Opti Canada (OPCDF) 6-K Opti Canada 6-K

Exhibit 99.2

Condensed Interim

Financial Statements

For the three months ended

March 31, 2011

2011

Balance Sheet

Unaudited

(amounts in thousands of Canadian dollars)	March 31, 2011			December 31, 2010			January 1, 2010
ASSETS
Current assets
Cash and cash equivalents	$	287,065		$	173,110		$	357,723
Trade and other receivables		43,069			33,255			15,308
Inventory		13,146			11,904			8,496
Interest reserve account		28,361			28,688			-
		371,641			246,957			381,527
Non-current assets
Property, plant and equipment (note 5)		3,282,601			3,260,347			3,196,988
Exploration and evaluation assets (note 5)		324,339			297,942			261,627
Interest reserve account		42,620			58,265			-
TOTAL ASSETS	$	4,021,201		$	3,863,511		$	3,840,142
LIABILITIES
Current liabilities
Trade payables and accrued liabilities (note 6)	$	161,963		$	94,104		$	79,135
Derivative instrument (note 10b)		101,855			89,202			134,099
Short-term revolving credit facility (note 7)		165,000			-			-
		428,818			183,306			213,234
Non-current liabilities
Long-term debt (note 7)		2,443,224			2,502,318			2,234,870
Finance leases		20,117			20,224			20,616
Decommissioning liabilities (note 8)		35,698			38,078			27,182
TOTAL LIABILITIES		2,927,857			2,743,926			2,495,902
SHAREHOLDERS’ EQUITY
Share capital		2,037,862			2,037,862			2,037,862
Contributed surplus		35,908			35,557			33,506
Deficit		(980,426	)		(953,834	)		(727,128	)
TOTAL EQUITY		1,093,344			1,119,585			1,344,240
TOTAL LIABILITIES AND EQUITY	$	4,021,201		$	3,863,511		$	3,840,142

See accompanying notes to the interim financial statements and going concern uncertainty note 2.

OPTI CANADA INC. – 2 – 2011 Q1 FINANCIAL STATEMENT

2011

Statement of Comprehensive Loss

Three months ended March 31, 2011 and 2010

Unaudited

(amounts in thousands of Canadian dollars, except per share amounts)	2011			2010
Petroleum sales	$	62,349		$	49,779
Power sales		2,957			2,043
Royalties		(2,238	)		(1,445	)
Revenue		63,068			50,377
Expenses
Operating costs		64,640			52,239
Diluent and feedstock purchases		2,334			23,563
Transportation and marketing		4,330			3,765
General and administrative		3,180			4,042
Derivative instruments loss (note 10b)		12,653			30,170
Foreign exchange translation gain		(60,932	)		(71,973	)
Depletion and depreciation		13,601			9,695
Borrowing costs (note 9)		49,854			40,302
		89,660			91,803
Loss before taxes		(26,592	)		(41,426	)
Deferred income tax		-			-
Net and comprehensive loss	$	(26,592	)	$	(41,426	)
Loss per share, basic and diluted	$	(0.09	)	$	(0.15	)

See accompanying notes to the interim financial statements

OPTI CANADA INC. – 3 – 2011 Q1 FINANCIAL STATEMENT

2011

Statement of Changes in Equity

Unaudited

(amounts in thousands of Canadian dollars)	Share capital		Contributed Surplus		Deficit			Total Equity
Balance – January 1, 2010	$	2,037,862	$	33,506	$	(727,128	)	$	1,344,240
Net and comprehensive loss		-		-		(41,426	)		(41,426	)
Stock based compensation expense		-		654		-			654
Balance at March 31, 2010	$	2,037,862	$	34,160	$	(768,554	)	$	1,303,468
Balance – January 1, 2011	$	2,037,862	$	35,557	$	(953,834	)	$	1,119,585
Net and comprehensive loss		-		-		(26,592	)		(26,592	)
Stock based compensation expense		-		351		-			351
Balance at March 31, 2011	$	2,037,862	$	35,908	$	(980,426	)	$	1,093,344

See accompanying notes to the interim financial statements

OPTI CANADA INC. – 4 – 2011 Q1 FINANCIAL STATEMENT

2011

Statement of Cash Flows

Three months ended March 31, 2011 and 2010

Unaudited

	2011			2010
(amounts in thousands of Canadian dollars)
Cash provided by (used in):
Operating activities
Net loss	$	(26,592	)	$	(41,426	)
Items not affecting cash
Depletion and depreciation		13,601			9,695
Non-cash borrowing costs		10,097			(7,806	)
Stock-based compensation expense		351			654
Derivative instruments unrealized loss		12,653			26,380
Foreign exchange translation gain		(60,932	)		(71,973	)
		(50,822	)		(84,476	)
Cash interest received		436			113
Abandonment costs incurred		(81	)		-
Changes in items of working capital
Trade and other receivables		(9,866	)		(11,346	)
Inventory		(1,242	)		(1,287	)
Trade payables and accrued liabilities		69,333			47,780
Net cash generated by operating activities		7,758			(49,216	)
Financing activities
Increase in revolving credit facility		165,000			-
Cash borrowing costs paid		(17,669	)		(454	)
Decrease in interest reserve account		13,489			-
Decrease in principal portion of finance lease		(107	)		(93	)
Net cash generated by financing activities		160,713			(547	)
Investing activities
Property, plant and equipment additions		(34,374	)		(29,155	)
Exploration and evaluation asset additions		(18,200	)		(1,011	)
Net cash used by investing activities		(52,574	)		(30,166	)
Effect of exchange rate changes on cash and cash equivalents held in foreign currency		(1,942	)		(5,987	)
Increase (decrease) in cash and cash equivalents		113,955			(85,916	)
Cash and cash equivalents – beginning of period		173,110			357,723
Cash and cash equivalents – end of period	$	287,065		$	271,807

See accompanying notes to the interim financial statements

OPTI CANADA INC. – 5 – 2011 Q1 FINANCIAL STATEMENT

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

1.  GENERAL INFORMATION

OPTI Canada Inc. (OPTI) is a public Canadian company with its shares listed for trading on the Toronto Stock Exchange (Symbol: OPC).  OPTI is incorporated and domiciled in Canada, and the address of its registered office is at 555 4th Ave SW Calgary, Alberta.  OPTI’s primary activity is a 35% working interest in the Long Lake Project (the Project).  The initial development consists of SAGD (steam assisted gravity drainage) oil production integrated with an upgrading facility that uses OPTI's proprietary OrCrudeTM process and commercially available hydrocracking and gasification technologies.

2.  GOING CONCERN

Since inception, the Company has incurred significant losses from operations and negative cash flows from operating activities and as at March 31, 2011, a working capital deficiency of $57 million and an accumulated deficit of $980 million.  OPTI has significant debt, as outlined in note 7, and contractual commitments that will necessitate cash outflows.  OPTI has limited financial resources and significant levels of fixed costs in terms of our interest payments and the majority of our operating costs.  Based on our current balance of cash and cash equivalents, achieving bitumen production improving from current levels, extending our foreign exchange derivative instruments, and access to and extension of our revolving credit facility, among other factors, we expect to have sufficient financial resources to meet our financial obligations for 12 months. Failure to improve bitumen production levels, extend our foreign exchange derivative instruments and extend our revolving credit facility, are the primary risks to our liquidity. Many of these factors are outside of the control of management. OPTI may require funding from capital markets or alternative sources.

These factors create significant doubt about OPTI’s ability to continue as a going concern and therefore OPTI may be unable to realize its assets and discharge its liabilities in the normal course of operations.  OPTI’s board of directors initiated a process to explore strategic alternatives to address the Company’s overall leverage position in 2009.  OPTI has expanded it strategic alternatives to include seeking advice on capital structure adjustments and there can be no assurance that OPTI will be successful in these activities.

The financial statements have been prepared on the basis that OPTI will continue to operate as a going concern.  The financial statements do not reflect adjustments in the carrying values of assets and liabilities, revenue or expenses and the classification used on the balance sheets that would be necessary if the going concern assumption was not appropriate.  Such adjustments would be material.

3.  BASIS OF PREPARATION, ADOPTION OF IFRS AND STATEMENT OF COMPLIANCE

On February 13, 2008 the CICA Accounting Standards Board announced that Canadian public reporting issuers will be required to report under International Financial Reporting Standards (IFRS) effective for years beginning on or after January 1, 2011.

These interim financial statements, including comparatives, have been prepared in accordance with IFRS applicable to the preparation of interim financial statements including International Accounting Standard (IAS) 34 “Interim Financial Reporting” and IFRS 1 “First-time Adoption of IFRS”.  The disclosures regarding the transition to IFRS are included in note 12, which includes the impact on OPTI’s reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting policies from those used in OPTI’s financial statements for the year ended December 31, 2010.  Subject to certain transition elections taken and disclosed in note 12, OPTI has consistently applied the same accounting policies in its opening IFRS balance sheet at January 1, 2010 and throughout all periods presented, as if these policies had always been in effect.  OPTI previously prepared its annual and interim financial statements under Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants (Canadian GAAP).  In these interim financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of IFRS.

