NCX: Record PE Sales and Strong Cash Flow despite Volatile Market; Non-Cash STYRENIX Asset Charge



    PITTSBURGH, January 31 /CNW/ - NOVA Chemicals Corporation
(NYSE:  NCX)(TSX:NCX):

    All financial information is in U.S. dollars unless otherwise indicated.

    NOVA Chemicals Corporation (NOVA Chemicals) reported a net loss of $781
million ($9.46 per share loss) for the fourth quarter of 2006. The loss
includes a $772 million after-tax ($9.35 per share) non-cash restructuring
charge related to the write-down of assets in the STYRENIX business unit. This
write-down reduces the carrying value of STYRENIX assets to reflect the
estimated realizable value of the future cash flows from those assets (see
page 4).

    The fourth quarter results also include an unrealized gain on feedstock
derivatives totaling $5 million after-tax ($0.06 per share). This
mark-to-market adjustment was required to record positions that do not qualify
for hedge accounting treatment.

    The net loss for the fourth quarter compares to a net loss of $24 million
($0.29 per share loss) for the third quarter of 2006, and a net loss of $66
million ($0.80 per share loss) for the fourth quarter of 2005. NOVA Chemicals
reported a net loss of $703 million ($8.52 per share loss) for 2006 compared
to a net loss of $101 million ($1.22 per share loss) for 2005.

    "We were able to generate cash and reduce debt by about $100 million
despite the sharp decline in domestic prices and margins. Our inventory
control data and our logistics infrastructure allowed us to take rapid action
to export a large amount of polyethylene to Asia with very good netbacks."

    "The write-down of the STYRENIX assets is consistent with our
restructuring effort and clears the decks for action. We remain confident that
we will be able to finalize a shareholder value-building pathway for the
business," said Jeff Lipton, NOVA Chemicals' President and CEO.

    Fourth quarter net loss from the businesses was $12 million ($0.14 per
share loss) versus net income of $83 million ($1.00 per share) in the third
quarter of 2006.

    NOVA Chemicals' three business units have been further segmented for
financial reporting purposes. See page 2 for the breakdown of net income by
the new reporting segments, and page 3 for additional details.

    
    Net Income (Loss)                          Fourth Quarter   Full Year
    ($U.S. Millions)                                2006          2006
      Olefins/Polyolefins                           $35           $379
      Performance Styrenics                         (14)          (29)
      STYRENIX                                      (33)          (152)
                                               ---------------------------
      Net income (loss) from the Businesses         $(12)         $198
    ----------------------------------------------------------------------
    

    NOVA Chemicals will host a conference call today, Wednesday, January 31,
2007 for investors and analysts at 10 a.m. EDT (8 a.m. MDT; 7 a.m. PDT). Media
are welcome to join this call in "listen-only" mode. The dial-in number for
this call is (416) 406-6419. The replay number is (416) 695-5800 (Reservation
No. 3209629). The live call is also available on the Internet at
www.investorcalendar.com (ticker symbol NCX)

    

    NOVA Chemicals Highlights
    (millions of U.S. dollars except per share amounts and as noted)
    These highlights should be read in conjunction with NOVA Chemicals'
     other interim and annual financial statement disclosures, as well as
     its 2005 Annual Report.

                                   Three Months Ended        Year Ended
                                ------------------------- ----------------
                                Dec. 31 Sept. 30 Dec. 31  Dec. 31 Dec. 31
                                  2006   2006(1)  2005(1)   2006   2005(1)
                                ------- -------- -------- ------- --------

    Revenue                     $1,635   $1,712   $1,433  $6,519   $5,616
    Adjusted EBITDA(2)             $98     $197      $81    $604     $461
    Operating income (loss)(3)   $(837)     $13     $(76)  $(680)      $3

    Net income (loss)
      Olefins/Polyolefins
        Joffre Olefins             $66      $85      $34  $324(7)    $154
        Corunna Olefins            (12)       4      (19)   25(7)       2
        Polyethylene               (27)      35       21    32(7)      71
        Eliminations                 8       (1)       4      (2)       9
                                ------- -------- -------- ------- --------
           Olefins/Polyolefins
            Total                   35      123       40     379      236

    Performance Styrenics          (14)      (5)      (7)    (29)     (14)

    STYRENIX
        Styrene Monomer            (13)     (14)     (28)    (61)     (81)
        North American Solid
         Polystyrene               (14)     (10)      (3)    (44)     (33)
        NOVA Innovene European
         JV                         (7)     (10)     (27)    (47)     (92)
        Eliminations                 1       (1)      (1)      -        -
                                ------- -------- -------- ------- --------
            STYRENIX Total         (33)     (35)     (59)   (152)    (206)

    Corporate(4)                  (769)    (107)     (40)   (901)    (117)
                                ------- -------- -------- ------- --------

    Net loss                     $(781)    $(24)    $(66)  $(703)   $(101)
                                ------- -------- -------- ------- --------


    Loss per common share
      - basic                   $(9.46)  $(0.29)  $(0.80) $(8.52)  $(1.22)
      - diluted                 $(9.46)  $(0.29)  $(0.80) $(8.52)  $(1.22)

    Weighted-average common
     shares outstanding
     (millions)(5) (6)
      - basic                       83       83       82      83       83
      - diluted                     83       83       82      83       83
    

    (1) See Note 1 to Consolidated Financial Statements on page 21 for a
discussion of the prior period restatement related to stock-based
compensation. The impact to net loss for the three months ended Sept. 30, 2006
and Dec. 31, 2005 was a $1 million benefit and a $2 million benefit,
respectively. The impact to net loss for the year ended Dec. 31, 2005 was a $3
million benefit.

    (2) Net income (loss) before restructuring charges, income taxes, other
gains and losses, interest expense and depreciation and amortization (see
Consolidated Statements of Net Loss and Reinvested Earnings (Deficit) on page
18; and Supplemental Measures on page 12).

    (3) Net income (loss) before income taxes, other gains and losses and
interest expense (see Consolidated Statements of Net Loss and Reinvested
Earnings (Deficit) on page 18 and Supplemental Measures on page 12).

    (4) See tables on page 12 for a description of all Corporate Items.

    (5) Weighted-average number of common shares outstanding during the
period used to calculate the loss per share (see Note 6, page 24).

    (6) For periods where there are losses, diluted shares are the same as
basic shares because outstanding securities such as stock options that could
potentially dilute earnings per share would be anti-dilutive and are therefore
excluded from outstanding diluted shares.

    (7) One-third of the $60 million benefit from Canadian tax-rate
reductions was allocated to each reportable segment within the
Olefins/Polyolefins business unit.

    
    NOVA Chemicals Supplemental Financial Data
    (millions of U.S. dollars)
    This Supplemental Financial Data should be read in conjunction with
     NOVA Chemicals' other interim and annual financial statement
     disclosures, as well as its 2005 Annual Report.

                                   Three Months Ended        Year Ended
                                ------------------------- ----------------
                                Dec. 31  Sept.   Dec. 31  Dec. 31  Dec. 31
                                  2006      30     2005     2006     2005
                                           2006
                                -------- ------- -------- -------- -------

    Depreciation and
     amortization expense
      Olefins/Polyolefins           $46     $44      $42     $179    $166
      Performance Styrenics           2       4        4       12      13
      STYRENIX                       27      27       28      108     111
                                -------- ------- -------- -------- -------
                                    $75     $75      $74     $299    $290

    Capital expenditures
      Olefins/Polyolefins           $24     $22      $81      $93    $256
      Performance Styrenics          14      16       39       81      86
      STYRENIX                        8       9        9       24      77
                                -------- ------- -------- -------- -------
                                    $46     $47     $129     $198    $419

    Average capital employed(1)
      NOVA Chemicals            $ 3,407  $3,759   $3,324  $ 3,629  $3,339
      Olefins/Polyolefins        $2,358  $2,503   $2,071   $2,414  $2,025
      Performance Styrenics        $265    $265     $223     $242    $230
      STYRENIX(2)                 $ 870  $1,108   $1,100  $ 1,070  $1,157

    After-tax return (loss) on
     capital employed(3)
      NOVA Chemicals             (88.0)%    0.9%   (5.0)%  (15.9)%  (0.5)%
      Olefins/Polyolefins           8.9%   22.5%    10.2%    18.6%   13.8%
      Performance Styrenics      (18.3)%  (4.8)%   (9.8)%   (9.1)%  (4.1)%
      STYRENIX                    (9.8)%  (8.1)%  (17.6)%   (9.7)% (14.7)%

    Funds from operations(4)        $58     $77      $39     $297    $262

    Loss on average common
     equity(5)                  (286.1)%  (7.0)%  (20.9)%  (55.6)%  (7.5)%
    

    (1) Average capital employed equals cash expended on plant, property and
equipment (less accumulated depreciation and amortization) and working
capital, and excludes assets under construction and investments. Amounts are
converted to U.S. dollars using quarter-end exchange rates (see Supplemental
Measures on page 12).

    (2) As of Dec. 31, 2006, the capital employed, including cash expended on
plant, property and equipment (less accumulated depreciation and amortization
and any asset write-downs) and working capital, and excluding assets under
construction and investments, for STYRENIX was $392 million.

    (3) After-tax return (loss) on capital employed equals NOVA Chemicals'
net income (loss) plus after-tax interest expense (annualized) divided by
average capital employed (see Supplemental Measures on page 12).

    (4) See Supplemental Measures on page 12.

    (5) Loss on average common equity equals annualized net loss divided by
average common equity.

    Reportable Segment Change

    Based on results of a Securities and Exchange Commission (SEC) routine,
periodic review of NOVA Chemicals' financial statements, NOVA Chemicals has
increased the number of reportable business segments from three to seven.
These new reporting segments have been grouped according to NOVA Chemicals'
business structure:

    
    Olefins/Polyolefins Performance Styrenics    STYRENIX
    1. Joffre Olefins   4. Performance Styrenics 5. Styrene Monomer
                                                 6. North American Solid
    2. Corunna Olefins                            Polystyrene (SPS)
                                                 7. NOVA Innovene European
    3. Polyethylene                               Joint Venture
    

    This change increases the amount of detail disclosed but does not impact
the operation of the business units or the previously reported financial
position, results of operations or cash flows for the Company. Current and
future financial reports will reflect this reporting structure. Prior periods
have been restated accordingly.

    Progress with Cost Reduction and STYRENIX Restructuring

    Cost Reduction

    On June 26, 2006, NOVA Chemicals announced plans to restructure its North
American operations to better align resources and reduce costs. The Company
set a cost-reduction target of $125 million per year, to be achieved by the
end of 2007. NOVA Chemicals has already taken necessary actions to achieve
annual cost savings of $127 million in 2007. In total, the Company expects to
save $140 million annually commencing in 2008.

    
    (millions of U.S. dollars/year)      Targeted Expected Annual Savings
                                         Savings      2007        2008
                                                  ------------------------

       STYRENIX - North America             $15(1)         $12        $12
       NOVA Innovene improvements              30           37         41
       (NOVA Chemicals' share)
       Styrene contract expiration             30           22         30
    ----------------------------------------------------------------------
    Total STYRENIX                            $75          $71        $83
         Other company-wide savings          50(1)          56         57
    Total Savings                            $125         $127       $140
    ----------------------------------------------------------------------
    

    (1) Beginning with the first quarter of 2007, NOVA Chemicals will no
longer allocate interest, taxes or corporate charges to the business segments.
As such, $15 million of the original targeted savings in STYRENIX associated
with corporate charges has been re-classified to other company-wide savings.

    STYRENIX Restructuring

    On July 20, 2006, NOVA Chemicals announced, as part of its restructuring,
that it would pursue all strategic options available for the STYRENIX business
unit including: sale, formation of a joint venture with other producers, or
spin-out. A number of options continue to be aggressively pursued.

    Each year, NOVA Chemicals reviews the carrying value of its plant,
property and equipment to determine if this value will be recoverable through
projected future cash flows from these assets. To estimate future cash flows,
NOVA Chemicals uses third-party forecasts of market conditions and product
margins. During 2006, the third-party forecasts for products sold by the
STYRENIX business unit were revised to reflect weaker market conditions than
were expected at the time of the earlier forecast. It was determined that the
carrying value of the STYRENIX assets was greater than the estimated future
cash flows. Accordingly, the assets were written down to the estimated
realizable value of the assets, resulting in a non-cash charge of $860 million
($772 million after-tax). The realizable value was estimated using discounted
cash flow analysis and information gathered during the investigation of
strategic options for STYRENIX.

    

    (millions of U.S. dollars)         Europe    North America    Total
                                     ----------- -------------- ----------
    Book value
     Before write-down                     $383           $719     $1,102
     After write-down                        63            179        242
                                     ----------- -------------- ----------
    Write-down before-tax                  $320           $540        860
                                                                ----------
    Tax recovery at 36%                                              (308)
    Tax valuation reserve(1)                                          220
                                                                ----------
    Net tax recovery                                                  (88)
                                                                ----------

    Write-down, after-tax                                            $772
                                                                ----------
    

    (1) Recording the future income tax recovery on the write-down resulted
in a future income tax asset of $220 million in the U.S. and Swiss
subsidiaries. NOVA Chemicals established a valuation reserve that will reduce
the amount of the tax benefit recorded in 2006.

    The write-down will reduce future depreciation charges. The Company
estimates that depreciation charges will decrease by about $80 million per
year from 2007 to approximately 2017 as a result of this write-down. In
addition, there is a potential future income tax benefit related to this
write-down that will be recognized when the business records profits. See Note
3 in the Notes to the Consolidated Financial Statements on page 22 for more
details.

