap;
   6. Alberta has passed legislation to set a 120-day approval timeline for qualified projects; and
   7. Alberta has committed to finalizing the Alberta Carbon Capture Incentive Program (“ACCIP”).
6. On May 15, 2026, Canada and Alberta entered into an Implementation Agreement which includes:
   1. An agreement on carbon pricing and other measures;
   2. A commitment from Canada and Alberta to work together on this MOU and on the WCOP; and
   3. an agreement from Canada to hold the Clean Electricity Regulations (“CER”) in abeyance while the CER Reference is before the Alberta Court of Appeal and any subsequent appeal to the Supreme Court of Canada proceeds.
7. Alberta and Canada are each committed to efforts to make their respective fiscal and regulatory frameworks more efficient, effective, competitive and streamlined, including those structures in support of oil sands production growth, without diminishing the robustness of regulatory oversight.
8. Canada and Alberta are committed to respecting the rights recognized and affirmed by Section 35 of the Constitution Act, 1982 in accordance with their respective practices and policies. The Participants recognize the importance of respecting consistent and early engagement and meaningful consultation with Indigenous Peoples while advancing Indigenous economic opportunities.
9. Recognizing their mutual interest in production growth, emissions reductions and the WCOP, the Participants wish to set out their shared understanding for cooperation relating to responsibly growing oil sands output while reducing CO2e emissions intensity; enabling secure and diverse global market access; and driving investment and economic multiplier benefits.
10. This MOU is also intended to inform the development of future binding agreements (collectively, the “Definitive Agreements”) among Canada and Alberta with each of the Oil Sands Alliance Parties on related matters.

Now Therefore, the Participants set out the following non-binding mutual understandings:

1.0 Ojectives

The Participants recognize that achieving the long-term potential of Canada’s oil sands sector requires coordinated policy and regulatory systems to ensure the following objectives are achieved:

1. Expanded market access: Supporting the expansion and diversification of global market access for competitive and secure Canadian oil.
2. Production growth: Supporting the development of fiscal and regulatory frameworks to enable sustained and substantial oil sands development and production growth.
3. Emissions reduction: Advancing effective and efficient emissions reduction projects, including carbon market frameworks and incentives that support meaningful greenhouse gas reductions and contribute to emissions intensity reductions for heavy oil produced in Canada.
4. Indigenous Peoples: Respecting consistent and early engagement and meaningful consultation with Indigenous Peoples while advancing Indigenous economic opportunities relating to WCOP.

2.0 Emissions reduction – Emissions reduction projects

The Participants acknowledge that:

1. The Oil Sands Alliance Parties have developed a plan to reduce greenhouse gas emissions from Alberta oil sands by approximately 6 Mtpa (net) through a carbon capture and storage project comprised of:
   1. carbon capture projects from each of the Oil Sands Alliance Parties, which may include shared projects among Oil Sands Alliance Parties; and
   2. CO2 transportation pipelines, compression facilities and storage hub infrastructure (the “Project Infrastructure”), ((I) and (II) known, collectively, as the “Pathways Project”).
2. It is contemplated that the Pathways Project will proceed on a staged basis, with the Project Infrastructure expected to be in service on or before January 1, 2032, and the Pathways Project fully complete by January 1, 2035. The Definitive Agreements will set out each Oil Sands Alliance Party’s commitment with respect to its share of the Pathways Project (the “Commitment Milestones”).

Additional 10 Mtpa of emission reductions

The Oil Sands Alliance Parties recognize Canada and Alberta’s objective, as set forth in the May 15, 2026, Implementation Agreement, of achieving an additional 5 Mtpa (net) of emissions reductions via a range of technologies by 2040 and a further 5 Mtpa (net) by 2045 (the “Additional Emissions Reductions”).