OPTI CANADA INC. – 6 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

3. BASIS OF PREPARATION, ADOPTION OF IFRS AND STATEMENT OF COMPLIANCE (CONTINUED)

The policies applied in these interim financial statements are based on IFRS issued and outstanding as of April 26, 2011, the date the Board of Directors approved the statements.   Any subsequent changes to IFRS that are given effect to OPTI’s annual financial statements for the year ended December 31, 2011 could result in restatement of these interim financial statements, including the transition adjustments described in note 12.

The interim financial statements should be read in conjunction with OPTI’s Canadian GAAP annual financial statements for the year ended December 31, 2010.  Note 12 discloses information on the transition to IFRS effective for the year ended December 31, 2010 that is material to the understanding of these interim financial statements.

4.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)   Basis of measurement

The interim financial statements have been prepared under the historical cost method, except for the revaluation of certain financial assets and financial liabilities to fair value, including derivative instruments.

b)   Cash and cash equivalents

Cash and cash equivalents include cash, bankers’ acceptances, term deposits and bankers’ deposit notes that are highly liquid instruments that carry terms less than 91 days at the date of purchase.

c)   Trade and other receivables

If applicable, an allowance for doubtful accounts is recorded to provide for specific doubtful receivables. Trade and other receivable also include deposits and prepaid expenses that are short term.

d)   Inventory

Inventory consists of materials, supplies and volumes of Premium Sweet Crude (PSCTM) that are recorded at the lower of the weighted average cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

e)   Interest reserve account

Cash is considered to be restricted when its availability is limited to a specified purpose. OPTI’s interest reserve account is restricted cash required to fund the US$300 million First lien notes anticipated interest payments to maturity in August 2013. The current portion of the Interest reserve account represents interest payments due within 12 months.

f)   Property, plant and equipment and exploration and evaluation assets

(i)   Exploration and evaluation assets

Exploration and evaluation (E&E) assets include land acquisition costs, geological and geophysical costs, exploratory drilling, directly attributable expenses and activities relating to evaluating the technical feasibility and commercial viability of our resources.

E&E costs are capitalized and are not depleted until such time as the exploration phase is complete and technical feasibility and commercial viability of extracting the mineral resource has been demonstrated.  Technical feasibility and commercial viability is demonstrated when proven reserves are determined to exist along with sanctioning of a project by our Board of Directors.  Once demonstrated, E&E assets are tested for impairment in accordance with IAS 36 “Impairment of Assets” and transferred to property, plant and equipment (PP&E), and further development costs are capitalized to PP&E.  E&E assets are also tested for impairment in accordance with IAS 36 if facts and circumstances suggest that the carrying amount exceeds the recoverable amount.  If it is determined

OPTI CANADA INC. – 7 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

that technical feasibility and commercial viability has not been achieved in relation to a property, the resulting loss is included in the statement of loss and comprehensive loss.

Pre-license costs, defined as those costs incurred before the legal right to explore has been acquired, are expensed in the period in which they are incurred. Exploration and evaluation costs of a type that are not sufficiently closely related to a specificmineral resource to support capitalization are also expensed in the period in which they areincurred.

(ii)   Property, plant and equipment

Property, plant and equipment (PP&E) are carried at cost, less accumulated depletion, depreciation and accumulated impairment losses.  The cost of an item of PP&E consists of the purchase price, any costs directly attributable to bringing the asset into the location and condition necessary for its intended use, a discounted current estimate of the decommissioning costs and borrowing costs for qualifying assets.  The capitalized value of a finance lease is also included in PP&E.

Oil and gas capitalized costs are depleted using the unit-of-production method. Depletion is calculated using the ratio of production in the year to the remaining total proved and probable reserves before royalties, taking into account future development costs prior to inflation necessary to bring those reserves into production. These estimates are evaluated and reported on by independent reserve engineers annually.  Proven and probable reserves are estimated using independent reserve engineer reports and represent the estimated quantities of bitumen and Premium Sweet Crude (PSCTM) which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially viable.  There is a 50 percent estimated statistical probability that the actual quantity of recoverable reserves will be more than the amount estimated as proven and probable. The statistical probability for proven reserves is 90 percent.

Where an item of PP&E comprises major components with different useful lives, the components are accounted for as separate items of PP&E.  OPTI’s PP&E include the Upgrader, SAGD central processing facilities and the Cogeneration facilities and are depreciated using the unit of production method based on the facilities’ productive capacity over 40 years.  The capitalized value of finance leases are depreciated over the life of the lease.  The expected useful lives of PP&E, residual values and methods of depreciation are reviewed at each reporting period and, if necessary, changes are accounted for prospectively.

Changes in estimates such as quantities of proved and probable reserves that affect unit-of-production calculations are applied on a prospective basis.

An item of PP&E is derecognized upon disposal or is impaired when no future economic benefits are expected to arise from the continued use of the asset.  Any gain or loss on disposal of the asset, determined as the difference between the net proceeds and the carrying amount of the asset, is recognized in the statement of loss and comprehensive loss in the period incurred.

The carrying amounts of capital assets are reviewed for impairment when indicators of such impairment exist.  If indicators exist, the assets are tested for impairment under IAS 36.

(iii)   Impairment of non-financial assets under IAS 36

At each financial reporting date, the carrying amounts of capital assets are reviewed to determine whether there is any indication that those assets are impaired.  If such indication exists, an estimate of the recoverable amount of the asset is calculated.

OPTI CANADA INC. – 8 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Individual assets are grouped together for impairment assessment purposes into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash generating unit or CGU).  The carrying amount of PP&E assets within a CGU are compared to its recoverable amount of the CGU.  E&E assets are allocated to CGUs that are expected to benefit from synergies of the combination.  E&E assets are allocated to CGUs when they are assessed for impairment if indicators of impairment exist as well as upon their re-classification into PP&E.

A CGU’s recoverable amount is the higher of its fair value less costs to sell and its value in use.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money to the Company and the risks specific to the asset.  In determining fair value less cost to sell, recent market transactions are taken into account, if available.  If no transactions can be identified, an appropriate valuation model is used.

Where the carrying amount of a CGU exceeds its recoverable amount, the CGU is considered impaired and is written down to its recoverable amount.  The impairment loss is charged to the statement comprehensive loss.  A previously recognized impairment loss is reversed or partially reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized.  If that is the case, the carrying amount of the asset is increased to its recoverable amount.  The new carrying amount cannot exceed the carrying amount that would have been determined, net of depletion and depreciation, had no impairment loss been recognized for the asset in prior periods.

(iv)   Decommissioning liability

OPTI recognizes a decommissioning liability in the period it arose with a corresponding increase to the carrying amount of the related asset.  Measurement occurs when a legal or constructive obligation arises.  Provisions are measured at the present value of the expenditures expected to be required to settle the obligation discounted using the pre-tax risk-free rate, updated at each reporting date.  The increase in the provision due to the passage of time (accretion) is recognized as a borrowing cost where as increases or decreases due to changes in the estimated cost to decommission the asset are capitalized as PP&E.  Actual costs incurred upon settlement of the decommissioning liability reduce the liability to the extent the provision was established.  The related decommissioning asset is depreciated or depleted on the same basis as the PP&E to which it relates.

(v)   Corporate assets

Corporate assets are recorded at cost less accumulated amortization, which is calculated using the declining balance method at rates of 30 percent to 50 percent per annum.

(vi)   Maintenance and turnarounds

Expenditures associated with maintenance activities or major turnarounds that improve the productive capacity or extend the life of an asset are capitalized. These costs are included in PP&E when incurred and charged to depletion and depreciation over the estimated useful life.  Any remaining carrying amounts of any replaced or sold components are derecognized.  Maintenance and repairs, other than major turnaround costs, are expensed as incurred.

OPTI CANADA INC. – 9 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(vii)   Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying capital asset or project under construction are capitalized and added to the asset or project during construction until such time as the asset or project is substantially ready for its intended use.  Where funds were specifically borrowed to finance an asset or project, the amount capitalized represents the actual borrowing costs incurred.  Where funds used to finance an asset or project form part of general Company borrowings, the amount capitalized is calculated by using the weighted average of rates applicable to relevant general borrowings of OPTI during the period. Costs are allocated to assets using this weighted average borrowing rate and the assets' average book values during the borrowing period.  These costs are subsequently depleted or depreciated to the statement of comprehensive loss as a part of the related assets.  Capitalization of borrowing costs ceases when the assets are ready for their intended use.  All other borrowing costs are recognized in the statement of comprehensive loss in the period they are incurred.

g)   Leases

Leases that transfer substantially all the benefits, risks and rewards of ownership to OPTI are recorded as finance leases.  Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments with a corresponding increase to obligations under finance leases.  Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the obligation outstanding.  The finance charge is included in the statement of comprehensive loss over the lease period.

Leases that do not transfer the risks and rewards of ownership to OPTI are classified as operating leases under which leasing costs are expensed in the period incurred.

h)   Interests in joint ventures

A jointly controlled asset involves joint control and offers joint ownership by the venturers of assets contributed or acquired for the purpose of the joint venture, without the formation of a corporation, partnership or other entity.