    
    OLEFINS/POLYOLEFINS BUSINESS UNIT
    Financial Highlights
    (millions of U.S. dollars
     except as noted)               Three Months Ended       Year Ended
                                 ------------------------- ---------------
                                 Dec. 31  Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005    2006    2005
                                 -------- -------- ------- ------- -------
    Revenue
    ----------------------------
       Joffre Olefins(1)            $427     $417    $555  $1,744  $1,704
       Corunna Olefins(1)            515      557     232   1,997   1,430
       Polyethylene(1)               455      507     445   1,922   1,628
       Eliminations                 (348)    (335)   (333) (1,382) (1,176)
                                 -------- -------- ------- ------- -------
          Total                   $1,049   $1,146    $899  $4,281  $3,586

    EBITDA(2)
    ----------------------------
       Joffre Olefins               $125     $153     $73    $558    $313
       Corunna Olefins                 2       26     (14)     83      67
       Polyethylene                  (13)      77      59     120     202
       Eliminations(3)                 9       (1)      7      (5)     14
                                 -------- -------- ------- ------- -------
             Total                  $123     $255    $125    $756    $596

    Operating income
     (loss)(4)(5)
    ----------------------------
       Joffre Olefins               $111     $141     $60    $506    $262
       Corunna Olefins               (14)      10     (25)     24      17
       Polyethylene                  (29)      61      41      52     137
       Eliminations(3)                 9       (1)      7      (5)     14
                                 -------- -------- ------- ------- -------
             Total                   $77     $211     $83    $577    $430

    Sales Volumes (millions of
     pounds)
    ----------------------------
       Polyethylene(6)
          Standard Products          722      698     537   2,726   2,403
          Performance Products       143      102     110     513     438
                                 -------- -------- ------- ------- -------
       Total                         865      800     647   3,239   2,841
    

    (1) Before intersegment eliminations between the business units.

    (2) Net income (loss) before income taxes, other gains and losses,
interest expense, depreciation and amortization (see Supplemental Measures on
page 12).

    (3) Represents intersegment profit eliminations.

    (4) Net income (loss) before income taxes, other gains and losses and
interest expense (see Supplemental Measures on page 12).

    (5) To conform with changes in internal segment analysis and reporting,
beginning with the first quarter of 2007, NOVA Chemicals will no longer
allocate interest, taxes or corporate charges to the business segments and
accordingly will only report segment results down to the operating income
(loss) line. Assuming NOVA Chemicals had removed corporate charges from
operating income (loss) in the fourth quarter of 2006, operating income (loss)
before corporate charges for the Joffre Olefins, Corunna Olefins and
Polyethylene segments would have been $119 million, $(11) million and $(24)
million, respectively.

    (6) The Joffre site produces Standard Products as well as Performance
Products, including SCLAIR(R) and SURPASS(R) resins that are produced using
Advanced SCLAIRTECH(TM) technology. The other sites produce Standard Products.

    
    Operating Highlights
    Average Benchmark Prices(1)
    (U.S. dollars per pound,
     unless otherwise noted)        Three Month Average     Year Average
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                    2006    2006     2005    2006    2005
                                  ------- -------- ------- ------- -------
    Benchmark Principal Products:
    Ethylene(2)                    $0.45    $0.51   $0.56   $0.48   $0.44
    Polyethylene - LLDPE butene
     liner(3)                      $0.58    $0.69   $0.76   $0.65   $0.60
    Polyethylene - weighted-
     average benchmark(4)          $0.61    $0.71   $0.78   $0.67   $0.63

    Benchmark Raw Materials:
    AECO natural gas (dollars per
     mmBTU)(5)                     $6.07    $5.03   $9.72   $5.75   $7.25
    NYMEX natural gas (dollars
     per mmBTU)(6)                 $6.62    $6.53  $12.85   $7.26   $8.55
    WTI crude oil (dollars per
     barrel) (7)                  $60.21   $70.48  $60.02  $66.21  $56.56
    

    (1) Average benchmark prices do not necessarily reflect actual prices
realized by NOVA Chemicals or any other petrochemical company.

    (2) Source: Chemical Market Associates, Inc. (CMAI) U.S. Gulf Coast
(USGC) Net Transaction Price.

    (3) Linear Low-Density Polyethylene (LLDPE) butene liner. Source:
Townsend Polymer Services Information (TPSI).

    (4) Benchmark prices weighted according to NOVA Chemicals' sales volume
mix in North America. Source for benchmark prices: TPSI.

    (5) Source: Canadian Gas Price Reporter, weighted average daily spot gas
price, values in millions of British Thermal Units (mmBTU).

    (6) Source: New York Mercantile Exchange (NYMEX) Henry Hub 3-Day Average
Close.

    (7) Source: NYMEX WTI daily spot-settled price average for calendar
month.

    Review of Operations

    Olefins/Polyolefins

    The Olefins/Polyolefins business unit reported net income of $35 million
in the fourth quarter of 2006 compared with net income of $123 million in the
third quarter of 2006. The quarter-over-quarter decline in earnings was
primarily related to a significant reduction in polyethylene pricing as North
American demand fell due to inventory de-stocking by customers. In addition,
ethane feedstock costs were higher in the fourth quarter due to higher Alberta
natural gas prices.

    Joffre Olefins

    Fourth Quarter 2006 Versus Third Quarter 2006

    The Joffre Olefins segment reported net income of $66 million in the
fourth quarter of 2006 compared with $85 million in the third quarter of 2006.
The quarter-over-quarter decline in earnings was due to higher feedstock costs
and declining ethylene prices, which were partially offset by higher ethylene
sales volume.

    Relative to the third quarter, Joffre Olefins' average ethane feedstock
costs were higher in the fourth quarter due to higher Alberta natural gas
prices. The average AECO cash natural gas price in the fourth quarter was up
21% while the average price of NYMEX contract natural gas was up 1%,
reflecting a return to more normal basis differential in the fourth quarter.
The average USGC ethane price was down 19%. USGC ethane prices averaged 142%
of NYMEX natural gas cash prices, down from an average of 189% in the previous
quarter.

    The combination of higher Alberta natural gas prices and lower USGC
ethane prices resulted in a lower Alberta Advantage in the fourth quarter. The
Alberta Advantage averaged 7(cents) per pound of ethylene production cash cost
in the fourth quarter of 2006, down from the record 17(cents) per pound in the
third quarter, but stronger than it has been in most previous fourth quarters.
NOVA Chemicals uses ethylene produced at its Joffre, Alberta, facility to make
approximately 65% of its total polyethylene.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The Joffre Olefins segment reported net income of $66 million in the
fourth quarter of 2006 compared with $34 million in the fourth quarter of
2005. The increase in earnings was primarily due to lower feedstock costs as
the AECO cash natural gas price was 38% lower in the fourth quarter of 2006
versus the same quarter one year ago. The Alberta Advantage was 7(cents) per
pound this quarter versus 3(cents) per pound in the same quarter of 2005.

    2006 Versus 2005

    The Joffre Olefins segment reported net income of $324 million in 2006
compared with $154 million in 2005. The year-over-year increase in earnings
was primarily due to lower feedstock costs as AECO cash natural gas price was
21% lower in 2006 than 2005. The Alberta Advantage was 11(cents) per pound in
2006 versus 6(cents) per pound in 2005. The segment also benefited from a $20
million tax rate adjustment due to lower future Canadian tax rates that were
enacted in 2006.

    Corunna Olefins

    Fourth Quarter 2006 Versus Third Quarter 2006

    The Corunna Olefins segment reported a net loss of $12 million in the
fourth quarter of 2006 compared with net income of $4 million in the third
quarter of 2006. The quarter-over-quarter decline was primarily due to lower
co-product pricing, which was only partially offset by lower feedstock costs.

    NOVA Chemicals' co-product prices were down 20%, primarily driven by
lower propylene and energy co-product pricing during the quarter. WTI crude
oil price declined 15% from the third quarter while NOVA Chemicals' average
crude oil cost of sales decreased 6% due to its use of FIFO accounting.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The Corunna Olefins segment reported a net loss of $12 million in the
fourth quarter of 2006 compared to a net loss of $19 million in the same
period one year ago. In the fourth quarter of 2005, the Corunna ethylene
flexi-cracker underwent a major maintenance turnaround which experienced a
delayed re-start due to issues relating to newly installed equipment.

    2006 Versus 2005

    The Corunna Olefins segment reported net income of $25 million in 2006
compared with $2 million in 2005. Volumes increased in 2006 versus 2005 as a
result of approximately 11 months of Corunna operations versus approximately 9
months in 2005. A slight reduction in product margins largely offset the
volume gains. The segment also benefited from a $20 million tax rate
adjustment due to lower future Canadian tax rates that were enacted in 2006.

    Polyethylene

    Fourth Quarter 2006 Versus Third Quarter 2006

    The Polyethylene segment reported a net loss of $27 million in the fourth
quarter of 2006 compared with net income of $35 million in the third quarter.
The quarter-over-quarter decline in net income was primarily due to lower
polyethylene pricing, which was only partially offset by higher sales volume.

    The average butene liner benchmark polyethylene price in the fourth
quarter was 58(cents) per pound, down 11(cents) per pound from the third
quarter. NOVA Chemicals believes that the drop in polyethylene pricing was
triggered by soft demand due to rapid de-stocking by customers who had built
inventory in preparation for hurricanes that did not occur.

    NOVA Chemicals' total polyethylene sales volume for the fourth quarter
was 865 million pounds, up 8% from the previous quarter and an all-time
record. The increase in NOVA Chemicals' sales volumes was due to an increase
in export demand. International sales represented approximately 16% of total
sales in the fourth quarter, compared to 10% in the third quarter as NOVA
Chemicals aggressively pursued profitable sales opportunities in Asia.

    Compared to NOVA Chemicals, North American polyethylene producer sales,
as reported by the American Plastics Council (APC), were 2% higher in the
fourth quarter relative to the third quarter of 2006.

    The APC reported North American producer operating rates averaged 89% in
the fourth quarter. Producer inventories rose early in the quarter and then
declined sharply to 40 days of sales versus a 45-day, five-year average. NOVA
Chemicals finished the fourth quarter with 16 days of polyethylene inventory,
down from 20 days at the end of the third quarter.

    In the fourth quarter, AST sales volumes were essentially flat over the
third quarter but Performance Products sales were up 40%. Performance Products
sales represented 88% of AST plant capacity, a monthly record, in December.
Margins eroded during the quarter as prices fell due to softening demand in
North America.

    In the fourth quarter, NOVA Chemicals announced two price increases
totaling 13(cents) per pound to be effective in January 2007. The first price
increase for 6(cents) per pound was effective Jan. 1, 2007 and the second
price increase for 7(cents) per pound was updated to be effective Mar. 1,
2007.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The Polyethylene segment reported a net loss of $27 million in the fourth
quarter of 2006 compared with net income of $21 million in the fourth quarter
of 2005. The decline from the same quarter of 2005 was primarily due to lower
prices, which were partially offset by higher sales volume. Weighted-average
benchmark polyethylene prices were 61(cents) per pound in the fourth quarter
of 2006 compared to 78(cents) per pound in the fourth quarter of 2005. The
fourth quarter of 2006 reflects surplus product in the market, while the same
period in 2005 saw the effect of the Gulf Coast hurricanes' impact on pricing.

    2006 Versus 2005

    The Polyethylene segment reported net income of $32 million in 2006
compared with $71 million in 2005. The year-over-year decline in earnings was
primarily due to an increase in feedstock costs and partially offset by an
increase in sales price and volume. The segment benefited from a $20 million
tax rate adjustment due to lower future Canadian tax rates that were enacted
in 2006.

    In 2006, total sales volumes of polyethylene made from Advanced
SCLAIRTECH technology were 854 million pounds, 17% higher than 2005.

    NOVA Chemicals' ability to implement announced price increases depends on
many factors that may be beyond its control. See Forward-Looking Information
on page 17.

    
    PERFORMANCE STYRENICS BUSINESS UNIT
    Financial Highlights
    (millions of U.S. dollars except as noted)
                                     Three Months Ended      Year Ended
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005    2006    2005
                                  ------- -------- ------- ------- -------
    Revenue                         $105     $111     $98    $421    $392
    EBITDA(1)                       $(17)     $(3)    $(6)   $(24)    $(5)
    Operating Loss(2) (3)           $(19)     $(7)   $(10)   $(36)   $(18)

    Sales Volumes(4) (millions of
     pounds)                         116      116      97     457     396
    

    (1) Net loss before income taxes, other gains and losses, interest
expense, depreciation and amortization (see Supplemental Measures on page 12).

    (2) Net loss before income taxes, other gains and losses and interest
expense (see Supplemental Measures on page 12).

    (3) To conform with changes in internal segment analysis and reporting,
beginning with the first quarter of 2007, NOVA Chemicals will no longer
allocate interest, taxes or corporate charges to the business segments and
accordingly will only report segment results down to the operating income
(loss) line. Assuming NOVA Chemicals had removed corporate charges from
operating loss in the fourth quarter of 2006, operating loss before corporate
charges for the Performance Styrenics segment would have been $18 million.

    (4) Third-party sales.