1. The Oil Sands Alliance Parties share the objective of reducing oil sands carbon emissions and will continue to work toward it, which may be achieved through the expansion of the Pathways Project, deployment of other emission reduction technologies, or projects deploying improved production practices focused on lowering emissions.
2. Each Oil Sands Alliance Party’s reduction in emissions under the Additional Emissions Reductions will be assessed based on i) a comparison to business as usual or deployment of existing commercially deployed recovery technologies or ii) on a comparison to existing production facilities or practices, where appropriate and taking into account reservoir specific characteristics for both i) and ii). The assessment of each Oil Sands Alliance Party’s achievement of its share of the Additional Emissions Reductions will also consider any emissions reductions it achieves from new projects or the Pathways Project during the 2027 – 2035 period that exceeds its Commitment Milestones.
3. Canada and Alberta will maintain appropriate fiscal supports which may be required in the future to support investment to achieve the Additional Emissions Reductions.

TIER Stringency Rate Incentive

1. Each Oil Sands Alliance Party that meets its Commitment Milestones will be entitled to a 1.0% annual reduction (the “Stringency Incentive”) to its annual 2.0% Facility Specific Benchmark (“FSB”) stringency rate increase under the Technology Innovation and Emissions Reduction (“TIER”) regulation, beginning:
   1. on January 1, 2029, for those parties reaching Final Notice to Proceed (“FNTP”) on their full Commitment Milestones before January 1, 2028;
   2. on January 1, 2030, for parties reaching FNTP on their full Commitment Milestones before January 1, 2029; or
   3. on January 1, 2031, or if the FNTP date for parties reaching FNTP on their full Commitment Milestones is after January 1, 2031, then on that later date.
2. An Oil Sands Alliance Party that has a plan and is taking demonstrable actions in implementing its share of the first 5 Mtpa (net) Additional Emissions Reductions before January 1, 2035, will maintain a Stringency Incentive of 1% until 2040.
   1. However, should those actions fail to achieve the Oil Sands Alliance Party’s full share of the Additional Emissions Reductions by December 31, 2039, the FSB in 2040 shall be adjusted for such Party to reflect a stringency rate based on a 1.5% level for the period from January 1, 2035, to December 31, 2039, subject to appropriate materiality conditions.
   2. In the event an Oil Sands Alliance Party does not have a plan or pursue their share of the Additional Emissions Reductions by January 1, 2035, a stringency rate of 1.5% will apply from January 1, 2035, to December 31, 2039.
3. An Oil Sands Alliance Party that has a plan and is taking demonstrable actions in implementing its share of the second 5 Mtpa (net) Additional Emissions Reductions before January 1, 2040, will maintain a Stringency Incentive of 1% until 2045.
   1. However, should those actions fail to achieve the Oil Sands Alliance Party’s full share of the Additional Emissions Reductions by December 31, 2044, the FSB in 2045 shall be adjusted for such Party to reflect a stringency rate based on a 2.0% level for the period from January 1, 2040, to December 31, 2044, subject to appropriate materiality conditions.
   2. In the event an Oil Sands Alliance Party does not present a plan or pursue their share of the Additional Emissions Reductions by January 1, 2040, a stringency rate of 2.0% will apply from January 1, 2040, to December 31, 2044.
4. For greater certainty, an Oil Sands Alliance Party who achieves its share of the Commitment Milestones and Additional Emissions Reductions will be subject to a 1% stringency rate on their FSB facilities through 2045.
5. Failure to maintain its previously achieved Commitment Milestones or Additional Emissions Reductions will result in the end of the Stringency Incentive for that Oil Sands Alliance Party.
6. High-Performance Benchmarks for sectors under TIER, other than electricity, which is being dealt with separately by Alberta and Canada, will be subject to a 0.5% stringency rate increase from 2027 to 2040 and the High-Performance Benchmarks will not otherwise be changed during that period, irrespective of the Commitment Milestones or Additional Emissions Reduction.