OPTI accounts for its share of the jointly controlled assets, liabilities, income from the sale or use of the joint venture’s output, together with its share of the expenses incurred by the joint venture in proportion to its 35% interest in the joint venture with Nexen Inc. (“Nexen”).

i)   Share capital

Common shares are classified as equity.  Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

j)   Revenue recognition

(i)   Oil and gas products

Sales from the production of oil and gas products are recognized when the risks and rewards are transferred to the customer. At the Long Lake Project, OPTI’s share of sales is recognized when the oil and gas product ownership is transferred at the plant gate. Revenue is measured net of royalties as OPTI acts as a collection agent for the Government of Alberta.

(ii)   Power

Sales from power generated are recognized when the risks and rewards are transferred to the customer. At the Long Lake Project, OPTI’s share of sales is recognized when the excess power leaves the plant gate.  

OPTI CANADA INC. – 10 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

k)   Transportation

OPTI is contractually obligated to pay to transport OPTI’s share of oil and gas products sold to the nearest market terminal, as well as transmission costs for OPTI’s share of excess power sold.  These costs are presented in the statement of comprehensive loss as transportation expense.

l)   Income taxes

Income tax expense represents the sum of current tax expense and deferred tax expense.  Current tax expense is based on the taxable profits for the year.  Income tax is recognized in the statement of comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities are recognized based on differences in the financial statement carrying amount for assets and liabilities and the associated tax balance.  Deferred tax liabilities are generally recognized for all taxable temporary differences.  Deferred tax assets are generally recognized for all deductible temporary differences, unused tax credits carried forward and unused tax losses to the extent that it is probable that there will be taxable profits against which deductible temporary differences can be utilized.

Deferred taxes are measured based on enacted or substantially enacted tax rates for the period in which the temporary differences are expected to be realized or settled, and are presented as non-current.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority and when OPTI intends to settle its current tax assets and liabilities on a net basis.

m)   Stock-based compensation plans

Stock options granted to directors, officers, employees and consultants are accounted for using the fair value method under which compensation expense is recorded based on the estimated fair value of the options at the grant date using the Black-Scholes option pricing model.  Each tranche in an award is considered a separate award with its own vesting period and grant date fair value.  Compensation cost is either expensed or capitalized depending upon whether or not the individual to which the award relates is directly related to the construction of assets, over the vesting period with a corresponding increase in contributed surplus.  When stock options are exercised, the cash proceeds along with the amount previously recorded as contributed surplus are recorded as share capital.  The number of awards expected to vest is reviewed annually.

n)   Foreign currencies

(i)   Functional and presentation currency

The functional and presentation currency of OPTI is the Canadian dollar.

(ii)   Transactions and balances

Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates in effect on the balance sheet date.  Other assets, other liabilities and expenses denominated in foreign currencies are translated at rates in effect at the date of the transaction.  OPTI includes foreign exchange gains or losses in the statement of comprehensive loss. These gains and losses are primarily related to the revaluations of its U.S. dollar (US$) denominated cash and cash equivalents, derivative instruments, and US$ denominated long-term debt.

OPTI CANADA INC. – 11 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

o)   Loss per share

Basic earnings per share (“EPS”) is calculated by dividing the net loss for the period attributable to equity owners of OPTI by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for dilutive instruments. OPTI’s potentially dilutive instruments are comprised of stock options granted.  2011 and 2010 diluted EPS is not disclosed as the effect is anti-dilutive.

p)   Financial instruments

Financial assets and liabilities are recognized when OPTI becomes a party to the contractual provisions of the instrument.  Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and OPTI has transferred substantially all the risks and rewards of ownership.

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

At initial recognition, OPTI classifies its financial instruments in the following categories depending on the purpose for which the instrument were acquired.

Financial assets

(i)   Fair value through profit or loss

A financial asset can be classified as fair value through profit or loss only if it is designated at fair value through profit or loss or held-for-trading.  OPTI’s financial assets at fair value through profit or loss are held for trading financial assets.  These assets are comprised of derivatives or assets acquired or incurred principally for the purpose of selling or repurchasing in the near term.  OPTI’s foreign exchange contracts are derivatives and are recorded at fair value with changes in fair value included in profit or loss. OPTI does not apply hedge accounting to its derivative instruments.

(ii)   Held-to-maturity

These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that OPTI has the positive intention and ability to hold until maturity.  These assets are measured at amortized cost using the effective interest method.  If there is objective evidence that the investment is impaired, impairment losses are included in profit or loss.

(iii)   Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  These assets are measured at amortized cost using the effective interest method. Any gains or losses on the realization of receivables are included in profit or loss.

Impairment of financial assets

All financial assets except for those at fair value through profit or loss are subject to review for impairment at each reporting date.  Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets are impaired.  Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

OPTI CANADA INC. – 12 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial liabilities

(i)   Fair value through profit or loss

These liabilities are comprised of derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing in the near term.  They are measured at fair value with changes in fair value included in profit or loss.

(ii)   Other financial liabilities

They are measured at amortized cost using the effective interest method. Any gains or losses in the realization of other financial liabilities are included in profit or loss.

Fair values

Fair values of financial assets and liabilities are based upon quoted market prices available from active markets or are otherwise determined using a variety of valuation techniques and models using quoted market prices. OPTI uses the counterparty close out approach with regard to the entities own credit risk adjustment in fair valuing financial liabilities.

Borrowing costs

Borrowing costs that are directly related to the issuance of new debt are recorded net of the associated debt and recognized into income using the effective interest rate method over the life of the debt.

Discounts on issuance of new debt

Discounts, where proceeds received are less than the par value of the debt, are recorded as a reduction to long-term debt.  These discounts are being amortized using the effective interest method and included in borrowing costs.

q)   Significant accounting judgements and estimates

The preparation of the financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect reported amounts and presentation of assets, liabilities, revenues, expenses and disclosures of contingencies and commitments.  Such estimates primarily relate to unsettled transactions and events at the balance sheet date which are based on information available to management at each financial statement date.  Actual results could differ from those estimated.

Judgements, estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Going concern uncertainty

The assessment of the Company’s ability to execute its strategy by funding future operating and capital requirements involves judgement. Management monitors future cash requirements to assess the Company’s ability to meet these future funding requirements. Further information regarding going concern uncertainty is outlined in note 2.

Property, plant and equipment

OPTI capitalizes costs in connection with the development of oil sands projects. The measurement of these costs at each financial statement date requires estimates to be made with respect to construction, materials procurement and drilling activities. The estimate of the percentage of completion of various projects at the financial statement date affects PP&E additions and the related accrued liability.  An increase in the measurement amount of these items would increase PP&E and accrued liabilities accordingly.

OPTI CANADA INC. – 13 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reserves

Reserves and resources are used in the unit of production calculation for depletion and depreciation as well as impairment analysis.  The quantity of reserves is subject to a number of estimates and projections, including assessment of engineering data, projected future rates of production, characteristics of bitumen reservoirs, commodity prices, regulatory changes, foreign exchange rates, operating costs and sustaining capital expenditures. These estimates and projections are uncertain as OPTI does not have a long commercial production history to assist in the development of these forward-looking estimates. However, all reserve and associated financial information is evaluated and reported on by a firm of qualified independent reserve evaluators in accordance with the standards prescribed by applicable securities regulators.

The calculation of future cash flows based on these reserves is dependent on a number of estimates including: production volumes, facility performance, commodity prices, royalties, operating costs, sustaining capital, foreign exchange and tax rates. The price used in our assessment of future cash flows is based on OPTI’s independent evaluator’s estimate of future prices and evaluated for reasonability by OPTI against other available information.  OPTI believes these prices are reasonable estimates for a long-term outlook.

Impairment

OPTI assesses its PP&E and E&E assets for possible impairment if there are events or changes in circumstances that indicate the carrying values of the assets may not be recoverable. Such indicators include changes in OPTI’s business plans, changes in commodity prices, evidence of physical damage and significant downward revisions to estimated recoverable volumes or increases in estimated future development expenditures.

The assessment for impairment for PP&E and E&E assets involves comparing the carrying value of the CGU with the higher of value in use calculations and fair value less costs to sell.  Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, discount rates, production profiles and the outlook for regional supply-and-demand conditions for crude oil. Impairment is recognized in earnings in the period in which carrying amount exceeded the recoverable amount.

Depletion and depreciation

Depletion on SAGD resource assets is measured over the life of proved and probable reserves on a unit-of-production basis and commences when the facilities are substantially complete and after commercial production has begun.   Reserve estimates and the associated future capital can have a significant impact on earnings, as these are key components to the calculation of depletion.  A downward revision in the reserve estimate or an upward revision to future capital would result in increased depletion, reduced earnings and reduced carrying value of petroleum and natural gas property assets.  Major SAGD and Upgrader facilities are depreciated with the unit-of-production method based on the estimated productive capacity of the facilities. A downward revision in the estimated productive capacity of the facilities would result in increased depreciation, reduced earnings and a reduced net book value of SAGD and Upgrader facilities.