    
    Operating Highlights
    Average Benchmark Raw Material Prices(1)
    (U.S. dollars per pound)     Three Month Average       Year Average
                             --------------------------- -----------------
                               Dec. 31  Sept. 30 Dec. 31 Dec. 31  Dec. 31
                                 2006     2006     2005    2006     2005
                              --------- -------- ------- -------- --------
    Styrene Monomer              $0.67    $0.70   $0.64    $0.65    $0.63
    

    (1) Source: CMAI Contract Market.

    Review of Operations

    Performance Styrenics

    Fourth Quarter 2006 Versus Third Quarter 2006

    The Performance Styrenics unit reported a net loss of $14 million in the
fourth quarter of 2006 compared to a net loss of $5 million in the third
quarter of 2006. The quarter-over-quarter decline was primarily due to higher
feedstock costs and lower expandable polystyrene (EPS) and ZYLAR(R) resin
prices. Despite lower benchmark styrene monomer prices in the fourth quarter,
feedstock cost of sales was higher due to NOVA Chemicals' use of FIFO
accounting.

    In December, NOVA Chemicals announced a 4(cents) per pound price increase
for EPS effective Feb.1, 2007.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The Performance Styrenics segment reported a net loss of $14 million in
the fourth quarter of 2006 compared with a net loss of $7 million in the
fourth quarter of 2005. The decline from the same quarter last year was
primarily due to higher styrene feedstock costs that were partially offset by
higher sales volume.

    2006 Versus 2005

    The Performance Styrenics segment reported a net loss of $29 million in
2006 compared with a net loss of $14 million in 2005. The year-over-year
decline was primarily due to higher styrene monomer feedstock costs and lower
average selling prices for EPS resins, despite higher sales volumes.

    NOVA Chemicals' ability to implement announced price increases depends on
many factors that may be beyond its control. See Forward-Looking Information
on page 17.

    
    STYRENIX BUSINESS UNIT
    Financial Highlights
    (millions of U.S. dollars except as noted)

                                     Three Months Ended      Year Ended
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005   2006    2005
                                  ------------------------ ---------------
    Revenue
    -----------------------------
       Styrene Monomer(1)           $526     $485    $451  $1,889  $1,828
       North American SPS(1)         119      140     120     500     545
       NOVA Innovene European
        JV(1)                        184      179     129     672     616
       Eliminations                 (254)    (249)   (203)   (909) (1,081)
                                  ------- -------- ------- ------- -------
          Total                     $575     $555    $497  $2,152  $1,908

    EBITDA(2)
    -----------------------------
       Styrene Monomer               $(7)      $2    $(24)   $(17)   $(61)
       North American SPS            (13)     (10)      3     (39)    (18)
       NOVA Innovene European JV       1       (3)    (23)    (18)    (64)
       Eliminations(3)                 1       (1)     (1)      -       -
                                  ------- -------- ------- ------- -------
             Total                  $(18)    $(12)   $(45)   $(74)  $(143)

    Operating Loss(4) (5)
    -----------------------------
       Styrene Monomer              $(21)    $(12)   $(38)   $(72)  $(113)
       North American SPS            (18)     (15)     (3)    (60)    (47)
       NOVA Innovene European JV      (7)     (11)    (31)    (50)    (94)
       Eliminations(3)                 1       (1)     (1)      -       -
                                  ------- -------- ------- ------- -------
             Total                  $(45)    $(39)   $(73)  $(182)  $(254)

    Sales Volumes (millions of
     pounds)
    -----------------------------
       Styrene Monomer(6)            503      351     465   1,649   1,672
       North American SPS            169      194     162     736     781
       NOVA Innovene European JV     238      234     217     966     991
                                  ------- -------- ------- ------- -------
                                     910      779     844   3,351   3,444
    

    (1) Before intersegment eliminations between the business units.

    (2) Net loss before income taxes, other gains and losses, interest
expense, depreciation and amortization (see Supplemental Measures on page 12).

    (3) Represents intersegment profit eliminations.

    (4) Net loss before income taxes, other gains and losses and interest
expense (see Supplemental Measures on page 12).

    (5) To conform with changes in internal segment analysis and reporting,
beginning with the first quarter of 2007, NOVA Chemicals will no longer
allocate interest, taxes or corporate charges to the business segments and
accordingly will only report segment results down to the operating income
(loss) line. Assuming NOVA Chemicals had removed corporate charges from
operating loss in the fourth quarter of 2006, operating loss before corporate
charges for the Styrene Monomer, North American SPS and NOVA Innovene European
Joint Venture segments would have been $18 million, $17 million and $5
million, respectively.

    (6) Third-party sales, including purchased volumes resold. Excludes sales
to NOVA Innovene.

    
    Operating Highlights
    Average Benchmark Prices(1)
    (U.S. dollars per pound,
     unless otherwise noted)        Three Month Average     Year Average
                                 ------------------------- ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                    2006    2006     2005    2006    2005
                                 -------- -------- ------- ------- -------
    Benchmark Principal Products:
    Styrene Monomer(2)             $0.67    $0.70   $0.64   $0.65   $0.63
    Solid Polystyrene(3)
      North America                $0.95    $0.93   $0.89   $0.89   $0.86
      Europe                       $0.76    $0.73   $0.61   $0.68   $0.65
    Benchmark Raw Materials:
    Benzene (dollars per
     gallon)(4)                    $3.64    $3.71   $2.54   $3.26   $2.90
    

    (1) Average benchmark prices do not necessarily reflect actual prices
realized by NOVA Chemicals or any other petrochemical company.

    (2) Source: CMAI Contract Market.

    (3) Source for benchmark prices: CMAI.

    (4) A 10(cents) per gallon change in the cost of benzene generally
results in about a 1(cents) per pound change in the variable cost of producing
styrene monomer. Source of benzene benchmark prices: CMAI.

    Review of Operations

    STYRENIX

    The STYRENIX business unit reported relatively flat earnings
quarter-over-quarter with a net loss of $33 million in the fourth quarter of
2006 compared with a net loss of $35 million in the third quarter of 2006.
Higher flow-through feedstock costs offset the fixed-cost improvements from
NOVA Chemicals' restructuring.

    Styrene Monomer

    Fourth Quarter 2006 Versus Third Quarter 2006

    The Styrene Monomer segment reported a net loss of $13 million in the
fourth quarter, relatively flat compared to a net loss of $14 million in the
third quarter. Benchmark styrene monomer prices fell 4%, driven primarily by
lower benzene and ethylene feedstock costs.

    Third-party styrene monomer sales volumes in the fourth quarter were up
43% compared to the third quarter, primarily due to increased export shipments
to Europe and Asia, driven by strong demand in those markets.

    Effective Dec. 31, 2006, the first of two styrene monomer purchase
contracts expired. NOVA Chemicals estimates that it will save $22 million per
year starting Jan. 1, 2007 as a result of the first contract expiration. In
addition, the elimination of this 400 million pound per year supply contract
will allow NOVA Chemicals to run its styrene monomer plants at higher rates.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The Styrene Monomer segment reported a net loss of $13 million in the
fourth quarter of 2006 compared with a net loss of $28 million in the fourth
quarter of 2005. The improvement was primarily due to higher average selling
prices that were partially offset by higher feedstock costs. Industry outages
in Europe in 2006 provided profitable export opportunities.

    2006 Versus 2005

    The Styrene Monomer segment reported a net loss of $61 million in 2006
compared with a net loss of $81 million in 2005. The year-over-year
improvement was primarily due to a higher average selling prices, driven by
better export opportunities, and lower operating costs due to improved
efficiency at NOVA Chemicals' Bayport, Texas plant.

    North American Solid Polystyrene

    Fourth Quarter 2006 Versus Third Quarter 2006

    The North American SPS segment reported a net loss of $14 million in the
fourth quarter of 2006 compared to a net loss of $10 million in the third
quarter of 2006. The decline from the previous quarter was due to higher
flow-through feedstock costs and lower sales volume.

    North American SPS sales volume decreased by 13% in the fourth quarter
from the third quarter due to seasonally slow demand during the holiday season
and customer de-stocking of inventory in anticipation of price declines. North
American benchmark SPS prices increased approximately 2(cents) per pound from
the third quarter.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The North American SPS segment reported a net loss of $14 million in the
fourth quarter of 2006 and a net loss of $3 million in the fourth quarter of
2005. The decline from the same quarter of 2005 was primarily due to higher
feedstock costs in the fourth quarter of 2006.

    2006 Versus 2005

    The North American SPS segment reported a net loss of $44 million in 2006
compared to a net loss of $33 million in 2005. The year-over-year decline was
primarily due to higher feedstock costs and lower average selling prices.

    NOVA Innovene European Joint Venture

    NOVA Innovene continues to be on track to exceed its cost-savings target
of $80 million per year by the end of 2007 as a result of joint venture
synergies. By the end of the fourth quarter of 2006, the joint venture had
achieved annualized cost savings of $66 million. NOVA Chemicals receives 50%
of the benefit of the total cost savings.

    Fourth Quarter 2006 Versus Third Quarter 2006

    The NOVA Innovene European Joint Venture (NOVA Innovene) reporting
segment recorded a net loss of $7 million in the fourth quarter of 2006, a 30%
improvement over the $10 million net loss reported in the third quarter. The
quarter-over-quarter improvement was due to fixed cost savings and strong
polymer demand that enabled the implementation of price increases.

    For the fourth quarter, SPS sales volumes for NOVA Innovene were up 10%
from the third quarter, while EPS sales volumes for NOVA Innovene were down 8%
from the third quarter. Margins expanded in the fourth quarter as price
increases outpaced higher feedstock costs. The European SPS benchmark price
increased by approximately 3(cents) per pound from the third quarter.

    Fourth Quarter 2006 Versus Fourth Quarter 2005

    The NOVA Innovene segment reported a net loss of $7 million in the fourth
quarter of 2006 compared to a net loss of $27 million in the fourth quarter of
2005. Results improved from the same quarter of 2005 due to higher prices,
higher sales volumes, and lower fixed costs.

    2006 Versus 2005

    The NOVA Innovene segment reported a net loss of $47 million in 2006
compared with a net loss of $92 million in 2005. Two primary factors
contributed to the significant improvement in the joint venture's performance:
an improvement in the European EPS business and fixed-cost reductions.

    The supply/demand balance for the European EPS industry improved in 2006
from 2005 with the closure of NOVA Innovene's Berre, France and Carrington, UK
EPS facilities. European SPS market conditions have not improved to the same
extent. However, the closure of the Carrington, UK SPS facility reduced fixed
costs by $13 million before-tax for NOVA Innovene.

    
    CORPORATE
    (millions of U.S. dollars)
                                  Three Months Ended        Year Ended
                               ------------------------- -----------------
                               Dec. 31 Sept. 30 Dec. 31  Dec. 31  Dec. 31
                                2006     2006   2005(6)    2006   2005(6)
                               ------- -------- -------- -------- --------
    Before-Tax Corporate Items
    Stock-based compensation
     and profit sharing (1)        $1      $(7)     $(3)    $(14)     $22
    IRS Settlement (2)              -        -        8        -        8
    Restructuring (3)            (860)    (109)     (83)    (985)    (168)
    Insurance charge(4)             -      (19)       -      (19)     (22)
    Mark-to-market feedstock
     derivatives (5)                9      (17)       9      (21)      12
                               ------- -------- -------- -------- --------
                                $(850)   $(152)    $(69) $(1,039)   $(148)
                               ------- -------- -------- -------- --------
    After-Tax Corporate Items
    Stock-based compensation
     and profit sharing (1)       $(2)     $(4)     $(1)    $(13)     $10
    IRS Settlement (2)              -        -        5        -        5
    Restructuring (3)            (772)     (79)     (50)    (861)    (125)
    Insurance charge(4)             -      (13)       -      (13)     (15)
    Mark-to-market feedstock
     derivatives (5)                5      (11)       6      (14)       8
                               ------- -------- -------- -------- --------
                                $(769)   $(107)    $(40)   $(901)   $(117)
                               ------- -------- -------- -------- --------
    

    (1) NOVA Chemicals has two cash-settled, stock-based incentive
compensation plans that are marked-to-market with changes in the value of the
common stock price. In November 2005, NOVA Chemicals entered into a three-year
hedging arrangement that effectively neutralizes the mark-to-market impact on
the stock-based incentive compensation plans. In addition, NOVA Chemicals
maintains a profit sharing program available to most employees based on the
achievement of shareholder return on equity targets. Stock-based compensation
also includes the amount expensed related to the fair value of stock options
earned by employees during the period.

    (2) The fourth quarter of 2005 included a before-tax gain of $8 million
($5 million after-tax) resulting from the final resolution of a tax dispute
related to the deductibility of foreign taxes in certain returns filed with
the United States Internal Revenue Service prior to 1982.

    (3) In the fourth quarter of 2006, NOVA Chemicals wrote-down the assets
in the STYRENIX business unit. See page 4 for details. In the third quarter of
2006, NOVA Chemicals accrued $53 million ($33 million after-tax) of
restructuring costs related to severance, pension and other employee-related
costs associated with the North American restructuring announced on June 26,
2006. In addition, NOVA Chemicals accrued $56 million ($46 million after-tax)
related primarily to the non-cash asset write-down for the Carrington, UK SPS
facility closure. In the second quarter of 2006, NOVA Chemicals accrued $1
million of restructuring costs related to actions taken by NOVA Innovene. In
the first quarter of 2006, NOVA Chemicals accrued $15 million ($10 million
after-tax) related to severance costs for the Chesapeake, VA plant site
closure. In the third quarter of 2005, NOVA Chemicals recorded a charge of $85
million ($75 million after-tax) primarily as a result of NOVA Innovene's
decision to cease EPS production at Berre, France and permanently shutdown the
EPS plant at Carrington, UK. The benefit of tax losses in France and obsolete
assets associated with the Corunna modernization were written off and also
included in this charge. In the fourth quarter of 2005, NOVA Chemicals took a
charge for restructuring in the amount of $76 million ($46 million after-tax)
related to the closure of the Chesapeake, VA site and recorded $7 million ($4
million after-tax) related to NOVA Chemicals' share of NOVA Innovene severance
costs associated with plant closures.