3.0 Participant commitments

1. Oil Sands Alliance Parties
    

   Subject to the terms to be set forth in the Definitive Agreements, each of the Oil Sands Alliance Parties will undertake the following actions:

   1. Advance the Pathways Project within the Commitment Milestones;
   2. Collaborate with Canada and Alberta to advance oil sands production growth that would support the WCOP, assuming fiscal and regulatory frameworks are in place to support that growth; and
   3. Use commercially reasonable efforts to leverage and prioritize Canadian technologies and supply chains, subject to trade law obligations, including through selection of suppliers, manufacturers, engineering firms, service providers, renewable energy and low-carbon equipment and process providers across the Pathways Project and any projects related to the Additional Emissions Reductions, where reasonably feasible and appropriate, as follows:
      1. Using Canadian-produced steel and aluminum in the construction and development of such projects;
      2. Encouraging products sourced from Canadian companies that mitigate carbon emissions, including without limitation those active in methane management, renewable electricity supply, industrial electrification, energy efficiency, hydrogen, advanced materials, and other emissions reduction and energy efficient technology applications; and
      3. Encouraging digital optimization where such technologies support emissions reduction; cost optimization; and/or best-in-class operational performance of such projects.
2. Government of Canada
    

   Canada commits to updating its guidance document entitled Clean Fuel Regulations – Guidance for Determining Crude Oil and Bitumen Quantities for the Purposes of Credit Creation under Compliance Category 1 to allow upstream projects to create at least a 20% credit rate in all circumstances (i.e., regardless of whether the credit creator has information on where the crude oil/bitumen is used). Canada also confirms that it will advance regulatory amendments to ensure that the regulations provide for clear and effective mechanisms to determine eligibility above the minimum national default level.

   Canada will, subject to applicable legislative and regulatory approval processes, advance proposals with a view to providing greater policy certainty regarding the following:

   1. Offer financing or support mechanisms that provide for operating cost support for carbon capture and storage projects, through various mechanisms including but not limited to enhanced CFR durability to ensure that environmental and economic outcomes are achieved and sustained;
   2. Review and address technical clarifications and other concerns raised by the industry related to the CCSU ITC; and
   3. Establish a bilateral regulatory-focused working group with the Oil Sands Alliance Parties to guide work relating to reviewing the efficiency and effectiveness of existing statutes and regulations relating to the development of oil sands resources and to advance solutions.
3. Government of Alberta
    

   Alberta will, subject to applicable legislative and regulatory approval processes, agree to the following:

   1. Implement financial supports to encourage the oil production growth required to underpin the WCOP, the expansion of Trans Mountain, and other egress growth;
   2. Extend ACCIP to 2035;
   3. Issue a Carbon Sequestration Agreement for the Pathways Project consistent with the Pathways Project and plans, including the storage complex; and
   4. The Government of Alberta has recently passed legislation to set a 120-day approval timeline for qualified projects. Oil sands development is in the public interest and the Government of Alberta will work closely with all oil sands producers, including the Oil Sands Alliance Parties, to ensure regulatory issues and concerns are addressed expeditiously in support of oil sands production growth. In addition to this general intent, Alberta will establish a bilateral working group with the Oil Sands Alliance Parties on regulatory reform to review and address, subject to applicable legislative and regulatory approval processes, existing statutes and regulations identified by the Oil Sands Alliance Parties as barriers to sector competitiveness and investment in developing the oil sands resource. This bilateral working group, the membership of which will be agreed between the Alberta and the Oil Sands Alliance Parties, will have an agreed mandate and scope which will include identified actions that must be completed prior to the Definitive Agreements and ongoing actions following the Definitive Agreements within agreed timelines.

4.0 Expanded market access

1. The Participants recognize that the WCOP and the Pathways Project are mutually dependent, and that production growth, with proper fiscal and regulatory frameworks in place to support that growth, is essential to underpin the WCOP.
2. The Participants acknowledge that under the Canada-Alberta MOU, Alberta committed to act as initial proponent for the development of the WCOP, and Canada committed to declare the project a priority, including by supporting its advancement to the Major Projects Office for consideration of listing as a project of national interest under the Building Canada Act.
3. Canada confirms that it is pursuing the expansion of the Trans Mountain pipeline targeted for an additional estimated 300,000 to 400,000 barrels per day of transportation capacity.
4. The Participants agree that support for growth of Alberta’s oil sands is essential to support the expansion of Trans Mountain and the WCOP and the shared goals of substantial oil production growth.
5. To advance the Participants’ common strategic objectives related to growth and market egress, each Participant acknowledges the need to work together to develop a shared understanding of the WCOP project to inform future commercial discussions.