OPTI CANADA INC. – 14 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

4.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Decommissioning liabilities

OPTI measures decommissioning liabilities at each financial statement date. The estimate is based on OPTI’s share of costs to reclaim the resource assets and certain facilities related to the Project as well as other resource assets associated with future expansions. The liability is related to reclamation of the Upgrader, central plant facility, SAGD facility and petroleum and natural gas assets. To determine the future value of the liability, estimates of the amount, timing and inflation of the associated abandonment costs are made.  The present value of the cost is recorded as the decommissioning liability using a risk-free discount rate.  Due to the long-term nature of current and future project developments, abandonment costs will be incurred many years in the future.  As a result of these factors, different estimates could be used for such abandonment costs and the associated timing.  Assumptions of higher future abandonment costs, regulatory changes, higher inflation, lower risk-free rates or an assumption of earlier or specified timing of abandonment would cause the decommissioning liability and corresponding asset to increase. These changes would also cause future accretion expenses to increase and future earnings to decrease.

Deferred taxes

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amount and the tax basis of assets and liabilities.  An estimate is required for both the timing and corresponding tax rate for this reversal.  Should these estimates change, it may impact the measurement of our asset or liability as well as deferred tax recovery or expense recognized to earnings. Where unfavourable evidence exists, additional considerations and evidence for recognition of deferred tax assets is required.  OPTI has applied management judgment and evaluated applicable factors necessary in making this determination and have concluded that the positive evidence in consideration of the estimated future cash flows based on reserve reports from OPTI’s independent engineers, does not sufficiently outweigh negative factors, such as the net field operating losses in 2009 and 2010.  OPTI only recognizes deferred tax assets arising from unused tax losses to the extent that OPTI has sufficient taxable temporary differences or it is probable that sufficient taxable profit will be available against which the unused tax losses can be utilized.  OPTI has not recognized a deferred tax asset.

Contingencies

By their nature, contingencies will only be resolved when one or more of the future events occur or fail to occur.  The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.

Other areas of estimates

The recognition of amounts in relation to stock-based compensation requires estimates related to valuation of stock options at the time of issuance.  The fair value of foreign exchange contracts is calculated using valuation models that require estimates as to future market prices.

By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates on the financial statements for current and future periods could be significant.

r)   Accounting standards issued but not yet applied

(i)   Financial instruments – classification and measurement

IFRS 9 “Financial Instruments” was issued in November 2009 and as issued reflects the first phase on the work to replace IAS 39 “Financial Instruments: Recognition and Measurement” and applies to the classification and measurement of financial assets.  This standard is effective for periods beginning on or after January 1, 2013, with earlier adoption permitted.  Subsequent phases will address classification and measurement of financial liabilities, hedge accounting and derecognition.  OPTI has not yet assessed the impact of the standard or whether it will adopt the standard early.

OPTI CANADA INC. – 15 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

5.  PROPERTY, PLANT AND EQUIPMENT AND EXPLORATION AND EVALUATION ASSETS

Cost	Petroleum and natural gas properties		Major facilities		Corporate assets		Capital lease		Total PP&E		Exploration and evaluation assets
At January 1, 2010	$	432,291	$	2,775,933	$	622	$	22,719	$	3,231,565	$	261,627
Additions		24,180		92,071		-		-		116,251		36,315
Disposals		-		-		528		-		528		-
At December 31, 2010		456,471		2,868,004		94		22,719		3,347,288		297,942
Additions		21,126		14,729		-		-		35,855		26,397
Cost at March 31, 2011	$	477,597	$	2,882,733	$	94	$	22,719	$	3,383,143	$	324,339

Accumulated depletion and depreciation
At January 1, 2010	$	24,832	$	8,624	$	409	$	712	$	34,577	$	-
Depletion and depreciation		29,379		22,362		31		950		52,722		-
Disposals		-		-		358		-		358		-
At December 31, 2010		54,211		30,986		82		1,662		86,941		-
Depletion and depreciation		7,413		5,950		1		237		13,601		-
Accumulated depletion and depreciation at March 31, 2011	$	61,624	$	36,936	$	83	$	1,899	$	100,542	$	-

Net book value
January 1, 2010	$	407,459	$	2,767,309	$	213	$	22,007	$	3,196,988	$	261,627
December 31, 2010	$	402,260	$	2,837,018	$	12	$	21,057	$	3,260,347	$	297,942
March 31, 2011	$	415,973	$	2,845,797	$	11	$	20,820	$	3,282,601	$	324,339

For the three months ended March 31, 2011, borrowing costs of $8.2 million (twelve months ended December 31, 2010 - $30.9 million) have been capitalized to exploration and evaluation assets and borrowing costs of $4.1 million (twelve months ended December, 30, 2010 - $15.8 million) has been capitalized to property, plant and equipment as it relates to general borrowings used to finance the development of future phases.  The effective weighted average interest rate of the relevant borrowings was 10.8 percent (twelve months ended December, 30, 2010 – 11.3 percent).

Assets under construction included in cost	Major facilities		Corporate assets		Capital lease		Total PP&E
January 1, 2010	$	445,119	$	-	$	-	$	445,119
December 31, 2010	$	263,012	$	-	$	-	$	263,012
March 31, 2011	$	257,690	$	-	$	-	$	257,690

Assets under construction include the costs of sustaining capital projects not yet ready for their intended use and engineering future expansions and are included in PP&E.  These assets are not depreciated until they are ready for their intended use.

OPTI CANADA INC. – 16 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

6.  TRADE PAYABLES AND ACCRUED LIABILITIES

	March 31, 2011		December 31, 2010		January 1, 2010
Trade payables and accrued liabilities relating to operations (a)	$	48,401	$	46,377	$	35,463
Trade payables and accrued liabilities relating to capital expenditures (b)		53,665		27,871		31,031
Corporate payables and accrued liabilities (c)		1,555		523		1,863
Interest payable (d)		58,342		19,333		10,778
Total trade payables accrued liabilities	$	161,963	$	94,104	$	79,135

a)   Trade payables and accrued liabilities relating to operations

Trade payables and accrued liabilities relating to operations are non-interest bearing and are normally settled on a 30 day basis.  The majority of these amounts are owing to Nexen, our joint venture partner.

b)   Trade payables and accrued liabilities relating to capital expenditures

Trade payables and accrued liabilities relating to capital expenditures are non-interest bearing and are normally settled on a 30 day basis.  The majority of these amounts are owing to Nexen, our joint venture partner.

c)   Corporate payables and accrued liabilities

Corporate payables and accrued liabilities are non-interest bearing and are normally settled on a 30 day basis.  These amounts relate to head office employee and operating costs.

d)   Interest payable

Interest payable represents amounts accrued in relation to interest on our long-term debt.

7.  LONG-TERM DEBT

	Note		March 31, 2011			December 31, 2010			January 1, 2010
Canadian dollar denominated debt
Revolving credit facility due December 15, 2011		a	$	165,000		$	-		$	-
U.S. dollar denominated Senior notes
First lien notes
US$525million @ 9.0% due December 15, 2012		b		509,040			522,165			446,675
US$300million @ 9.75% due August 15, 2013		c		290,880			298,380			-
Secured notes
US$1,000million @ 8.25% due December 15, 2014		d		969,600			994,600			1,051,000
US$750million @ 7.785% due December 15, 2014		e		727,200			745,950			788,250
Total debt principal				2,661,720			2,561,095			2,285,925
Issuance discounts		b, c		(16,088	)		(18,305	)		(12,933	)
Transaction costs		b, c, d, e		(37,408	)		(40,472	)		(38,122	)
Total net debt				2,608,224			2,502,318			2,234,870
Less short term revolving credit facility				165,000			-			-
Total long-term debt			$	2,443,224		$	2,502,318		$	2,234,870

a)   Revolving credit facility

OPTI has a $190 million revolving credit facility.  This facility matures on December 15, 2011 and is effectively senior in priority to all other long term debt.  Amounts drawn under this facility can take the

OPTI CANADA INC. – 17 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

7.     LONG TERM DEBT (CONTINUED)

form of prime rate based loans, bankers’ acceptances, LIBOR loans or letters of credit.  The facility bears interest at a floating rate based on the prime rate, bankers’ acceptance rate or at LIBOR plus a credit spread above the reference rate, while any unused amounts are subject to standby fees.  During the three months ended March 31, 2011, the weighted average interest rate on borrowings under this facility was 8.0 percent (three months ended March 31, 2010 – nil). This facility is collateralized by a first priority security interest on all present and after acquired property of OPTI.  The revolving credit facility includes certain conditions precedent to all borrowings, see note 11 for discussion of the financial maintenance covenant. 

b)   US$525 million notes

OPTI issued US$525 million of First Lien Notes which bear interest at a fixed 9.0 percent and mature on December 15, 2012.  Transaction costs in relation to the issuance of these notes were $15.7 million.  These are amortized over the expected life of the notes by the effective interest method.  These notes are collateralized by a first priority security interest on all OPTI’s existing and future property and are effectively senior in priority to the US$300 million notes and Secured notes.  Until June 15, 2012, OPTI may redeem all or a part of these notes at redemption price of 102 percent of the principal amount plus accrued and unpaid interest. This redemption price declines over time and these notes can be redeemed at par subsequent to June 15, 2012.  These notes were sold with an original issue discount of 3 percent or US$13.2 million.