    (4) NOVA Chemicals is one of many participants in OIL and sEnergy - two
mutual insurance companies formed to insure against catastrophic risks. NOVA
Chemicals accrued $19 million ($13 million after-tax) in the third quarter of
2006 and $22 million ($15 million after-tax) in the second quarter of 2005
related to its share of estimated incremental costs in these insurance pools.
Due to losses incurred by OIL and sEnergy that are related to participants
other than NOVA Chemicals, NOVA Chemicals was required to pay higher premiums.
The third quarter charges are related to sEnergy, which is in the process of
closing operations.

    (5) See page 15 for description.

    (6) Beginning in 2006, NOVA Chemicals began classifying stock option
expense and mark-to-market adjustments on feedstock derivative positions as
corporate items, as they are non-cash items and are not relevant in measuring
business performance. Previously these amounts were allocated to the
Olefins/Polyolefins and Styrenics business units. Prior periods have been
restated to conform with the new presentation.

    Supplemental Measures

    In addition to providing measures in accordance with Canadian Generally
Accepted Accounting Principles (GAAP), NOVA Chemicals presents certain
supplemental measures as follows:

    --  EBITDA - This measure, defined on page 5, is provided to assist
investors in determining the ability of NOVA Chemicals to generate cash from
operations. Segment EBITDA is determined as segment operating income or loss
before depreciation and amortization.

    --  Adjusted EBITDA - This measure, defined on page 2, is provided to
assist investors in determining the ability of NOVA Chemicals to generate cash
from operations.

    --  After-tax return (loss) on capital employed - defined on page 3.

    --  Average capital employed - defined on page 3.

    --  CFCT - defined on page 14.

    --  Funds from operations - See Consolidated Statements of Cash Flows on
page 20 for a reconciliation to Net Loss.

    --  Net current debt - defined on page 13.

    --  Net debt to total capitalization - defined on page 13.

    --  Net income (loss) from the businesses - total net income or loss from
the Olefins/Polyolefins, Performance Styrenics and STYRENIX business units,
which equals NOVA Chemicals' net income less corporate and other items (see
page 1). This measure highlights the ongoing performance of the business units
without considering one-time charges, events or other items which are not
driven by the business units.

    --  Net tangible asset coverage on long-term debt - defined on page 13.

    --  Total capitalization - defined on page 13.

    These measures do not have any standardized meaning prescribed by GAAP
and are therefore unlikely to be comparable to similar measures presented by
other companies.

    
    Liquidity and Capital Resources
    Capitalization
    (millions of U.S. dollars except as noted) Dec. 31  Sept. 30  Dec. 31
                                                 2006     2006     2005
                                               -------- -------- ---------

    Current debt (1) (2)                          $263     $201      $302
    Less: restricted cash and other assets         (72)     (72)      (72)
                                               -------- -------- ---------
        Net current debt (3)                       191      129       230
    Long-term debt (2)                           1,615    1,753     1,737
    Less: cash and cash equivalents                (75)    (110)     (166)
                                               -------- -------- ---------

    Total debt, net of cash, cash equivalents,
     and restricted cash and other assets        1,731    1,772     1,801

    Total common shareholders'
    equity (4) (5) (6) (7) (8)                     546    1,370     1,215
                                               -------- -------- ---------

    Total capitalization (9)                    $2,277   $3,142    $3,016
                                               -------- -------- ---------
    

    (1) Current debt includes the $198 million preferred shares due Mar. 15,
2007. Current debt also includes the current debt related to the Joffre
co-generation facility joint venture, the current portion of the Corunna
compressor capital lease, the secured revolver and bank loans.

    (2) Maturity dates for NOVA Chemicals' current and long-term debt range
from March 2007 to August 2028.

    (3) Net current debt equals current debt less restricted cash and other
assets (see Supplemental Measures on page 12).

    (4) Common shares outstanding on Jan. 26, 2007 were 82,580,067 (Dec. 31,
2006 - 82,561,272; Sept. 30, 2006 - 82,553,456; Dec. 31, 2005 - 82,364,899).

    (5) A total of 5,459,702 stock options to purchase common shares of NOVA
Chemicals were outstanding to officers and employees on Jan. 26, 2007, and
5,478,697 were outstanding on Dec. 31, 2006. A total of 2,199,655 common
shares were reserved but unallocated at Dec. 31, 2006. A total of 13 million
common shares were initially reserved for issuance under the Option Plan.

    (6) A total of 47,800 shares were reserved for the Directors' Share
Compensation Plan.

    (7) In April 2005, NOVA Chemicals' shareholders reconfirmed a shareholder
rights plan where one right was issued for each outstanding common share. The
plan expires in May 2009.

    (8) For the three months ended Dec. 31, 2006, a total of 7,816 common
shares were issued upon the exercise of stock options.

    (9) Total capitalization includes shareholders' equity and total debt net
of cash, cash equivalents, and restricted cash and other assets (see
Supplemental Measures on page 12).

    
    Senior Debt Ratings (1)
                                                   Senior Unsecured Debt
                                                  ------------------------
      DBRS                                          BBB (low) (negative)
      Fitch Ratings                                     BB (stable)
      Moody's                                          Ba3 (negative)
      Standard & Poor's                                 B+ (stable)
    

    (1) Credit ratings are not recommendations to purchase, hold or sell
securities and do not comment on market price or suitability for a particular
investor. There is no assurance that any rating will remain in effect for any
given period of time or that any rating will not be revised or withdrawn
entirely by a rating agency in the future.

    
    Coverage Ratios
                                                    Three Months Ended
                                                 -------------------------
                                                 Dec. 31  Sept. 30 Dec. 31
                                                   2006     2006    2005
                                                 -------- -------- -------
    Net debt to total capitalization (1)          76.0%    56.4%    59.7%
    Interest coverage on long-term debt (2)        0.0x     0.7x    0.1x
    Net tangible asset coverage on long-term       1.3x     1.7x    1.6x
     debt (3)
    

    (1) Net debt to total capitalization is equal to total debt, net of cash,
cash equivalents, and restricted cash and other assets, divided by total
common shareholders' equity plus net debt (see Capitalization table above and
Supplemental Measures on page 12).

    (2) Interest coverage on long-term debt is equal to net income before
interest expense on long-term debt and income taxes, for the last four
quarters, divided by annual interest requirements on long-term debt.

    (3) Net tangible asset coverage on long-term debt is equal to total
assets (excluding future tax assets) less liabilities (excluding long-term
debt) divided by long-term debt.

    
    Funds Flow and Changes in Cash and Debt
    The following table shows major sources and uses of cash.

    (millions of U.S. dollars)          Three Months Ended   Year Ended
                                          Dec. 31, 2006     Dec. 31, 2006
                                        ------------------ ---------------
    Operating income                                $(837)          $(680)
    Add back - depreciation and
     amortization                                      75             299
              - restructuring charges                 860             985
                                        ------------------ ---------------
    Adjusted EBITDA (1)                                98             604
    Interest expense                                  (43)           (168)
    Restructuring charges                               -             (78)
    (Gain) loss on derivatives                        (11)              6
    Current tax expense and other                      14             (75)
    Stock option expense                                -               8
                                        ------------------ ---------------
    Funds from operations                              58             297
    Operating working capital decrease                 28              27
                                        ------------------ ---------------
    Cash flow from operating activities                86             324

    Asset sale proceeds                                 1               3
    Capital expenditures                              (46)           (198)
    Turnaround costs, long-term
     investments and other assets                     (10)            (48)
    Dividends paid                                     (7)            (29)
    Common shares issued                                1               3
    Options retired for cash                           (1)             (2)
    Affiliate long-term notes                           3               3
    Foreign exchange and other                         14              14
                                        ------------------ ---------------
    Total change in cash and debt                     $41             $70
                                        ------------------ ---------------
    Decrease in cash and cash
     equivalents                                     $(35)           $(91)
    Decrease in debt (including foreign
     exchange changes)                                 76             161
                                        ------------------ ---------------
    Total change in cash and cash
     equivalents and debt(2)                          $41             $70
                                        ------------------ ---------------
    

    (1) See Consolidated Statements of Net Loss and Reinvested Earnings
(Deficit) on page 18 and Supplemental Measures on page 12.

    (2) NOVA Chemicals also paid down $58 million on the accounts receivable
securitization program, resulting in a total reduction in cash and cash
equivalents, debt and accounts receivable securitization of $99 million.

    NOVA Chemicals' funds from operations were $58 million for the fourth
quarter of 2006, down from $77 million in the third quarter. Operating working
capital decreased by $28 million, primarily as a result of lower-priced
inventories as crude oil prices declined during the quarter.

    NOVA Chemicals measures the effectiveness of its working capital
management through Cash Flow Cycle Time (CFCT). See Supplemental Measures on
page 12. CFCT measures working capital from operations (excluding NOVA
Innovene) in terms of the number of days sales (calculated as working capital
from operations divided by average daily sales). This metric helps to
determine which portion of changes in working capital results from factors
other than price movements. CFCT was 27 days as of Dec. 31, 2006, and 35 days
as of Sept. 30, 2006.

    Capital expenditures were $46 million in the fourth quarter of 2006,
compared to $47 million in the third quarter and $129 million in the fourth
quarter of 2005. Capital spending was down from the same time last year due to
reduced expenditures related to the Corunna flexi-cracker modernization
project.

    Financing

    NOVA Chemicals has $575 million of revolving credit facilities, which
expire on the following dates: $100 million on Dec. 31, 2007, $375 million on
June 30, 2010, and $100 million on Mar. 20, 2011. As of Dec. 31, 2006, NOVA
Chemicals had utilized $154 million of the facilities, of which $44 million
was in the form of letters of credit.

    NOVA Chemicals amended its financial covenants governing these credit
facilities to allow for an exemption of any write-down of the STYRENIX assets
up to $950 million and for the debt to capitalization ratio financial covenant
to be raised from 55% to 60%. These amendments are in effect for the period
Dec. 31, 2006 to June 29, 2007. Using the covenant methodology in the relevant
revolving credit facilities, the debt to capitalization ratio was 55% at Dec.
31, 2006. NOVA Chemicals continues to comply with all financial covenants
under the applicable facilities.

    As a result of the STYRENIX asset write-down, the permitted amount of
secured debt under the terms of NOVA Chemicals' public debt indentures will be
reduced. Accordingly, NOVA Chemicals intends to reduce the $375 million
secured revolver to $325 million effective Feb. 5, 2007. The remaining two
revolving credit facilities are not affected as they are unsecured.

    NOVA Chemicals also has $350 million accounts receivable securitization
programs that will expire on June 30, 2010. As of Dec. 31, 2006, $247 million
was sold under the accounts receivable securitization programs.

    In November 2006, NOVA Innovene entered into a five-year, EUR 120 million
accounts receivable securitization program. Borrowings under this program are
accounted for as long-term debt. NOVA Chemicals' 50% share of the outstanding
balance was $33 million at Dec. 31, 2006. The program expires in November
2011.

    Feedstock Derivative Positions

    NOVA Chemicals maintains a derivatives program to manage risk associated
with feedstock purchases. In the fourth quarter, there was a net gain of $2
million from all Corunna feedstock derivative positions that matured compared
with a net gain of $4 million in the third quarter.

    In addition, NOVA Chemicals is required to record on its balance sheet
the market value of any outstanding derivative positions that do not qualify
for hedge accounting treatment. The gain or loss resulting from changes in the
market value of these derivatives is recorded through earnings each period.
The fourth quarter mark-to-market earnings impact of NOVA Chemicals'
outstanding feedstock derivative portfolio was a $5 million after-tax gain,
compared to an $11 million after-tax loss in the third quarter. These
mark-to-market adjustments are recorded as part of Corporate results until the
positions are realized. Once realized, any income effects are recorded in
business results.

    FIFO Impact

    NOVA Chemicals uses the first-in, first-out (FIFO) method of valuing
inventory. Most of NOVA Chemicals' competitors use the last-in, first-out
(LIFO) method. Because NOVA Chemicals uses FIFO, a portion of the third
quarter feedstock purchases flowed through the Consolidated Statements of Net
Loss and Reinvested Earnings (Deficit) in the fourth quarter. The following
chart depicts the benzene, crude oil and natural gas prices at the end of each
quarter.

    
    Benchmark Price                December 2006         September 2006
                              ------------------------ -------------------
    Benzene(1)                $ 3.32 per gallon        $ 3.55 per gallon
    Crude oil(2)              $ 62.09 per barrel       $ 63.90 per barrel
    Natural Gas(3)            $ 8.01 per mmBTU         $ 6.82 per mmBTU
    

    (1) Source: CMAI

    (2) Source: NYMEX WTI daily spot-settled price average for calendar month

    (3) Source: NYMEX Henry Hub 3-Day Average Close

    NOVA Chemicals estimates that earnings would have been about $22 million
higher in the fourth quarter had it used the LIFO method of accounting.