5.0 Indigenous matters

1. The Participants will respect the rights of Indigenous Peoples of Canada recognized and affirmed by Section 35 of the Constitution Act, 1982. The Participants recognize the importance of consistent and early engagement and meaningful consultation with Indigenous Peoples.
2. The Participants acknowledge that Alberta and Canada may have a duty to consult and, if appropriate, accommodate Indigenous Peoples arising from their respective actions and decision-making related to the Pathways Project and/or the WCOP.
3. The Participants will pursue potential opportunities for Indigenous economic participation in aspects of the Pathways Project, and Canada and Alberta will pursue opportunities for Indigenous economic participation in aspects of the WCOP (including with Indigenous groups in the WCOP pipeline right of way and in the oil sands region where the Oil Sands Alliance Parties operate).
4. In advancing the works contemplated by this MOU, the Participants commit to working cooperatively with Indigenous Peoples in Alberta as part of engagement and meaningful consultation in accordance with Alberta’s and Canada’s respective practices and policies. The Participants will cooperate, share information (including the record of engagement and consultation) and coordinate, to the extent possible, to reduce duplication and overlap in their respective engagement and consultation activities. The Participants recognize that the Pathways Project is predominantly within provincial jurisdiction, that the Oil Sands Alliance Parties have been consulting with Indigenous Peoples in accordance with Provincial requirements since 2023, and the Participants will continue to work cooperatively with Indigenous Peoples in Alberta to engage and consult as appropriate on the Pathways Project Infrastructure.

6.0 Engagement

1. Working group
    

   The Participants will establish a trilateral working group immediately following the Effective Date of this MOU to advance the goals and objectives of the Participants as set out in this MOU.

2. Definitive agreements
    

   This MOU is also intended to inform the development of the future binding Definitive Agreements among Canada and Alberta with each of the Oil Sands Alliance Parties on related matters, with target signings on or before November 15, 2026.

   All commitments of the Participants are conditional upon the signing of the Definitive Agreements and subject to the terms and conditions of such agreements.

3. Process management
    

   The Participants will establish process-management protocols to maintain, to the extent possible, a critical path timeline to achieve the Pathways Project in-service dates contemplated in Section 2.0 of this MOU, assuming positive final notice to proceed.

7.0 Limitation

1. Notwithstanding anything to the contrary in this document, the Participants acknowledge that nothing in this MOU is intended to, nor does, create a binding legal agreement or have any legal effect. The Participants further acknowledge that nothing in this MOU is intended to result in a legal relationship of reliance between the Participants; or to supersede, prejudice, or otherwise derogate from the respective laws and regulations or policies, administrative practices or procedures, or administrative or adjudicative decision-making of either the Government of Alberta or the Government of Canada; or to affect, concede, or otherwise acknowledge in any way either Canada’s or Alberta’s constitutional jurisdiction or to affect, bind, or otherwise anticipate any prerogative and statutory authorities of the Government of Alberta or the Government of Canada, or any rights and commitments under any international instrument.

8.0 General

1. This MOU will be effective as of July 2, 2026, and will remain valid until the earlier to occur of November 15, 2026, or the mutual agreement of the Participants.

In Witness Whereof this non-binding Memorandum of Understanding has been executed by duly authorized representatives of the Participants.

The King in Right of Canada
Per:
Michael Sabia
Clerk of the King’s Privy Council and Secretary to the Cabinet

The King in Right of the Province of Alberta
Per:
Dale McFee
Deputy Minister of Executive Council and Head of the Public Service

Canadian Natural Resources Limited
Per:
N. Murray Edwards
Executive Chairman

Per:
Scott Stauth
President

Cenovus Energy Inc.
Per:
Jon McKenzie
President & Chief Executive Officer

Suncor Energy Inc.
Per:
Rich Kruger
President and Chief Executive Officer

Imperial Oil Resources Limited
Per:
John Whelan
Chairman, President and CEO

ConocoPhillips Canada Resources Corp.
Per:
Nick McKenna
President