c)   US$300 million notes

OPTI issued US$300 million of First Lien Notes which bear interest at a fixed 9.75 percent and mature on August 15, 2013.  Transaction costs in relation to the issuance of these notes were $8.6 million.   These are amortized over the expected life of the notes by the effective interest method.  These notes are collateralized by a first priority security interest on all OPTI’s existing and future property and are effectively senior in priority to the Secured notes.  At any time prior to August 15, 2011, OPTI may redeem all or part of these notes at a redemption price equal between 106 percent and 102 percent of the principal amount, plus accrued interest.  At any time after August 15, 2011 OPTI may redeem all or a part of these notes at redemption price of 102 percent of the principal amount plus accrued and unpaid interest and after February 15, 2013, may redeem all or part of these notes at par plus accrued and unpaid interest. Also, these notes have a special change of control provision of 105 percent of the principal amount.  These notes were sold with an original issue discount of 3 percent or US$10.5 million.  In connection with these notes, OPTI funded US$87 million to an interest reserve account for interest payments until August 15, 2013.

d)   US$1,000 million Secured Notes

OPTI issued US$1,000 million Secured Notes which bear interest at a fixed 8.25 percent and mature on December 15, 2014.  Transaction costs in relation to the issuance of these notes were $24.2 million.   These are amortized over the expected life of the notes by the effective interest method.  These notes are collateralized by a second priority security interest on all OPTI’s existing and future property.  At any time prior to December 15, 2012, OPTI may redeem all or part of these notes at a redemption price equal between 104 percent and 102 percent of the principal amount, plus accrued interest.  This redemption price declines over time and these notes can be redeemed at par subsequent to December 15, 2012.

e)   US$750 million Secured Notes

OPTI also issued US$750 million Secured Notes.  These notes bear interest at a fixed 7.875 percent and mature December 15, 2014.  Transaction costs in relation to the issuance of these notes were $11.9 million.  These are amortized over the expected life of the notes by the effective interest method.  The other terms and conditions associated with these notes are substantially the same as the US$1,000 million Secured Notes described above.

See note 11 for discussion of the debt covenants.

OPTI CANADA INC. – 18 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

8.  DECOMMISSIONING LIABILITIES

OPTI’s obligations with respect to decommissioning relate to reclamation of sites and facilities on which the Project operations are situated.  The liability is recognized in the period in which the liability is incurred based on the estimated future reclamation cost discounted using a weighted average risk-free rate of 3.7 percent (December 31, 2010 – 3.5 percent) and estimated inflation of 2.0 percent (December 31, 2010 – 2.0 percent) annually.

Continuity of decommissioning liability
Present value of obligation at January 1, 2010	$	27,182
New obligations during the year		235
Changes in present value of estimated retirement costs		2,712
Changes in discount rates		6,780
Decommissioning costs incurred		(2	)
Accretion		1,171
Present value of liability at December 31, 2010		38,078
Changes in discount rates		(2,616	)
Decommissioning costs incurred		(82	)
Accretion expense		318
Present value of liability at March 31, 2011	$	35,698

OPTI estimates its liability related to drilling activities will be settled over approximately the next 20 years and liability relating to resource assets and OPTI’s upgrading and central plant facilities will be settled in approximately 55 years.

9.   BORROWING COSTS

	Three months ended March 31, 2011			Three months ended March 31, 2010
Interest expense incurred	$	56,418		$	47,827
Accretion on decommissioning liabilities		318			266
Issuance discounts		1,777			949
Financing charges on finance leases		706			720
Transaction and financing costs		3,380			1,884
Interest income		(452	)		(104	)
Capitalized interest expense		(12,293	)		(11,240	)
Borrowing costs expensed	$	49,854		$	40,302

10.  FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

a)   Fair values

OPTI’s financial instruments include cash and cash equivalents, interest reserve account, trade and other receivables, trade payables and accrued liabilities, derivative instruments, long-term debt and lease obligations.

The three levels of the fair value hierarchy are:

·   Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

·   Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

·   Level 3 – Inputs that are not based on observable market data.

OPTI CANADA INC. – 19 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

10.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

The derivative instruments are classified as Level 2 for the purposes of measuring fair value.  The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale.

Valuations for level 2 financial instruments have inputs other than quoted prices that are observable for the asset or liability either directly or indirectly. There were no transfers between levels of the fair value hierarchy in the first quarter of 2011.

The following methods and assumptions were used to estimate fair value

·   Trade receivables and trade payables are all current and less than 30 days outstanding and primarily from and due to one customer.  Due to the short-term nature of the trade receivables and trade payables, the carrying values approximate the fair values.

·   The fair value of quoted notes is based on price quotations at the reporting date

·   The fair value of loans from banks, and obligations under finance leases is estimated by discounting the future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

·   Fair values of derivative instruments are based upon quoted market prices available from active markets.

The estimated fair values of OPTI’s financial instruments are as follows:

		March 31, 2011						December 31, 2010						January 1, 2010
	Financial instrument classification	Carrying value			Estimated fair-value			Carrying value			Estimated fair-value			Carrying value			Estimated fair-value
Cash and cash equivalents	Loans and receivables	$	287		$	287		$	173		$	173		$	358		$	358
Interest reserve account	Loans and receivables		71			71			87			87			-			-
Trade and other receivables	Loans and receivables		43			43			21			21			12			12
Trade payables and accrued liabilities	Other financial liabilities		(162	)		(162	)		(94	)		(94	)		(79	)		(79	)
Derivative instruments	Held-for-trading		(102	)		(102	)		(89	)		(89	)		(134	)		(134	)
Obligation under finance lease	Other financial liabilities		(20	)		(20	)		(20	)		(20	)		(21	)		(21	)
Revolving credit facility (1)	Other financial liabilities		(165	)		(165	)		-			-			-			-
Long term debt
US$525 million @ 9.0% due December 15, 2012 (2)	Other financial liabilities		(491	)		(517	)		(502	)		(522	)		(422	)		(451	)
US$300 million @ 9.75% due August 15, 2013 (2)	Other financial liabilities		(275	)		(290	)		(281	)		(298	)		-			-
US$1,000 million @ 8.25% due December 15, 2014(2)	Other financial liabilities		(958	)		(514	)		(981	)		(706	)		(1,034	)		(870	)
US$750 million @ 7.785% due December 15, 2014(2)	Other financial liabilities		(719	)		(384	)		(738	)		(521	)		(779	)		(642	)
Long term debt total			(2,443	)		(1,705	)		(2,502	)		(2,047	)		(2,235	)		(1,963	)
Total net financial liabilities		$	(2,491	)	$	(1,753	)	$	(2,424	)	$	(1,969	)	$	(2,099	)	$	(1,827	)

(1) The carrying value of the revolving credit facility approximates its fair value due to the variable rate, first priority security position and short-term duration of instruments outstanding under the facility.

(2)  The carrying value of the senior notes is in Canadian dollars and is net of the respective unamortized transaction costs and issue discount.

OPTI CANADA INC. – 20 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

10.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

b)   Derivative instruments

	March 31, 2011		December 31, 2010		January 1, 2010
Foreign exchange derivative instruments (level 2) (i)	$	101,855	$	89,202	$	114,650
Commodity derivative instruments (level 2) (ii)		-		-		19,449
Total derivative liability	$	101,855	$	89,202	$	134,099

	March 31, 2011		March 31, 2010
Unrealized loss on foreign exchange derivative instruments (i)	$	12,653	$	28,363
Unrealized gain on commodity derivative instruments (ii)		-		(1,983	)
Realized loss on commodity derivative instruments  (ii)		-		3,790
Derivative instrument loss	$	12,653	$	30,170

(i)   Foreign exchange derivative instruments

OPTI has foreign exchange forward contracts that provide for a fixed payment of Canadian dollars in exchange for receipt of U.S. dollars. OPTI’s foreign exchange derivative instruments are accounted for as held-for-trading financial instruments and are recorded at fair value through profit and loss.

At March 31, 2011, there are US$420 million of foreign exchange derivative instruments to mitigate a portion of the exposure to the foreign exchange fluctuations on the Company’s long-term debt at a rate of approximately CDN$1.22 to US$1.00.  Changes in the exchange rate between Canadian and U.S. dollars change the value of these instruments.  These derivative instruments have a scheduled maturity of September 30, 2011.

(ii)   Commodity derivative instruments

OPTI’s West Texas Intermediate (WTI) derivative contracts expired in 2010.  OPTI’s commodity hedges were derivative instruments and accounted for as fair value through profit or loss financial instruments and were recorded at fair value.

c)   Risk management

The Company considers its risks in relation to financial instruments in the following categories:

Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will not discharge its obligations, resulting in a financial loss to OPTI. OPTI has policies and procedures in place that govern the credit risk it will assume. OPTI evaluates credit risk on an ongoing basis including an evaluation of counterparty credit rating and counterparty concentrations measured by amount and percentage. OPTI’s objective is to have no credit losses.

The primary sources of credit risk arise from the following financial assets: (1) cash and cash equivalents; (2) interest reserve account; (3) accounts receivable; and (4) derivative instruments.  OPTI has not had any credit losses in the past and the risk of financial loss is considered to be low given the counterparties used by the Company.  As at March 31, 2011, OPTI has no financial assets that are past due or impaired due to credit-risk-related defaults.