    NOVA Chemicals' share price on the New York Stock Exchange (NYSE) fell to
$27.90 at Dec. 31, 2006 from $30.71 at Sept. 30, 2006. NOVA Chemicals' share
value decreased 9% for the quarter ending Dec. 31, 2006 on the NYSE and 5% on
the Toronto Stock Exchange (TSX). Peer chemical companies' share values
increased 5% on average and the S&P Chemicals Index increased 7%. The S&P/TSX
Composite Index was up 9% and the S&P 500 was up 6% in the fourth quarter. As
of Jan. 30, 2007, NOVA Chemicals' share price was $29.88, up 7% from Dec. 31,
2006. The S&P Chemicals Index was up 2% during the same period.

    In the fourth quarter, approximately 41% of trading in NOVA Chemicals'
shares took place on the TSX and 59% of trading took place on the NYSE and
other U.S. markets.

    
    Fourth Quarter Trading      Millions of Shares % of Float % of Trading
     Volumes
    --------------------------- ------------------ ---------- ------------
    Toronto Stock Exchange                   21.1         26%          41%
    Consolidated U.S. Trading
     Volumes                                 30.9         37%          59%
                                ------------------ ---------- ------------
    Total                                    52.0         63%         100%
                                ------------------ ---------- ------------
    

    
                             INVESTOR INFORMATION
    For inquiries on stock-related matters        Transfer Agent and
     including dividend payments, stock transfers  Registrar
     and address changes, contact NOVA Chemicals  CIBC Mellon Trust
     toll-free at 1-800-661-8686 or e-mail to      Company
     shareholders@novachem.com.                   600 The Dome Tower, 333
                                                   Seventh Avenue S.W.
    Contact Information                           Calgary, Alberta, Canada
    Phone: (403) 750-3600 (Canada) or (412) 490-   T2P 2Z1
     4000 (United States) Internet:
     www.novachemicals.com E-Mail:                Phone: (403) 232-2400 /
     invest@novachem.com                           1-800-387-0825
                                                  Fax: (403) 264-2100
    NOVA Chemicals Corporation                    Internet:
    1000 Seventh Avenue S.W., P.O. Box 2518        www.cibcmellon.ca
    Calgary, Alberta, Canada T2P 5C6              E-Mail:
                                                  inquiries@cibcmellon.ca
    If you would like to receive a shareholder
     information package, please contact us at    Share Information
     (403) 750-3600 or (412) 490-4000 or via e-   NOVA Chemicals' trading
     mail at publications@novachem.com.            symbol on the New York
                                                   and Toronto Stock
    We file additional information relating to     Exchanges is NCX.
     NOVA Chemicals, including our Annual
     Information Form (AIF), with Canadian
     securities administrators. This information
     can be accessed through the System for
     Electronic Document Analysis and Retrieval
     (SEDAR), at www.sedar.com. This same
     information is filed with the U.S.
     Securities and Exchange Commission and can
     be accessed via their Electronic Data
     Gathering Analysis and Retrieval System
     (EDGAR) at www.sec.gov/edgar.shtml
    --------------------------------------------- ------------------------
    

    Advanced SCLAIRTECHTM is a trademark of NOVA Chemicals.

    ARCEL(R) and DYLARK(R) are registered trademarks of NOVA Chemicals Inc.

    SCLAIR(R) is a registered trademark of NOVA Chemicals Corporation in
Canada and of NOVA Chemicals (International) S.A. elsewhere; authorized
use/utilisation autorisee.

    SURPASS(R) is a registered trademark of NOVA Chemicals Corporation in
Canada and of NOVA Chemicals (International) S.A. elsewhere.

    ZYLAR(R) is a registered trademark of NOVA Chemicals (Canada) Ltd./NOVA
Chimie (Canada) Ltee.; authorized use/utilisation autorisee.

    
    CHANGES IN NET LOSS
    (millions of U.S. dollars)
                                                Q4 2006
                                             Compared with        2006
                                          -------------------   Compared
                                           Q3 2006   Q4 2005    with 2005
                                          --------- --------- ------------
    (Lower) higher net unit margins          $(133)     $(58)         $60
    Higher sales volumes                        22        55           86
                                          --------- --------- ------------
    (Lower) higher operating margin(1)        (111)       (3)         146
    Higher research and development              -        (1)          (1)
    Lower (higher) selling, general and
     administrative                             12        21           (2)
    Higher restructuring charges              (751)     (777)        (817)
    Higher depreciation and amortization         -        (1)          (9)
    Higher interest expense                      -       (10)         (55)
    Higher (lower) other gains and losses        1        (8)          (7)
    Lower income tax expense                    92        64          143
                                          --------- --------- ------------
    Increase in net loss                     $(757)    $(715)       $(602)
                                          --------- --------- ------------
    

    (1) Operating margin equals revenue less feedstock and operating costs.

    Selling, general and administrative (SG&A) costs for the fourth quarter
were $12 million lower than in the third quarter of 2006 and $21 million lower
than in the fourth quarter of 2005 due to timing of expenditures, lower costs
due to restructuring and some mark-to-market impact from stock-based
compensation recorded in 2005. In 2006, stock-based compensation exposure was
hedged.

    Refer to Note 3 on page 22 for details related to the restructuring
charges.

    Interest expense was $10 million higher in the fourth quarter of 2006
compared to the fourth quarter of 2005, and $55 million higher on a
year-to-date basis compared to 2005 due to higher debt levels, higher interest
rates and less capitalized interest resulting from the completion of the
Corunna and Bayport projects.

    Forward-Looking Information

    This news release contains forward-looking statements with respect to
NOVA Chemicals, its subsidiaries and affiliated companies. By their nature,
forward-looking statements require NOVA Chemicals to make assumptions and are
subject to inherent risks and uncertainties. There is significant risk that
predictions, forecasts, conclusions and projections will not prove to be
accurate, that NOVA Chemicals' assumptions may not be correct and that actual
results may differ materially from such predictions, forecasts, conclusions or
projections. Forward-looking statements for the time periods beyond 2007
involve longer-term assumptions and estimates than forward-looking statements
for 2007 and are consequently subject to greater uncertainty. NOVA Chemicals
cautions readers of this news release not to place undue reliance on its
forward-looking statements as a number of factors could cause actual results,
conditions, actions or events to differ materially from the targets,
expectations, estimates or intentions expressed in the forward-looking
statements.

    The words "believe," "expect," "plan," "intend," "estimate," or
"anticipate" and similar expressions, as well as future or conditional verbs
such as "will," "should," "would," and "could" often identify forward-looking
statements. Specific forward-looking statements contained in this news release
include, among others, statements regarding: NOVA Chemicals' belief that NOVA
Chemicals will be able to finalize a shareholder value-building pathway for
the business; NOVA Chemicals' expectations with respect to its cost savings in
2007 and 2008; its estimate with respect to decreases in depreciation charges
due to the write-down of STYRENIX assets; and potential income tax benefit
related to the write-down of STYRENIX assets. With respect to forward-looking
statements contained in this news release, NOVA Chemicals has made assumptions
regarding, among other things: future oil, natural gas and benzene prices; its
ability to obtain raw materials; its ability to market products successfully
to its anticipated customers; the impact of increasing competition; and its
ability to obtain financing on acceptable terms. Some of the risks that could
affect NOVA Chemicals' future results and could cause results to differ
materially from those expressed in the forward-looking statements include:
commodity chemicals price levels (which depend, among other things, on supply
and demand for these products, capacity utilization and substitution rates
between these products and competing products); feedstock availability and
prices; operating costs; terms and availability of financing; technology
developments; currency exchange rate fluctuations; starting up and operating
facilities using new technology; realizing synergy and cost savings targets;
NOVA Chemicals' ability to implement its business strategies; meeting time and
budget targets for significant capital investments; avoiding unplanned
facility shutdowns; safety, health, and environmental risks associated with
the operation of chemical plants and marketing of chemical products, including
transportation of these products; public perception of chemicals and chemical
end-use products; the impact of competition; changes in customer demand,
including customer acceptance of NOVA Chemicals' Performance Products; changes
in, or the introduction of new laws and regulations relating to NOVA
Chemicals' business, including environmental, competition and employment laws;
loss of the services of any of NOVA Chemicals' executive officers;
uncertainties associated with the North American, South American, European,
and Asian economies; terrorist attacks; severe weather events; and other risks
detailed from time to time in the publicly filed disclosure documents and
securities commission reports of NOVA Chemicals and its subsidiaries or
affiliated companies.

    Implementation of announced price increases depends on many factors,
including market conditions, the supply/demand balance for each particular
product and feedstock costs. Price increases have varying degrees of success.
They are typically phased in and can differ by product or market. There can be
no assurances that any announced price increases will be successful or will be
realized within the anticipated time frame. In addition, benchmark price
indices sometimes lag price increase announcements due to the timing of
publication.

    NOVA Chemicals' forward-looking statements are expressly qualified in
their entirety by this cautionary statement. In addition, the forward-looking
statements are made only as of the date of this news release, and except as
required by applicable law, NOVA Chemicals undertakes no obligation to
publicly update these forward-looking statements to reflect new information,
subsequent events or otherwise.

    
    Summary Quarterly Financial Information
    (millions of U.S. dollars, except per share amounts)

                                             Three Months Ended
                                   ---------------------------------------
                                                   2006
                                   -------------------------------------
                                   Dec. 31 Sept. 30   June 30   Mar. 31
                                           (restated (restated (restated
                                             - see     - see     - see
                                            Note 1)   Note 1)   Note 1)

    Revenue                        $1,635     1,712     1,619     1,553
    Operating income (loss)         $(837)       13       107        37
    Net income (loss)               $(781)      (24)      106        (4)
    Net income (loss) per share
     - basic                       $(9.46)    (0.29)     1.28     (0.05)
     - diluted                     $(9.46)    (0.29)     1.27     (0.05)
    Weighted-average common shares
     outstanding (millions)
     - basic                         82.6      82.6      82.5      82.5
     - diluted                       82.6      82.6      83.2      82.5

    Summary Quarterly Financial Information
    (millions of U.S. dollars, except per share amounts)

                                             Three Months Ended
                                  ----------------------------------------
                                                    2005
                                  ----------------------------------------
                                    Dec. 31  Sept. 30   June 30   Mar. 31
                                   (restated (restated (restated (restated
                                     - see     - see     - see     - see
                                    Note 1)   Note 1)   Note 1)   Note 1)

    Revenue                           1,433     1,366     1,329     1,488
    Operating income (loss)             (76)      (98)        5       172
    Net income (loss)                   (66)     (107)      (22)       94
    Net income (loss) per share
     - basic                          (0.80)    (1.29)    (0.27)     1.12
     - diluted                        (0.80)    (1.29)    (0.27)     1.06
    Weighted-average common shares
     outstanding (millions)
     - basic                           82.4      82.3      82.3      83.2
     - diluted                         82.4      82.3      82.3      90.0
    

    
    CONSOLIDATED FINANCIAL STATEMENTS
    Consolidated Statements of Net Loss and Reinvested Earnings (Deficit)
    (unaudited, millions of U.S. dollars except per share amounts)

                                 Three Months Ended         Year Ended
                             --------------------------- -----------------
                             Dec. 31 Sept. 30   Dec. 31  Dec. 31  Dec. 31
                               2006     2006      2005     2006     2005
                             ------- --------- --------- ------- ---------
                                     (restated (restated         (restated
                                       - see     - see             - see
                                      Note 1)   Note 1)           Note 1)

    Revenue                  $1,635    $1,712    $1,433  $6,519    $5,616
                             ------- --------- --------- ------- ---------

    Feedstock and operating
     costs                    1,482     1,448     1,277   5,663     4,906
    Research and development     13        13        12      51        50
    Selling, general and
     administrative              42        54        63     201       199
    Restructuring charges
     (Note 3)                   860       109        83     985       168
    Depreciation and
     amortization                75        75        74     299       290
                             ------- --------- --------- ------- ---------
                              2,472     1,699     1,509   7,199     5,613
                             ------- --------- --------- ------- ---------
    Operating income (loss)    (837)       13       (76)   (680)        3
                             ------- --------- --------- ------- ---------

    Interest expense (net)
     (Note 4)                   (43)      (43)      (33)   (168)     (113)
    Other gains and losses
     (net)                        -        (1)        8       1         8
                             ------- --------- --------- ------- ---------
                                (43)      (44)      (25)   (167)     (105)
                             ------- --------- --------- ------- ---------
    Loss before income taxes   (880)      (31)     (101)   (847)     (102)
    Income tax recovery
     (Note 5)                    99         7        35     144         1
                             ------- --------- --------- ------- ---------
    Net loss                  $(781)     $(24)     $(66)  $(703)    $(101)
    Reinvested earnings,
     beginning of period
      - restated (Note 1)       435       467       454     381       621
      Common share dividends     (7)       (7)       (7)    (29)      (27)
      Common share
       repurchase                 -         -         -       -      (107)
      Options retired for
       cash (net)                (1)       (1)        -      (3)       (5)
                             ------- --------- --------- ------- ---------
    Reinvested earnings
     (deficit), end of
     period                   $(354)     $435      $381   $(354)     $381
                             ------- --------- --------- ------- ---------
    Loss per share (Note 6)
      - basic                $(9.46)   $(0.29)   $(0.80) $(8.52)   $(1.22)
      - diluted              $(9.46)   $(0.29)   $(0.80) $(8.52)   $(1.22)
    

    Notes to the Consolidated Financial Statements appear on pages 21 to 29.