OPTI CANADA INC. – 21 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

10.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Cash and cash equivalents

OPTI has cash deposits and money market investments with Canadian banks. Counterparty selection is governed by the OPTI’s treasury policy, which limits concentration of investments and requires that all instruments be rated as investment grade by at least one rating agency. As at March 31, 2011 the amount in cash and cash equivalents was $287 million and the maximum exposure to a single counterparty was $69 million with a major Canadian bank.

As at March 31, 2011, the remaining terms on investments made by OPTI are less than 32 days with interest fixed over the period of investment. Maturity dates for investments are established to ensure cash availability for working capital requirements, operating activities and interest payments.

Interest reserve account

As at March 31, 2011, there was US$73 million held in an interest reserve account to fund the semi-annual interest payments on the US$300 million First Lien Notes until maturity in 2013. OPTI is permitted to invest these funds in specific investment instruments. These funds are currently invested in U.S. Treasury bills which provide a highly rated and secure investment alternative to ensure security of principal invested.

Accounts receivable and deposits

OPTI’s accounts receivable include amounts due from Nexen related to operating activities and Nexen Marketing related to marketing activities as well as deposits for operating expenses related to advances on joint venture expenses required under the joint venture agreement with Nexen. OPTI’s credit risk in regard to accounts receivable therefore relates primarily to the risk of default by Nexen, which has an investment-grade corporate rating from Moody’s Investor Service, and by financial institutions with an investment-grade rating. Therefore, we estimate our risk of credit loss as low.

Derivative instruments

OPTI periodically uses instruments to hedge certain of the projected financial risks. In the past, such instruments have involved the use of interest rate swaps, cross-currency interest swaps, currency-forward contracts and crude oil put options and swaps. Currently OPTI only holds foreign exchange derivative instruments to which the counterparties are major Canadian and international banks and lenders under OPTI’s revolving credit facility. Our exposure to non-payment from any single institution at March 31, 2011, is approximately 37 percent of the value of these derivative instruments if the instruments are in a gain position relative to the Company.

Liquidity Risk

Liquidity risk is the risk that OPTI will not be able to meet obligations associated with financial liabilities. OPTI’s financial liabilities are comprised of accounts payable and accrued liabilities, derivative instruments, long-term debt and obligations under capital leases. OPTI frequently assesses its liquidity position and obligations under its financial liabilities by preparing regular financial forecasts. Liquidity risk is increased by OPTI’s high levels of long-term debt and historical net field operating losses. OPTI mitigates liquidity risk by maintaining a sufficient cash balance, maintaining sufficient current and projected liquidity to meet expected future payments based upon reasonable production and pricing assumptions and ensuring adequate sources of financing are available through bank credit facilities and complying with debt covenants. OPTI’s financial liabilities arose primarily from the development of the Project. As at March 31, 2011 OPTI has met all of the obligations associated with its financial liabilities.

See Note 7 for information regarding the amount of available credit facilities and contractual maturities of OPTI’s long-term debt. OPTI was in compliance with its debt covenants at March 31, 2011. See Note 2 in the notes to the March 31, 2011 financial statements regarding going concern uncertainty.

OPTI CANADA INC. – 22 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

10.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Market Risk

Market risk is the risk that the fair value (for assets or liabilities considered to be held for trading and available for sale) or future cash flows (for assets or liabilities considered to be held-to-maturity, other financial liabilities, and loans and receivables) of a financial instrument will fluctuate because of changes in market prices. OPTI evaluates market risk on an ongoing basis. OPTI assesses the impact of variability in identified market risks on the medium-term cash requirements and impact with respect to covenants on the credit facilities. At March 31, 2011, OPTI had mitigation programs to reduce market risk related to foreign exchange price changes.

Interest rate risk

The $190 million revolving credit facility is a variable interest rate facility with borrowing rates and duration established at the time of the initial borrowing and subsequent extension. The extent of the exposure to interest rate risk depends on the amount outstanding under the facility. At March 31, 2011, $165 million was drawn under this facility.

The Senior Notes are comprised of US$2,575 million of debt which has fixed U.S. dollar semi-annual interest payments. Changes in the exchange rate between the Canadian dollar and U.S. dollar impact the carrying value of the Senior Notes and the measurement amount of interest expense. A CDN$0.01 change in the exchange rate will impact the carrying value of the Senior Notes by approximately $26 million. A CDN$0.01 change in the exchange rate will change OPTI’s annual interest costs by approximately $2 million.

Foreign exchange derivative instruments

OPTI is exposed to foreign exchange rate risk on our long-term U.S. dollar-denominated debt. At March 31, 2011, we have US$420 million of foreign exchange derivative instruments to manage a portion of the exposure to the foreign exchange fluctuations on the Company’s long-term debt at a rate of approximately CDN$1.22 to US$1.00. Changes in the exchange rate between Canadian and U.S. dollars change the value of these instruments. These derivative instruments currently expire in September 2011. The instruments offset changes in the measurement amount of the US debt. The foreign exchange derivative instruments at March 31, 2011 are a liability of $102 million.

Prior to or at the expiry of the foreign exchange derivative instruments in September 2011, OPTI may choose to settle or extend to a later settlement date. If we are unable or choose not to extend the term of these instruments, we expect to pay or receive, based on the mark-to-market of this contract, at the time of the settlement. As of March 31, 2011, the value of the foreign exchange derivative instruments would change by approximately $4 million for each $0.01 change in the foreign exchange rate between U.S. and Canadian dollars. This change would have a corresponding impact on earnings (loss) before taxes in 2011.

Commodity derivative instruments

During 2010, we had established commodity derivative contracts to mitigate OPTI’s exposure of future operations to decreases in the price of its synthetic crude oil. OPTI had commodity price swaps to mitigate a portion of the exposure. During 2010 OPTI had WTI price swaps that provided for 3,000 bbl/d at strike prices between US$64/bbl and US$67/bbl of crude oil that expired on December 31, 2010. The counterparties to the commodity derivative instruments were major Canadian banks and lenders under OPTI’s revolving credit facility. No new commodity derivative contracts were entered into for 2011.

OPTI CANADA INC. – 23 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

10.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Sensitivities

For the quarter ended March 31, 2011 estimated changes to reported net income as a result of changes in market rates are as noted.

·   An increase of $1.00/bbl in WTI would have resulted in approximately $0.5 million decrease in our net loss (three months ended March 31, 2010 - $0.3 million) with an offsetting increase in our net loss of approximately $nil (three months ended March 31, 2010 - $0.6 million increase) as a result of the increase in the value of our commodity liabilities (assuming the WTI change occurred in a range where the WTI price per barrel is greater than the strike price of the commodity swap),

·   A $0.10/GJ increase in the price of natural gas would have resulted in approximately $0.2 million increase in net loss (three months ended March 31, 2010 - $0.2 million increase),

·   A 1.0 percent increase in interest rates would have resulted in approximately a $0.2 million increase in net loss (three months ended March 31, 2010 - nil),  and

·   A $0.01 increase in the Canadian to U.S. exchange rate would decrease net loss by approximately $15.4 million (three months ended March 31, 2010 - $10.0 million decrease) considering the impact on the Senior Notes and related interest and the foreign exchange derivative instruments.

11.  CAPITAL MANAGEMENT

All of OPTI’s debt facilities set certain limitations on its capital structure primarily through financial covenants. Measurement of the ratios for this purpose is defined in the relevant credit agreement.

At the end of the reporting period, OPTI is in compliance with the debt to capitalization maintenance covenant in its revolving credit facility.

	March 31, 2011			December 31, 2010(4)			January 1, 2010(4)
Senior Notes (2)		2,538,756			2,607,852			2,297,875
Revolving credit facility		165,000			-			-
Foreign exchange derivative instruments(2)		103,022			90,308			114,650
Total Consolidated Debt		2,806,778			2,698,160			2,412,525
Shareholders’ equity		1,093,344			1,039,007			1,310,992
Exclusions from equity(3)		454,613			454,613			454,613
Total Capitalization		4,354,735			4,191,780			4,178,130
Total Debt to Capitalization(1)		64.5	%		64.4	%		57.7	%
Total Debt to Capitalization limit		75.0	%		75.0	%		70.0	%

In accordance with the loan agreement:

(1) "Debt to Capitalization” means, as at any date of determination, the ratio of Total Consolidated Debt to Total Capitalization (net of the effect of any currency derivative Agreements relating to any Debt included therein).  "Total Capitalization" means, as at any date of determination, the aggregate of Total Consolidated Debt, and Shareholders' Equity on such date.

(2)  The carrying value of debt and derivative instruments are translated at the average exchange rate for the quarter.

(3) The carrying value of the equity is adjusted to exclude $369 million increase to deficit as a result of the asset impairment associated with the working interest sale to Nexen and to exclude the $85 million increase to the January 1, 2009 opening deficit as a result of new accounting pronouncements at that date.

(4)  Calculated under Canadian GAAP and not restated for IFRS as no restatement is required for prior period accounting changes.

OPTI CANADA INC. – 24 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

11.  CAPITAL MANAGEMENT (CONTINUED)

With respect to our senior notes, the covenants are in place primarily to govern the total amount of debt that OPTI may incur at any time.  This limit is most affected by the present value discounted at 10% of our total proved reserves using forecast prices.  We have sufficient capacity under this test to incur additional debt.  Other leverage considerations are expected to be more constraining in future than this limitation.  Under certain payment related defaults under our revolving credit facility, we may be required to offer to repay our senior notes.

12.  TRANSITION TO IFRS

The effect of OPTI’s transition to IFRS, described in note 3, is summarized in this note. In accordance with IFRS 1 “First-time Adoption of IFRS”, certain disclosures relating to the transition are also provided in this note.

IFRS 1 allows first time adopters of IFRS to elect a number of optional exemptions from the general principal of retrospective application of IFRS.  OPTI has taken the following optional exemptions:

Oil and gas exemption

In July 2009, the IASB published an amendment to IFRS 1 “Additional Exemptions for First-time Adopters”, which introduces a first-time adoption exemption for first-time adopters that accounted under their previous GAAP for exploration and development costs for oil and gas properties in the development or production phases in cost centres that include all properties in a large geographical area (defined as full cost method under Canadian GAAP).  Under the exemption, a first-time adopter may elect to measure oil and gas assets at the date of transition to IFRS on a deemed cost basis, but does not permit continued application of the previous GAAP accounting policy.  OPTI followed a full cost approach under Canadian GAAP and have elected to use this election to measure oil and gas exploration and production assets at the date of transition to IFRS on a deemed cost basis.

Share based payments

IFRS 2 “Share-based Payment” has not been applied to any equity instruments that were granted on or before November 7, 2002 nor has it been applied to equity instruments granted after November 7, 2002 that were fully vested before January 1, 2010, the date of transition to IFRS.

Decommissioning liabilities

An entity that uses the deemed cost oil and gas exemption under IFRS 1 may also use an additional exemption with respect to decommissioning liabilities on oil and gas properties encompassed by the full cost method under Canadian GAAP.  As OPTI has elected to apply the deemed cost oil and gas exemption, OPTI has also elected to apply this exemption and as such, OPTI has re-measured the decommissioning liability as at January 1, 2010 under IAS 37, and has recognized directly into deficit any differences between that amount and the carrying amount of the liabilities at January 1, 2010 as determined by Canadian GAAP.

For assets not subject to the oil and gas exemption, OPTI has elected to apply the exemption from full retrospective application of decommissioning provisions as allowed under IFRS 1.  As such OPTI has re-measured the provisions as at January 1, 2010 under IAS 37, estimated the amount to be included in the cost of the related asset by discounting the liability to the date at which the liability first arose using best estimates of the historical risk-adjusted discount rates that would have applied for that provision over the intervening period, and recalculated the accumulated depreciation and depletion under IFRS.

Borrowing costs

OPTI has elected to apply the exemption from full retrospective application of IAS 23 “Borrowing costs” and therefore IAS 23 has not been applied to borrowing costs that occurred before OPTI’s transition date of January 1, 2010.

OPTI CANADA INC. – 25 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

Leases

OPTI has elected to apply the transitional provisions in International Financial Reporting Interpretation Committee (“IFRIC”) 4 “Determining whether an Arrangement contains a lease” and therefore if the determination of whether an arrangement contains a lease existing under Canadian GAAP is the same as the determining the arrangement under IFRIC 4, no reassessment is required on the adoption of IFRS.

Reconciliation of equity as previously reported under Canadian GAAP to IFRS

(amounts in thousands of Canadian dollars)			December 31, 2010			March 31,                  2010			January 1,                 2010
		note	Cdn   GAAP	Adj	IFRS	Cdn GAAP	Adj	IFRS	Cdn GAAP	Adj	IFRS
ASSETS
Current assets
Cash and cash equivalents			$     173,110	$               -	$     173,110	$  271,807	$              -	$   271,807	$  357,723	$             -	$ 357,723
Trade and other receivables			33,255	-	33,255	26,648	-	26,648	15,308	-	15,308
Inventory			11,904	-	11,904	9,783	-	9,783	8,496	-	8,496
Interest reserve account			28,688	-	28,688	-	-	-	-	-	-
			246,957	-	246,957	308,238	-	308,238	381,527	-	381,527
Non-current assets
Interest reserve account			58,265	-	58,265	-	-	-	-	-	-
Property, plant and equipment		a, c, e, f	3,487,346	(226,999)	3,260,347	3,463,253	(243,032)	3,220,221	3,442,496	(245,508)	3,196,988
Exploration and evaluation assets		a, f	-	297,942	297,942	-	270,106	270,106	-	261,627	261,627
TOTAL ASSETS			$   3,792,568	$     70,943	$  3,863,511	$3,771,491	$     27,074	$3,798,565	$3,824,023	$     16,119	$3,840,142
LIABILITIES
Current liabilities
Trade payables and accrued liabilities			$       94,104	$               -	$       94,104	$   125,103	$               -	$   125,103	$     79,135	$              -	$     79,135
Derivative instruments			89,202	-	89,202	160,479	-	160,479	134,099	-	134,099
			183,306	-	183,306	285,582	-	285,582	213,234	-	213,234
Non-current liabilities
Long-term debt		b	2,542,790	(40,472)	2,502,318	2,197,787	(36,242)	2,161,545	2,272,992	(38,122)	2,234,870
Obligation under finance lease			20,224	-	20,224	20,523	-	20,523	20,616	-	20,616
Decommissioning liabilities		c	7,241	30,837	38,078	6,306	21,142	27,448	6,189	20,993	27,182
TOTAL LIABILITIES			2,753,561	(9,635)	2,743,926	2,510,198	(15,100)	2,495,098	2,513,031	(17,129)	2,495,902
SHAREHOLDERS’ EQUITY
Share capital		g, h	1,992,394	45,468	2,037,862	1,992,394	45,468	2,037,862	1,992,394	45,468	2,037,862
Contributed surplus		d	34,263	1,294	35,557	32,876	1,284	34,160	32,432	1,074	33,506
Deficit	b, c, d, e, f, g, h		(987,650)	33,816	(953,834)	(763,977)	(4,578)	(768,555)	(713,834)	(13,294)	(727,128)
TOTAL EQUITY			1,039,007	80,578	1,119,585	1,261,293	42,174	1,303,467	1,310,992	33,248	1,344,240
TOTAL LIABILITIES AND EQUITY			$   3,792,568	$     70,943	$  3,863,511	$3,771,491	$     27,074	$3,798,565	$3,824,023	$     16,119	$3,840,142

OPTI CANADA INC. – 26 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

Reconciliation of comprehensive loss as previously reported under Canadian GAAP to IFRS

(amounts in thousands of Canadian dollars)		Year ended December 31, 2010			Three months ended March 31, 2010
	note	Cdn       GAAP	Adj	IFRS	Cdn       GAAP	Adj	IFRS
Petroleum sales		$         249,609	$                    -	$         249,609	$           49,779	$                     -	$              49,779
Power sales		7,451	-	7,451	2,043	-	2,043
Royalties		(7,256)	-	(7,256)	(1,445)	-	(1,445)
Revenue		249,804	-	249,804	50,377	-	50,377
Expenses
Operating costs		213,814	-	213,814	52,239	-	52,239
Diluent and feedstock purchases		86,194	-	86,194	23,563	-	23,563
Transportation and marketing		14,618	-	14,618	3,765	-	3,765
General and administrative	d	14,712	215	14,927	3,837	205	4,042
Derivative instruments loss		40,595	-	40,595	30,170	-	30,170
Foreign exchange translation gain		(127,065)	-	(127,065)	(71,973)	-	(71,973)
Depreciation and depletion	c, e	52,321	572	52,893	9,527	168	9,695
Borrowing costs	b, c, f	228,431	(47,897)	180,534	49,392	(9,090)	40,302
		523,620	(47,110)	476,510	100,520	(8,717)	91,803
Loss before taxes		(273,816)	47,110	(226,706)	(50,143)	8,717	(41,426)
Income taxes
Deferred income tax		-	-	-	-	-	-
Net and comprehensive loss		$        (273,816)	$           47,110	$       (226,706)	$         (50,143)	$              8,717	$             (41,426)

Explanation of the effect of the transition to IFRS

a)   Exploration and evaluation assets

In accordance with IAS 16 “Property, Plant and Equipment”, IFRS 6 “Exploration and Evaluation of Mineral Resources” and as a result of OPTI using the oil and gas exemption, OPTI reallocated costs relating to the exploration and evaluation phase from PP&E to E&E assets. Under Canadian GAAP, capitalized E&E costs were included in PP&E on the balance sheet.  While the accounting treatment is unchanged under IFRS other than expensing of pre-acquisition costs and the capitalization of borrowing costs (discussed in (f) below), E&E and PP&E are presented separately in the balance sheet under IFRS. This has resulted in a reclassification from PP&E to E&E assets at January 1, 2010 of $261.6 million, at March 31, 2010 an adjustment of $270.1 million and at December 31, 2010 an adjustment of $297.9 million.