    
    Consolidated Balance Sheets
    (unaudited, millions of U.S. dollars)    Dec. 31, 2006  Dec. 31, 2005
                                             -------------- --------------
    Assets                                                   (restated -
                                                              see Note 1)
    Current assets
      Cash and cash equivalents                        $75           $166
      Restricted cash and other assets                  72              -
      Accounts receivable                              507            564
      Inventories                                      669            680
                                             -------------- --------------
                                                     1,323          1,410

    Investments and other assets                       113            181
    Plant, property and equipment, net               2,719          3,626
                                             -------------- --------------
                                                    $4,155         $5,217
                                             -------------- --------------

    Liabilities and Shareholders' Equity
    Current liabilities
      Bank loans                                        $1             $1
      Accounts payable and accrued
       liabilities                                     926            974
      Long-term debt due within one year               262            301
                                             -------------- --------------
                                                     1,189          1,276
    Long-term debt                                   1,615          1,737
    Future income taxes                                435            643
    Deferred credits and long-term
     liabilities                                       370            346
                                             -------------- --------------
                                                     3,609          4,002
                                             -------------- --------------

    Shareholders' equity
          Common shares                                497            494
          Contributed surplus                           25             16
          Cumulative translation adjustment            378            324
          Reinvested earnings (deficit)               (354)           381
                                             -------------- --------------
                                                       546          1,215
                                             -------------- --------------
                                                    $4,155         $5,217
                                             -------------- --------------
    

    Notes to the Consolidated Financial Statements appear on pages 21 to 29.

    
    Consolidated Statements of Cash Flows
    (unaudited, millions of U.S. dollars)

                                 Three Months Ended         Year Ended
                             --------------------------- -----------------
                             Dec. 31 Sept. 30   Dec. 31  Dec. 31  Dec. 31
                              2006     2006       2005    2006     2005
                             ------- --------- --------- ------- ---------
    Operating activities             (restated (restated         (restated
                                       - see     - see             - see
                                      Note 1)   Note 1)           Note 1)
      Net Loss                $(781)     $(24)     $(66)  $(703)    $(101)
      Depreciation and
       amortization              75        75        74     299       290
      Future income tax
       recovery                 (85)      (34)      (34)   (219)      (69)
      (Gain) loss on
       derivatives              (11)       11        (3)      6       (19)
        Asset writedowns
         (Note 3)               860        47        76     907       161
      Other gains and losses      -         1        (8)     (1)       (8)
      Stock option expense        -         1         -       8         8
                             ------- --------- --------- ------- ---------
      Funds from
       operations(1)             58        77        39     297       262
      Changes in non-cash
       working capital           28       (66)     (166)     27       (43)
                             ------- --------- --------- ------- ---------
      Cash flow from (used
       in) operating
       activities                86        11      (127)    324       219
                             ------- --------- --------- ------- ---------

    Investing activities
      Proceeds on asset
       sales and other
       capital transactions       1         -        11       3        11
      Plant, property and
       equipment additions      (46)      (47)     (129)   (198)     (419)
      Turnaround costs,
       long-term investments
       and other assets         (10)      (18)      (77)    (48)     (176)
      Settlement of
       derivatives                2         6        (6)     15         7
      Changes in non-cash
       working capital            -         9         2      (2)      110
                             ------- --------- --------- ------- ---------
                                (53)      (50)     (199)   (230)     (467)
                             ------- --------- --------- ------- ---------
    Financing activities
      Increase in current
       bank loans                 -         1         -       -         1
      Long-term debt
       additions                 34         -       400      38       419
      Long-term debt
       repayments                (4)       (2)       (2)   (308)     (103)
      Long-term debt -
       increase (decrease)
       in revolving debt        (95)       65         -     108         -
      Affiliate long-term
       notes                      3         -         -       3         -
      Options retired for
       cash                      (1)       (1)       (1)     (2)      (11)
      Common shares issued        1         -         2       3        13
      Common share
       repurchases                -         -         -       -      (125)
      Common share dividends     (7)       (7)       (7)    (29)      (27)
      Changes in non-cash
       working capital            1         -         3       2         2
                             ------- --------- --------- ------- ---------
                                (68)       56       395    (185)      169
                             ------- --------- --------- ------- ---------

    Increase (decrease) in
     cash and cash
     equivalents                (35)       17        69     (91)      (79)
    Cash and cash
     equivalents, beginning
     of period                  110        93        97     166       245
                             ------- --------- --------- ------- ---------

    Cash and cash
     equivalents, end of
     period                     $75      $110      $166     $75      $166
                             ------- --------- --------- ------- ---------

    Cash tax payments           $12       $30        $1     $53       $55
                             ------- --------- --------- ------- ---------

    Cash interest payments      $40       $44       $29    $168      $131
                             ------- --------- --------- ------- ---------
    

    (1) See Supplemental Measures on page 12.

    Notes to the Consolidated Financial Statements appear on pages 21 to 29.

    Notes to Consolidated Financial Statements

    (unaudited, millions of U.S. dollars, except per share amounts and unless
otherwise noted)

    These interim Consolidated Financial Statements do not include all of the
disclosures included in NOVA Chemicals' annual Consolidated Financial
Statements. Accordingly, these interim Consolidated Financial Statements
should be read in conjunction with the Consolidated Financial Statements for
the year ended Dec. 31, 2005.

    1. Significant Accounting Policies

    These interim Consolidated Financial Statements have been prepared in
accordance with Canadian GAAP, using the same accounting policies as set out
in Note 2 to the Consolidated Financial Statements for the year ended Dec. 31,
2005 on pages 71 to 75 of the 2005 Annual Report except as follows. Canadian
GAAP implemented EIC (Emerging Issues Committee) 162, Stock-Based Compensation
for Employees Eligible to Retire Before the Vesting Date, which results in the
acceleration of the recognition of compensation cost for stock-based awards
based on employees' retirement eligibility at the date of the grant. This
standard became effective for NOVA Chemicals in the fourth quarter of 2006 and
was applied retroactively, with restatement of prior periods, as required by
EIC 162. The adoption of EIC 162 resulted in an $11 million ($9 million
after-tax) charge for prior years as well as a decrease in the current year
expense of $2 million ($1 million after-tax).

    Certain comparative figures have been restated to conform with the
current periods' presentation.

    2. Pensions and Other Post-Retirement Benefits

    
    Components of Net Periodic               Three Months Ended
     Benefit Cost for Defined
     Benefit Plans
                                  ----------------------------------------
                                     Dec. 31, 2006      Sept. 30, 2006
                                  ------------------- --------------------
                                  Pension    Other    Pension    Other
                                   Benefits  Benefits  Benefits  Benefits
                                  --------- --------- --------- ----------

    Current service cost                $6       $(2)       $7        $1
    Interest cost on projected
     benefit obligations                16         2         9         1
    Actual gain on plan assets         (60)        -        (9)        -
    Actuarial loss on accrued
     obligation                         28         -         -         -
                                  --------- --------- --------- ----------
    Costs arising in the period        (10)        -         7         2
    Differences between costs
     arising in the period and
     costs recognized in the
     period in respect of the
     long-term nature of employee
     future benefit costs:
      Return on plan assets             42         -         -         -
       Transition (asset)
        obligation                      (3)        1        (1)        -
       Actuarial loss                  (24)        1         2         -
       Past service and actual
        plan amendments                  -        (1)        -         -
                                  --------- --------- --------- ----------
    Net defined benefit cost
     recognized                          5         1         8         2
    Curtailment / special
     termination charge                  4         1         5         4
    Settlement charge                    3         -         -         -
                                  --------- --------- --------- ----------
    Total cost                        $ 12       $ 2      $ 13       $ 6
                                  --------- --------- --------- ----------

    Components of Net Periodic Benefit Cost for       Three Months Ended
     Defined Benefit Plans
                                                    ----------------------
                                                         Dec. 31, 2005
                                                      --------------------
                                                       Pension    Other
                                                       Benefits   Benefits
                                                      --------------------

    Current service cost                                     $6        $-
    Interest cost on projected benefit obligations           10         1
    Actual gain on plan assets                              (27)        -
    Actuarial loss on accrued obligation                      2         -
                                                      ---------- ---------
    Costs arising in the period                              (9)        1
    Differences between costs arising in the period
     and costs recognized in the period in respect
     of the long-term nature of employee future
     benefit costs:
      Return on plan assets                                  18         -
       Transition (asset) obligation                         (1)        -
       Actuarial loss                                         -         -
       Past service and actual plan amendments                -         -
                                                      ---------- ---------
    Net defined benefit cost recognized                       8         1
    Curtailment / special termination charge                  -         -
    Settlement charge                                         -         -
                                                      ---------- ---------
    Total cost                                               $8        $1
                                                      ---------- ---------
    

    
                                                Year Ended
                                 -----------------------------------------
                                    Dec. 31, 2006        Dec. 31, 2005
                                 -----------------------------------------
                                  Pension    Other     Pension    Other
                                   Benefits  Benefits  Benefits   Benefits
                                 ------------------------------- ---------

    Current service cost               $27        $2        $26        $2
    Interest cost on projected
     benefit obligations                43         5         39         4
    Actual gain on plan assets         (87)        -        (55)        -
    Actuarial loss on accrued
     obligation                         28         -          2         -
                                  --------- --------- ---------- ---------
    Costs arising in the period         11         7         12         6
    Differences between costs
     arising in the period and
     costs recognized in the
     period in respect of the
     long-term nature of employee
     future benefit costs:
       Return on plan assets            42         -         18         -
       Transition (asset)
        obligation                      (6)        1         (5)        1
       Actuarial (gain) loss           (18)        1          5         1
       Past service and actual
        plan amendments                  -        (1)         1         -
                                  --------- --------- ---------- ---------
    Net defined benefit cost
     recognized                         29         8         31         8
    Curtailment / special
     termination charge                  9         5          -         -
    Settlement charge                    3         -          -         -
                                  --------- --------- ---------- ---------
    Total cost                         $41       $13        $31        $8
                                  --------- --------- ---------- ---------
    

    The expected long-term rate of return on plan assets is 7.4% compared
with 7.5% in the prior year.

    Employer Contributions

    NOVA Chemicals contributed $15 million, $28 million and $17 million
during the quarters ended Dec. 31, 2006, Sept. 30, 2006, and Dec. 31, 2005,
respectively, to its defined benefit pension plans. NOVA Chemicals contributed
$2 million, $2 million and $1 million during the quarters ended Dec. 31, 2006,
Sept. 30, 2006, and Dec. 31, 2005, respectively, to its defined contribution
plans. NOVA Chemicals contributed $65 million and $49 million during 2006 and
2005, respectively, to its defined benefit pension plans. NOVA Chemicals
contributed $8 million and $7 million during 2006 and 2005, respectively, to
its defined contribution plans.

    
    3. Restructuring Charges
    

    During the fourth quarter of 2006, NOVA Chemicals performed a review of
the carrying value of its assets to determine if expectations for future cost
recovery continue to support these carrying values. In the case of the
STYRENIX assets, it was determined that the carrying value was in excess of
the expected future cash flows from the assets. Accordingly, the assets were
written down to their estimated realizable value. This resulted in a
write-down of $860 million ($772 million after-tax). As a consequence,
depreciation charges in future years will be reduced. Depreciation in 2007
will be lower by $80 million as a result of this write-down. The future income
tax benefit related to this write-down was not completely recognized due to
uncertainty around the ultimate realization of the benefits. Accordingly, $220
million of potential future income tax benefits was not recorded. This amount
is included in the valuation reserve which can be taken into income in the
future to offset any tax expense otherwise recordable in the relevant
subsidiaries. At such time as these subsidiaries establish a record of ongoing
profitability the entire remaining reserve could be brought into income.

    In the third quarter of 2006, NOVA Chemicals had two significant
restructuring charges as follows:

    1) On June 26, 2006, NOVA Chemicals announced plans to restructure its
North American operations to better align resources and reduce costs. NOVA
Chemicals removed $65 million of costs across the organization. These
reductions include the previously announced savings of $15 million per year
from the Chesapeake, VA site closure.

    As a result, a restructuring charge of $53 million before-tax ($33
million after-tax) for severance, pension and other employee-related costs was
booked in the third quarter of 2006. Of this amount, approximately $10 million
related to one-time pension curtailment and special termination benefit
charges. Of the $43 million remaining charge, approximately $22 million was
paid to employees by the end of 2006 with the majority of the remainder to be
paid in 2007.

    2) On July 25, 2006, NOVA Innovene announced its plans to permanently
close its Carrington, UK, SPS facility in October 2006. Accordingly, NOVA
Chemicals wrote down the value of the plant on its books to zero as of Sept.
30, 2006. NOVA Chemicals incurred a charge of $56 million before-tax ($46
million after-tax) related primarily to non-cash asset write-downs, however $8
million related to severance and other departure costs. As of Dec. 31, 2006,
$5 million of the severance costs was paid to employees.

    In the second quarter of 2006, NOVA Chemicals accrued $1 million of
additional restructuring costs related to rationalization activities commenced
in 2005 by NOVA Innovene.

    In the first quarter of 2006, NOVA Chemicals included in the
restructuring charges severance costs of $15 million ($10 million after-tax)
related to the Chesapeake, VA closure. To date, $3 million of the severance
costs has been paid to employees.

    Included in the restructuring charges for 2005 are a plant write-down of
$76 million ($60 million after-tax) related to the shutdown of the EPS plant
at Carrington, UK. NOVA Chemicals also reduced the recorded benefit of certain
tax loss carry-forwards by $9 million, as the likelihood of their utilization
was reduced as a result of the formation of the joint venture and closure of
the plants. Certain other non-productive assets were written off amounting to
$9 million ($6 million after-tax). The total amount of the restructuring
charge was $85 million ($75 million after-tax). An additional $7 million ($4
million after-tax) was recorded in the fourth quarter of 2005 to accrue for
severance costs related to the plant closures. NOVA Chemicals recorded a $76
million ($46 million after-tax) write-down of the Chesapeake, VA plant in the
fourth quarter of 2005.

    
    4. Interest Expense
    Components of Interest
     Expense                         Three Months Ended      Year Ended
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005   2006    2005
                                  ------- -------- ------- ------- -------
    Interest on long-term debt       $36      $35     $33    $146    $117
    Interest on securitizations
     and other                         9       10       6      30      14
                                  ------- -------- ------- ------- -------
    Gross interest expense            45       45      39     176     131
    Interest capitalized during
     plant construction               (1)      (1)     (5)     (3)    (14)
    Interest income                   (1)      (1)     (1)     (5)     (4)
                                  ------- -------- ------- ------- -------
    Interest expense (net)           $43      $43     $33    $168    $113
                                  ------- -------- ------- ------- -------
    

    
    5. Income Taxes
                                    Three Months Ended       Year Ended
                                 ------------------------ ----------------
                                 Dec. 31 Sept. 30 Dec. 31 Dec. 31  Dec. 31
                                  2006     2006     2005    2006    2005
                                 ------- -------- ------- -------- -------
    Loss before income taxes      $(880)    $(31)  $(101)   $(847)  $(102)
    Statutory income tax rate     32.49%   32.49% 33.62 %   32.49%  33.62%
                                 ------- -------- ------- -------- -------
    Computed income tax recovery   $286      $10     $34     $275     $34
    Decrease (increase) in taxes
     resulting from:
        Lower tax rates on other
         gains                        -        -       2        -       2
        Tax benefit of rate
         reductions(1)                -        -       -       60       -
        Tax benefits not
         recognized on
         restructuring
         charges(2)                (220)      (6)      -     (226)    (16)
        Foreign tax rates            30        4       1       37      (9)
        Other                         3       (1)     (2)      (2)    (10)
                                 ------- -------- ------- -------- -------
    Income tax recovery             $99       $7     $35     $144      $1
                                 ------- -------- ------- -------- -------
    

    (1) As a result of Canadian federal and Alberta provincial income tax
rate reductions, which were enacted in the second quarter of 2006, future tax
liabilities were reduced by $60 million. This benefit was recorded as a
reduction in income tax expense in the Olefins/Polyolefins business unit and
was allocated evenly to the three reportable segments in that business unit.

    (2) Refer to Note 3 above.

    
    6. Loss Per Share
    (shares in millions)                Three Months Ended
                          ------------------------------------------------
                              Dec. 31        Sept. 30         Dec. 31
                               2006            2006            2005
                          --------------- --------------- ----------------
                           Basic  Diluted  Basic  Diluted  Basic  Diluted
    Net loss available to
     common shareholders  $ (781) $ (781)   $(24)   $(24)  $ (66)  $ (66)
                          ------- ------- ------- ------- ------- --------
    Weighted-average
     common shares
     outstanding            82.6    82.6    82.6    82.6    82.4    82.4
    Add back effect of
     dilutive securities:
      Stock options            -       -       -       -       -       -
                          ------- ------- ------- ------- ------- --------
    Weighted-average
     common shares for EPS
     calculations           82.6    82.6    82.6    82.6    82.4    82.4
                          ------- ------- ------- ------- ------- --------
    Loss per common share $(9.46) $(9.46) $(0.29) $(0.29) $(0.80) $(0.80)
                          ------- ------- ------- ------- ------- --------

    6. Loss Per Share
    (shares in millions)                             Year Ended
                                           -------------------------------
                                               Dec. 31         Dec. 31
                                                2006            2005
                                           --------------- ---------------
                                            Basic  Diluted  Basic  Diluted
    Net loss available to common
     shareholders                           $(703) $ (703) $ (101) $ (101)
                                           ------- ------- ------- -------
    Weighted-average common shares
     outstanding                             82.5    82.5    82.6    82.6
    Add back effect of dilutive
     securities:
      Stock options                             -       -       -       -
                                           ------- ------- ------- -------
    Weighted-average common shares for
     EPS calculations                        82.5    82.5    82.6    82.6
                                           ------- ------- ------- -------
    Loss per common share                  $(8.52)  (8.52) $(1.22) $(1.22)
                                           ------- ------- ------- -------
    

    A total of 3.3 million, 3.4 million and 4.6 million stock options were
excluded from the computation of diluted loss per share for the quarters ended
Dec. 31, 2006 and Sept. 30, 2006, and Dec. 31, 2005, respectively, because
they were anti-dilutive. As of Dec. 31, 2006, the fully diluted share count
was 82.6 million. Options become dilutive when the market price is higher than
the strike price and NOVA Chemicals is profitable. The amount of dilution will
vary with the stock price.

    
    7. Segmented Information
    

    Based on results of a Securities and Exchange Commission (SEC) routine,
periodic review of NOVA Chemicals' financial statements, NOVA Chemicals has
increased the number of reportable business segments from three to seven. This
change increases the amount of detail disclosed but does not impact the
operation of the business units or the previously reported financial position,
results of operations or cash flows. Prior periods have been restated
accordingly.

    (1) Joffre Olefins

    Products: Ethylene and co-products, including propylene, crude C4 and
crude C5 hydrocarbons, and hydrogen off-gas.

    Applications: Ethylene is used internally by NOVA Chemicals to produce
polyethylene or sold to third parties who use ethylene to produce polyethylene
and other products.

    (2) Corunna Olefins

    Products: Ethylene and co-products, including propylene, crude C4
hydrocarbons, C5 dienes, dicyclopentadiene, aromatics, C9 resin oils, hydrogen
and fuels. Feedstock mix determines the type and volume of co-products
manufactured.

    Applications: Ethylene is used internally by NOVA Chemicals to produce
polyethylene and styrene, or sold to customers who use the ethylene to make
other products. Chemical co-products are building blocks for polymers that are
used by customers to make items such as tires, carpet and clothing fibers, and
household goods. Energy co-products are primarily used by customers for fuel.

    (3) Polyethylene

    Products: LLDPE, LDPE, HDPE; (Standard and Performance Products)

    Applications: Polyethylene is sold to customers for production of a
variety of end-use industrial and consumer products. Consumer products include
packaging film, plastic bags, bottles, and toys. Industrial applications
include storage drums, industrial wrap, retail packaging, and building
products.

    (4) Styrene Monomer

    Products: Styrene Monomer

    Applications: Styrene monomer is used internally by NOVA Chemicals to
produce styrenic polymers, or sold to customers who use styrene to produce
styrenic polymers and other products such as ABS, synthetic rubber, and
unsaturated polyesters.

    (5) North American Solid Polystyrene

    Products: SPS

    Applications: SPS is sold to customers who make products for end-use
applications including electronics and food packaging, small appliances, and
construction components.

    (6) NOVA Innovene European Joint Venture

    Products: SPS and EPS. Neither of these products exceed the quantitative
threshold for separate reporting.

    Applications: SPS is sold to customers who make products for end-use
applications including electronics and food packaging, small appliances, and
construction components. EPS is sold to customers who make products for
end-use applications including packaging for food and consumer products, and
insulation for the building and construction industry.

    (7) Performance Styrenics

    Products: EPS and Styrenic Performance Products which include polymers
such as ARCEL(R), ZYLAR(R) and DYLARK(R); as well as downstream business
ventures. None of these products exceed the quantitative threshold for
separate reporting.

    Applications: EPS is sold to customers who make products for end-use
applications including packaging for food and consumer products, and
insulation for the building and construction industry. Customers for Styrenic
Performance Products make protective packaging, automotive interiors, food
packaging, consumer goods, medical devices, appliances and components for the
construction industry.

    The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. In addition to the
previously reported measures of income - operating income (loss) and net
income (loss), NOVA Chemicals is reporting Adjusted EBITDA because this
measure is used by management to evaluate the ability of each segment to
generate operating cash flow. NOVA Chemicals accounts for intersegment sales
and transfers as if the sales or transfers were to third parties, that is, at
market price.

    The following tables provides information for each segment.

    
                                     Three Months Ended      Year Ended
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005   2006    2005
                                  ------- -------- ------- ------- -------
    Revenue
      Joffre Olefins                $427     $417    $555  $1,744  $1,704
      Corunna Olefins                515      557     232   1,997   1,430
      Polyethylene                   455      507     445   1,922   1,628
      Performance Styrenics          105      111      98     421     392
      Styrene Monomer                526      485     451   1,889   1,828
      North American SPS             119      140     120     500     545
      NOVA Innovene European JV      184      179     129     672     616
      Eliminations                  (696)    (684)   (597) (2,626) (2,527)
                                  ------- -------- ------- ------- -------
                                  $1,635   $1,712  $1,433  $6,519  $5,616
                                  ------- -------- ------- ------- -------
    Adjusted EBITDA(1)
      Joffre Olefins                $125     $153     $73    $558    $313
      Corunna Olefins                  2       26     (14)     83      67
      Polyethylene                   (13)      77      59     120     202
      Performance Styrenics          (17)      (3)     (6)    (24)     (5)
      Styrene Monomer                 (7)       2     (24)    (17)    (61)
      North American SPS             (13)     (10)      3     (39)    (18)
      NOVA Innovene European JV        1       (3)    (23)    (18)    (64)
      Corporate                       10      (43)      7     (54)     13
      Eliminations                    10       (2)      6      (5)     14
                                  ------- -------- ------- ------- -------
                                     $98     $197     $81    $604    $461
                                  ------- -------- ------- ------- -------
    

    (1) Net income (loss) before restructuring charges, income taxes, other
gains and losses, interest expense and depreciation and amortization (see
Consolidated Statements of Net Loss and Reinvested Earnings (Deficit) on page
18 and Supplemental Measures on page 12).

    
                                   Three Months Ended        Year Ended
                                Dec. 31  Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                  2006     2006     2005   2006     2005
                                -------- -------- ------- ------- --------
    Operating income (loss)(1)
      Joffre Olefins               $111     $141     $60    $506     $262
      Corunna Olefins               (14)      10     (25)     24       17
      Polyethylene                  (29)      61      41      52      137
      Performance Styrenics         (19)      (7)    (10)    (36)     (18)
      Styrene Monomer               (21)     (12)    (38)    (72)    (113)
      North American SPS            (18)     (15)     (3)    (60)     (47)
      NOVA Innovene European JV      (7)     (11)    (31)    (50)     (94)
      Corporate                    (850)    (152)    (76) (1,039)    (155)
      Eliminations                   10       (2)      6      (5)      14
                                -------- -------- ------- ------- --------
                                  $(837)     $13    $(76)  $(680)      $3
                                -------- -------- ------- ------- --------
    Net income (loss)
      Joffre Olefins                $66      $85     $34  $324(2)    $154
      Corunna Olefins               (12)       4     (19)   25(2)       2
      Polyethylene                  (27)      35      21    32(2)      71
      Performance Styrenics         (14)      (5)     (7)    (29)     (14)
      Styrene Monomer               (13)     (14)    (28)    (61)     (81)
      North American SPS            (14)     (10)     (3)    (44)     (33)
      NOVA Innovene European JV      (7)     (10)    (27)    (47)     (92)
      Corporate                    (769)    (107)    (40)   (901)    (117)
      Eliminations                    9       (2)      3      (2)       9
                                -------- -------- ------- ------- --------
                                  $(781)    $(24)   $(66)  $(703)   $(101)
                                -------- -------- ------- ------- --------
    Depreciation and
     amortization expense
      Joffre Olefins                $14      $12     $13     $52      $51
      Corunna Olefins                16       16      11      59       50
      Polyethylene                   16       16      18      68       65
      Performance Styrenics           2        4       4      12       13
      Styrene Monomer                14       14      14      55       52
      North American SPS              5        5       6      21       29
      NOVA Innovene European JV       8        8       8      32       30
                                -------- -------- ------- ------- --------
                                    $75      $75     $74    $299     $290
                                -------- -------- ------- ------- --------
    Interest expense (net)(3)
      Joffre Olefins                $13      $12      $7     $50      $25
      Corunna Olefins                 5        5       3      20       11
      Polyethylene                    9        9       9      34       30
      Performance Styrenics           2        3       2      10        7
      Styrene Monomer                 5        6       4      21       14
      North American SPS              4        2       3      11        9
      NOVA Innovene European JV       5        6       5      22       17
                                -------- -------- ------- ------- --------
                                    $43      $43     $33    $168     $113
                                -------- -------- ------- ------- --------
    

    (1) Net income (loss) before income taxes, other gains and losses and
interest expense (see Consolidated Statements of Net Loss and Reinvested
Earnings (Deficit) on page 18 and Supplemental Measures on page 12).

    (2) Includes $60 million benefit from Canadian tax rate reductions
allocated evenly to the Joffre Olefins, Corunna Olefins and Polyethylene
segments.

    (3) Management primarily relies on interest expense, rather than gross
interest revenue and expense amounts, in managing the segments, thus only the
net interest expense (revenue) amount is disclosed as permitted by paragraph
1701.30 of the Canadian Institute of Chartered Accountants' Handbook.