OPTI CANADA INC. – 27 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

b)   Debt transaction costs

Under Canadian GAAP, transaction costs that are directly attributable to long-term debt could be either offset against the cost of the associated debt issuance and amortized to income using the effective interest method or expensed as incurred.  OPTI had chosen a policy under Canadian GAAP to expense these costs as incurred. In accordance with IAS 39 “Financial Instruments: Recognition and Measurement”, these costs must be offset against the cost of the associated debt issuance and amortized to income using the effective interest method.  This has resulted in a decrease to long-term debt for previously expensed transaction costs net of the effects of amortization under the effective interest method at January 1, 2010 of $38.1 million, an adjustment of $36.2 million at March 31, 2010 and an adjustment of $40.5 million at December 31, 2010.  Borrowing costs recognized due to the amortization of transaction costs under the effective interest method were $2.0 million for the three months ended March 31, 2010 and $9.3 million for the year ended December 31, 2010.

c)   Decommissioning liabilities

Under Canadian GAAP, decommissioning obligations are measured at fair value, incorporating market assumptions and discount rates based on OPTI’s credit adjusted risk-free rate at the time the obligation arose.  Changes in the discount rate did not result in the re-measurement of the entire obligation.  Changes in estimates that decreased the liability are discounted using the rate applied upon initial recognition while changes that increase the liability are discounted using the current discount rate.  Accretion expense resulting from the increase in the liability due to the passage of time was recorded in depreciation, depletion and accretion expense.

IFRS requires adjustments to the liability to be made each period for changes in the timing or amount of cash-flow, changes in discount rates and the accretion of the liability.  Estimated future cash flows have been discounted using the risk-free rate.  Under IFRS, accretion expense is recorded as a borrowing cost.

As described previously, OPTI has elected to use the oil and gas exemption and the exemption from full retrospective application of decommissioning liabilities.  OPTI has re-measured the liabilities relating to resource assets as at January 1, 2010 using the risk-free rate, and this has resulted in an increase to the liability of $3.5 million at January 1, 2010 with a corresponding increase in deficit.  OPTI also re-measured the liabilities relating to the central plant facilities as at January 1, 2010 based on this rate which resulted in an increase to the liability of $8.6 million at January 1, 2010 with a corresponding increase in the related asset of $7.5 million and an increase in deficit of $1.1 million.

Under Canadian GAAP if a reasonable estimate of fair value cannot be made in the period the decommissioning obligation is incurred, the liability should be recognized when a reasonable estimate of fair value can be made.  Under IFRS, only under extremely rare circumstances where no reliable estimate can be made, is a liability not recognized.  Under IFRS, OPTI has recorded a liability in relation to the upgrading facilities of $8.9 million at January 1, 2010 with a corresponding increase to the related asset of $8.6 million and an increase in deficit of $0.3 million related to accretion.

The change to the decommissioning liability resulting from changes in the period end risk-free rate for the three months ended March 31, 2010 was $nil and for the year ended December 31, 2010 was $6.7 million with a $6.7 million increase to the cost of the corresponding assets.  The increase to the decommissioning liability due to the new liabilities incurred being measured at this rate as opposed to OPTI’s credit adjusted risk-free rate was $2.4 million with a corresponding increase to the cost of the assets.

OPTI CANADA INC. – 28 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

Additional accretion related to changes in the measurement basis of the liability was $0.1 million for the three months ended March 31, 2010 and a cumulative amount of $0.6 million for the year ended December 31, 2010, recognized in borrowing costs.  Additional depreciation and depletion related to the increase in the cost of the assets was $nil during the three months ended March 31, 2010 and $0.2 million during the year ended December 31, 2010.

Accretion expense recorded in depreciation, depletion and accretion expense under Canadian GAAP was $0.1 million for the three months ended March 31, 2010 and was $0.5 million for the year ended December 31, 2010.  Under IFRS, these amounts have been reclassified as borrowing costs.

d)   Share-based payments

IFRS requires the expense relating to employee options to be recognized individually for each vesting tranche over the applicable vesting period whereas under Canadian GAAP, it was acceptable for the expense to be recognized on a straight line method over the total service period.  This has resulted in an increase in contributed surplus and deficit at January 1, 2010 of $1.1 million, at March 31, 2010 a cumulative adjustment of $1.3 million and at December 31, 2010 a cumulative adjustment of $1.3 million.  Stock based compensation expense increased by $0.2 million for the three months ended March 31, 2010 and $0.2 million for the year ended December 31, 2010.

e)   Method of depletion

Canadian GAAP includes specific standards that prescribe the method for the calculation of depletion which does not exist under IFRS. Using full-cost accounting under Canadian GAAP, oil and gas assets are depleted using the unit-of-production method using remaining proved reserves. Under IFRS, the accounting policy for depletion includes proved and probable reserves, as this more accurately reflects the estimate for the usage of the resource assets.  This has resulted in an increase to depreciation and depletion expense of $0.3 million for the three months ended March 31, 2010 and $0.9 million for the year ended December 31, 2010.

f)   General purpose borrowing costs

Under Canadian GAAP, OPTI’s policy was to capitalize interest that was directly related to its long-term debt for major development projects.  Under IFRS, interest that is directly attributable to the acquisition, construction or production of a qualifying asset should be capitalized as well as any interest on funds borrowed generally for the purposes of obtaining qualifying assets.  As a result OPTI has capitalized interest on general borrowings of $7.4 million related to E&E assets and $3.8 million related to future phase PP&E for the three months ended March 31, 2010.  OPTI has capitalized interest on general borrowing of $30.9 million related to E&E assets and $15.8 million related to future phase PP&E for the year ended December 31, 2010.

g)   Flow-through shares

Flow-through shares are a Canadian tax incentive which is the subject of specific guidance under Canadian GAAP, however there is no specific guidance under IFRS. Under Canadian GAAP, when flow-through shares are issued they are recorded at face value. The related future tax liability is established for the tax effect of the difference between the tax basis and the book basis of the assets when renounced and is recorded as a reduction of share capital. There is no income statement effect associated with the issuance of these shares.

OPTI CANADA INC. – 29 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

OPTI has adopted a policy under IFRS where the proceeds from the offering are to be allocated between the sale of the shares and the sale of the tax benefit. The allocation is made based on the difference between the quoted market price of the existing shares and the amount an investor pays for the flow through shares. A liability is established for this difference that is reversed upon renunciation of the tax benefit. The difference between this liability and the deferred tax liability is recorded as an income tax expense.  This has resulted in a re-classification between deficit and share capital at January 1, 2010 of $47.3 million.

h)   Share issue costs

Under Canadian GAAP, when there are changes to the substantially enacted tax rates, the future tax impact is recorded directly into earnings.  IFRS requires that all deferred taxes be recognized into income except when the transaction that gave rise to the deferred tax is recognized directly into equity, such as the case with share issuance costs, the deferred taxes including changes in tax rates should be recorded into equity. This has resulted in a re-classification between deficit and share capital at January 1, 2010 of $1.9 million.

i)   The following is a summary of the transition adjustments to OPTI’s deficit from Canadian GAAP to IFRS

In $ thousands	note		December 31, 2010			March 31, 2010			January 1, 2010
Deficit as reported under Canadian GAAP			$	(987,650	)	$	(763,977	)	$	(713,834	)
Debt transaction costs		b		40,472			36,242			38,122
Decommissioning liabilities - resource assets		c		(3,521	)		(3,521	)		(3,521	)
Decommissioning liabilities - central plant facilities		c		(1,091	)		(1,091	)		(1,091	)
Decommissioning liabilities - upgrader		c		(262	)		(262	)		(262	)
Accretion		c		(680	)		(149	)		-
Stock-based compensation		d		(1,294	)		(1,284	)		(1,074	)
Depletion and depreciation		e		(1,062	)		(285	)		-
Capitalization of borrowing costs		f		46,722			11,240			-
Flow-through shares		g		(47,331	)		(47,331	)		(47,331	)
Share issue costs		h		1,863			1,863			1,863
Deficit as reported under IFRS			$	(953,834	)	$	(768,555	)	$	(727,128	)

j)   Adjustments to the statement of cash flows

The transition from Canadian GAAP to IFRS had no significant impact on cash flows generated by OPTI except that under IFRS, cash flows relating to interest are classified as operating, investing or financing in a consistent manner each period which has resulted in interest being classified as financing. Under Canadian GAAP, cash flows relating to interest were classified as operating.

OPTI CANADA INC. – 30 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED

OPTI Canada Inc.

Notes to Condensed Interim Financial Statements

Three months ended March 31, 2011 and 2010

Unaudited

12.     TRANSITION TO IFRS (CONTINUED)

k)   Expenses by nature

Operating costs	Year ended December 31, 2010
Fuel and consumables	$	47,789
Employee costs		49,171
Materials and services		86,303
Insurance and taxes		18,136
Joint venture administration, overhead and other		12,415
Total operating costs	$	213,814

General and administrative	Year ended December 31, 2010
Employee costs	$	8,817
Stock-based compensation		1,831
Insurance and taxes		356
Administrative, overhead and other		3,708
Total general and administrative	$	14,712

OPTI CANADA INC. – 31 – 2011 Q1 FINANCIAL STATEMENT

TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS EXCEPT AS NOTED