    
                                     Three Months Ended      Year Ended
                                  ------------------------ ---------------
                                  Dec. 31 Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005   2006    2005
                                  ------- -------- ------- ------- -------
    Income tax expense (recovery)
      Joffre Olefins                 $33      $42     $18    $131     $82
      Corunna Olefins                 (6)       2      (9)    (19)      4
      Polyethylene                   (11)      17      12     (14)     37
      Performance Styrenics           (8)      (4)     (5)    (18)    (12)
      Styrene Monomer                (13)      (4)    (14)    (33)    (46)
      North American SPS              (9)      (6)     (2)    (26)    (20)
      NOVA Innovene European JV       (4)      (8)     (8)    (24)    (19)
      Corporate                      (82)     (46)    (29)   (138)    (32)
      Eliminations                     1        -       2      (3)      5
                                  ------- -------- ------- ------- -------
                                    $(99)     $(7)   $(35)  $(144)    $(1)
                                  ------- -------- ------- ------- -------
    Capital expenditures
      Joffre Olefins                  $7       $8      $3     $25     $18
      Corunna Olefins                  6       10      69      45     204
      Polyethylene                    11        4       9      23      34
      Performance Styrenics           14       16      39      81      86
      Styrene Monomer                  3        1       2       6      55
      North American SPS               3        2       3       7       7
      NOVA Innovene European JV        2        6       4      11      15
                                  ------- -------- ------- ------- -------
                                     $46      $47    $129    $198    $419
                                  ------- -------- ------- ------- -------
    

    
                                                        Dec. 31   Dec. 31
                                                         2006      2005
                                                       --------- ---------
    Assets
      Joffre Olefins                                       $658      $741
      Corunna Olefins                                     1,177     1,152
      Polyethylene                                          946     1,009
      Performance Styrenics                                 429       332
      Styrene Monomer                                       334       720
      North American SPS                                     82       312
      NOVA Innovene European JV                             216       554
      Corporate(1)                                          331       412
      Eliminations                                          (18)      (15)
                                                       --------- ---------
                                                         $4,155    $5,217
                                                       --------- ---------
    

    (1) Amounts include all cash and cash equivalents.

    
    8. Reconciliation to United States Generally Accepted Accounting
     Principles

                                    Three Months Ended       Year Ended
                                 ------------------------- ---------------
                                 Dec. 31  Sept. 30 Dec. 31 Dec. 31 Dec. 31
                                   2006     2006     2005    2006    2005
                                 -------- -------- ------- ------- -------
    Net loss in accordance with
     Canadian GAAP                 $(781)    $(24)   $(66)  $(703)  $(101)
    Add (deduct) adjustments
     for:
      Hedging and derivative
       activity(1)                     -       (3)      -      (2)     (3)
      Inventory costing(2)            (2)       6      11      (2)      4
      Start-up costs(3)                1        2     (16)     (3)    (13)
      Stock-based
       compensation(7)                 -       (1)      -      (1)      -
      Restructuring(8)                11        -       -      11       -
      Other                            -        1       -       1       1
                                 -------- -------- ------- ------- -------
    Net loss in accordance with
     U.S. GAAP                     $(771)    $(19)   $(71)  $(699)  $(112)
                                 -------- -------- ------- ------- -------
    Loss per share - basic and
     diluted basic                $(9.34)  $(0.23) $(0.86) $(8.47) $(1.36)
                                 -------- -------- ------- ------- -------
    

    
                                 Three Months Ended         Year Ended
                             --------------------------- -----------------
                             Dec. 31  Sept. 30  Dec. 31  Dec. 31  Dec. 31
                               2006      2006     2005     2006     2005
                             -------- --------- -------- -------- --------
    Comprehensive loss (4)
    Net loss in accordance
     with U.S. GAAP            $(771)     $(19)    $(71)   $(699)   $(112)
      Cumulative translation
       adjustment(5)             (36)       17       (7)      54      (29)
      Pension liability
       adjustments(6)            (70)        -       (9)     (70)      (9)
                             -------- --------- -------- -------- --------
    Comprehensive loss in
     accordance with U.S.
     GAAP                      $(877)      $(2)    $(87)   $(715)   $(150)
                             -------- --------- -------- -------- --------
    

    
                                                          Dec. 31  Dec. 31
                                                            2006     2005
                                                          -------- -------
    Accumulated other comprehensive income(4)
        Cumulative translation adjustment(5)                 $357    $303
        Pension liability adjustments (6)                     (82)    (12)
                                                          -------- -------
                                                             $275    $291
                                                          -------- -------
    Balance sheet in accordance with U.S. GAAP(9)
      Current assets (2)                                   $1,370  $1,455
      Investments and other assets(3), (6)                     82     159
      Plant, property and equipment, net                    2,719   3,604
      Current liabilities(1)                               (1,186) (1,271)
      Long-term debt(1)                                    (1,617) (1,742)
      Deferred credits and long-term liabilities(1), (6),
       (7)                                                   (898)   (998)
                                                          -------- -------
      Common equity                                          $470  $1,207
                                                          -------- -------
    

    (1) Derivative Instruments and Hedging Activities. Canadian GAAP does not
require the recognition of derivative instruments on the consolidated balance
sheet at fair values, unless the derivative instrument does not qualify for
hedge accounting under Canadian Accounting Guideline 13, Hedging Relationships
(AcG-13). Non-qualifying derivatives are adjusted to fair value through income
(loss). Under U.S. GAAP, entities must follow the recommendations of Statement
of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities, which require the recognition of all
derivatives on the balance sheet at fair value. Derivatives that are not
hedges must be adjusted to fair value through income (loss). If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in other comprehensive income until the hedged item is recognized in earnings.
For derivatives that are designated and qualify as hedging instruments, NOVA
Chemicals documents the hedging strategy, including hedging instrument and
hedged item, based on the risk exposure being hedged. Based upon the
designated hedging strategy, effectiveness of the hedge in offsetting the
hedged risk is assessed at inception and on an ongoing basis during the term
of the hedge. The ineffective portion of a derivative's change in fair value
is immediately recognized in earnings. The application of SFAS No. 133 for
U.S. GAAP reporting results in differences related to commodity-based and
other derivative instruments used by NOVA Chemicals.

    (2) Inventory Costing. Canadian GAAP allows fixed overhead costs
associated with production activities to be expensed during the period whereas
U.S. GAAP requires an allocation of fixed production overhead to inventory.

    (3) Start-up Costs. Canadian GAAP provides that when an entity starts up
a new facility, expenditures incurred during the pre-operating period may be
deferred when certain criteria are met. Under U.S. GAAP, all costs (except
interest on constructed assets) associated with start-up activities must be
expensed as incurred.

    (4) Comprehensive Income (loss). U.S. GAAP SFAS No. 130, Reporting
Comprehensive Income, requires the presentation of a statement containing the
components of comprehensive income (loss) and the accumulated balance of other
comprehensive income. Comprehensive income includes all changes in equity
during the period including items that are not in net income (loss). This
statement is not currently required under Canadian GAAP. However, new Canadian
guidance, CICA 1530, Comprehensive Income, will require the reporting of
Comprehensive Income. NOVA Chemicals adopted this standard on Jan.1, 2007.

    (5) Cumulative Translation Adjustment. Under U.S. GAAP unrealized gains
(losses) resulting from translation of self-sustaining foreign operations are
recorded in other comprehensive income until there is a realized reduction in
the investment.

    (6) Pension Liability Adjustment. In 2006, for U.S. GAAP reporting, SFAS
No. 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
132(R), was effective. SFAS No. 158 requires an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan
(other than a multi-employer plan) as an asset or liability in its statement
of financial position and to recognize changes in that funded status in the
year in which the changes occur through comprehensive income. Retrospective
application is not permitted. Accordingly, at Dec. 31, 2006, an additional
liability for pension and post-retirement benefits in the amount of $124
million has been recognized, resulting in a charge of $70 million (net of tax)
to other comprehensive income (loss). In 2005 and 2004, SFAS No. 87,
Employer's Accounting for Pensions, was followed with respect to pension
accounting, which required an employer to record an additional minimum
liability (AML) if the unfunded accumulated benefit obligation exceeded the
accrued pension liability or if there was a prepaid pension asset with respect
to the plan. If an AML was recognized, an intangible asset, in an amount not
exceeding the unrecognized prior service cost, was also recognized. The excess
of the AML, over the intangible asset, if any, was charged to other
comprehensive income, net of income tax effects.

    (7) Stock-Based Compensation Plans. Under Canadian GAAP, the Employee
Incentive Stock Option Plan is measured using a fair-value based method, while
the Equity Appreciation Plan and the Restricted Stock Unit Plan are
marked-to-market. U.S. GAAP, SFAS No. 123(R), Accounting for Share-Based
Payment, which was adopted by NOVA Chemicals effective Jan. 1, 2006, requires
the share-based compensation transactions to be accounted for using a
fair-value based method, such as the Black Scholes method used by NOVA
Chemicals. This standard requires adoption using a modified prospective
application. The fair value of awards classified as liability instruments must
be remeasured subsequently at each reporting date through the settlement date.
Changes in fair value during the requisite service period will be recognized
as compensation cost over that period. The cumulative effect of $5 million for
the period prior to Dec. 31, 2005, has been charged to reinvested earnings at
Jan. 1, 2006.

    (8) Restructuring. Due to differences in the cost basis, under U.S. GAAP,
of certain assets for which an impairment charge has been recorded, the
resulting charge is lower under U.S. GAAP.

    (9) Joint Ventures. NOVA Chemicals accounts for its interests in joint
ventures using the Proportionate Consolidation method under Canadian GAAP. As
permitted by specific U.S. SEC exemptions, adjustments to reflect equity
accounting, as required under U.S. GAAP, have not been made. The equity method
would not result in any changes in NOVA Chemicals' net income (loss) or
shareholders' equity, however, all assets, liabilities, revenue, expenses, and
most cash flow items would decrease when compared with the amounts that are
presented using proportionate consolidation.

    New Accounting Pronouncements

    Canadian GAAP

    EIC 162, Stock-Based Compensation for Employees Eligible to Retire Before
the Vesting Date, requires that compensation cost for stock-based awards for
employees eligible to retire at the grant date must be recognized at the grant
date. For those employees who will become eligible to retire during the
vesting period, compensation cost should be recognized over the period from
the grant date to the date on which the employee becomes eligible to retire.
Application of this standard will result in acceleration of the recognition of
compensation expenses. This standard was implemented in the fourth quarter of
2006. See Note 1 of the Notes to Consolidated Financial Statements for a
description of the impact.

    CICA 3855, Financial Instruments - Recognition and Measurement & CICA
3865, Hedges, are effective for fiscal years beginning on or after Oct. 1,
2006. This statement harmonizes Canadian and U.S. GAAP and IFRS by
establishing standards for recognition and measurement of financial assets,
liabilities and non-financial derivatives. Previous Canadian standards
addressed disclosure and presentation matters only. CICA 3865 sets standards
for when and how hedge accounting may be applied, further restricting which
hedging relationships qualify for hedge accounting.

    CICA 1530, Comprehensive Income, is effective for interim and annual
periods relating to fiscal years beginning on or after Oct. 1, 2006 and was
adopted by NOVA Chemicals on Jan.1, 2007. This standard harmonizes Canadian
and U.S. GAAP and IFRS. This statement defines the presentation of
comprehensive income and its components. Comprehensive income includes all
changes in equity during the period including items that are not in net income
(loss).

    CICA 1506, Changes in Accounting Policies and Estimates, and Errors, is
effective Jan. 1, 2007 and states an entity is permitted to change accounting
policies only when it is required by a primary source of GAAP, or when the
change results in a reliable and more relevant presentation in the financial
statements.

    U.S. GAAP

    FIN 48, Accounting for Uncertainty in Income Taxes, clarifies accounting
for income taxes by prescribing a minimum recognition threshold a tax position
is required to meet before being recognized. An enterprise would be required
to recognize the best estimate of a tax position if that position is more
likely than not of being sustained upon examination, based solely on the
technical merits of the position. This change is effective beginning in 2007.
NOVA Chemicals has not yet determined the impact on 2007 results.

    SFAS 154, Accounting Changes and Error Corrections, requires
retrospective application, with restatement of prior periods, for a voluntary
change in accounting principle. This standard aligns U.S. and Canadian GAAP
and IFRS.

    SFAS 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans, issued on Sept. 29, 2006, amends SFAS 87 and SFAS 106,
and requires recognition of the overfunded or underfunded status of pension
and other post-retirement benefit plans on the balance sheet. Under SFAS 158,
gains and losses, prior service costs and credits, and any remaining
transition amounts under SFAS 87 and SFAS 106 that have not yet been
recognized through net periodic benefit cost will be recognized in accumulated
other comprehensive income, net of tax effects, until they are amortized as a
component of net periodic cost. The measurement date, the date at which the
benefit obligation and plan assets are measured, is required to be the
company's fiscal year end. SFAS 158 is effective for publicly-held companies
for fiscal years ending after Dec. 15, 2006, except for the measurement date
provisions, which are effective for fiscal years ending after Dec. 15, 2008.
This Statement does not affect the results of operation. Retrospective
application is not permitted.




For further information:

For further information: NOVA Chemicals Corporation Investor Relations -
Chris Bezaire, 412-490-5070 Media Relations - Greg Wilkinson, 412-490-4166

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NOVA CHEMICALS CORPORATION

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